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HomeMy WebLinkAboutPR 19408: FUNDING OF THE CONDITONAL LOAN/GRANT AND PERMANENT LOAN WITH NAUTICAL AFFORDABLE HOUSING INC., EDC P. R. No. 19408 5/31/2016 RESOLUTION NO. A RESOLUTION APPROVING THE FUNDING OF THE CONDITIONAL LOAN/GRANT AND PERMANENT LOAN BY AND BETWEEN NAUTICAL AFFORDABLE HOUSING, INC., AND THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION, FOR THE SEAHAWK LANDING STUDENT HOUSING PROJECT AT LAMAR STATE COLLEGE PORT ARTHUR, PURSUANT TO THE $1,000,000.00 CONDITIONAL LOAN/GRANT AGREEMENT AND THE $1,000,000.00 PERMANENT LOAN TO SEAHAWK LANDING LLC WHEREAS, on March 20, 2014, at a joint meeting with the City of Port Arthur Section 4A Economic Development Corporation (the "PAEDC"), the City Council for the City of Port Arthur, Texas (the "City") made a motion to approve the City of Port Arthur to give its full support of the concept of a Grant/Loan in an amount not to exceed Two Million Dollars for the purpose of student housing in conjunction with Lamar State College Port Arthur; and WHEREAS, Seahawk Landing LLC is an affiliate of ITEX Development, LLC which has collaborated with LSCPA and the Texas State University System to develop and construct the student housing project at LSCPA; and WHEREAS, Seahawk Landing LLC has a leasehold interest pursuant to a Ground Lease in certain property in the City on the campus of LSCPA which is under construction for the development of the Seahawk Landing student housing project; and WHEREAS, Nautical Affordable Housing, Inc. is a Texas non-profit corporation ("Nautical") whose corporate purpose includes providing assistance to the development of affordable housing and is a member of Seahawk Landing, LLC and a development partner for the Seahawk Landing student housing project located at LSCPA; and WHEREAS, PAEDC has heretofore committed to provide funding to the Seahawk Landing student housing project as evidenced through a Conditional Loan/Grant Agreement (the "Agreement") in the sum of$1,000,000 and a $1,000,000 permanent loan; and WHEREAS, in order to provide development assistance, Nautical has undertaken certain development and funding obligations for the Seahawk Landing student housing project as set forth in the executed Agreement attached hereto as Exhibit "A" and made a part hereof for all purposes; and WHEREAS, Nautical has executed to and for the benefit of PAEDC in consideration for the satisfaction of the covenants and conditions of the Agreement, a Conditional Commercial Promissory Note, Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement and Collateral Assignment of Notes and Liens attached hereto as Exhibits "Bl", "B2" and "B3"; and WHEREAS, upon completion and acceptance of the Seahawk Landing student housing project by LSCPA and the Texas State University System, the $1,000,000 Conditional Loan/Grant Agreement obligations shall be satisfied, and the $1,000,000 in construction funds shall be a grant to the project; and WHEREAS, Seahawk Landing LLC has executed a Loan Agreement (Borrower/Owner), $1,000,000 Promissory Note and a Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement attached hereto as Exhibits "Cl". "C2" and "C3" to evidence the $1,000,000 permanent loan; and WHEREAS, the City Council finds that approval of the terms, conditions, covenants and agreements in the Agreement by and between Nautical and PAEDC will provide for the #1286103 Page 2 a , NOES: . Deloris "Bobbie" Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED: /—ee etc---A- --t--- Floyd Batiste,rEDC CEO APPROVE i • T 4 • ' : Guy N. Goodson, PAEDC Attorney APPROVED AS TO FORM: 50 ,-141.04171) Valecia R. Tizeno, City Attorney #1286103 Page 4 EXHIBIT " A " CONDITIONAL LOAN/GRANT AGREEMENT THIS AGREEMENT (the "Agreement") is made as of the 'i day ofr k.2016, by and between NAUTICAL AFFORDABLE HOUSING, INC., a Texas non-profit corporation, with an address of 1885 E. Farragut, Orange, Texas 77630 ("Borrower") and CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORA"f"ION, a Texas corporation,with an office at 501 Procter, Suite 100,Port Arthur,Texas 77640 ("Lender"). WITNESSETH A. Borrower is a Texas non-profit corporation whose corporate purposes include providing assistance to the development of housing in Southeast Texas, and a member of Seahawk Landing, LLC ("Seahawk Landing"). B. Seahawk Landing is the owner of a leasehold interest pursuant to a Ground Lease Agreement (as hereinafter defined) in certain property in Port Arthur, Texas, being a part of Lamar State College Port Arthur ("LSCPA"), which parcels of ground are more particularly described in Exhibit A-1 (the "Leasehold Premises") and Exhibit A-2 (the "Fee Interest") attached hereto and made a part hereof(collectively,the"Land"). C. Seahawk Landing is an affiliate of ITEX Development, LLC ("Developer"), which intends to construct or cause to be constructed a student housing project for LSCPA on a portion of the Land, together with appurtenant easements, licenses, site improvements and facilities (the "Development"), pursuant to Development Agreement between TSUS/LSCPA and the Developer. D. Lender has agreed to provide to Borrower, a Loan as hereinafter described to be used to assist in the construction of the Development, appurtenant site improvements and facilities on the Land as more fully described in Exhibit B attached hereto and made a part hereof(the "Improvements"). The Land and Improvements are hereinafter collectively referred to herein as the "Project". The Improvements shall be constructed in accordance with certain plans and specifications as they relate to the Project hereinafter referred to, together with all modifications thereto approved to date by the Texas State University System ("TSUS") and LSCPA(as hereinafter defined)as the"Plans and Specifications". E. Pursuant to this Agreement, Lender will lend to Borrower funds to facilitate the construction of the Development in consideration of the Borrower satisfying the terms and. conditions of this Agreement, which if satisfied, shall convert the Loan (as hereinafter defined) to a grant in accordance with the authorities provided to the Lender pursuant to Sections 501.007,Texas Local Government Code. F. Lender is prepared to lend Borrower the sum of ONE MILLION DOLLARS ($1,000,000.00)to assist in the construction of the Improvements. The proceeds of the Loan will be funded by Lender through its Development Fund and as stated in accordance with Section 501.007, Texas Local Government Code. Such sum shall be evidenced by that certain Conditional Commercial Promissory Note of even date herewith (the "Note") from Borrower to Lender. #1242960 G. Borrower has agreed to provide as security for the repayment of the loan, a Collateral Assignment of Note and Lien, Financing Statement, and Designation of Beneficiary to Performance and Payment Bonds as more fully described in Section 2.3 of this Agreement. H. Borrower is operating pursuant to its Certificate of Incorporation under File No. 800089058, Office of the Secretary of State for the State of Texas, as filed in said office on May 31, 2002 and in accordance with the Bylaws of the corporation as duly adopted, and as the Borrower is further authorized to operate in accordance with its non-profit status as provided through Department of Treasury Internal Revenue Service under Employer Identification No. 04- 3674725 (the"Governing Documents") as hereinafter described. I. Borrower covenants and agrees that it may utilize the Loan only for the purposes of expenditures that are for development or construction of the Improvements and may not be utilized for any development fees, construction management fees,closing expenses or costs. J. This Agreement shall set forth the terms and conditions pursuant to which the Lender shall disburse the Loan. NOW, THEREFORE,the parties hereto, in accordance with the Recitals set forth above and the covenants, conditions, and agreements set forth below, intending to be legally bound is hereby, and said Recitals being incorporated as fully set forth below in the this Agreement, and in consideration of the covenants hereinafter contained agree as follows: ARTICLE I. DEFINITIONS As used in this Agreement, the following terms shall have the respective meanings indicated below. Where there are blanks to be completed in any meaning and the words "None"• or "Not applicable" or "N/A" are inserted, requirements involving the application of that term are of no effect to the extent that such term would be applicable. Advance Request-See Section 7.1(a). Assignments - See Section 2.3(a). Budgeted Category- See Section 5.2. Budgeted Loan Amount- See Section 5.2. Building Contracts -means all construction management contracts, general and/or other construction contracts, architects' contracts, if any, and interior design contracts, if any, which Borrower now has or will hereafter enter into m connection with the construction of the Project. CBOT-CommunityBank of Texas,N.A. CBOT Loan Documents—means those documents evidencing that certain loan of from CommunityBank of Texas,NA. to the Partnership. -2 - #1242960 ..........._ . Commencement Date - means not later than March 7,2016. Commitment for Title Insurance - See Section 4,4(a). Completion Date—means August 15,2016. Contractor - means the Borrower which shall serve in order to achieve cost savings on the Project. Contractor shall have the right to engage a Primary Sub- Contractor (as defined herein). ICON Builders, L.L.C., Borrower's construction. manager, and/or such contractor(s)as Lender shall designate. Cost Breakdown - means the itemized breakdown of costs which sets forth, under the separate columns entitled and hereinafter sometimes referred to as, the "Estimated Cost Amount"and the"Budgeted Loan Amount". Default Rate-means that rate specified as the Default Rate in the Note. Direct Costs- See Section 5.2. Estimated Cost Amount-See Section 5.2. Event of Default- See Section 8. Fee Interest - means the tract of land located in Port Arthur, Jefferson County, Texas,and which is more particularly described in Exhibit A-2 hereto. Governing Documents - means the articles of incorporation and by-laws of Borrower. Ground Lease - means that certain ground lease of the Land dated as of even date herewith from Lamar State College Port Arthur("LSCPA")acting by and through the Texas State University System("TSUS"),to Seahawk Landing, as tenant. Hazardous Substances - means those elements and compounds which are s_ designated as such in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601 (14) and any other hazardous substances as that term may be further defined in applicable federal, state or local laws. Hazardous Waste - means any hazardous waste, residual waste, solid waste or other waste as those terms are defined in applicable federal,state or local laws. Improvements-means the Improvements referred to and described in Exhibit B. Indirect Costs-See Section 5.2. Land-means the land referred to and described in Exhibit A-1. -3 #1242960 Leasehold Premises —means the 2.204 acre (more or less)tract of land, which is located in Port Arthur, Jefferson County,Texas and more particularly described in Exhibit A-1. Loan-means the sums to be loaned as set forth in.Recital F above. Loan IJocuments- See Section 2.3. Mortgage - means the Subordinated Leasehold Deed of Trust and Security Agreement of even date herewith from Seahawk Landing to Borrower covering, among other things, the leasehold interest in the Leasehold Premises and the Improvements, and all amendments, supplements, restatements, renewals, and extensions thereof Note - means the promissory note of even date herewith given by Borrower as maker to Lender as payee referred to in Recital F above. Plans and Specifications - means the Plans and Specifications referred to in Recital D above. Primary Sub-Contractor —means ICON Builders, L,L.C., a Texas limited liability company. Project - means the Land and Improvements as set forth in Recitals B and D above. Project Costs - means any item or cost intended or required to be incurred to lx complete the Improvements and to carry the Project and to service the Loan for ss' the period from the initial advance hereunder until the Completion Date. Survey-means the survey required by Section 4.4(f)herein. Title Insurer- See Section 4.4(a). ARTICLE II. THE LOAN 2.1 Purpose and Amount. Ix (a) Lender, pursuant to Article VII of this Agreement and in accordance with the itemized Cost Breakdown attached hereto as Exhibit C and made a part hereof. The Loan shall be advanced by Lender and used upon the conditions and subject to the provisions hereinafter set forth. Borrower or its duly assigned agent or trustee will transfer the Loan proceeds in accordance with the Cost Breakdown. (b) Additional funding for the construction of the Development is being provided as follows: -4- #1242960 (i) A loan from the CommunityBank of Texas,N.A. ("CBOT") in the original principal amount$4,000,000(the"Loan"); (ii) A subordinated loan from Lender to Seahawk Landing in the original principal amount of$1,000,000("Subordinated Loan"); and (in) Developer Equity in the amount of$935,160. 2.2 Note and Mortgage. Borrower has executed the Note in the amount of the Loan; however, if the covenants, conditions, and agreements contained herein are satisfied and TSUS and LSCPA provide written acceptance to Lender of the Development for student housing, Lender shall cancel the Loan and provide the$1,000,000.00 in proceeds of said Loan as a grant to the Development. 2.3 Security for Loan. As security for the Loan as evidenced by the Promissory Note, and for Borrower's obligations thereunder and hereunder, Borrower shall deliver, or cause to be delivered,to Lender at or before closing hereunder, the following documents (which documents, together with the Note, this Agreement and all other documents relating to the Loan, are collectively called the"Loan Documents"): (a) Collateral Assignment of Note and. Lien as to the Subordinated Deed of Trust, Security Agreement & Financing Statement as executed by between Seahawk Landing, LLC and Nautical Affordable Housing,Inc. (the"Mortgage"). (b) Financing Statements to be filed in such public offices as Lender and Lender's counsel may deem necessary to perfect a security interest in any of two items referred to in the Mortgage. (c) Designation as Beneficiary in and to Performance and Payment Bonds to which Developer and/or Seahawk Landing shall become an insured parties as required by Section 4.4(i)in this Agreement. (d) Commitment for Title Insurance. The document described in Section 4.4(a). ARTICLE III. BORROWER'S REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties. Borrower specifically represents and warrants to Lender that as of the date of this Agreement and as of the date of each advance of the Loan: (a) Borrower (i)has full power and authority to engage in all the transactions contemplated by this Agreement and (u)has full power, authority and legal right to execute and deliver, and to comply with its obligations under the Loan Documents, which documents constitute the legally binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms. (b) There is no suit, action, or proceeding pending, or to the best of Borrower's knowledge, threatened against or affecting Borrower, Seahawk Landing, the Land or - 5 - #1242960 Improvements before or by any court, administrative agency or other governmental authority which brings into question the validity of the transactions contemplated hereby or would interfere with the ability of Borrower to comply with the terms hereof (c) Borrower is a corporation, duly organized, validly existing, in good standing under the laws of the state of its incorporation, is qualified to do business and is in active status in the state in which the Project is located with full power and authority to consummate the transactions contemplated hereby; (d) Neither the execution nor delivery of this Agreement, the Note, the Mortgage, the Assignments or any other Loan Documents or the security or collateral relating hereto or thereto will conflict with or result in a breach of any of the provisions of the Governing Documents or of any applicable law,judgment,order, writ, injunction, decree, rule or regulation of any court, administrative agency or other governmental authority, or of any agreement or other instrument to which Borrower is a party or by which Borrower is bound, or constitute a default under any of the aforementioned or result in the creation or imposition of any lien, charge or encumbrance upon any property of Borrower or the Land and/or Improvements, or any other property of Borrower other than those in favor of Lender. (e) No consent, approval or other authorization of or by any court, administrative agency or other governmental authority or any other entity is required that remains outstanding in connection with the execution or delivery by Borrower of the Loan Documents, or compliance with the provisions hereof or of any of the Loan Documents. (f) All approvals from governmental or quasi-governmental authorities having jurisdiction over the Land and Improvements, including, but not limited to, building permits, street openings or closings, zoning or use permits, variances or special exceptions, zoning reclassifications, setback requirements however established, and approvals of any applicable insurance underwriters necessary as of the date of this Agreement to commence construction of the Improvements have been obtained (or will be obtained) and remain in full force and effect without restriction or modification. (g) All balance sheets, earnings statements and other financial data which have been or shall hereafter be furnished to Lender to induce it to enter into this Agreement or otherwise in connection herewith or with the Loan Documents, do or will fairly represent the financial condition of Borrower as of the respective dates thereof and the results of its operations for the period for which the same are furnished to Lender and have been or will be prepared in accordance with generally accepted accounting principles consistently applied, except as disclosed to Lender, and all other information, reports and other papers and data furnished to Lender are or will be, at the time the same are so furnished, accurate and correct in all material respects and complete insofar as completeness may be necessary to give Lender a true and accurate knowledge of the subject matter. There are no material liabilities of any kind as of the date of the most recent financial statements which are not reflected therein. (h) The construction of the Improvements funded through proceeds of the Loan shall be performed in conformity with all applicable statutes, laws, codes, rules, regulations,resolutions and ordinances, and the Plans and Specifications. -6- #r242960 (i) The Plans and Specifications, as of the date of this Agreement, have been approved by all applicable governmental authorities. All construction, if any, heretofore performed on the Improvements has been performed within the perimeter of the Land in accordance with the Plans and Specifications and all applicable governmental authorities, and in accordance with any restrictive covenants applicable thereto. The anticipated use of the Improvements complies with applicable zoning ordinances and all regulations affecting the Project and all governmental requirements for such use as of the date of this Agreement have been satisfied. (j) There is no default on the part of Borrower under this Agreement, the Note, the Mortgage, or any of the other Loan Documents, and no event has occurred and is continuing which with notice or the passage of time would constitute a default thereunder. (k) The Borrower is not in default with respect to any order, writ, injunction, decree or demand of any court or any governmental authority. (l) Seahawk Landing has a leasehold title to the Land and title to all other collateral given as security to Borrower and collaterally assigned to Lender, free and clear of all mortgages, pledges, liens, security interests or other encumbrances, except for the CBOT Loan the Subordinated Loan and Permitted Encumbrances(as defined in the Ground Lease). 3.2 Survival of Representations and Warranties. All of the representations and warranties of Borrower as set forth in this Agreement shall survive the making of this Agreement and the full repayment of the Loan and shall be continuing. Each and every Advance Request submitted by Borrower for funds under this Agreement shall constitute a new and independent representation and warranty to Lender with respect to all of the matters set forth in this Agreement,as of the date of such application. ARTICLE IV. CONDITIONS PRECEDENT The obligations of Lender to make the initial advance to Borrower and all additional advances under the Loan is subject to each of the following conditions precedent: 4.1 Representations and Warranties. The representations, covenants and warranties made by Borrower in this Agreement shall be true and correct in all material respects on and as of the date of each such advance. 4.2 No Event of Default. There shall be no Event of Default under any of the Loan Documents (or an event which would be an Event of Default but for the passage of time or the giving of notice or both). 4.3 Delivery of Loan Documents. All of the Loan Documents shall have been duly executed and delivered to Lender, and the Mortgage, financing statements and other recordable Loan Documents, shall have been recorded in the appropriate public offices or if not so recorded then the Title Insurer will insure any applicable"gap" in a manner satisfactory to Lender in its sole discretion. -7 - #1242460 4.4 Delivery of Other Documents. Borrower shall have delivered, or caused to be delivered,to Lender the following, unless otherwise waived by Lender: (a) Commitment for Title Insurance. A marked-up commitment for title insurance (the "Commitment for Title Insurance') issued by a title company or companies acceptable to Lender(the "Title Insurer"), representing Title Insurer's commitment to issue, in favor of Lender, but at the expense of Borrower, a standard mortgagee title insurance policy, insuring the lien of the Mortgage as a third mortgage lien on Seahawk Landing's interest in the Land and the Improvements, free and clear of all prior liens and encumbrances (including possible mechanics' or construction liens) other than CBOT's lien, the Subordinated Loan, and also subject to such objections and exceptions as are reasonably acceptable to Lender and its counsel and which policy shall contain such endorsements as Lender shall require in its reasonable discretion. At Lender's option, such title policy shall include a pending disbursements clause in form reasonably acceptable to Lender. In connection with each advance, Lender shall at its option receive a notice of title continuation or an appropriate endorsement from the Title Insurer(i) indicating that, since the last preceding disbursement, there has been no change in the state of title theretofore approved by Lender (including, without limitation, no mechanics' or construction lien, notice of unpaid balance and right to file lien or other notice or claim in connection therewith), (ii) increasing the coverage of the policy by an amount equal to the disbursement then being made,so that the total amount insured equals the total amount of the Loan disbursed by Lender, and (iii) changing the effective date of the policy to the date of disbursement. In addition, at its option, Lender may require the Title Insurer to obtain co-insurance or reinsurance in such amounts as Lender shall reasonably determine. (b) Property and Liability Insurance. A policy or policies of fire insurance with extended coverage, "builder's risk" insurance, and coverage against such other risks as CBOT shall require, workers compensation, contingent and public liability insurance and such other insurance (including federal flood insurance if required by law) as CBOT may require, covering any loss or damage to the Improvements or to persons or other property in, on, or about the Land and Improvements during the period of construction and thereafter, howsoever such loss or damage may arise, such insurance to be issued in such form and placed with such companies and in such amounts as Lender shall reasonably_require. All premiums required to maintain all such insurance in full force and effect shall be paid by Developer and/or Seahawk Landing,and evidence of payment shall be furnished by Borrower to Lender. All such insurance shall be maintained in such form as to be available to and for the protection of Borrower and Borrower's agents as its interests may appear, and shall contain provisions allowing the insured to complete the construction provided for under this Agreement and the Building Contracts executed for the Development and shall cover materials on the Land during construction. All such policies shall contain a non-contributory mortgagee clause acceptable to Lender making losses payable thereunder, without contribution or assessment, and shall obligate the insurer to give not less than thirty (30)days' notice to Lender prior to expiration or cancellation of such policies or material change in the coverage thereof All of the proceeds of such policies as to the interests of Borrower are hereby assigned by Borrower to Lender as collateral security for the repayment of the Loan. Receipt of insurance policies acceptable to Lender shall not thereafter bar Lender from requiring additional insurance,as Lender may deem necessary or desirable from time to time. Lender's rights under the insurance policies shall be subordinate to those of CBOT. -8 - #1.242960 (c) Building Contracts. Executed copies of all Building Contracts necessary to complete the Project, together with a list thereof and a list of all engineers, architects, contractors, and subcontractors in connection with the construction of the Improvements. (d) Permits. Copies of building permit or permits, site plan approval, approved plat, planning, zoning, subdivision, use, federal and state environmental, and all other permits and approvals with respect to the construction and operation of the Improvements and such other evidence as Lender may reasonably require showing the construction of the Improvements and uses thereof are permitted by and comply with all applicable statutes, codes, laws,rules,regulations,ordinances and resolutions. (e) Utilities. Evidence that water, sewer, electrical and other utilities are available in adequate capacities and are either in existence or will be available to the Land so that they can be accessed for use at the Project upon completion of the Improvements. (f) Survey. A survey of the Land showing any encroachments by or on the Land or any existing improvements thereon, discrepancies or conflicts in boundary lines, the location of the foundations of the Improvements and all easements and rights of way affecting the Land. Such survey shall be certified to Lender and to Title Insurer by a licensed surveyor or civil engineer and dated not more than ninety(90) days prior to Closing. (g) Opinion of Borrower's Counsel. The opinion(s) of Borrower's counsel dated as of the date hereof and in form and substance reasonably satisfactory to Lender and Lender's counsel. (h) Governing Documents. Certified copies of the Governing Documents, any amendments thereto and the certificates thereof and such other documents, active status certificates, authority to do business in a foreign jurisdiction, incumbency certificates, certified resolutions, or authorisations as may be required to establish the power and authority of Borrower and its members, general partners and/or controlling shareholders to execute and deliver the Loan Documents(as applicable). (i) Bonds. Contractor shall be required to obtain a surety bond which shall include coverage for the Contractor's or Primary Sub-Contractor's faithful performance and completion of its work (including defects arising within the guarantee period) and a separate labor and material payment bond covering the payment of all obligations arising in connection therewith, each of which shall be in the amount of the contract price. The surety bonds shall be issued by companies and in amounts and in form satisfactory to Lender in its sole discretion. 4.5 Fees, Charges and Premiums. Borrower shall provide evidence that all recording, filing and conveyancing in connection with the closing, including, without limitation title insurance fees, costs or premiums assessed against Borrower have been paid. 4.6 No Damage or Taking. No portion of the Improvements shall have been damaged by fire or other casualty which is not covered by insurance and no condemnation or taking of the entire Project or any portion thereof which would result in the termination of Seahawk Landing's leasehold estate in the Land shall be pending or threatened. -9 - #I242960 4.7 Licenses and Permits. All licenses, permits, consents, approvals and authorizations for the construction of the Improvements necessary as of the date of this Agreement shall be in full force and effect and no notices of violation or revocation with respect thereto shall have been received. ARTICLE V. AMOUNT; COST BREAKDOWN; BORROWER'S INVESTMENT 5.1 Funding. Lender agrees to lend and Borrower agrees to borrow (subject to the terms and conditions herein set forth), a sum aggregating not in excess of the Loan which sums shall be disbursed by Lender in connection with the terms and conditions of this Agreement. Lender shall have the right, but not the obligation, after occurrence of an Event of Default to fund amounts in excess of the Loan, to pay accrued and unpaid interest, to complete construction of the Improvements, or to correct any defaults under any of the Loan Documents (provided, however, that no such corrective action taken by Lender shall be deemed to cure.Borrower's default). Any excess amount so funded shall be evidenced by the Note to the fullest extent possible and by this Agreement. Such excess amount shall bear interest at the Default Rate specified in the Note and shall be secured by the Mortgage, the Assignments and the other Loan Documents. Borrower hereby agrees to execute additional. notes, mortgages and other additional documents and modifications thereto, evidencing and securing amounts funded in excess of the Loan,promptly upon request by Lender. 5.2 Cost Breakdown. The Cost Breakdown that has been prepared by Seahawk Landing and approved by TSUS & LSCPA in the form attached hereto as Exhibit C is a breakdown of Project Costs and sources and uses of funds (including categories sometimes hereinafter referred to as the "Estimated Cost Amount" and the "Budgeted Loan Amount") and the constituent amounts allocated to each category of cost shown therein (a `Budgeted Category"). The Budgeted Categories have been grouped or classified in the Cost Breakdown and such groupings are herein sometimes referred to as the "Direct Costs" and the "Indirect Costs". 5.3 Exceeding Budgeted Amounts, Reallocation. Lender is not obligated to pay out or advance proceeds of the Loan for the payment of any Project Costs which exceed the Budgeted Loan Amount for the applicable Budgeted Category. If at any time during the existence of this Agreement, the undisbursed balance of the Budgeted Loan Amount for any Budgeted Category is, in Lender's reasonable judgment, excessive, that excess may be reallocated, with the approval of Borrower, which approval shall not be unreasonably withheld, to any other category as to which the Budgeted Loan Amount is deemed to be insufficient. Disbursements shall be made from the "contingency" and "miscellaneous" categories of the Cost Breakdown if any, only for such costs as Lender, in its reasonable discretion,may approve in advance in writing. ARTICLE VI. CONSTRUCTION AND CONDUIT COVENANTS While Developer is responsible for the construction of the Improvements at the Project in conjunction with Contractor, Borrower agrees to the following conduit covenants which it shall either assume as herein stated or shall assure performance by Developer or Seahawk Landing to enable the disbursement of funds as provided in Article VII of this Agreement: - 10- #1242960 6.1 Commencement, Prosecution and Completion of Construction. Developer shall cause the Contractor to commence the construction of the Improvements according to the Plans and Specifications by the Commencement Date, and to proceed diligently, employing sufficient workers and supplying sufficient materials for that purpose, so that the Improvements shall be completed no later than the Completion Date. 6.2 Extras and Change Orders. Except to the extent otherwise provided in Section 9.14 of this Agreement, no extra work or change orders shall be ordered by Developer and/or Seahawk Landing or furnished by the Contractor, nor shall any change in the Plans and Specifications or supplements thereto be made without first obtaining written approval of Lender, which such approval not to be unreasonably withheld, delayed or conditioned. Before Lender shall be required to consider any such change,plans or bids,Borrower shall furnish to Lender any other information or documentation reasonably requested by Lender respecting the proposed extra work or change. 6.3 Conduit Covenants. Borrower covenants that it shall assure that as to the Project: (a) All materials and labor to be used in the construction of the Improvements shall be in accordance with the Plans and Specifications, and the Improvements will be completed in accordance with the Plans and Specifications and supplements thereto,as well as with all applicable building codes and regulations and all other applicable governmental and quasi-governmental requirements including the requirements of any applicable insurance underwriters. The construction shall proceed diligently and continuously and that such construction will be completed by the Completion Date. Construction of the Improvements shall be performed, free and clear of liens or claims for liens for material supplied and for labor or services performed in connection with the construction of the Improvements. All payments of worker's compensation premiums, Social ,Security taxes, withholding taxes, all other taxes, unemployment compensation premiums and any charges which may constitute a lien on the Project shall be paid timely. (b) Any structural defect in the Improvements or any material departure from the Plans and Specifications other than any change approved in accordance with this Agreement shall be corrected. The advance of any proceeds of the Loan shall not constitute a waiver of Lender's right to require compliance with this covenant with respect to any such defects or departures from the Plans and Specifications. (c) All easements affecting the Project shall be submitted to Lender shall be accompanied by a drawing or survey showing the location thereof. (d) Any and all governmental requirements shall be met and Lender, upon request, shall be furnished with copies of official inspection reports made by any governmental authority. (e) Borrower will permit Lender,or its representatives,to enter upon the Land during business hours to, inspect the Improvements and all materials to be used in the - 11 - #1242960 construction thereof and to examine all detailed plans and shop drawings which are or may be kept at the construction site. (f) All taxes and recording expenses, including documentary stamp taxes, if any; and all costs associated with loan disbursements including, without limitation, all title search costs and the fees and shall be paid as incurred. (g) The Improvements when erected will be within all building setback lines,. and the Improvements will not violate applicable use, construction or other restrictions, zoning laws or regulations. Upon their completion, Lender shall be provided with an as-built survey by a registered surveyor or engineer, (i) showing that the construction is entirely on the Land and free from any such violations, and does not encroach upon or overhang any easements, rights-of-way, or land of others,and(ii)containing and/or showing such other matters and detail as Lender may reasonably require. (h) All requirements of any governmental or quasi-governmental agency, authority or department in connection with the construction of the Improvements shall be met, including obtaining all required permits, licenses and approvals, and such additional permits or approvals as may he required at any time after the date of this Agreement. (i) On or before the Completion. Date, Borrower or Seahawk Landing shall deliver to Lender certificates of occupancy issued by the public authorities having jurisdiction over the Land and Improvements confirming that construction of the Improvements has been completed in accordance with all applicable requirements. (j) Payments to Contractor, or any subcontractors, laborers or materialmen shall be made, when due, and to obtain and deliver to Lender and the Title Insurer, lien waivers, subordinations of lien, releases of liens, releases of notices of unpaid balance and right to file lien, affidavits of payment and any and all other documents and instruments necessary to induce the Title Insurer to at all times insure the lien of the Mortgage free and clear of mechanics' and materialmens' liens and the like. Borrower shall furnish to Lender and file with public authorities as appropriate such lien waivers, subordinations of lien, affidavits, and/or releases, together with paid receipts, as Lender and/or the Title Insurer and/or other applicable title insurance companies may require prior to the commencement of construction of the Improvements and from time to time thereafter to assure proper expenditure of advances made or to be made by Borrower hereunder. (k) Borrower will deliver to Lender upon request, copies of any contracts, bills of sale, statements, receipted vouchers or agreements,under which Borrower claims title to any materials, fixtures or articles incorporated in the Improvements or subject to the lien of the Mortgage. (1) Without the prior written consent of Lender which consent shall not be unreasonably withheld, Borrower will not execute any contract or become a party to any arrangement for the performance of construction work at the Project except with Contractor. (m) Borrower agrees to make its books and accounts relating to the Project available for inspection by Lender or its representatives upon reasonable request. - 12 - #1242960 (n) During the course of construction of the Improvements, Borrower shall provide Lender with such additional surveys as requested by Lender, in its reasonable discretion, or by the Title Insurer, including but not limited to a revised survey showing the location of foundation(s)when completed at Seahawk Landing's expense. (o) Lender shall not be required to make advances in excess of the Loan, regardless of any approvals by Lender of change orders subject, however, to the right of Borrower to reallocate certain portions of budgeted Categories, which reallocation shall be submitted to Lender for reasonable review and approval. 6.4 Negative Covenants. In addition to those provisions contained elsewhere in this Agreement,Borrower agrees not to do any of the following without Lender's prior written consent which consent shall not be unreasonably withheld: (a) Amend, or permit to be amended in any material respect, the Plans and Specifications,any of the Building Contracts or any other document referred to herein. (b) Grant or acquiesce in granting any easement with respect to the Project. (c) Assign, pledge or encumber this Agreement or any funds held pursuant hereto. No such assignment,pledge or encumbrance shall be effective. (d) Commence or permit the commencement of any work with respect to any particular segment of construction until the Plans and Specifications for such segment shall have been submitted to and approved by TSUS,College and CBOT. (e) Either (i)store, use or generate any Hazardous Substance in or on the Project except in such amounts as are ordinarily used, stored or generated in similar projects; (ii)treat or dispose of any Hazardous Waste in or on the Project; and(iii) nor will Borrower, for more than the maximum period of time allowed by the applicable federal, state or local law, without being required to obtain a permit or approval, therefore, store any Hazardous Waste or Hazardous Substance in or on the Project, but in no event will Borrower store any Hazardous Waste or Hazardous Substance in or on the Project for more than ninety(90) days. Lender reserves its right, as a condition to approving any of the foregoing, to require written confirmation in the form reasonably acceptable to Lender and its counsel that: (x)Borrower has obtained all necessary permits and approvals to perform such activities; and (y) Borrower will perform such activities in material compliance with all applicable laws in a safe and effective manner that will not endanger persons or property and will not materially diminish the value of any collateral or other security provided by Borrower to Lender to secure any and all advances hereunder. 6.5 Other Covenants. Borrower further covenants as follows: (a) As of the date of closing hereunder, there shall be no lien or security interest held by any third party with respect to the Land or Improvements or any item or property, whether or not a fixture, installed thereon or stored on such site, other than those permitted under the Loan Documents, the CBOT Loan Documents, the Subordinate Loan - 13 - #1242960 documentation, and the Ground Lease, and Borrower shall keep such property free from any other hen or security interest. (b) Borrower shall not undertake additional financing in the future secured by any lien or security interest on the Land, or any other real or personal property encumbered in favor of Lender to secure the Loan, without first obtaining Lender's written consent which consent shall not be unreasonably withheld. ARTICLE VII. 'DISBURSEMENTS 7.1 Advances by Lender. Subject to the terms and conditions hereof, Lender shall undertake to disburse the proceeds of the Loan from time to time in connection with construction costs of the Improvements and other development costs, all as described in the Cost.Breakdown,as each such portion of construction is completed. The obligation of Lender to make any such disbursement is conditioned upon a request of Borrower, delivery by Borrower and approval by Lender of the items required pursuant to Section 4 hereof, satisfaction of all other conditions to disbursements set forth herein, delivery of the items specified below and the satisfaction by Borrower of all of its conduit or other covenants, agreements and obligations under this Agreement and the other Loan Documents. (a) Requisition. At least ten (10) business days prior to the date on which fk Borrower desires a disbursement, Borrower shall submit to Lender (i)the requisition submitted to CBOT on AIA Form G702/G703 or such other form as designated by CBOT, signed by the Contractor and Bonower's architect and notarized, accompanied by original lien waivers for the prior period(as provided under Section 7.1(c))and original change orders, and copies of invoices for indirect construction costs, and such other information and documentation required hereunder, signed by Seahawk Landing, the Contractor and Project architect ("Advance Request"); and (ii) a revised project budget showing the total project costs to date and the balance of each category of construction costs. (b) Timing. Requests for disbursements shall not be made more often than once a month and the amount advanced shall be subject to retainage as set forth in Section 7.3 below until the retainage disbursement is made. Prior to each disbursement, Lender may inspect the Improvements to verify the accuracy of all other reports,requests or documents submitted by Borrower. (c) Lien Release. If requested by Lender, Borrower shall furnish Lender with a schedule identifying all contractors or subcontractors who have performed work or furnished materials in connection with the Improvements, together with lien waivers from the Contractor and all subcontractors who have performed work or furnished materials in connection with the Improvements, current through the end of the previous period covered by Borrower's prior requisition. 7.2 Other Conditions for Disbursements. Advances hereunder shall be in amounts not exceeding the cost in the Lender's reasonable judgment, of labor furnished and materials physically incorporated into the Improvements, that Seahawk Landing has reasonably expended therefor,it being expressly understood that under no circumstances shall the Lender 14 #1242960 be obligated to advance from proceeds of the Loan an amount for any items of Direct Cost in excess of the Budgeted Loan Amount for the item. Lender shall not be required to make disbursements for costs incurred by Borrower with respect to material stored on or off the Land unless Lender shall, in its reasonable discretion, deem it advisable to do so. Each Advance Request shall constitute a representation that the work done and the materials supplied to date are in accordance with the Plans and Specifications; that the work and materials for which payment is requested have been physically incorporated into the Improvements and that its value is as stated; that such work and materials conform with all applicable rules and regulations of the public authorities having jurisdiction over the Land and Improvements; and that payment for the work or materials described in such Advance Request has been made or will be made with the proceeds of the advance in connection with which the Advance Request is submitted. Disbursement of proceeds of the Loan will also be contingent upon a continuation of title to the date of each disbursement showing: (1) leasehold title vested in Seahawk Landing; (2) that all real estate taxes have been paid to date; (3) the filing of no mechanic's or construction lien or notice of unpaid balance and right to file lien; and(4) no exceptions to title other than those previously approved by Lender. During the course of construction of the Improvements,Borrower shall provide to Lender monthly reports in form satisfactory to Lender indicating the projected disbursements of the Loan from the undisbursed balance of proceeds of the Loan. All costs associated with loan disbursements including, without limitation, title search and inspection fees, shall be paid by Borrower or Seahawk Landing. 7.3 Retainage. Lender reserves the right, at its own discretion and without liability to Borrower, to withhold from the amount of any advances made hereunder for or with respect to Direct Costs (pending completion of construction of the Improvements in accordance with the Plans and Specifications)ten percent (10%) of each request for an advance; except,that if upon completion of 50 percent of the construction of the Improvements in accordance with the Plans and Specifications, Lender may make the remaining payments in full for the work subsequently completed. If the Lender subsequently determines or is advised that the Contractor's performance and progress are unsatisfactory, Lender shall reinstate the ten percent (10%) retainage until such time as Lender determines that performance and progress are satisfactory. 7.4 Retainage Payment. In the case of advances of any of the retainage of the proceeds of the Loan, any other retainages by CBOT, and any balance of proceeds to be advanced under the Loan, it shall be a condition precedent to each such advance that Lender shall have also received: (a) Evidence of the approval by all applicable governmental authorities of the Improvements in their entirety for permanent occupancy to the extent any such approval is a condition of the lawful use and occupancy of the Improvements, any and all certificates of occupancy and other permits and approvals required by any governmental authority, and evidence of such approval by the local Board of Fire Underwriters or its equivalent and evidence of the approval of the contemplated use thereof by all applicable governmental authorities; (b) Written acceptance by TSUS/LSCPA to the effect that the Improvements have been completed in accordance with the PIans and Specifications; - 15- #1242960 (c) A final as-built survey showing the completed Improvements and all easements; (d) The full and complete release of all liens and the right to lien the.Project in connection with any and all work performed,or labor and materials supplied, for the Land or the Improvements to the extent then permitted by law; and (e) Such other information and documentation as may be reasonably requested by Lender. 7.5 Absence of Certain Events; Material Damage. If, at the time any advance is requested, any event shall have occurred and be continuing which,with the passage of time or the giving of notice or both,would be an Event of Default (as hereinafter defined) hereunder, then Lender shall have no further obligation to make any further advances unless such event shall be cured before it gives rise to an Event of Default. Furthermore, if the Project shall have suffered any material damage or destruction prior to any disbursement,such damaged or destroyed portion shall be restored or replaced in a manner reasonably acceptable to Lender without cost to Lender prior to any further disbursement from Lender. 7.6 Liens. If any mechanics' or construction lien or claim of mechanics' or construction lien or if applicable any other notice or claim including without limitation any notice of unpaid balance and right to file lien shall be filed against the Land or Improvements or any interest therein by reason of work, labor, services, or materials supplied or claimed to have been supplied, and if such lien, claim or notice is not fully and finally discharged, released or withdrawn as applicable against the Land and Improvements in a manner reasonably satisfactory to Lender within sixty (60) days after such lien, claim or notice shall have been filed and Borrower shall have received actual notice of the filing thereof, then Lender,at its option, may (a)pay and discharge any lien, in which case the sum which Lender shall have so advanced shall be due immediately from Borrower to Lender, shall be secured by the Mortgage, and shall bear interest at the Default. Rate from the date of payment by Lender until the date of repayment, and/or (b)treat such occurrence as an Event of Default hereunder. 7.7 No Approval. The making of any advance by Lender shall under no circumstances be deemed an approval or acceptance by Lender of any work done prior thereto. Although Lender may inspect the Plans and Specifications, Project Cost estimates and budgets, the course of developmental activities, and other matters pertaining to the Loan, such inspections are solely for the protection of Lender as Lender and Borrower shall have no right to rely thereon. Borrower hereby confirms that Lender is not making and will not make �= any representations and warranties as to any matters respecting the Loan, including, without limiting the generality of the foregoing,the sufficiency of the Loan,the adequacy of any Plans and Specifications,or the proper performance of any construction work. ARTICLE VIII. DEFAULTS 8.1 Events of Default. The occurrence of any one or more of the following events, shall constitute an"Event of Default"hereunder: - 16 - #1242960 (a) If any of the following occurs with respect to Borrower: (i)insolvency, assignment for the benefit of creditors, filing of a petition under Title 11 of the United States Bankruptcy Code or the filing of a bill in equity or the institution of other proceedings for the appointment of a receiver of assets provided, however, if such event is involuntary in nature Borrower shall have ninety (90) days in which to seek to have it dismissed; (ii)the filing of a petition or institution of other proceedings in any court for the composition with creditors or for relief in any manner from the payment of debts when due under any state or local law; or(iii)the institution by any creditor of any proceedings under Title 11 of the United States Bankruptcy Code or for the appointment of a receiver under any state or federal law whichis not dismissed within ninety (90)days; (b) If any representation or warranty made by Borrower hereunder or in any Loan Document proves to be inaccurate or untrue in any material respect as of the date of the execution hereof or as of the date of any advance, or any statement or certificate furnished by Borrower hereunder or in any Loan Document proves to be inaccurate or untrue in any material respect as of the date as to which the facts therein set forth were stated or certified, and such misrepresentation or warranty concerns an issue which materially jeopardizes Lender's interest in the Project or demonstrates a material adverse change in the financial condition of Borrower; (c) If Borrower shall have failed to observe and perform any of the terms, covenants, promises and agreements on its part to be observed and performed under this Agreement (other than those described in and embraced by the terms of the other subsections of this Section), or under any Loan Document, which in Lender's reasonable judgment would have a material adverse impact on the Project, Borrower or Lender, and such failure is not cured within thirty(30) days after written notice thereof provided,however, if such failure is of such a nature that it cannot be cured within a thirty (30) day period and during such period Borrower commences such cure and thereafter diligently continues to cure the failure then the thirty (30) day period shall be extended for such additional time as may be reasonably required to complete the cure which period in no event shall exceed ninety (90) days after the notice to Borrower. (Notwithstanding the foregoing, there is no intent that there be a cumulation of grace periods under this Agreement and the other Loan Documents with respect to any particular default or Event of Default); (d) If any event of default and the expiration of any applicable period of grace (or event giving rise to the acceleration of the Loan) occurs under any of the other Loan Documents and such event of default remains uncured; (e) If the construction of the Improvements shall, at any time,be discontinued (i)for a continuous period of thirty (30) days for reasons within the reasonable control of Developer and/or Seahawk Landing and/or its Contractor, or (ii)for a continuous period of sixty(60) days for reasons beyond such reasonable control (provided, however, that in no event shall the aggregate of all such periods equal more than ninety(90) days or cause the Completion Date to be extended or delayed); (f) If Developer and/or Seahawk Landing shall have failed to comply with any requirements of any governmental authority concerning the Improvements which in Lender's reasonable judgment would have a material adverse impact on the Project, Borrower or - 17- #1242960 Lender within thirty(30) days after notice in writing of such requirements shall have been given to Borrower provided,however,if such failure is of such a nature that it cannot be cured within a thirty(30) day period and during such period Developer and/or Seahawk Landing commences such cure and thereafter diligently continues to cure the failure then the thirty (30) day period shall be extended for such additional time as may be reasonably required to complete the cure(so long as enforcement of such requirements are stayed during such cure) which period in no event shall exceed ninety(90) days after the notice to Borrower; (g) If Borrower, Developer or Seahawk Landing, without the Lender's consent, shall have created any security interest in favor of any party (other than CBOT or Lender) in any materials, fixtures, machinery or equipment then,or thereafter to be,incorporated or placed in the Improvements or shall have failed to purchase any such materials, fixtures, machinery or equipment so as to vest the ownership thereof in Seahawk. Landing, unconditionally and free from any other security interest or other encumbrance, upon the delivery thereof to the Project and Borrower fails to cure such act or omission within thirty (30) days after Lender provides Borrower with written notice of such occurrence provided, however, that if the breach is of a nature that it cannot be cured within a thirty (30) day period and during such period Borrower commences such cure and thereafter diligently continues to cure the breach then the thirty (30) day period shall be extended for such additional time as may be reasonably required to complete the cure which period in no event shall exceed ninety(90) days after the notice to Borrower; (h) If a notice of Federal or State tax lien is filed which materially adversely affects the leasehold title to the Project(and, for this purpose, an exception taken for such lien by the Title Insurer which insures title to the Project in the continuation reports or endorsements contemplated hereunder shall be treated as conclusive) and the same is not discharged, bonded off or insured over by the Title Insurer within sixty (60) days after notice in writing from Lender to Borrower; (i) If any execution shall have been levied against, or attachment or other judicial seizure made of the Project which shall remain undismissed, undischarged, or not bonded off for a period of thirty (30) days after notice in writing from Lender to Borrower, Developer and/or Seahawk Landing; or (j) If the Improvements either cannot be completed on or before the Completion Date or, in fact, are not completed by the Completion Date, provided, however,that CBOT shall have the right,but not the obligation,to extend the Completion Date for up to six(6) months,provided TSUS/LSCPA extends the Completion Date commensurately. 8.2 Lender's Rights and Remedies. (a) Upon any Event of Default, Lender may exercise any or all of the following rights and remedies as it may deem reasonably necessary or appropriate: (i) Withhold any advances hereunder which would otherwise become due to Borrower; - 18 - 4)242960 (ii) Declare immediately due and payable all monies advanced under the Note, and/or pursuant to this Agreement which are then unpaid,with all arrearages of interest (and, accordingly, accelerate payment thereof, notwithstanding any contrary terms of payment stated therein); (iii) Advance any remaining balance of the proceeds of the Loan to pay for the completion of the Improvements pursuant to an irrevocable authorization from Borrower for such purpose,but Lender shall not be obligated to do so; it being further understood that; a. No further direction or authorization from Borrower shall be necessary to warrant such direct advances and to the extent they represent advances of proceeds of the Loan shall satisfy the obligations of Lender hereunder and shall be secured by the Mortgage as fully as if made to Borrower and regardless of the disposition thereof by the Contractor,any subcontractor or other person. b. Lender may impose any reasonable condition for such direct payment including,but not limited to,estoppel certificates,waivers of lien,releases and the like. c. In any action or proceeding for recovery of any sums expended by Lender in connection with the completion of the Improvements, a statement of such expenditures, verified by the affidavit of an officer of Lender, shall be prima facie evidence of the amounts so expended and of the propriety of and necessity for such expenditures, and the , burden of proving the contrary shall be upon Borrower. d. The remedies provided in this Agreement are cumulative and shall be in addition to and not in substitution for the rights and remedies which would otherwise be vested in Lender under the Loan Documents or otherwise at law or in equity, all of which rights and remedies are specifically reserved by Lender. Failure of Lender to exercise any remedy shall not constitute a waiver of Lender's rights for that default nor for any further or future default. The exercise of any right or remedy by Lender hereunder shall not in any way constitute a cure or waiver of default hereunder, or invalidate any act done pursuant to any notice of default, or prejudice Lender in the exercise of any of its rights hereunder, unless, in the exercise of said rights,Lender realizes all amounts owed hereunder or under the other Loan Documents. ARTICLE IX. MISCELLANEOUS 9.1 Lender's Discretion. With respect to any provision of this Agreement which requires the submission of evidence of the existence or non-existence of a specified fact or facts Lender shall, at all times, be free independently to establish to its satisfaction and in its reasonable discretion such existence or non-existence. 9.2 No Third Party Beneficiaries Nor Rights to Rely on Supervision. No part of the Loan will at any time be subject or liable to attachment or levy at the suit of any creditor of Borrower or of any other interested party, or at the suit of any contractor, subcontractor, subsubcontractor or materialmen, or any of their creditors. This Agreement is solely for the benefit of Lender and Borrower and no third parties except Seahawk Landing shall have any rights herein or hereunder. All inspections and supervision performed by Lender are solely - 19- #1242960 for the benefit of Lender and Borrower is required to monitor the progress of the construction for its own benefit and on its own behalf. 9.3 Modifications. This Agreement may be changed, waived, discharged, or terminated only by an instrument in writing duly executed by the party against which enforcement of such change, waiver,discharge, or termination is sought. 9.4 Notices. All notices, requests, demands, approvals, or other communications given hereunder or in connection with this Agreement shall be in writing and shall be deemed given when delivered by hand or sent by registered or certified mail, return receipt requested, federal express or other courier services addressed as follows: If to Lender: Floyd Batiste, CEO Port Arthur Section 4A Economic Development Corp. 501 Procter, Suite 100 Port Arthur,TX 77640 Telephone: (409)963-0579 Facsimile: (409)962-4445 E-mail: (batiste@paedc.org With Copies to: Guy N. Goodson,EDC Attorney Germer PLLC P. O. Box 4915 Beaumont, Texas 77704 Telephone: (409)654-6730 Facsimile: (409) 835-2115 'S E-mail: ggoodson@germer.com If to Borrower: Nautical Affordable Housing,Inc. Attn:Donald R. Ball 1885 E. Farragut Orange, TX 77630 Telephone: (409)988-1851 E-mail: Donald.Ba11@nauticalaffordablehousing.org With Copies to: Coats Rose Attn: Barry J. Palmer 9 Greenway Plaza, Suite 1100 Houston, Texas 77046 9.5 Headings, The headings preceding the text of the sections and subsections of this Agreement are used solely for convenience of reference and shall not affect the meaning, construction,or effect of this Agreement. 9.6 Parties to Agreement and Governing Law. Borrower shall not assign this Agreement without the prior written consent of Lender which may be granted or withheld in its sole discretion, and any assignment in violation hereof shall be of no force and effect and -20 - #1242960 1 • shall constitute an Event of Default herein. Subject.to the previous sentence,this Agreement shall extend to and bind the parties hereto, their respective successors and assigns. This Agreement shall be governed by and construed in accordance with the laws of Texas to contracts executed therein and to be wholly performed therein. 9.7 No Waiver., Enforcement. No advance of proceeds of the Loan hereunder shall constitute a waiver of any of the conditions of Lender's obligation to make further advances nor, in the event Borrower is unable to satisfy any such condition, shall any waiver have the effect of precluding Lender from thereafter declaring such inability to be an Event of Default as hereinabove provided. All conditions of the obligations of Lender to make advances hereunder are imposed solely and exclusively for the benefit of Lender and its assigns and no other person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make advances in the absence of strict compliance with any or all thereof and no other person shall, under any circumstances, be deemed to be beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender at any time if in its sole discretion it deems it advisable to do so. 9.8 Lender Approval. All proceedings taken in connection with the transactions provided for herein, all surveys, appraisals and documents required or contemplated by this Agreement or any other Loan Documents (and the persons responsible for the execution and preparation thereof) including, without limitation, Contractor, insurers and the form of all of the Building Contracts, all leases, bonds, policies of insurance and other documents shall be reasonably satisfactory to Lender, and Lender's counsel shall have received copies (or certified copies where appropriate in such counsel's judgment) of all documents which they may reasonably request in connection therewith. 9.9 Materials. All materials delivered upon the Land for the purposes of being used in the construction of the Improvements shall be considered annexed thereto and shall become a part of the Land as if actually incorporated in the Improvements and as against Borrower and all parties acting or claiming under Borrower, shall be subject to the rights, conditions and covenants to which the Land and the Improvements are subject under this Agreement, provided that nothing herein contained shall be construed to make Lender responsible for any loss, damage or injury to such materials, nor for payment of the same. Borrower shall not make or cause to be made any contract for materials or equipment of any kind or nature to be incorporated in or to become a part of the Improvements if title to such materials or equipment is reserved under a conditional sales contract or otherwise, or is subject to a chattel mortgage or security interest in favor of a third person. 9.10 Courts of Jefferson County Jurisdiction. Borrower irrevocably consents to the exclusive jurisdiction of the state and federal courts of the State of Texas, in any and all actions and proceedings whether arising hereunder or under any other agreement. Borrower waives any objection, now or hereafter, to the laying of venue of any such action, suit or proceeding, and irrevocably submits to the jurisdiction of any of said courts in any action,suit or proceeding. Any service of process and other notice in any action, suit or proceeding shall be effective against Borrower if given by registered or certified mail,return receipt requested, or by any other means of mail which requires a signed receipt, postage prepaid, mailed to -21 - #1242960 Borrower as herein provided for notice purposes. Nothing herein contained shall be deemed to affect the right of any party to serve process in any other manner permitted by law. 9.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument. 9.12 Force Majeure. Except to the extent otherwise specified herein a party to this Agreement shall not be in default hereunder if the delay in performance of its obligations arises from unforeseeable causes beyond its control (collectively, "Force Majeure") and without the fault or negligence of the party in question. Examples of such causes include (a) acts of God, or public enemy, (b) fires, (c) floods, (d) epidemics, (e) quarantine restrictions, (f) freight embargoes, (g) unusually severe weather, or (h) shortages in labor or material, (i) labor disputes not caused by Borrower. The party prevented from acting within a reasonable time from the beginning of such delay shall advise the other party in writing of the cause and likely duration of such delay. 9.13 Limitation of Liability. The liability of Borrower under this Agreement shall be limited in the same manner and to the same extent specified in the Note and the Mortgage. [the remainder of this page intentionally left blank] -22- #1242960 IN WITNESS WHEREOF,the parties hereto have caused this Conditional Loan/Grant Agreement to be duly executed. NAUTICAL AFFORDABLE HOUSING,INC., a Texas non-profit corporation 3.. By: f Name: Donald R. :all Title: Executive Director • -23 - #1242960 EXHIBIT A-i LEGAL DESCRIPTION OF THE LEASEHOLD PREMISES Tract 1; Al-1 • I # RRp �h \ 'I $♦tbiil .:1-101' gJ. � a4 Vit. 121C4"-"Il:➢ u iii";'; iT., #.,,. p., ,- tr od "^ . 5..d t I 1Aailli 4% 4.,i ! S I ,, -�$ " ii I II l i11111111 11 --i-1 l 11, 111 ) ' r y ,; i. -... ---.- } —.10.-..rabn r?" H-4-''- s.-¢.r-1, H E u6R ,] u'. '1i 4algi 1. i �`_ 1 t e I �� , 1. 40 V J lit It 1 ! f ; i g a I . IY3 t.t I ., .. to iRF9 'a'\, 4 ,1,1, a , t 14\� \f i t 4i it, C ¢ 1 ,a, i 3 G3 r • 1,l o l 'y1v• =�s; a $ ' 8R is II '5iiio 1 ‘. . i ,I id 1 ._ 1 1 1 1 FFrT I1 1111TH 111 . _ 14, 1 I Ar. 6 + { g I I it +I 1i , , j 1 Sg Ili l tk1 s lb1 i'''11 1111 � i 1 It?' 1 + ' s € 111'1 Ili' EXHIBIT A-2 LEGAL DESCRIPTION OF THE FEE INTEREST Tract£ LE \ ( [ ( [ ( E � t ( � ( [ ( � ( � r � ( � r � ( A2-1 LEGAL DESCRIPTION Being 2.204(called 2.203) acres of land,known as LAMAR PORT ARTHUR DORMS, PHASE I,out of Lakeshore Park to the City of Port Arthur,Jefferson County,Texas, as the same appears upon the map or plat thereof, on file and of record under County Clerk's File No.2015041258 Official Public Records of Jefferson County, Texas. TAX CERTIFICATE ts, 1 PG 201504125$ 111111 I. ) 15041II I) IlD ALLISON NATHAN GETZ,P.C.C. JEFFERSON COUNTY TAX ASSESSOR-COLLECTOR P.O.BOX 2112,BEAUMONT,TX 77704 EMAIL:PROPERTY@CO.JEFFERSON.TX.US Issued To: Legal Description SOUTEX SURVEYORS,INC OUT OF LAKESHORE PARK LT E ELK 154 TR 2 3737 DOCTORS DRIVE CITY OF PORT ARTHUR 2.200 PORT ARTHUR, TX 77642 Fiduciary Number: 7034 Parcel Address: <-- _ Legal Acres: 2.2006 Account Number: 053400-000/174540-00000 Print Date: 11/20/2015 Paid Date: Certificate No: 229796418 Issue Date: 11/20/2015 Certificate Fee: $10.00 Operator ID: CINDYY Parent No. 59186-J TAX CERTIFICATES ARE ISSUED WITH THE MOST CURRENT INFORMATION AVAILABLE.ALL ACCOUNTS ARE SUBJECT TO CHANGE PER SECTION 26.15 OF THE TEXAS PROPERTY TAX CODE. THIS 1S TO CERTIFY THAT ALL TAXES DUE ON THE ABOVE DESCRIBED I PROPERTY HAVE BEEN EXAMINED,UP TO AND INCLUDING THE YEAR 2015.ALL TAXES ARE PAID IN FULL I Exemptions: i Certified Owner: I' PRO SCHOOLS LAMAR STATE COLLEGE , PORT ARTHUR PO BOX 310 PORT ARTHUR , TX 77641-0310 i Certified Tax Unit(s): la 2015 Value: 8,370 1 JEFFERSON COUNTY r 2015 Levy: 54.00 9 PORT ARTHUR ISD 35 CITY OF PORT ARTHUR 2015 Levy Balance: $0.00 43 PORT OF PORT ARTHUR '1' 51 DRAINAGE DISTRICT#7 z Prior Year Levy Balance: 50.00 55 SAI31NE-NECHES NAV.DIST. Total Levy Due: $0.00 1` P&I+Attorney Fee: $0.00 1 . fit, 1 Total Amount Due: $0.00 CITY OF PORT ARTHUR ' } 444 4TH STREET PORT ARTHUR TX 77640 i FILED AND RECORDED Reference(GF)No: N/A OFFICIAL PUBLIC RECORDS i Issued By: LC.C, ,44s,,t ALLISON NATHAN C•- JEFFERSON COUNTY TAX ASSESSOR-COLLECTOR (409)835-85I6,WEBSITE:WWW.JEFFCOTAX.COM Carolyn L. Guidry, County Clerk Jefferson County, Texas December 22, 2015 04:21:58 PM FEE, $46,00 2015041255 53.1.80 5 I I-1 ��pWf� O a 1a}A— is I Q �� I 65 I 44" ai�2 I 7`e4f o R oz `t,,'1, 9 z iz e. 48. ( bea?: I k i mt .a S t. m f 5111 1 I 4i n� y� 9�i+r� ' N 6316'04'w 11631' x SNiZr (OAIIEC,N 65Ya`37'w 318.25') ��'w ni i ' __s11 • N t` O \\%OK dAf VANS 126012 26621.1T S ��1 gSy S _—._.`-. /fA la3^61-0BM PPJ4J.4 -y }} ( Y p I.. SfA� I I ` �f q.:k w''niV f lit s 4}, �t$jqqt Biu pE � 3 iii gxk° Stg �„ 'amt,,. ,x. .i , n q Mi ,kii;‘, -iti al ^ s N 7.1p!, l �14IYty ; II:Iilag II!, � t A> 1 !Vittuifla !Ili 1;i; -a gab § tia11the :tr°#Fi. t i 1 r41a3- $s "r,f Ill( = t ,' 8 q 6 !yy ,,, } m o f g'llta, l',1 7f 8 ; Y[il $o r.^' 5 531a'sa"E 31185' + / +ZI �fy q jgg 9 (G....5 8316'00'E 313.5T) fJ0 0-n D, tilli A,-,A -E fit' ! !! 1. gi ZV.r lit "r3 gg a I p r9 xg i Z pjv�..,'-3 c3 ss 3g gN F ;� e�! $sy t3ta4 t I G1 I Oc D D 1 ..10. j. C Oil 9 w "4 /1 I p l 7 71 0 b v, 6 C3 .-.--.1 $ 1 " 8 .!j3 9.,s Tq r p s WI A1�aaktl R 4 Z- q Yi2 &,.1. �.'o S8 t 3 0 mw p.,,„ ~ z 4 C]V1 4 23 44!! F]U} 2 z LZ f17 2 W � y-. g q y iu > �i O H 1 ,1 q w3 1 „SY S' O'y . C hi tit K'1/444111o,0x El ''"arc v' p $'^ so $ o k 5 rCT�b,, tf 1�. t7, 11 S ^ i 2K Av S fir r1 "0A tom, g . AI'P'. . i. $ P;i I : '.>2.'ai c8 r- .' ii! E N v,a.. o x ,;4 r, n2i'dX ; si 41 . I - 4 "zF, ..!.. .":,4 g• q 2-6 .• 1'` g9g , n my ASLgm> 8 , A or. €1 ''0 '�a� 8 A g. i .-., o np roN 1 A � ` iAl65. • �;�� I m 37'9 a!O!� F1 .... $+ -,r.. 1 g3 yw , by ; a 4� g a M �u K filar : /J7 x zes - ,hos/o ' EXHIBIT B IMPROVEMENTS Seahawk Landing, LLC is building a 37 suite, 101 bed student housing development. It will be comprised of one building with three floors serviced by an elevator. There will be 36 two- bed/one-bath and four-bed/two-bath suites, and one one-bed/one-bath suite for a Resident Assistants. The building will have a common area that will consist of management offices, computer lab, study room, lounge with kitchen, and laundry room. The site amenities will include volleyball court, half size basketball court, splash pad, and barbecue grills with picnic tables." B-1 EXHIBIT C COST BREAKDOWN C-1 ---.------- - 20 Ic) 0 --1 Cr P --i 1 5 2 V) C •-ri .-•-• to Lo 17( H E (.-;) z n --o v (r) td,) ti,,i, Tc.7 ' 1 til (.7; A.- E .T :' 3 a 43 cv i i i C•' ,?,, ••ii--.' ''' `67 - A cl. '• ' 0 cu ,n g - •'4. ''. s r-; ,-,"-T -rn` 'c'il 3 r"- " t"."., ' 1.i' 00 111 ' i i c un G•1 5 -,z, cc 0 n at - ,., ,-+. CO in R. 0 0 —f 1 F ,,n I 0 .. rii• if 7 2 16, = ‘,., a -, fp -. 4,, fp IE. i 2 a 4 7 m C- if) 0 03,, '..--.•• r•-' 7 7 ea ,-, ci, 7.,, :.:- -n Z •: cr'•". r- 1. 0 0 4i, Er II. = Ci rD 0r} , ul 0- .-- 4 Ci (,) 0 CD I.-3 (C (D 2' = ..L,' '" 7) F,, ,p ...? I., . , < ,•,p,f• i. 1 , CA I 1 .,4 Cr ..N.),., . 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WI a- a) C.; cc C) a. , co a * C) iii a_ a a -, D- a a * a CD 1 r, t-: 4 L: , V G n al la GI to 1., -, 0 a c a, C t• g .. . in a 0, (n 6 a -. 2 r7? :A. g S 3 (1) i — n a' ,D CD Fa I Pq• P2,_ g 3 3 tOn -J .I.,.. :4 P 1 '1 4 k j >, V..;' 1, r , ,. A ,.: N , SD ni NJ V :4 NJ 'V NJ CT VI ..!11 ..t.J1 $71. , i NJ V t.rt U Li) VI :r1 C 0 il 4 cr) P 1,1 1 o , -t, (-) . o = e.. 1 . r .1 2 0 .o cz. :-.. 0 i = s: ..-.: sl) 0 41 4 .I, '..i! ,F: , r, '5f... .., I-, :5555:55. ;.: „55 i•-•,.;. 55 5: EXHIBIT " B1 " CONDITIONAL COMMERCIAL PROMISSORY NOTE Port Arthur,Texas This COMMERCIAL PROMISSORY NOTE becomes effective on the date when Nautical Affordable Housing, Inc., a Texas corporation (hereinafter called "Maker") breaches that certain Conditional Loan/Grant Agreement between the City of Port Arthur Section 4A Economic Development Corporation(hereinafter called"Lender")and Maker,dated March ,2016. Effective Date of Note: This Note shall become effective on the date of breach of its obligations under this Agreement and following notice thereof from PAEDC and thirty-day (30-day) opportunity to cure, said date being the day of , 2016 ("Note Date"). Principal Amount: $1,000,000.00. Term of the Loan: This loan shall have a term from the Note Date to (the "Final Payment Date"). Payment Schedule: The principal amount together with interest at the hereinafter described rate shall be payable in equal monthly installments from the Note Date until , and all outstanding principal and interest due hereunder shall be due and payable. FOR VALUE RECEIVED, the undersigned "Maker", promises to pay to Lender, at its office at P.O. Box 1089, Port Arthur, Texas, 77640-1089, or such other place or places as the holder hereof shall from time to time designate in written notice to Maker, the principal amount, in legal and lawful money of the United States of America, together with interest thereon from the date hereof until maturity at the rate of seven percent(7%)per annum as detailed herein. All past due principal and interest shall bear interest from date of maturity until paid at the rate of ten percent (10%) per annum, or to the maximum extent allowed by law (whichever is greater)as may hereafter be in effect,payable on demand after maturity. Any notices required or permitted to be given by the holder hereof to Maker pursuant to the provisions of this note shall be in writing and shall be either personally delivered or transmitted by first class United States mail, addressed to Maker at the address designated below for receipt of notice (or at such other address as Maker may, from time to time, designate in writing to the holder hereof for receipt of notices hereunder). Any such notice personally delivered shall be effective as of the date of delivery, and any notice transmitted by mail, in accordance with the foregoing provisions, shall be deemed to have been given to and received by Maker as of the date on which such notice was deposited with the United States Postal Service, properly addressed and with postage prepaid. This note is also secured by and entitled to the benefits of all other security agreements, pledges, collateral assignments, deeds of trust, guaranties, mortgages, assignments, and lien instruments, if any, of any kind executed by Maker or by any other party as security for any loans owing by Maker to the Lender. Such lien instruments shall include those executed simultaneously herewith,those heretofore executed, and those hereafter executed. If any installment or payment of principal or interest of this note is not paid when due or any drawer, acceptor, endorser, guarantor, surety, accommodation party or other person now or hereafter primarily or secondarily liable upon or for payment of all or any part of this note (each hereinafter called an "other liable party") shall die, or become insolvent (however such insolvency may be evidenced); or if any proceeding, procedure or remedy supplementary to or in enforcement of judgment shall be resorted to or commenced against Maker or any other liable party, or with respect to any property of any of them; or if any governmental authority or any court at the instance thereof shall take possession of any substantial part of the property of or assume control over the affairs or 'I' operations of, or a receiver shall be appointed for or take possession of the property of, or a writ or order of attachment or garnishment shall be issued or made against any of the property of Maker or any other liable party; or if any indebtedness for which Maker or any other liable party is primarily or secondarily liable shall not be paid when due or shall become due and payable by acceleration of maturity thereof, or if any event or condition shall occur which shall permit the holder of any such indebtedness to declare it due and payable upon the lapse of time, giving of notice or otherwise; or if Maker or any other liable party (if other than a natural person) shall be dissolved, wound up, liquidated or otherwise terminated, or a party to any merger or consolidation without the written consent of Lender; or if Maker or any other liable party shall sell substantially all or an integral portion of its assets without the written consent of Lender; or if Maker or any other liable party fails to furnish financial information requested by Lender; or if Maker or any other liable party furnishes or has furnished any financial or other information or statements which are misleading in any respect; or if a default occurs under any instrument now or hereafter executed in connection with or as security for this note; or any event occurs or condition exists which causes Lender to in good faith reasonably deem itself insecure or in good faith reasonably believe the prospect of payment or performance by Maker or any other liable party under this note, under any instrument or agreement executed in connection with or as security for this note, or under any other indebtedness of Maker or any other liable party to Lender is impaired; thereupon, at the option of Lender, the principal balance and accrued interest of this note and any and all other indebtedness of Maker to Lender shall become and be due and payable forthwith without demand, notice of default, notice of acceleration, notice of intent to accelerate the maturity hereof, notice of nonpayment, presentment, protest or notice of dishonor, all of which are hereby expressly waived by Maker and each other liable party. Lender may waive any default without waiving any prior or subsequent default. If this note is not paid at maturity whether by acceleration or otherwise, and is placed in the hands of any attorney for collection, or suit is filed hereon, or proceedings are had in probate, bankruptcy, receivership, reorganization, arrangement or other legal proceedings for collection hereof, Maker and each other liable party agree to pay Lender its collection costs, including court costs and a reasonable amount for attorney's fees. It is the intention of Maker and Lender to conform strictly to applicable usury laws. Accordingly, if the transaction contemplated hereby would be usurious under applicable law, then, in that event, notwithstanding anything to the contrary herein or in any agreement entered into in connection with or as security for this note, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under applicable law that is taken, reserved, contracted for, charged or received under this note or under any of the other aforesaid agreements or otherwise in connection with this note shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited on this note by the holder hereof(or, if this note shall have been paid in full, refunded to Maker); (ii) in the event that maturity of this note is accelerated by reason of an election by the holder hereof resulting from any default hereunder or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the maximum amount allowed by applicable law, and excess interest, if any, provided for in this note or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore prepaid, shall be credited on this note (or if this note shall have been paid in full, refunded to Maker); and (iii) all calculations of the rate of interest taken, reserved, contracted for, charged or received under this note or under any of the other aforesaid agreements or otherwise in connection with this note, that are made for the purpose of determining whether such rate exceeds the maximum lawful rate shall be made, to the extent permitted by applicable law, by amortizing, prorating, allocating, and spreading such interest over the entire term of the loan evidenced by this note(including all renewal and extended terms). Maker may prepay all or any part of the principal of this note before maturity without penalty. No partial prepayment shall reduce, postpone or delay the obligation of Maker to continue paying the installments herein provided on their respective due dates following any such partial prepayment until this note is fully paid. #1242611 The Maker shall be directly and primarily liable for the payment of all sums called for hereunder; and, except for notices specifically required to be given by the holder hereof to Maker pursuant to the earlier provisions of this note, Maker and each other liable party hereby expressly waive demand, presentment for payment, notice of other loan documents of nonpayment, protest, notice of protest,notice of intention to accelerate maturity,notice of acceleration of maturity,and all other notice, filing of suit and diligence in collecting this note or enforcing or handling any of the security therefor, and do hereby agree to any substitution, exchange or release, in whole or in part, of any security or the release of any other liable party, and do hereby consent to any and all renewals or extensions from time to time, of this note, or any part hereof, either before or after maturity, all without any notice thereof to any of them and without affecting or releasing the liability of any of them. Each holder hereof, in order to enforce payment of this note by any other liable party, shall be required to first institute suit or exhaust its remedies against Maker and to enforce its rights against any security therefor prior to enforcing payment of this Note by any other liable party. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] #1242611 SIGNED AND AGREED TO on the day of , 2016. Nautical Affordable Housing, Inc., a Texas corporation By: Donald R. Ball Its: Executive Director THE STATE OF TEXAS § § ACKNOWLEDGEMENT COUNTY OF JEFFERSON § BEFORE ME, THE UNDERSIGNED Notary Public, on this day personally appeared Donald R. Ball, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same as the act and deed of Nautical Affordable Housing,Inc., a Texas non-profit corporation, for the purposes and consideration therein expressed, and the Capacities therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of ,2016. Notary Public, State of Texas #1242611 MAKERS' ADDRESS FOR RECEIPT OF NOTICE: Nautical Affordable Housing, Inc., a Texas corporation c/o Donald R. Ball 1885 E. Farragut Orange, Texas 77630 #1242611 EXHIBIT " B2 " FILED AND RECORDED rOFFICIAL PUBLIC RECORDS 2016 Mar 10 02:41 PM Fee: $110.00 2016007582 When recorded, return to: CAROLYN L. GUIDRY, COUNTY CLERK Tarnea A. Dula JEFFERSON COUNTY TEXAS Coats Rose, P.C. 'Electronically Recorded 9 Greenway Plaza, Suite 1100 Houston,TX 77046 NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER. kic3$-fit-1 SUBORDINATE LEASEHOLD ESTATE DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT From Seahawk Landing, LLC, a Texas limited liability company as Grantor to Donald R.Ball, as Trustee for the benefit of Nautical Affordable Housing, Inc., a Texas non-profit corporation • as Beneficiary • 4846-6794-1930.v3 2016007582 Page 2 of 22 SUBORDINATE DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT • THE STATE OF TEXAS § COUNTY OF JEFFERSON § That in consideration of certain indebtedness hereinafter described, justly owing by Seahawk Landing, LLC, a Texas limited liability company, ("Grantor''), to Nautical Affordable Housing, Inc., a Texas non- profit corporation ("Beneficiary") and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other valuable consideration paid to the Grantor, the receipt and sufficiency of which are hereby acknowledged, Grantor has GRANTED, ASSIGNED, TRANSFERRED and CONVEYED, and does hereby GRANT, ASSIGN, TRANSFER and CONVEY unto Donald R. Ball, as trustee ("Trustee"), all of the following described property is collectively referred to herein as the"Property": A. All of Grantor's right, title and interest,whether now or hereafter arising, in and to: (i) The leasehold estate in real property situated in Jefferson County,Texas, pursuant to that certain Ground Lease Agreement executed March 7 , 2016, more accurately described in EXHIBIT A hereto, together with all right, title and interest now and/or hereafter owned by Grantor, its successors and assigns, in the whole or any part of the above described leasehold estate in real property, and/or any street or road adjacent and/or contiguous to the above described real property("Land"). (ii) All of Grantor's right, title and interest,whether now or hereafter arising, in and to all buildings and other improvements now or hereafter placed on the Land, as well as all appurtenances, betterments and additions thereto("Improvements"); all and singular the rights, privileges. hereditaments and appurtenances in anywise incident or appurtenant to the Land and Improvements;and the rents, revenue, profits and income from the Land and Improvements. (iii) All of Grantor's right, title and interest,whether now or hereafter arising, in and to any and all plumbing, electrical, heating,cooling and other equipment and all building materials and other goods of every type, kind and character that are now or hereafter situated upon the Land and which (i)are intended to be incorporated into the Improvements or(ii)are now, or hereafter become,fixtures related to the Land or the Improvements; any and all other goods of every type, kind and character, including without limitation, all appliances,furniture,fixtures, inventory and equipment now owned or hereafter acquired by Grantor that are now or hereafter situated upon the Land (whether or not situated within or attached to the Improvements)and that facilitate the use and occupancy of the Improvements for the purpose for which they were or are to be constructed; all plans and specifications for the Improvements,all rights of Grantor under ail existing and future leases, construction, maintenance and other contracts covering or relating to the Land or the Improvements,all tenants deposits made pursuant to or in connection with such leases, all rights of ingress and egress, easements,water and wastewater rights, and to the extent assignable, all licenses, permits,franchises,certificates, accounts, instruments,chattel paper, documents, agreements, contracts,and general intangibles, and all rights of Grantor in and to any development rights relating to the Land or the Improvements (including,without limitation, trade names and symbols used in connection therewith and any deposits with utility companies)and all other rights and privileges obtained in connection with, relating to or associated with the Land 2 4546-6794-1930.v3 2016007582 Page 3 of 22 or the Improvements(collectively, the"Personalty")and all proceeds of the Persona Ity. B. All of Grantor's right,title and interest, whether now or hereafter arising, in and to any tax refunds, including interest thereon, tax rebates, ad valorem tax credits, and tax abatements, and the right to receive the same, which may be payable or available with respect to the Property. C. All of Grantor's right, title and interest in the proceeds (including conversion to cash or liquidation claims) of (A) insurance relating to the Property and (B) all awards made for the taking by eminent domain (or by any proceeding or purchase in lieu thereof) of the Property, including awards resulting from a change of any streets (whether as to grade, access, or otherwise) and for severance damages. D. All of Grantor's right, title and interest, if any, in and to all substances in, on, or under the Land which are now, or may become in the future, intrinsically valuable, that is, valuable in themselves, and which now or may be in the future enjoyed through extraction or removal from the property, including without limitation, oil, gas, and all other hydrocarbons, coal, lignite, carbon dioxide and all other nonhydrocarbon gases, uranium and all other radioactive substances, and gold, silver, copper, iron and all other metallic substances or ores (collectively, "Minerals"). E. All funds of Grantor that may be deposited with Beneficiary at any time and from time to time for any purpose, which funds shall be deemed to be part of the Personalty for purposes hereof. In the event of a conflict between the terms and conditions of this instrument and the instrument under which Beneficiary holds any funds of Grantor, the terms and conditions of the latter instrument shall prevail. TO HAVE AND TO HOLD the Property unto the Trustee and the assigns of the Trustee, and Grantor does hereby bind Grantor and the successors and assigns of Grantor, to WARRANT AND FOREVER DEFEND all and singular the Property and title thereto unto the Trustee and unto the assigns of the Trustee, against every person or party whomsoever claiming or to claim the same, or any part thereof, subject, however, to the permitted encumbrances set forth on EXHIBIT B attached hereto (the "Permitted Encumbrances")and the liens securing the Senior Notes (as described below). 1. SECURITY FOR PERFORMANCE OF OBLIGATIONS This conveyance is made in trust, however, to secure the performance of all covenants and agreements contained in this Subordinate Deed of Trust, Security Agreement and Financing Statement ("Deed of Trust") and that one certain Loan Agreement (the "Loan Agreement") executed or to be executed between Grantor and Beneficiary, and the full and prompt payment when due (by lapse of time or otherwise), of the following indebtedness (the"Indebtedness"): A. Loan. All sums, including principal, interest and attorneys' fees, called for in that certain promissory note (the "Note") executed by Grantor payable to the order of Beneficiary, in the principal amount of ONE MILLION AND NO/104 DOLLARS ($1.000,000.00) or so much thereof as shall be advanced, which Note evidences that certain loan from Beneficiary to Grantor of the amount set forth in • the Note (the "Loan"), and which Note bears interest at the rates therein stated and provides for acceleration of maturity should a default under such Note or any of the documents evidencing, securing, or otherwise pertaining to the Loan occur. Advancements pursuant to the Note shall be made from, and within five days of receipt of, the proceeds of that certain Development Agreement even date herewith, as defined in the Loan Agreement, with respect to up to a maximum of $1,000,000.00 in reimbursable expenses for the payment of hard costs associated with installation of a student housing facility on the Property. 3 4846-r794-1.93(1.v3 2016007582 Page 4 of 22 B. Other Sums. All other sums owing by Grantor to Beneficiary or other holder(s) of any part of the Indebtedness or becoming due under the Loan Agreement. This Deed of Trust and all other instruments now or hereafter evidencing, governing or securing any part of the Indebtedness are hereinafter collectively referred to as the"Loan Documents"). If. PAYMENT OF THE INDEBTEDNESS: DEFAULT; ENFORCEMENT OF TRUST A. Payments. If the Indebtedness is fully paid and if all of Grantor's covenants and agreements herein and in the Loan Agreement and the other Loan Documents are fully kept and performed, then this conveyance shall thereupon become of no further force and effect and shall be • released by Beneficiary or other holder(s) of the Indebtedness upon the written request and at the expense of Grantor. B. Enforcement. But if there occurs any Default (as defined in the Loan Agreement), the whole of the Indebtedness shall at the option of Beneficiary, without notice to Grantor or any other person, which notice is hereby waived, become immediately due and payable and thereupon, or at any • time thereafter that the Indebtedness or any part thereof remains unpaid, it shall be the duty of the Trustee, or the Substitute Trustee, as hereinafter defined, at the request of Beneficiary, or the holder(s) of the Indebtedness, which request shall be presumed, to enforce this Trust and to sell as an entirety, or in parcels, by one sale or by several sales, held at one time or at different times, as the Trustee acting may elect (all rights to a marshaling of Grantor's assets, including Property, or to a sale in inverse order of alienation, being hereby expressly waived by Grantor), the Property in the county in which the Property, or a part of the Property to be sold, is situated (the "County")at such area at the courthouse designated by the Commissioner's Court of the County as the area where sales are to take place, or if no area is designated, at the door of the County Courthouse, each sale to be made on the first Tuesday of a calendar month between the hours of 10:00 A.M. and 4:00 P.M. to the highest bidder for cash at public auction, after both posting or causing to be posted written or printed notice of the time (including the earliest time at which the sale will occur), place, and term of sale at the door of the Courthouse of the County and filing or causing to be filed a copy of the notice in the Office of the County Clerk of the County, for at least twenty-one (21) days preceding the day of sale, and to execute and to deliver to the purchaser(s) at each such sale proper conveyance(s) of the property interest sold,with general warranty of title binding upon Grantor and the sucrpssors and assigns of Grantor; or Beneficiary or other holder(s) of the Indebtedness may foreclose or cause to be foreclosed the Lien of this Deed of Trust, in whole or in part, through judicial foreclosure or in any manner as may at any time be authorized under the statutes of the State of Texas. In addition, the holder(s) of the Indebtedness to which the power is related shall, at least twenty-one (21) days preceding the date of sale, serve written notice of the proposed sale by certified mail on each person obligated to pay the Indebtedness according to the records of the holder(s). Service of the notice shall be completed upon deposit of the notice, enclosed in a postpaid wrapper, • properly addressed to each debtor at the most recent address as shown by the records of the holder(s) of the Indebtedness, in a post office or official depository under the care and custody of the United States Postal Service. The Affidavit of any person having knowledge of the facts to the effect that service was completed shall be prima facie evidence of the fact of service. No notice of the sale or sales other than that herein provided for need be given to Grantor or any other person or party, and any other notice is hereby waived. Beneficiary or other holder(s) of the Indebtedness shall have the right to become the purchaser at any sale to the same extent as any other party, being the highest bidder, and in lieu of paying cash may credit the amount of the bid upon the Indebtedness up to the full amount of the Indebtedness then unpaid. C. Proceeds. The Trustee acting shall apply the proceeds arising from each sale, first, to pay all reasonable expenses of the sale actually incurred, second, to reimburse Beneficiary for any expenses incurred by Beneficiary in protecting, administering or operating the Property prior to the foreclosure sale and third, to the payment of the Indebtedness (including all principal, interest and attorneys' fees owing as part of the Indebtedness). The proceeds of each sale paid to Beneficiary may 4 4346-6794-1930.v3 • 2016007582 Page 5 of 22 • • • be applied by Beneficiary on the Indebtedness in any order and manner as Beneficiary may elect. Any • surplus funds from the foreclosure sale or sales hereunder shall be paid to Grantor or the person(s) • lawfully entitled thereto. III. UNMATURED INDEBTEDNESS • • • If any Default occurs, Beneficiary or other holder(s) thereof shall, in addition to any remedies available to Beneficiary at law or in equity, have the option to proceed with foreclosure in satisfaction of such item or items, either through the courts or by directing the Trustee, or the Substitute Trustee, as hereinafter provided for, to proceed as if under.a foreclosure,conducting the sale as herein provided and without declaring the whole debt due, and if a sale is made because of such Default, the sale may be made subject to the unmatured part of the Indebtedness, but as to the unmatured part of the Indebtedness, this Deed of Trust shall remain in full force and effect just as though no sale had been made under the provisions of this paragraph. Several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Indebtedness, it being the purpose hereof to provide for a foreclosure and sale of the Property, in whole or in part, for any matured portion of the Indebtedness without exhausting the power of foreclosure and the power to sell the Property, in whole or in part, for any other part of the Indebtedness subsequently maturing. IV. SUBSTITUTE TRUSTEE • In case of the resignation of the Trustee, or the inability (through death or otherwise), refusal or • failure of the Trustee to act, or at the option of Beneficiary or the holder(s) of the Indebtedness for any other reason (which reason need not be stated), a substitute trustee ("Substitute Trustee") may be named, constituted and appointed by Beneficiary or the holder(s) of the Indebtedness, without other formality than an appointment and designation in writing; the appointment and designation shall be full evidence of the right and authority to make the same and of all facts therein recited; and this conveyance shall vest in the Substitute Trustee the title, power and duties herein conferred on the Trustee originally •• • • named herein and the conveyance of the Substitute Trustee to the purchaser(s) at any sale shall be • equally valid and effective. The right to appoint a Substitute Trustee shall exist as often and whenever • from any of said causes,the Trustee,original or Substitute,resigns, or cannot,will not, or does not act,or Beneficiary or the holder(s) of a majority of the Indebtedness desire to appoint a new Trustee. No bond shall ever be required of the Trustee, original or Substitute. The recitals in any conveyance made by the Trustee, original or Substitute, shall be accepted and construed in court and elsewhere as prima facie evidence and proof of the facts recited and no other proof shall be required as to the request by Beneficiary or the holder(s)of a majority of the Indebtedness to the Trustee to enforce this Trust, or as to the notice of or holding of the sale, or as to any particulars thereof, or as to the resignation of the Trustee, original or Substitute, or as to the inability, refusal or failure of the Trustee, original or Substitute, to act or as to the election of Beneficiary or the holder(s) of a majority of the Indebtedness to appoint a new Trustee, or as to appointment of a Substitute Trustee, and all prerequisites of the sale shall be presumed to have been performed; and each sale made under the powers herein granted shall be a perpetual bar • • against Grantor and the successors and assigns of Grantor. V. REPRESENTATIONS,WARRANTIES,COVENANTS AND AGREEMENTS OF GRANTOR For the purpose of better securing to Beneficiary the payment of the Indebtedness, Grantor represents,warrants and covenants to Beneficiary as follows: A. Title, Authority, and Performance under Leases. At the time of the execution and delivery of this Deed of Trust, Grantor is the sole and lawful owner of the Land in fee simple,and Grantor 5 4846-6794-1930.v3 2016007582 Page 6 of 22 •• has the authority to execute this Deed of Trust. The Property is free from all encumbrances and charges whatsoever except for the liens securing the Senior Notes and the Permitted Encumbrances. No assignments or pledges are currently in effect with respect to any leases of or rentals or income from the Property except for assignments and/or pledges to Beneficiary and those expressly stated in EXHIBIT B and those securing the Senior Notes, and until the Indebtedness is fully paid and this Deed of Trust is released, Grantor shall not make any additional assignment or pledge thereof without Beneficiary's prior written consent. B. Tax and Insurance Escrow. Upon written request by Beneficiary, Grantor agrees to deposit with Beneficiary on a monthly basis, or at other intervals as specified, a sum that shall be sufficient to pay taxes, assessments, charges, and insurance premiums as they become due, all as reasonably estimated by Beneficiary, which sum shall be held by Beneficiary (or by a banking institution selected by Beneficiary whose funds are insured by a federal agency or instrumentality) in trust to pay taxes, assessments, charges and premiums, but which shall not bear interest and may be commingled with other funds. If at any time the funds so held by (or on behalf of) Beneficiary are insufficient to pay any tax, assessment, charge or insurance premium, Grantor shall, upon receipt of notice, deposit with Beneficiary(or such banking institution), all additional funds as are necessary to remove the deficiency. If the Indebtedness is for any reason declared immediately due and payable,funds held by(or on behalf of) Beneficiary for payment of taxes, assessments, charges or premiums as herein provided may, at Beneficiary's election, be applied on the Indebtedness in any manner as Beneficiary so elects. In the event that Grantor is escrowing with a Senior Lender (as defined below) a sum for payment of taxes, assessments, charges and insurance premiums and such amount is sufficient to fully discharge such taxes, assessments, charges and insurance premiums, Beneficiary agrees not to require an additional escrow deposit under this paragraph. In the event that Beneficiary does not require the escrow deposits described in the paragraph, Grantor shall provide Beneficiary with written evidence that (i) all applicable taxes and assessments have been paid at least thirty(30)days prior to delinquency and (ii)all insurance premiums have been paid thirty(30)days before the renewal date of the applicable policies. Grantor shall duly pay and discharge, or cause to be paid and discharged, all taxes, assessments, charges, and insurance premiums as they become due. C. Insurance. Grantor shall, prior to or concurrently with the execution of this Deed of Trust, deliver to Beneficiary all of the following insurance policies together with evidence of such other insurance coverage as required pursuant to the Loan Agreement, accompanied by paid premium receipts evidencing payment in full of the required premiums for at least the first full year of coverage: (i) fire insurance with extended coverage and standard Beneficiary and replacement cost endorsement for the full insurable value of the insurable portion of the Property, but in no event for an amount less than the amount of the Note (90% shall be acceptable co-insurance rates for fire insurance);and (ii) public liability insurance in the amount of $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate for a twelve (12) month policy period. Each renewal policy shall be delivered to Beneficiary not less than thirty (30) days before the termination of the prior policy and with each policy there shall be delivered to Beneficiary a receipt showing payment of the premium therefor. Upon request, Grantor shall also carry additional insurance or additional reasonable amounts of insurance covering Grantor or the Property as Beneficiary shall reasonably require, insuring against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in the region where the Property is located. If the Property or any part thereof has been or at any time during the term of this Deed of Trust or any extension or renewal thereof is designated as a flood-prone or flood-risk area pursuant to the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each have been or may be amended, or any successor law, Grantor shall obtain flood insurance in such total amounts as Beneficiary may from time to time require and shall otherwise comply with the requirements of the 6 4E46-6794-1930.v3 2016007582 Page 7 of 22 National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973 or the National Flood insurance Reform Act of 1994,or any successor law. All insurance required under this Deed of Trust and the Loan Agreement shall be fully paid for, non-assessable, and such policies shall contain such provisions, endorsements, and expiration dates as Beneficiary shall reasonably require. Such policies shall be issued by insurance companies authorized and licensed to transact business in the State of Texas with ratings acceptable to Beneficiary in its sole and absolute discretion and shall name Beneficiary as an additional insured. D. Operations. Grantor will abstain from and not permit the commission of waste in or about the Property, will maintain the Property in good operating condition and repair at all times, ordinary wear and tear excepted, will not remove or demolish the buildings or other improvements now or hereafter constituting a part of the Property, or alter the design or structural character of any buildings or improvements unless Beneficiary shall first consent thereto in writing, which consent shall be granted or denied in Beneficiary's reasonable discretion, and will comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the Property or the use thereof, which consent shall not be unreasonably withheld, delayed or conditioned. Grantor will not seek or acquiesce in a zoning reclassification of all or any portion of the Property or grant or consent to any easement, dedication, plat, or restriction (or allow any easement to become enforceable by prescription), or any amendment or modification thereof,covering all or any portion of the Property,without Beneficiary's prior written consent. Grantor will not, without the prior written consent of Beneficiary, permit any drilling or exploration for or extraction, removal, or production of, any Minerals from the surface or subsurface of the Land regardless of the depth thereof or the method of mining or extraction thereof. E. Obligations Under Other Loan Documents. Grantor hereby agrees to comply with and perform all of its obligations under the other Loan Documents and agrees to be bound by the • • • representations, warranties and covenants made by Grantor contained in the Loan Documents. All of • representations, warranties and covenants contained in the other Loan Documents are hereby fully • incorporated herein. F. Casualty and Condemnation Proceeds. Subject to the terms of the Loan Agreement and the Intercreditor Agreement (as defined below), in the event of any fire or other casualty to the Property or eminent domain proceedings resulting in condemnation of the Property or any part thereof, Grantor shall have the right to rebuild the Property, and to use all available insurance or condemnation proceeds therefor, provided that(a)such proceeds are sufficient to keep the Indebtedness in balance and rebuild the Project in a manner that provides adequate security to Beneficiary for repayment of the Indebtedness or if such proceeds are insufficient then Grantor shall have funded any deficiency, (b) Beneficiary shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or similar arrangement, which approval Beneficiary shall not withhold if the senior lender approves the same,and (c)no Default then exists under the Loan Documents. If the casualty or condemnation affects only part of the Property and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial repayment of the • Indebtedness in a manner that provides adequate security to Beneficiary for repayment of the remaining balance of the Indebtedness. G. Failure to Pay. All taxes and any assessments that are due and payable affecting the Property shall be paid and discharged in full prior to execution and delivery of this Deed of Trust, or as • they subsequently become due and payable and prior to delinquency. If Grantor fails to pay any tax, • assessment, charge or insurance premium called for herein, Beneficiary may, at its option, pay the same, or if Grantor fails to perform any of Grantor's covenants or agreements herein, Beneficiary may, at its option, correct or cause to be corrected the same and pay any sums in connection therewith as Beneficiary shall determine to be necessary or advisable,and all taxes, assessments, charges, insurance premiums and sums paid by Beneficiary in connection with such matters (collectively, whether one or more, an "Assessment")shall be immediately repayable by Grantor to Beneficiary, together with interest on each amount at the default rate provided in the Note from the date the sum is paid by Beneficiary, until the same is refunded to Beneficiary and all such amounts and interest thereon, shall be secured hereby. 7 4846-6794-1930.v3 2016007582 Page 8 of 22 Notwithstanding the foregoing, Grantor shall have the right to object and protest to ad valorem taxes on the Property in good faith and with due diligence provided that (i) no Default exists under this Deed of Trust or any of the other Loan Documents, (ii)Grantor gives Beneficiary prior written notice of its intent to contest an Assessment; (iii) Grantor demonstrates to Beneficiary's reasonable satisfaction that (A) the Property will not be sold to satisfy the Assessment prior to the final determination of the legal proceedings, (B)Grantor has taken such actions as are required or permitted to accomplish a stay of any such sale, and (C) Grantor has either(1) furnished a bond or surety (satisfactory to Beneficiary in form and amount) sufficient to prevent a sale of the Property or (2) at Beneficiary's option, deposited one hundred fifty percent (150%) of the full amount necessary to pay any unpaid portion of any Assessment with Beneficiary; and (iv)such proceeding shall be permitted under any other instrument to which Grantor or the Property is subject(whether superior or inferior to this Instrument). H. Title Litigation. Subject to title insurance coverage, in case of any litigation involving the title to any part of the Property, or the validity of this Deed of Trust, Beneficiary may be represented in the • litigation through attorneys of its own selection and Grantor shall, upon demand, promptly reimburse Beneficiary for all court costs and reasonable attorneys' fees incurred by Beneficiary in defending and/or protecting its rights in any litigation. Default Subject to applicable notice provisions, if a Default (as defined in the Loan Agreement) occurs, the whole of the Indebtedness, at the option of Beneficiary, shall become immediately due and payable,without further notice or demand. J. Tenancy at Sufferance. Following any sale of the Property,or any part thereof, under the provisions of this Deed of Trust, and to the extent permissible under applicable law, all persons and parties in possession of the Property sold shall be obligated to immediately vacate the premises and prior to such vacation shall be tenants at sufferance of the purchaser of the Property sold and shall be subject to eviction in an action of forcible detainer, provided, the provisions of this Subparagraph J shall be subject to any agreements made in writing by Beneficiary with reference to any existing and/or future leases; provided, further, the purchaser at any foreclosure sale shall have the option to affirm any then existing leases or tenancies or otherwise to succeed to the rights of Grantor thereunder. K. Subrogation. To the extent that any of the Indebtedness represents funds utilized to satisfy any outstanding Indebtedness or obligations secured by liens, rights, or claims against the Property or any part thereof, Beneficiary shall be subrogated to any and all liens,rights, superior titles and equities owned or claimed by the holder of any outstanding indebtedness or obligation so satisfied, however remote, regardless of whether the liens, rights, superior titles and equities are assigned to Beneficiary or released by the holder(s)thereof. L. Homestead Disclaimer. Grantor represents and covenants that the Property forms no part of any property owned, used, or claimed by Grantor as a business or residential homestead, or as exempt from forced sale under the laws of the State of Texas and disclaims and renounces all and every such claim thereto. • M. Additional Transfers and Encumbrances. Beneficiary shall have the right to declare the Indebtedness secured hereby immediately due and payable in the event the Grantor sells, transfers, assigns, or conveys its interest, whether voluntarily or involuntarily, in the Property, or any part thereof, without the prior written consent of Beneficiary,such request not to be unreasonably withheld, delayed or conditioned or in the event any junior or subordinate mortgage, lien, deed of trust,or other encumbrance is placed upon the Property without the prior written consent of Beneficiary, provided the foregoing shall not prohibit the removal of worn or obsolete Personalty that is replaced with new items of the same or similar quality. If Beneficiary consents to the sale, transfer, assignment, or conveyance of Grantor's interest in the Property,or any part thereof, and waives in writing its right to accelerate the Indebtedness secured hereby as provided in this Subparagraph M, Beneficiary may require that the transferee assume all the obligations of Grantor under this Deed of Trust, the Loan Agreement and the Note in a form reasonably acceptable to Beneficiary and its legal counsel. For purposes of this Subparagraph M, s 4846-6794-1930.v3 2016007582 Page 9 of 22 "transfer" of the Property shall not include the transfer of any direct or indirect ownership interests in Grantor and such transfers shall not require the consent of Beneficiary hereunder. N. No Reliance on Beneficiary. Grantor is experienced in the ownership and operation of properties similar to the Property, and Beneficiary is relying solely upon Grantor's expertise and business plan in connection with the construction of the Improvements and ownership and operation of the Property. Grantor is not relying on Beneficiary's expertise or business acumen in connection with the Property or in connection with the construction of the Improvements. 0. No Litigation. Except as disclosed in writing to Beneficiary, there are no(i) actions,suits, or proceedings, at law or in equity, before any Governmental Authority or arbitrator pending or threatened against or affecting Grantor, any guarantor,or involving the Property, (ii)outstanding or unpaid judgments against the Grantor or the Property, or(iii)defaults by Grantor with respect to any order, writ, injunction, decree, or demand of any Governmental Authority or arbitrator. P. Payment for Labor and Materials. Grantor will promptly pay all bills for labor, materials, and specifically fabricated materials incurred in connection with the Property (which shall be deemed an Assessment on the Property) and never permit to exist in respect of the Property or any part thereof any unbonded lien or security interest, even though inferior to the liens and security interests hereof,for any such bill, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest on a parity with, superior, or inferior to any of the liens or security interests hereof, except for the Permitted Encumbrances and the liens securing the Senior Notes. In the event that Grantor becomes aware that such lien has been recorded against the Property, Grantor shall have such lien released within thirty(30)days. If Grantor fails to pay any bills for labor, materials, and specifically fabricated materials incurred in connection with the Property, Beneficiary shall have the rights set forth in Section V.G for Grantor's failure to pay any Assessment. Q. Tax on Deed of Trust. At any time any law shall be enacted imposing or authorizing the imposition of any tax upon this Deed of Trust, or upon any rights,titles, liens, or security interests created hereby, or upon the Indebtedness or any part thereof, Grantor will immediately pay all such taxes, • provided that if such law as enacted makes it unlawful for Grantor to pay such tax, Grantor shall not pay nor be obligated to pay such tax. Nevertheless, if a law is enacted making it unlawful for Grantor to pay such taxes,then Grantor must prepay the Indebtedness in full within sixty(60)days after demand therefor by Beneficiary. R. ERISA. If and to the extent that Grantor is obligated under any plan governed by or subject to the Employee Retirement Income Security Act, as amended ("ERISA"), Grantor shall fully discharge and satisfy all of its obligations and funding requirements under such plan, ERISA and the Internal Revenue Code, as amended ('IRC"). Furthermore, Grantor shall comply in all material respects with any and all applicable provisions of ERISA and the IRC and will not incur or permit to exist any • unfunded liabilities to the Pension Benefit Guaranty Corporation or to such plan under ERISA or the IRC. S. Disclosures. If at any time Grantor shall become aware of the existence or occurrence of any financial or economic conditions or natural disasters which are likely to have a material adverse affect on the Property or Grantor's financial condition, Grantor shall promptly notify Beneficiary of the existence or occurrence thereof and of Grantor's opinion as to what effect such may have on the Property or Grantor. Grantor shall also give prompt notice to Beneficiary of (i)the serious illness or death of any principal or key employee of Grantor, (ii)any litigation or dispute, threatened or pending against or affecting Grantor, the Property or any guarantor which could have a material adverse effect on the Property or the financial condition or business of any of the aforementioned parties, (iii)any Default, (iv)any default by Grantor or any acceleration of any indebtedness owed by Grantor under any contract to which Grantor is a party, and (v)any change in the character of Grantor's business as it existed on the date hereof. s 4846-6794-1930.v3 2016007582 Page 10 of 22 VI •. CAPTIONS • The captions contained in this Deed of Trust are for convenience only and shall not be taken into account in determining the meaning of any provision of this Deed of Trust. • VII. ASSIGNMENT OF LEASES As further security for the payment of the Indebtedness, and subject to the rights of senior lienholders, Grantor hereby assigns to Beneficiary, its successors and assigns, all leases,whether now in existence or hereafter created, covering all or any portion of the Property together with all rents to become due under each such lease, subject, however,to any prior assignment in connection with senior indebtedness. For so long as no Default exists, Grantor may collect the rents, but not more than one(1) month in advance, in the ordinary course of business, unless otherwise provided by the express terms of the leases and approved by Beneficiary. In the event of any Default and at any and ail times during the continuance thereof, in addition to all other rights and remedies of Beneficiary, Beneficiary shall have the exclusive right and power (but not the obligation) to enter upon and take possession of the Property or any part thereof, to rent or re-rent the same, either in the name of Beneficiary or Grantor, to receive all rents, revenues, profits, or other income from the Property and to apply all amounts received first, to the costs and expenses incurred by Beneficiary in protecting and operating the Property and next, to the payment of the Indebtedness in any manner and in any order of priority as Beneficiary shall determine. This action by Beneficiary shall not operate as a waiver of the Default, or as an affirmance of any lease or of the rights of any tenant of title to that part of the Property covered by the lease or held by the tenant, should the Property, or any part thereof, be acquired by Beneficiary or other purchaser at a foreclosure sale. The right of Beneficiary to receive all rents, revenues, profits, or other income from the Property during the continuance of any Default shall be applicable whether Beneficiary has entered upon or taken possession of the Property, or has otherwise attempted to exercise its rights hereunder and if any rents, revenues, profits, or other income are paid to or received by Grantor, Grantor shall immediately pay the same to Beneficiary,without the necessity of any request or demand therefor. Grantor agrees at any time and from time to time until the Indebtedness is paid in full to execute and to deliver any additional assignments of leases and/or rents, security agreements and other instruments as Beneficiary shall from time to time reasonably require. The substance, form, execution and delivery of additional assignments of leases and/or rents, security agreements and other instruments shall be reasonably satisfactory to Beneficiary. • • VIII. PERSONALTY • This Deed of Trust covers and includes, without limitation, Grantor's interest in the Personalty hereinabove described. • • IX. USE OF PERSONALTY • • Grantor represents that all Personalty is property for business use and is not consumer goods. Grantor further covenants that there are and shall be no conditional sales contracts that cover any of the Personalty. 10 4846-6794-1930.v3 2016007582 Page 11 of 22 X. SECURITY INTEREST IN PERSONALTY Without limiting any of the provisions of this instrument, Grantor, as referred to in this paragraph as"Debtor,"expressly does the following: • A. Grant. Debtor hereby grants unto the holder of all Indebtedness, described herein as Secured Party, and referred to in this paragraph as "Secured Party", a security interest in Debtor's interest in the Personalty. B. UCC Remedies. Debtor agrees, in addition to any other remedies granted in this instrument to Secured Party or the Trustee, that Secured Party may, during the existence of any Default, proceed under Chapter 9 of the Texas Uniform Commercial Code (the "UCC') as to all or any part of the Personalty and shall have and may exercise with respect to the Personalty all the rights, remedies and powers of a Secured Party under the UCC, including, without limitation, the right and power to sell at public or private sale or sales, or otherwise to dispose of, to lease, or to utilize the Personalty and any part or parts thereof, in any manner authorized or permitted under the UCC after default by a debtor and to apply the proceeds thereof toward payment of any costs, expenses and attorneys' fees and legal expenses thereby incurred by Secured Party and toward the payment of Debtor's obligations, including the Note and all other Indebtedness described in this instrument in any order or manner as Secured Party • may elect. Among the rights of Secured Party during the existence of a Default, and without limitation, • Secured Party shall have the right to take possession of the Personalty and to enter upon any premises where same may be situated for this purpose without being deemed guilty of trespass and without liability for damages thereby occasioned and to take any action deemed necessary or appropriate or desirable by Secured Party, at its option and in its discretion, to repair, refurbish or otherwise prepare the Personalty for sale, lease, or other use or disposition as herein authorized. Debtor agrees that if any notice of sale required under the UCC is mailed, postage prepaid, to Debtor at the address shown herein at least ten (10)days before the time of the sale or disposition, the notice shall be deemed reasonable and shall fully satisfy any requirement for giving of the notice. To the extent it may lawfully do so and without limiting any rights and/or privileges herein granted to Secured Party, Debtor agrees that Secured Party and/or the above Trustee and any Substitute Trustee, may dispose of any or all of the Personalty at the same time and place and after giving the same notice provided for in this Deed of Trust in connection with a nonjudicial foreclosure sale under the terms • and conditions set forth in this Deed of Trust. In this connection, Debtor agrees that the sale may be • conducted by the Trustee or the Substitute Trustee; that the sale of the Land and Improvements • described in this Deed of Trust and the Personalty or any part thereof, may be sold separately and/or together; and that if the Land and Improvements described herein and the Personalty or any part thereof, are sold together, the Secured Party will not be obligated to allocate the consideration received as between the Land and Improvements and the Personalty. C. Possession. Debtor hereby grants to Secured Party the right, at its option upon a Default to transfer at any time to itself or to its nominee the Personalty, or any part thereof and to receive the monies, income, proceeds or benefits attributable or accruing thereto and to hold the same as security for Debtor's obligations or to apply it on the principal and interest or other amounts owing on any of Debtor's obligations, whether or not then due, in any order or manner as Secured Party may elect. All rights with respect to marshalling of assets of Debtor, including with respect to the Personalty, or to a sale in inverse order of alienation, are hereby waived. D. Authority. Debtor hereby covenants, stipulates and agrees that all recitals in any instrument of assignment or any other instrument executed by Secured Party incident to the sale, transfer, assignment, lease or other disposition or utilization of the Personalty or any part thereof hereunder shall be prima facie evidence of the matters stated therein and all prerequisites of the sale or other action taken by Secured Party or of any fact, condition or thing incident thereto shall be rebuttably presumed to have been performed or to have occurred. 4846-6794-1930.v3 2016007582 Page 12 of 22 E. Assembly and Expenses. Debtor hereby covenants and agrees that Secured Party upon a Default may require Debtor to assemble the Personalty and to make it available to Secured Party at a place to be designated by Secured Party that is reasonably convenient to both parties. All expenses of retaking, holding, preparing for sale, lease, or other use or disposition, selling, leasing or otherwise using or disposing of the Personalty and the like that are incurred or paid by Secured Party as authorized or permitted hereunder, including also all attorneys' fees, legal expenses and costs, shall be added to the indebtedness and Debtor shall be liable therefor. F. Financing Statement. A carbon, photographic,or other reproduction of this Deed of Trust may be filed as a Financing Statement under the UCC between Debtor and Secured Party whose addresses are set forth below. Except for the security interest granted hereby in the Personalty or otherwise expressly stated in EXHIBIT B hereto, Debtor is owner and holder of the Personalty free of any • adverse claim, security interest or encumbrance, and Debtor will defend the Personalty against all claims and demands of any person at any time claiming the same or any interest therein. Debtor has not heretofore signed any financing statement and no financing statement signed by Debtor is now on file in any public office except those statements, true and correct copies of which have been delivered to the Secured Party or in connection with the Senior Notes (as defined below). So long as any amount remains unpaid on any Indebtedness described in this Deed of Trust. Debtor will not execute and there will not be filed in any public office any financing statement or statements affecting the Personalty other than financing statements in favor of the Senior Lender or Secured Party hereunder, unless the prior written specific consent and approval of Secured Party shall have first been obtained. Debtor authorizes Secured Party to file, in jurisdiction where this authorization will be given effect, a financing statement signed only by Secured Party covering the Personalty and at the request of Secured Party, Debtor will join Secured Party in executing one or more financing statements, pursuant to the UCC in form satisfactory to Secured Party and will pay the cost of filing the same or filing or recording this instrument • as a financing statement, in all public offices at any time and from time to time whenever filing or recording of any financing statement or of this instrument is deemed by Secured Party to be necessary or • desirable. XI_ ADDRESSES - •• The addresses of Grantor and Beneficiary, are as follows: • Grantor. Seahawk Landing,LLC 3735 Honeywood Court Port Arthur,Texas 77642 Attention: Christopher A.Akbari With a copy to: Coats Rose 9 Greenway Plaza Suite 1100 Houston, Texas 77046 Attention: Barry J. Palmer • Beneficiary Nautical Affordable Housing,Inc. 1885 E.Farragut Orange, Texas 77630 - Donald R.Ball,Executive Director 12 4846-6794-1930_v3 2016007582 Page 13 of 22 Trustee: Donald R. Ball, Trustee 1 885 E. Farragut Orange, Texas 77630 Each party shall have the right to designate from time to time another address within the continental United States for purposes of this Deed of Trust by written notice to the other party. Notwithstanding the foregoing agreement to provide courtesy copies,such copies shall be a courtesy only and failure to provide such copies shall have no effect on the validity of a notice properly given to Grantor. Notices under this Deed of Trust shall be effective in the case of utilization of the U.S. Mail Service, upon the earlier of(i)three days after deposit of such notice in the mail, return receipt requested or (ii) delivery. Notices sent by overnight courier services shall be effective one day after deposit with such service. All other notices shall be effective upon delivery. Notwithstanding the foregoing, any foreclosure notices shall be effective upon deposit with the U.S. Mail Service. XII. RESERVED XIII. ENVIRONMENTAL MATTERS A. Compliance with Laws. Grantor hereby represents, warrants, covenants and agrees to and with Beneficiary that: (i) Grantor will not and will not permit any tenant or occupant of the Property to, generate, store, handle or otherwise deal with hazardous or toxic substances in, on, about or under the Property; and (ii) Grantor has not at any time engaged in or permitted, nor, to the best of Grantor's knowledge after reasonable and prudent inquiry, which has consisted of the Phase 1 report, has any current or former tenant, occupant or owner of the Property, or any portion thereof, engaged in or permitted any generation, storage, handling, dumping, discharge, disposal, spillage or leakage of any hazardous or toxic substances, at, on, or about the Property, or any portion thereof, except as disclosed on the Phase I report, deliverable to Beneficiary upon request. Notwithstanding the foregoing, Grantor shall be permitted to have such chemicals, materials and supplies on the Property which are normally used in connection with the prudent operation, use, maintenance and ownership of a multi-unit student housing facility and which are used in compliance with environmental laws. B. Indemnification. GRANTOR HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND (WITH COUNSEL REASONABLY APPROVED BY BENEFICIARY)AND TO HOLD BENEFICIARY, ITS AGENTS, MEMBERS, OFFICERS, REPRESENTATIVES AND ITS EMPLOYEES FREE AND HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS, ADMINISTRATIVE PROCEEDINGS, JUDGMENTS, DAMAGES, PUNITIVE DAMAGES, PENALTIES, FINES, COSTS, LIABILITIES (INCLUDING SUMS PAID IN SETTLEMENT OF CLAIMS), INTEREST OR LOSSES, INCLUDING REASONABLE ATTORNEYS', CONSULTANTS' AND EXPERTS' FEES AND EXPENSES, OF ANY KIND OR NATURE (COLLECTIVELY, THE "COSTS") THAT ARISE DIRECTLY OR INDIRECTLY, FROM OR IN CONNECTION WITH THE PRESENCE, SUSPECTED PRESENCE, • 13 4846-6794-1930.v3 2016007582 Page '14 of 22 RELEASE OR SUSPECTED RELEASE (A "RELEASE") OF ANY HAZARDOUS OR TOXIC SUBSTANCE, FROM, ON, ABOUT, UNDER OR WITHIN THE PROPERTY, OR ANY PORTION THEREOF WHICH OCCURS DURING OR PRIOR TO SUCH TIME AS GRANTOR OWNS THE PROPERTY. NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, GRANTOR'S LIABILITY HEREUNDER, SUBJECT TO THE DE MINIMIS PROVISIONS OF ARTICLE XIII(A)(ii) ABOVE, SHALL NOT INCLUDE ANY LOSS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BENEFICIARY OR ANY EMPLOYEE, AGENT OR REPRESENTATIVE OF BENEFICIARY OR RELEASE OF HAZARDOUS OR TOXIC SUBSTANCES BY BENEFICIARY OR ANY EMPLOYEE, AGENT OR REPRESENTATIVE OF BENEFICIARY AFTER BENEFICIARY HAS TAKEN POSSESSION OF THE PROPERTY. C. Remediation. If any investigation or monitoring of site conditions, or any cleanup, containment, restoration, removal or other remedial work (collectively, the "remedial work") is required under any applicable federal, state or local law or regulation, by any judicial order, or by any governmental entity, or in order to comply with any agreements affecting the Property because of, or in connection with any release of hazardous or toxic substances, Grantor shall perform, or cause to be performed, the remedial work in compliance with such law, regulation, order or agreement. All remedial work shall be performed by one or more contractors selected by Grantor and approved in advance, in writing, by Beneficiary and under the supervision of a consulting engineer selected by Grantor and approved in advance, in writing, by Beneficiary. All costs of any remedial work shall be paid by Grantor, including, without limitation, the reasonable charges of contractor(s) and/or the consulting engineer and Beneficiary's reasonable attorneys'fees and costs incurred in connection with the monitoring or review of any remedial work. If Grantor shall fail to timely commence or cause to be timely commenced, or fail to diligently prosecute to completion, any remedial work, then Beneficiary may, but shall not be required to, cause such remedial work to be performed and all costs and expenses thereof, or incurred in connection therewith, shall be "Costs" within the meaning of Subparagraph B above. All costs shall be due and payable upon demand therefor by Beneficiary,together with interest thereon at the Default Rate provided in the Note from the date such costs are paid by Beneficiary, until the same are refunded to Beneficiary and all such costs and the interest thereon shall be secured hereby. D. Survival. Notwithstanding anything to the contrary contained herein, or in the Note or Loan Agreement, the obligations of Grantor under this Paragraph XIII shall survive any assumption of the Indebtedness by a successor to Grantor (whether or not the assumption has been approved or disapproved, or whether or not Grantor was released from liability on the Indebtedness), foreclosure of this Deed of Trust (or transfer of the Property in lieu of foreclosure) and release or termination of this Deed of Trust. XIV. MISCELLANEOUS A. No Waiver, No delay by Beneficiary in exercising any right, option or remedy hereunder, or otherwise afforded by law, shall operate as a waiver thereof or preclude the exercise thereof during the continuance of any Default. B. Cumulative Remedy. All rights and remedies of Beneficiary under this Deed of Trust and any and all other instruments evidencing or securing the Indebtedness, are cumulative and concurrent and may be exercised singularly,successively, or concurrently. C. No Release. The granting to Grantor or to any other person or party of any extension(s) of time for payment of all or any part of the Indebtedness or the performance of any covenant or agreement contained herein, or the taking of other or additional security for the payment of the whole or any part of the Indebtedness, or the releasing of any part of the security at any time held in connection with the Indebtedness, shall not in any way release Grantor or any other person or party obligated for the payment of the Indebtedness, or release or impair this Deed of Trust or any other security held in 14 4346-6794-1930.v3 • 2016007582 Page 15 of 22 connection with the Indebtedness, except to the extent of the person, party or property expressly released in writing by Beneficiary D. Severability, If any provision in this Deed of Trust is invalid or unenforceable in whole or in part,this instrument shall in all other respects remain in full force and effect. E. Successors and Assigns. All of the provisions hereof shall apply to and be binding upon Grantor and the successors and assigns of Grantor (provided the foregoing shall not be construed as consent to any transfer by Grantor of the Property). F. Further Assurances and Corrections. From time to time, at the request of Beneficiary, Grantor will (i)promptly correct any defect,error, or omission which may be discovered in the contents of this Deed of Trust or in any other Loan Document or in the execution or acknowledgment thereof; (ii)execute, acknowledge,deliver, record and/or file such further instruments (including,without limitation, further deeds of trust, security agreements, financing statements, continuation statements and assignments of rents or leases) and perform such further acts and provide such further assurances as may be necessary, desirable, or proper, in Beneficiary's reasonable opinion, to carry out more effectively the purposes of this Deed of Trust and the Loan Documents and to subject to the liens and security interests hereof and thereof any property intended by the terms hereof or thereof to be covered hereby or thereby, including without limitation, any renewals, additions, substitutions, replacements, or appurtenances to the Property; (iii)execute, acknowledge, deliver, procure, file, and/or record any document or instrument (including without limitation, any financing statement) deemed advisable by Beneficiary to protect the liens and the security interests herein granted against the rights or interests of third persons; and (iv) pay all costs connected with any of the foregoing. G. Choice of Law, This Deed of Trust shall be performable and enforced in Jefferson County, Texas, and shall be construed in accordance with the laws of the State of Texas from time to time in effect except to the extent preempted by the United States federal law. Venue shall be appropriate in Jefferson County, as applicable. H. Usury. In no event shall any provision of this Deed of Trust, the Note, the Loan Agreement or any other instrument evidencing or securing the Indebtedness ever obligate Grantor to pay interest on the Note secured hereby at a rate greater than that permitted by law, or obligate Grantor to pay any taxes, assessments, charges, insurance premiums, or other amounts to the extent that the payments constitute interest under applicable law and when added to the interest payable on the Note secured hereby, would be held to constitute the payment by Grantor of interest at a rate greater than that permitted by law; and this provision shall control over any provision to the contrary. It is expressly stipulated and agreed to be the intent of Grantor and Beneficiary at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the Note or the Indebtedness or applicable United States federal law to the extent that it permits Beneficiary to contract for,charge,take, reserve or receive a greater amount of interest than under Texas law("Highest Lawful Rate"). If the applicable law is ever judicially interpreted so as to render usurious any amount(i)contracted for,charged, taken, reserved or received pursuant to the Note, any of the other Loan Documents or any other communication or writing by or between Grantor and Beneficiary related to the transaction or transactions that are the subject matter of the Loan Documents, (ii)contracted for, charged or received by reason of Beneficiary's exercise of the option to accelerate the maturity of the Note and/or the Indebtedness,or(iii)Grantor will have paid or Beneficiary will have received by reason of • any voluntary prepayment by Grantor of the Note and/or the Indebtedness, then it is Grantor's and •• Beneficiary's express intent that all amounts charged in excess of the Highest Lawful Rate shall be automatically cancelled, ab initio, and all amounts in excess of the Highest Lawful Rate theretofore collected by Beneficiary shall be credited on the principal balance of the Note and/or the Indebtedness (or, if the Note and all Indebtedness have been or would thereby be paid in full, refunded to Grantor), and the provisions of the Note and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the • 15 4846-6794-1930.v3 2016007582 Page 16 of 22 fullest amount otherwise called for hereunder and thereunder. Grantor hereby agrees that as a condition precedent to any claim seeking usury penalties against Beneficiary, Grantor will provide written notice to Beneficiary, advising Beneficiary in reasonable detail of the nature and amount of the violation, and Beneficiary shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Grantor, or crediting such excess interest against the Note and/or the Indebtedness then owing by Grantor to Beneficiary. All sums contracted for, charged or received by Beneficiary for the use, forbearance or detention of any debt evidenced by the Note and/or the Indebtedness shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of the Note and/or the Indebtedness (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Note and/or the Indebtedness does not exceed the Highest Lawful Rate from time to time in effect and applicable to the Note and/or the Indebtedness for so long as debt is outstanding. In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the Note and/or the Indebtedness. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Beneficiary to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. I. Covenants Run with the Land. All Obligations contained in this Deed of Trust and the other Loan Documents are intended by Grantor, Beneficiary and Trustee to be, and shall be construed as, covenants running with the Property until the lien of this Deed of Trust has been fully released by Beneficiary. J. JURY WAIVER. GRANTOR AND BENEFICIARY ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE, THE INDEBTEDNESS OR THIS DEED OF TRUST. K. Entire Agreement. THIS DEED OF TRUST, TOGETHER WITH THE NOTE AND LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS, AND THE RESTRICTIVE COVENANTS CONSTITUTE A WRITTEN LOAN AGREEMENT AS DEFINED IN SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE. THIS WRITTEN LOAN AGREEMENT CONSTITUTES THE • FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. •• THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. • L. Subordination. It is the intent of Beneficiary and Grantor that the indebtedness evidenced by the Note shall be subordinate in right of payment to the prior payment in full of the following indebtedness: (i) Promissory Note in the maximum principal amount of up to FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) to be issued by Grantor and payable to CommunityBank of Texas, N.A. ("Bank" ), or order, to the extent and in the manner provided in a certain Intercreditor Agreement to be entered into between Beneficiary, Grantor,the City of Port Arthur Section 4A Economic Development Corporation (the "EDC"), and CommunityBank of Texas, N.A., a national banking association collectively • referred to as "Senior Lender" (the "lntercreditor Agreement"); and (ii) Promissory Note in the maximum principal amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) to be issued by Grantor and payable to the EDC or order, to the extent and in the manner provided in the Intercreditor Agreement; (collectively, the "Senior Notes"). This Deed of Trust and all of the other Loan Documents are and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the deeds of trust securing the Senior Notes as more fully set forth in the lntercreditor Agreement. The rights and remedies of the Beneficiary and each subsequent holder of this Note and the Deed of Trust are subject to the restrictions and limitations set forth in the lntercreditor Agreement. Each subsequent holder of this Note shall be deemed, by virtue of such holder's acquisition of the Note, to have agreed to perform 16 4846-6794-1930.v3 2016007582 Page 17 of 22 • and observe all of the terms, covenants and conditions to be performed or observed by Beneficiary under the lntercreditor Agreement. [Signatures on following page] i • • • 17 4846-6794-1930.v3 • 2016007582 Page 18 of 22 Signature Page Subordinate Deed of Trust, Security Agreement and Financing Statement IN WITNESS WHEREOF, Grantor has executed this Subordinate Leasehold Estate Deed of Trust, Security Agreement and Fin racing Statement on the date sat forth in the acknowledgments below but to be effective as of March r , 2016. GRANTOR: SEAHAWK LANDING, LLC a Texas limited liability company By: ITEX Advisors, LLC, a Texas limited lia lity 9orripany, its Sole Manager i j By: ;< Christopher Akbari, President ATTACHMENTS: EXHIBIT "A" Land EXHIBIT "B" Permitted Encumbrances • STATE OF TEXAS § COUNTY OF-HARRIS § This instrument was acknowledged before me on qy-c..er—. , 2016, by Christopher A. Akbari, the President of ITEX Advisors, LLC, a Texas limited liability company the sole manager of SEAHAWK LANDING, LLC, a Texas limited liability company on behalf of said limited liability company. 4".41`t'• -L MALLET NOTARY PU:ji , State of Texas Adiy My Notary ID#315201-9 t 1 ',0V,p Expires May 18,2016 PRINTED NAME OF NOTARY My COMMISSION EXPIRES: • • 18 4346-6794-1930.v3 •• 2016007682 Page 19 of 22 Exhibit "A" LEGAL DESCRIPTION Being 2.204(called 2.203)acres of land,known as LAMAR PORT ARTHUR DORMS,PHASE I,out of Lakeshore Park to the City of Port Arthur,Jefferson County,Texas,as the same appears upon the map or plat thereof,on file and of record under County Clerk's File No, 2015041258 Official Public Records of Jefferson County,Texas. 1 ' is • 2016007582 Page 20 of 22 EXHIBIT B PERMITTED ENCUMBRANCES [ATTACH] • • I.: 20 4846-6794-1930_0 2016007582 Page 21 of 22 Permitted Encumbrances A. Leasehold Deed of Trust, Assignment of Rents and Security Agreement and Fixture Filing dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Scahawk Landing, LLC, a Texas limited liability company, to Joe F. West, Trustee for the benefit of CommunityBank of Texas, N.A., given to secure the payment of one certain promissory note for the sum of$4,000,000.00. B. Thirty (30) foot utility easement in favor of the City of Port Arthur as recorded under County Clerk's Film Code No. 100-76-0128 Real Property Records of Jefferson County,Texas. C. Easement in favor of Gulf States Utilities Company as recorded under County Clerk's Film Code No. 103-07-0624 Real Property Records of Jefferson County, Texas. D. Amended Information form filed by Jefferson County Drainage District No. 7, recorded under County Clerk's File No. 2014023296,Official Public Records of Jefferson County,Texas. between E. Terms and conditions of that certain Ground Lease for Seahawk Landing, LP Lamar State College-Port Arthur and Seahawk Landing, LP, a Memorandum of Ground Lease recorded or to be recorded in the Official Public Records of Jefferson County,Texas. F. UCC-1 Financing Statement from Seahawk Landing, LLC, Debtor, to CommunityBank of Texas, N.A., Secured Party, filed or to be filed in the Official Public Records, Jefferson County, Texas. G. Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Seahawk Landing, LLC, a Texas limited liability company, to Donald R. Ball, Trustee on behalf of Nautical Affordable Housing, Inc., a Texas non-profit corporation, given to secure the payment of one certain promissory note in the amount of $1,000,000.00. Intercreditor and Subordination Agreement by and between Nautical Affordable Housing, Inc., CommunityBank of Texas, N.A. and Seahawk Landing, LLC dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas. Collateral Assignment of Note and Liens dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Nautical Affordable Housing, Inc..to Guy N. Goodson, Trustee for the benefit of the City of Port Arthur Section 4A Economic Development Corporation. 2016007582 Page 22 of 22 H. UCC-1 Financing Statement from Seahawk Landing, LLC, Debtor, to Nautical Affordable Housing, Inc., Secured Party, filed or to be filed in the Official Public Records, Jefferson County, Texas. I. Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Seahawk Landing, LLC, a Texas limited liability company, to Guy N. Goodson, Trustee on behalf of City of Port Arthur Section 4A Economic Development Corporation, a Texas non-profit corporation, given to secure the payment of one certain promissory note in the amount of$1,000,000.00. hrtercreditor and Subordination Agreement by and between City of Port Arthur Section 4A Economic Development Corporation, CommunityBank of Texas,N.A. and Seahawk Landing, LLC dated March 7,2016, filed or to be filed in the Official Public Records,Jefferson County,Texas. J. UCC-1 Financing Statement from Seahawk Landing, LLC,Debtor,to City of Port Arthur Section 4A Economic Development Corporation, Secured Party, filed or to be filed in the Official Public Records,Jefferson County,Texas. • EXHIBIT " B3 " • FILED AND RECORDED ,/;,OFFICIAL PUBLIC RECORDS C 1\L3%_t.2016 Mar 10 03:36 PM Fee: $50-00 COLLATE L ASSIGNMENT OF 2016007614 CAROLYN L.GUIDRY, COUNTY CLERK NOTE AND LIENS JEFFERSON COUNTY TEXAS ;. *Electronically Recorded* THIS COLLATERAL ASSIGNMENT OF NOTE AND LIENS (this "Assignment"), is made as of the 1 day of March, 2016, by NAUTICAL AFFORDABLE HOUSING, INC., a Texas non-profit corporation ("Nautical") to GUY N. GOODSON, an individual ("Trustee"), solely in his capacity as trustee for the benefit of the CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION, a Texas non-profit corporation ("EDC"), relating to EDC's $1,000,000.00 grant (the "Grant Funds"), to Nautical to assist in financing �- the development of a student housing project to be located on the real property described in Exhibit "A" attached hereto (the "Property"). EDC and Nautical have entered into a Grant Agreement of even date herewith (the "Grant Agreement") setting forth certain agreements concerning the use of the Grant Funds for the development and restricted use of the Property. As security for its performance under the Grant Agreement,Nautical hereby assigns to Trustee all of its right, title, and interest in, to, and under that certain Loan Agreement and the related $1,000,000.00 Promissory Note and Deed of Trust (collectively, the "Loan Documents") executed by and between Assignor as lender and Seahawk Landing, LLC, a Texas limited liability company("Seahawk"),as borrower, dated on or about March '1 ,2016, Nautical acknowledges that neither the Trustee nor EDC assumes any of Nautical's obligations or duties under the Loan Documents pursuant to this Assignment. Further,Trustee is is under no obligation to take any action hereunder or under the Loan Documents except and until Trustee forecloses in accordance with the provisions of this Assignment. Nautical hereby authorizes Trustee to demand, receive, receipt for, and enforce any and all of Nautical's rights and entitlements under the Loan Documents, including without limitation the right to sue for breach of any warranties, express or implied, and to perform any and all acts is with respect thereto with the same force and effect as if performed by Nautical in the absence of this Assignment. Nautical hereby represents and warrants to Trustee that no previous assignment of its rights under the Loan Documents has been made, and Nautical agrees not to further assign, sell, pledge, transfer, mortgage, or otherwise encumber in any manner its rights in, to, and under the Loan Documents,so long as this Assignment remains in effect. 1. This Assignment is made to secure the performance and discharge of each and G' every obligation and agreement of Nautical under the Grant Agreement of even date herewith by and between EDC as grantor and Nautical as grantee. 2. Notwithstanding this Assignment, until such time as Nautical is in default under the Grant Agreement or any instrument,document, or agreement securing performance under the • Grant Agreement, Trustee shall not exercise any of Nautical's rights with respect to the Loan Documents. IJpon the occurrence and continuance of any such default and the expiration of all applicable cure periods, Trustee may, without affecting any of its rights or remedies against Nautical under any other instrument, document, or agreement, immediately exercise its rights under this Assignment by giving notice to Nautical and to Seahawk that Seahawk is no longer 1 4826-6323-2811.v6 2016007614 Page 2 of 7 • authorized to deal with Nautical with respect to the Loan Documents. In addition, Trustee shall • have and possess, without limitation, any and all rights and remedies of a secured party as provided by law. 3. Nautical hereby agrees to indemnify, defend, and hold Trustee harmless from and against any and all claims, demands, liabilities, losses, lawsuits, judgments, and costs and expenses (including without limitation any attorneys' fees) to which Trustee may become exposed,or which Trustee may incur, in exercising any of its rights under this Assignment. THE INDEMNIFICATION PROVISION PROVIDED FOR HEREIN SHALL BE APPLICABLE WHETHER OR NOT NEGLIGENCE OF TRUSTEE IS ALLEGED OR PROVEN. 4. Subject to the aforesaid limitation on further assignment by Nautical, this Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns,and successors in interest of Nautical,Trustee,EDC and Seahawk. S. In the event any action or proceeding is brought to enforce or interpret the provisions of this Assignment, the prevailing party shall be entitled to recover, as a part of the prevailing party's costs, a reasonable attorneys' fee, the amount of which shall be fixed by the court and made a part of any judgment rendered. 6. This Assignment shall be governed by and construed in accordance with the laws of the State of Texas as those laws are applied to contracts between residents of said state to be performed within said state. ,.. 7. THE EXCLUSIVE VENUE FOR THIS ASSIGNMENT SHALL BE TILE STATE OF TEXAS. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS ASSIGNMENT, THE UNDERSIGNED HEREBY AGREE THAT THE STATE AND FEDERAL COURTS LOCATED IN JEFFERSON COUNTY, TEXAS SHALL HAVE EXCLUSIVE JURISDICTION AND VENUE WITH RESPECT TO ALL ACTIONS BROUGHT BY OR AGAINST ANY PARTY UNDER OR PURSUANT TO THIS ASSIGNMENT, AND THE UNDERSIGNED HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS. [SIGNATURE PAGE FOLLOWS] • 2 4826-6323-2811.v6 2016007614 Page 3 of 7 NAUTICAL: NAUTICAL AFFORDABLE HOUSING INC., a Texas non-profit corporation By: /2.../,i 4 Donald R. Bal ,Executive Director THE STATE OF TEXAS COUNTY OF JEFFERSON § This instrument was acknowledged before me on ruk , 2016 by Donald R. Ball, Executive Director of Nautical Affordable Housing, Inc., a Texas non-profit corporation, on behalf of said corporation. (SEAL) e"."0* MOLLY MALLET � F,N s;; 1" My Notary IN 315201.9 f t Expires May 18,2016 Notary Publictate of Texas 3 4826-6323-2811.v6 • 2016007614 Page 4 of 7 ACKNOWLEDG I,AF ,FIRMED,AND AGREED TO: 1 TRUS ,E: 'r GU( .l N. GOODSON,AS TRUSTEE • THE STATE OF TEXAS § �. § COUNTY OF JEFFERSON § This instnnnent was acknowledged before me on t i i,t.-t`,. i.L--, 2016 by Guy N. Goodson, an individual, and Trustee for the City of Port Arthur Section 4A Economic Development • Corporation,a Texas non-profit corporation, on behalf of said corporation. (SEAL) F�;r t 4 11 � :l ' • Notary Public—State of Texas 'nv'PiN KALA GOHLKE I , n s Notary Public,State of Texas y1, :,V Comm_Expires 02/23/2019 %it's Notary ID #12521408-9 4 4826-6323-2811.v6 2016007614 Page 5 of 7 SEAHAWK: SEAHAWK LANDING,LLC, a Texas limited liability company By: ITEX Advisors,LLC, a Texas limited liability company, its Sole Manager , / By: Christophe-A.Akbari,President THE STATE OF TEXAS § J o,§ COUNTY OF HARRIS § This instrument was acknowledged before me on L rcA,r(, 2016 by Christopher A.Akbari, • President of Scahawk Landing, LLC, a Texas non-profit corporation, on behalf of said corporation. MOLLY MALLET f ,..*'."06•f "n (SEAL) c N, ;10; Notary l 3152x01.9 /1 r.Orkr Expires May 18,2016 ? Notary Public • -te of Texas • 5 4826-6323-2R11.v6 2016007614 Page 6 of 7 EDC: CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION, a Texas non-profit corporation Br•-.7-1;1-e4, --"" . 6" '''' ^1,t,Let. /71 4-141A--.0.) •. Name: (13-0,.-;d fk-1,—i ... , Title: t Pre{i Li 4 r1 IL THE STATE OF TEXAS § § COUNTY OF JEFFERSON § strument was acknowledged before me o /4,,,,:, g �'1 g �7911h` �_ ,2016 b a „,..,),(e.,„,-- of the City of Port Arthur Sec on 4A Economic Deve opment Corporation, a • Texas non-profit corporation,on behalf of said corporation. RACHEL A. JACQUET ke(SEAL) = �JUNE Notary Public-St974J of Texas 10,2019 •• 6 4826i-6323-2811.v6 2016007614 Page 7 of 7 Exhibit "A" LEGAL DESCRIPTION Being 2.204(called 2.203)acres of land,known as LAMAR PORT ARTHUR DORMS,PHASE I,out of Lakeshore Park to the City of Port Arthur, Jefferson County,Texas,as the same appears upon the map or plat thereof,on file and of record under County Clerk's File No.2015041258 Official Public Records of Jefferson County,Texas, • EXHIBIT " Cl " Loan Agreement (Borrower/Owner) This Loan Agreement ("Loan Agreement") is made and entered into this the 1 day of March, 2016 by and between the City of Port Arthur Section 4A Economic Development Corporation, a Texas public non-profit corporation ("Lender"), and Seahawk Landing, LLC, a Texas limited liability company ("Borrower"), for the purposes and consideration hereinafter set forth. RECITALS Lender has agreed to make a loan ("Borrower Loan") to Borrower in the original principal sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), as evidenced by a note ("Borrower Note") of even date herewith and secured by a Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement ("Deed of Trust") against the property("Property")more particularly described in Exhibit A attached hereto; WHEREAS, Borrower and Lender desire to enter into this Agreement to set forth certain terms and conditions of the Borrower Loan to supplement the provisions of the other documents executed in connection with or securing the Borrower Loan("Loan Documents"). NOW THEREFORE, for and in consideration of the Borrower Loan and the mutual covenants contained herein,the parties agree as follows: 1. Terms of Borrower Loan. The terms of the Borrower Loan are as follows: (a) Note. Borrower's obligation to repay Lender is evidenced by a promissory note of even date herewith, payable to Lender in the original principal amount of$1,000,000.00, or so much thereof as shall be advanced. (b) Purpose. The purpose of the loan is to provide subordinated permanent loan financing for that certain 101-unit student housing facility, known as Seahawk Landing (the"Project"). (c) Term. The term of the Loan shall commence on the Closing Date (as herein defined) and shall mature twenty-three (23) years thereafter (the "Maturity Date"). (d) Interest. The Loan shall bear interest at the rate of zero percent (0%) per annum. (e) Maturity Schedule. Payment of principal or interest shall be payable under this Note in accordance with the Note Amortization Schedule attached • hereto as Exhibit"A" and made a part hereof for all purposes except in the Event of a Default (as hereinafter defined). The unpaid principal balance of the Note together with accrued interest thereon shall be due and payable on the Maturity Date. (f) Amortization Commencement Date. The Note Amortization Schedule shall commence as of the Amortization Commencement Date as defined in the Promissory Note between Borrower and Senior Lender and shall mature twenty- three (23) years after the Amortization Commencement Date (the "Maturity Date") 2. Senior Lien Loan Agreement. Borrower and CommunityBank of Texas ("Senior Lender") have entered into a Loan Agreement dated the I day of March, 2016, for the provision of the Senior Lien permanent financing for the Project ("Senior Lien Loan Agreement"). Borrower agrees that (i) all terms and conditions of the Senior Lien Loan Agreement; and (ii) all terms and conditions specified in the Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement (the "Subordinated Leasehold Deed of Trust") executed by Borrower to Guy N. Goodson as Trustee for the Lender, are incorporated into this Agreement as if fully set forth herein. 3. Funding. Lender shall fund to Borrower the proceeds of the Note at the Closing Date as defined in the Senior Lien Loan Agreement (the "Closing Date") and/or acknowledges that the funds from the Borrower may only be used to provide permanent financing for the Project. 4. Default under this Agreement. The Lender may declare a default ("Default") under this Agreement or any one or more of the Loan Documents upon the occurrence of any one or more of the following circumstances: (a) Monetary Default. If Borrower fails to pay when due any portion of the sums owing under the Borrower Note, this Agreement and/or any of the Loan Documents and such failure continues for ten (10) business days after written notice thereof from the Lender or any holder of the Borrower Loan; (b) Non-Monetary Default. If Borrower fails, refuses or neglects to perform fully and timely any obligation or breaches and covenant, condition, representation or warranty under this Agreement or any other Loan Document and such failure continues for thirty(30)days following written notice from Lender to Borrower, provided however, that in the event that any such cure periods would cause a material violation to occur under applicable law or any breach or failure of a life safety covenant, such event shall be deemed a "Default" hereunder without any notice or opportunity to cure; 5. Notice and Cure Rights. Notwithstanding anything to the contrary contained in the Loan Documents, Lender hereby agrees that any cure of any default made or tendered #1254357 2 by a partner of Borrower shall be deemed to be a cure by Borrower and shall be accepted or rejected on the same basis as if made or tendered by Borrower. 6. Lender's Remedies. Upon the occurrence of a Default under this Agreement, Lender shall be entitled to exercise all rights and remedies available under the Loan Documents, without further notice or opportunity to cure by Borrower except as may be required by applicable law, provided however, that in the event of a non-monetary default, if such default cannot be cured within thirty (30) days and Borrower is diligently pursuing such cure to completion, then Borrower shall be provided an amount of time reasonably required to achieve such cure. 7. Miscellaneous. (a) This Agreement as supplemented by the Loan Documents contains the entire agreement between the parties relating to the Loan and shall be amended only by an instrument in writing executed by the parties hereto. (b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, as the case may require. (c) This Agreement shall be governed by the law of the State of Texas. Any dispute arising out of or in connection with this Agreement shall be resolved in the state courts located in Jefferson County, Texas. (d) This Agreement may be executed in multiple counterparts, each of which shall constitute an original. (e) Notices under the Loan Documents shall be effective in the case of utilization of the U.S. Mail Service, upon the earlier of(i)three days after deposit of such notice in the mail, return receipt requested or (ii) delivery. Notices sent by overnight courier services shall be effective one day after deposit with such service. All other notices shall be effective upon delivery. Notwithstanding the foregoing, any foreclosure notices shall be effective upon deposit with the U.S. Mail Service. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] #1254357 3 SIGNATURE PAGE LOAN AGREEMENT (BORROWER) Executed effective as of the date set forth above. BORROWER: SEAHAWK LANDING, LLC a Texas limited liability company By: ITEX Advisors, LLC, A Texas limited liability company, its Sole Manager By: Christophe A. Akbari,President • #1254357 4 SIGNATURE PAGE LOAN AGREEMENT (OWNER) LENDER: CITY OF PORT ARTHUR SECTION 4A ' ECONOMIC DEVELOPMENT CORPORATION, a Texas public non-profit corporation By -._ - kA OCs Inge i olmes, President Langston'•'ms, Secretary #1254357 5 Exhibit "A" LEGAL DESCRIPTION Being 2.204(called 2.203)acres of land,known as LAMAR PORT ARTHUR DORMS,PHASE I, out of Lakeshore Park to the City of Port Arthur,Jefferson County,Texas,as the same appears upon the map or plat thereof,on file and of record under County Clerk's File No.2015041258 Official Public Records of Jefferson County,Texas. Exhibit "B" • i UI O O IO O�O O O O O O-O 0 0 0 0 0'0 O O O O O o o O o 0 0 0 0 (n 0 O;O O.O (],O O O O-O O,O O O O'0 0 0 0 0 0 0 O 0 0 0 0 0 0 t,. 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W o 0 0 0 0 0 0 0 0 0 66 0,0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5 15 • w • � SUI O a r N Mid':10 CO CO C D CD N M'I Lf):CD r•-• 450:C0 IO N 01 "I-.1.0:C.0 N- CO O ',N C') 10 N- C5.6) O V CD V: N.CiCO,CD C.N O C) N�,U) .ti 11i�MN O'00 CD.d:N O C0.1- 1()101 - C) N- Lf3 M T ( "..Z r CX) LD i N•CO Ln N C3> CD N M.CC C`) 0.CS0 c') O N- t - N- (CO'LS) T CO U): EXHIBIT " C2 " PROMISSORY NOTE A �� $1,000,000.00 t rcQ 1 , 2016 I. PROMISE TO REPAY. FOR VALUE RECEIVED, Seahawk Landing, LLC, a Texas Limited Liability Company ("Maker")hereby agrees and promises to pay to the order of the City of Port Arthur Section 4A Economic Development Corporation, a Texas public non-profit corporation ("Payee"), at Jefferson, Texas or at any other place as the holder hereof may from time to time in writing designate, on the Maturity Date, in coin or currency, which at the time of payment shall constitute legal tender of the United States of America, the principal sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) or so much thereof as may be advanced, together with interest thereon at the rate of zero (0.0%)per annum, compounded annually. The loan ("Loan") evidenced by this Note is subject to the terms and conditions of that one certain Loan Agreement ("Loan Agreement") between Maker and Payee of even date herewith which incorporates terms and conditions of the Loan Agreement between Maker and CommunityBank of Texas (the"Senior Lien Loan Agreement"). II. TERM. The term of the Loan shall commence on the date specified as the day of closing in the Senior Lien Loan Agreement ("Closing Date") and shall mature upon the date defined in the Loan Agreement (Borrower/Owner) executed by and between Maker and Payee and as evidenced by the final payment date in the Note Amortization Schedule (defined herein) (the "Maturity Date"). This Note is secured by and entitled to the benefits of a Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement of even date ("Deed of Trust") by Maker to Guy N. Goodson, Trustee, covering leasehold estate ownership interest in the real property located at 1550 Lakeshore Drive, Port Arthur, Texas, and with fee ownership of the buildings and other improvements now or hereafter erected thereon, together with the personal property attached to or used in connection therewith. III. PAYMENTS. Payment of principal or interest shall be payable under this Note in accordance with the Note Amortization Schedule attached hereto as Exhibit "A" and made a part hereof for all purposes except in the Event of a Default(as hereinafter defined). The unpaid principal balance of the Note together with accrued interest thereon shall be due and payable on the Maturity Date. IV. DEFAULT; ACCELERATION. If a Default shall occur, the entire debt represented by this Note, consisting of the outstanding principal balance and all accrued interest thereon, shall, at the option of the holder hereof, become immediately due and payable, and except as otherwise herein provided, without notice, presentment for payment, demand, notice of nonpayment, notice of intention to accelerate, acceleration, or other notices of any type which are specifically waived. Time being of the essence hereof. Payee's rights under this paragraph shall be in addition to any other rights or remedies it may have under the Loan Agreement and any other loan documents executed in connection therewith ("Loan Documents"), at law or in equity, to enforce Maker's obligations under the Loan Documents. For purposes of this Note, the term "Default" shall mean a default in payment of the Note or under the terms of this Note, the Deed of Trust, the Loan Agreement, the Development Agreement or any other Loan Document securing or executed in connection with the Note. V. PREPAYMENT/MODIFICATION. THIS NOTE MAY BE PREPAID WITHOUT THE PRIOR WRITTEN CONSENT OF THE PAYEE. VI. APPLICATION OF PAYMENTS. Each payment made on this Note shall be credited first to accrued,unpaid interest and the remainder to principal. VII. WAIVER. Maker hereby waives presentment for payment, protest and demand, notice of protest, demand and dishonor, and non-payment of this Note, and except as otherwise specified in the Loan Agreement between the parties, waives notice of default, notice of acceleration, and notice of intent to accelerate, and hereby consents that the holder hereof may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note, at the request of any other person liable hereon, and such consent shall not alter nor diminish the liability of any person. The failure to exercise any remedy available to Payee shall not be deemed to be a waiver of any rights or remedies of Payee under this Note or under any of the other Loan Documents, or at law or in equity. No extension of the time for the payment of this Note or any installment due hereunder,made by agreement with any person now or hereafter liable for the payment of this Note, shall operate to release, discharge, modify, change or affect the original liability of Maker under this Note, either in whole or in part, unless Payee specifically, unequivocally and expressly agrees otherwise in writing. This note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change or modification is sought. VIII. COSTS OF COLLECTION; ATTORNEYS' FEES. Maker agrees to pay all costs of collection, including reasonable attorneys' fees, if the principal of this Note or any payment on the principal or interest hereon is not paid at the respective maturity and to pay all reasonable costs including,attorneys' fees and court costs, if it becomes necessary to protect the security hereof, whether suit be brought or not, after default hereunder by Maker. #1254438 2 IX. USURY LIMITATIONS. No provision of the Loan Agreement, this Note, or any instrument securing payment of or relating to the indebtedness, shall require the payment or permit the collection of interest in excess of ten (10) percent(the "Default Rate"). If any excess of interest in such respect is herein or in any other instrument provided for, or shall be adjudicated to be so provided for herein or in any other instrument, the provisions of this paragraph shall govern and neither Maker nor any guarantor or endorser of this Note nor their respective heirs,personal representatives, successors, or assigns shall be obligated to pay such interest to the extent it is in excess of the Default Rate. Any fees or other sums that under applicable law are deemed to constitute interest shall be or other sums so deemed interest shall be amortized, prorated, allocated and spread in equal parts over the full stated term of the loan evidenced hereby. If the maturity of this Note is accelerated for any reason before the due date stated, or in the event of any prepayment by Maker, or in any other event, earned interest may never exceed the Default Rate, computed from the date of disbursement of the loan evidenced hereby until payment, and any unearned interest otherwise payable hereunder that is in excess of the Default Rate shall be cancelled automatically as of the date of the acceleration, prepayment, or other event, and if previously paid, shall at the option of the holder of this Note be either refunded to Maker or credited on the principal of this Note, provided that, if the holder elects to credit the unearned interest on the principal of this Note, and such unearned interest exceeds the principal balance, the excess shall be refunded to Maker. Any interest computation under this Note and the Loan Agreement shall be at not more than the Default Rate upon the portion of the face amount hereof representing principal that remains unpaid from time to time, it being the intention of the parties hereto to conform strictly to the laws applicable to the loan evidenced by this Note and the Loan Agreement, and should it be held that interest payable under this Note and the Loan Agreement is in excess of the Default Rate, the interest chargeable hereunder shall be reduced to the maximum amount permitted by law. X. GOVERNING LAW. This Note is made in the State of Texas and shall be governed by and construed in accordance with the internal laws of the State of Texas, without regard to conflicts of laws principles. XI. SUCCESSORS. This Note shall he binding upon the parties hereto and their respective successors and assigns. XII. ENTIRE AGREEMENT. THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL #1254438 3 AGREEMENTS OF THE PATIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] #1254438 4 • EXECUTED on the date first written above. MAKER: SEAHAWK LANDING, LLC a Texas limited liability company By: Il'EX Advisors, LLC A Texas limited liability company, Its Sole Manager By: 1/ . Christoph: A. Akbari, President #1254438 5 W !- 0 0 0 0 0 0 0 0 0 O O 0 O 0 0 0 0 0 0 0 O O O 0 0 0 0 0 0 0 pq 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 LU O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O m U) ) U) (,A U)U)U) (I) U) U) U) U) U) U» U) U) U) U) )U) U) U) ) U U) 69 u9 b9 ) ) w MI D C.) 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O N (h V if) CO N- 00 G) O ,- N .- N M V U) CO (- (b m O r r .- N V U) (0 (` CO (T O r O r N c') V (n (O N (O m 0 N CO V u7 (.0 N CO m 0 N M V ((7 CO N CO m O r N CO V (n (fl V V V V V V V V V U) (f) U) (f) U) U) (n U) U) U) (fl (O CD (D (O (D (D (O (O (D 1:7,- N N N 1(1Z-4 N N �L z CV (-4 (V N CV CV CV N N N N OV (V N N C-A N CV N N N N (4 N N N N N N N N N N N N N EXHIBIT " C3 " FILED AND RECORDED `";< .OFFICIAL PUBLIC RECORDS When recorded,return to: 2016 Mar 10 03:36 PM Fee: 3 130.00 2016007612 CAROLYN L.GUIDRY, COUNTY CLERK Germer PLLC JEFFERSON COUNTY TEXAS Attn: Guy Goodson *Electronically Recorded* P.O. Box 4915 Beaumont, Texas 77704-4915 Ck LA NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER. SUBORDINATE LEASEHOLD ESTATE DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT From Seabawk Landing,LLC, a Texas limited liability company as Grantor to Guy N.Goodson, as Trustee for the benefit of City of Port Arthur Section 4A Economic Development Corporation, a Texas public non-profit corporation as Beneficiary 2016007612 Page 2 of 27 SUBORDINATE LEASEHOLD ESTATE DEED OF TRUST,SECURITY AGREEMENT AND FINANCING STATEMENT THE STATE OF TEXAS § COUNTY OF JEFFERSON ERSON § That in consideration of certain indebtedness hereinafter described, justly owing by Seahawk Landing, LLC, a Texas limited liability company, ("Grantor"), to the City of Port Arthur Section 4A Economic Development Corporation, a Texas public non-profit corporation ("Beneficiary") and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other • • valuable consideration paid to the Grantor, the receipt and sufficiency of which are hereby acknowledged, Grantor has GRANTED, ASSIGNED, TRANSFERRED and CONVEYED, and does hereby GRANT, ASSIGN, TRANSFER and CONVEY unto Guy N. Goodson, as trustee("Trustee"), all of the following described property is collectively referred to herein as the"Property": A. All of Grantor's right,title and interest,whether now or hereafter arising,in and to: (i) The leasehold estate in real property situated in Jefferson County, Texas, pursuant to that certain Ground Lease Agreement executed the day of March, 2016,more accurately described in EXHIBIT A hereto,together with all right, title and interest now and/or hereafter owned by Grantor, its successors and assigns, in the whole or any part of the above described leasehold estate in real property, and/or any street or road adjacent and/or contiguous to the above described real property("Land"). (ii) All of Grantor's right, title and interest, whether now or hereafter arising,in and to all buildings and other improvements now or hereafter placed on the Land, as well as all appurtenances, betterments and additions thereto ("Improvements"); all and singular the rights, privileges, hereditaments and appurtenances in anywise incident or appurtenant to the Land and Improvements; and the rents, revenue, profits and income from the Land and Improvements. (iii) All of Grantor's right, title and interest, whether now or hereafter arising, in and to any and all plumbing, electrical, heating, cooling and other equipment and all building materials and other goods of every type, kind and character that are now or hereafter situated upon the Land and which(i) are intended to be incorporated into the Improvements or (ii) are now, or hereafter become,fixtures related to the Land or the Improvements; any and all other goods of every type, kind and character, including without limitation, all appliances, furniture, fixtures, inventory and equipment now owned or hereafter acquired by Grantor that are now or hereafter situated upon the Land (whether or not situated within or attached to the Improvements) and that facilitate the use and occupancy of the Improvements for the purpose for which they were or are to be 2 #1254476 2016007612 Page 3 of 27 constructed; all plans and specifications for the Improvements, all rights of Grantor under all existing and future leases, construction, maintenance and other contracts covering or relating to the Land or the Improvements, all tenants deposits made pursuant to or in connection with such leases, all rights of ingress and egress, easements, water and wastewater rights, and to the extent assignable, all licenses, permits, franchises, certificates, accounts, instruments, chattel paper, documents, agreements, contracts, and general intangibles, and all rights of Grantor in and to any development rights relating to the Land or the Improvements(including,without limitation,trade names and symbols used in connection therewith and any deposits with utility companies) and all other rights and privileges obtained in connection with, relating to or associated with the Land or the Improvements (collectively, the "Personalty")and all proceeds of the Personalty. B. All of Grantor's right,title and interest,whether now or hereafter arising,in and to any tax refunds,including interest thereon,tax rebates, ad valorem tax credits, and tax abatements, and the right to receive the same,which may be payable or available with respect to the Property. C. All of Grantor's right,title and interest in the proceeds(including conversion to cash or liquidation claims) of(A) insurance relating to the Property and (B) all awards made for the taking by eminent domain (or by any proceeding or purchase in lieu thereof) of the Property, including awards resulting from a change of any streets (whether as to grade, access, or otherwise)and for severance damages. D. All of Grantor's right, title and interest, if any, in and to all substances in, on, or �. under the Land which arc now, or may become in the future, intrinsically valuable, that is, valuable in themselves, and which now or may be in the future enjoyed through extraction or removal from the property, including without limitation, oil, gas, and all other hydrocarbons, coal, lignite, carbon dioxide and all other nonhydrocarbon gases, uranium and all other radioactive substances, and gold, silver, copper, iron and all other metallic substances or ores (collectively, "Minerals"). E. All funds of Grantor that may be deposited with Beneficiary at any time and from time to time for any purpose, which funds shall be deemed to be part of the Personalty for purposes hereof In the event of a conflict between the terms and conditions of this instrument and the instrument under which Beneficiary holds any funds of Grantor,the terms and conditions of the latter instrument shall prevail. TO HAVE AND TO HOLD the Property unto the Trustee and the assigns of the Trustee, and Grantor does hereby bind Grantor and the successors and assigns of Grantor, to WARRANT AND FOREVER DEFEND all and singular the Property and title thereto unto the Trustee and unto the assigns of the Trustee, against every person or party whomsoever claiming or to claim the same, or any part thereof, subject,however,to the permitted encumbrances set forth on EXHIBIT B attached hereto (the "Permitted Encumbrances") and the liens securing the • Senior Note(as described below). 3 #1254476 2016007612 Page 4 of 27 I. SECURITY FOR PERFORMANCE OF OBLIGATIONS This conveyance is made in trust, however, to secure the performance of all covenants and agreements contained in this Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement("Deed of Trust") and that one certain Loan Agreement(the "Loan Agreement") executed or to be executed between Grantor and Beneficiary, and the full and prompt payment when due (by lapse of time or otherwise), of the following indebtedness(the "Indebtedness"): A. Loan. All stuns, including principal, interest and attorneys'fees, called for in that certain promissory note (the "Note") executed by Grantor payable to the order of Beneficiary, in the principal amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) or so much thereof as shall be advanced, which Note evidences that certain loan from Beneficiary to Grantor of the amount set forth in the Note (the "Loan"), and which Note bears interest at the rates therein staled and provides for acceleration of maturity should a default under such Note or any of • the documents evidencing, securing,or otherwise pertaining to the Loan occur. B. Other Sums. All other sums owing by Grantor to Beneficiary or other holder(s) of any part of the Indebtedness or becoming due under the Loan Agreement. This Deed of Trust and all other instruments now or hereafter evidencing, governing or securing any part of the Indebtedness are hereinafter collectively referred to as the"Loan Documents"). PAYMENT OF THE INDEBTEDNESS; DEFAULT;ENFORCEMENT OF TRUST Payments. If the Indebtedness is fully paid and if all of Grantor's covenants and agreements herein and in the Loan Agreement and the other Loan Documents are fully kept and performed, then this conveyance shall thereupon become of no further force and effect and shall be released by Beneficiary or other holder(s) of the Indebtedness upon the written request and at the expense of Grantor. B. Enforcement. But if there occurs any Default (as defined in the Loan Agreement),the whole of the Indebtedness shall at the option of Beneficiary, without notice to Grantor or any other person, which notice is hereby waived, become immediately due and payable and thereupon, or at any time thereafter that the Indebtedness or any part thereof remains unpaid, it shall be the duty of the Trustee, or the Substitute Trustee, as hereinafter defined, at the request of Beneficiary, or the holder(s) of the Indebtedness, which request shall be presumed, to enforce this Trust and to sell as an entirety,or in parcels,by one sale or by several sales,held at one time or at different times, as the Trustee acting may elect (all rights to a marshaling of Grantor's assets, including Property, or to a sale in inverse order of alienation, being hereby expressly waived by Grantor), the Property in the county in which the Property, or a part of the Property to be sold, is situated (the "County") at such area at the courthouse designated by the Commissioner's Court of the County as the area where sales are to take place, or if no area is designated, at the door of the County Courthouse, each sale to be made on the first Tuesday of 4 #1254476 2016007612 Page 5 of 27 a calendar month between the hours of 10:00 A.M. and 4:00 P.M. to the highest bidder for cash at public auction, after both posting or causing to be posted written or printed notice of the time (including the earliest time at which the sale will occur),place, and term of sale at the door of the Courthouse of the County and filing or causing to be filed a copy of the notice in the Office of the County Clerk of the County, for at least twenty-one (21)days preceding the day of sale, and to execute and to deliver to the purchaser(s) at each such sale proper conveyance(s) of the property interest sold, with general warranty of title binding upon Grantor and the successors and assigns of Grantor; or Beneficiary or other holder(s) of the Indebtedness may foreclose or cause to be foreclosed the Lien of this Deed of Trust,in whole or in part,through judicial foreclosure or in any �. manner as may at any time be authorized under the statutes of the State of Texas. In addition,the holder(s) of the Indebtedness to which the power is related shall, at Ieast twenty-one (21) days preceding the date of sale, serve written notice of the proposed sale by certified mail on each • person obligated to pay the Indebtedness according to the records of the holder(s). Service of the notice shall be completed upon deposit of the notice, enclosed in a postpaid wrapper, properly addressed to each debtor at the most recent address as shown by the records of the holder(s)of the Indebtedness, in apost office or official depository under the care and custodyof the United l Y States Postal Service. The Affidavit of any person having knowledge of the facts to the effect that service was completed shall be prima facie evidence of the fact of service. No notice of the sale I. or sales other than that herein provided for need be given to Grantor or any other person or party, and any other notice is hereby waived. Beneficiary or other holder(s) of the Indebtedness shall have the right to become the purchaser at any sale to the same extent as any other party, being the highest bidder, and in lieu of paying cash may credit the amount of the bid upon the Indebtedness up to the full amount of the Indebtedness then unpaid. C. Proceeds. The Trustee acting shall apply the proceeds arising from each sale, I: first, to pay all reasonable expenses of the sale actually incurred, second, to reimburse Beneficiary for any expenses incurred by Beneficiary in protecting, administering or operating the Property prior to the foreclosure sale and third, to the payment of the Indebtedness (including all principal, interest and attorneys' fees owing as part of the Indebtedness). The proceeds of each sale paid to Beneficiary may be applied by Beneficiary on the Indebtedness in any order and manner as Beneficiary may elect. Any surplus fluids from the foreclosure sale or • sales hereunder shall be paid to Grantor or the person(s)lawfully entitled thereto. III. UNMATURED INDEBTEDNESS If any Default occurs, Beneficiary or other holder(s) thereof shall, in addition to any remedies available to Beneficiary at law or in equity,have the option to proceed with foreclosure in satisfaction of such item or items, either through the courts or by directing the Trustee, or the Substitute Trustee, as hereinafter provided for,to proceed as if under a foreclosure, conducting the sale as herein provided and without declaring the whole debt due, and if a sale is made because of such Default, the sale may be made subject to the unmatured part of the Indebtedness, but as to the unmatured part of the Indebtedness, this Deed of Trust shall remain in full force and effect just as though no sale had been made under the provisions of this paragraph. Several sales may be made hereunder without exhausting the right of sale for any unmaturcd part of the Indebtedness, it being the purpose hereof to provide for a foreclosure and sale of the Property, in whole or in part, for any matured portion of the Indebtedness without exhausting the power of • 5 #1254476 2016007612 Page 6 of 27 foreclosure and the power to sell the Property, in whole or in part, for any other part of the Indebtedness subsequently maturing. Iv. SUBSTITUTE TRUSTEE In case of the resignation of the Trustee, or the inability (through death or otherwise), �. refusal or failure of the Trustee to act, or at the option of Beneficiary or the holder(s) of the Indebtedness for any other reason (which reason need not be stated), a substitute trustee ("Substitute Trustee")may be named, constituted and appointed by Beneficiary or the holder(s) • of the Indebtedness, without other formality than an appointment and designation in writing; the appointment and designation shall be full evidence of the right and authority to make the same and • of all facts therein recited; and this conveyance shall vest in the Substitute Trustee the title, power and duties herein conferred on the Trustee originally named herein and the conveyance of the Substitute Trustee to the purchaser(s) at any sale shall be equally valid and effective. The right i to appoint a Substitute Trustee shall exist as often and whenever from any of said causes, the Trustee, original or Substitute, resigns, or cannot, will not, or does not act, or Beneficiary or the holders) of a majority of the Indebtedness desire to appoint a new Trustee.No bond shall ever be required of the Trustee,original or Substitute. The recitals in any conveyance made by the Trustee, original or Substitute, shall be accepted and construed in court and elsewhere as prima facie evidence and proof of the facts recited and no other proof shall be required as to the request by Beneficiary or the holder(s) of a majority of the Indebtedness to the Trustee to enforce this Trust, or as to the notice of or holding of the sale, or as to any particulars thereof, or as to the resignation of the Trustee, original or Substitute, or as to the inability, refusal or failure of the • Trustee, original or Substitute, to act or as to the election of Beneficiary or the holder(s) of a majority of the Indebtedness to appoint a new Trustee, or as to appointment of a Substitute Trustee, and all prerequisites of the sale shall be presumed to have been performed; and each sale made under the powers herein granted shall be a perpetual bar against Grantor and the successors and assigns of Grantor. V. REPRESENTATIONS,WARRANTIES, COVENANTS AND AGREEMENTS OF GRANTOR For the purpose of better securing to Beneficiary the payment of the Indebtedness, Grantor represents,warrants and covenants to Beneficiary as follows: j. A. Title,Authority, and Performance under Leases. At the time of the execution and delivery of this Deed of Trust, Grantor is the sole and lawful owner of the Land in fee simple,and Grantor has the authority to execute this Deed of Trust. The Property is free from all encumbrances and charges whatsoever except for the liens securing the Senior Note and the Permitted Encumbrances. No assignments or pledges are currently in effect with respect to any leases of or rentals or income from the Property except for assignments and/or pledges to Beneficiary and those expressly stated in EXHIBIT B and those securing the Senior Note, and until the Indebtedness is fully paid and this Deed of"frust is released, Grantor shall not make any additional assignment or pledge thereof without Beneficiary's prior written consent. 6 • 01254475 • 2016007612 Page 7 of 27 B. Tax and Insurance Escrow. Upon written request by Beneficiary, Grantor • agrees to deposit with Beneficiary on a monthly basis, or at other intervals as specified, a sum that shall be sufficient to pay taxes, assessments, charges, and insurance premiums as they become due, all as reasonably estimated by Beneficiary, which sum shall be held by Beneficiary (or by a banking institution selected by Beneficiary whose funds are insured by a federal agency or instrumentality)in trust to pay taxes, assessments, charges and premiums,but which shall not • hear interest and may be commingled with other funds.Hat any time the funds so held by(or on behalf of) Beneficiary are insufficient to pay any tax, assessment, charge or insurance premium, Grantor shall, upon receipt of notice, deposit with Beneficiary (or such banking institution), all additional funds as are necessary to remove the deficiency. If the Indebtedness is for any reason declared immediately due and payable, funds held by(or on behalf of)Beneficiary for payment of taxes, assessments, charges or premiums as herein provided may, at Beneficiary's election,be applied on the Indebtedness in any manner as Beneficiary so elects. In the event that Grantor is escrowing with a Senior Lender (as defined below) a sum for payment of taxes, assessments, charges and insurance premiums and such amount is sufficient to fully discharge such taxes, assessments, charges and insurance premiums, Beneficiary agrees not to require an additional escrow deposit under this paragraph. In the event that Beneficiary does not require the escrow deposits described in the paragraph, Grantor shall provide Beneficiary with written evidence that (i) all applicable taxes and assessments have been paid at least thirty(30)days prior to delinquency and (ii) all insurance premiums have been paid thirty (30) days before the renewal date of the applicable policies. Grantor shall duly pay and,discharge, or cause to be paid and discharged, all taxes, assessments, charges, and insurance premiums as they become due. C. Insurance. Grantor shall,prior to or concurrently with the execution of this Deed of Trust, deliver to Beneficiary all of the following insurance policies together with evidence of such other insurance coverage, accompanied by paid premium receipts evidencing payment in full of the required premiums for at least the first full year of coverage: (i) fire insurance with extended coverage and standard Beneficiary and replacement cost endorsement for the full insurable value of the insurable portion of the Property, but in no event for an amount less than the •• amount of the Note (90% shall be acceptable co-insurance rates for fire • insurance);and (ii) public liability insurance in the amount of$1,000,000.00 per occurrence and $2,000,000.00 in the aggregate for a twelve (12) month policy period. Each renewal policy shall be delivered to Beneficiary not less than thirty (30) days before the termination of the prior policy and with each policy there shall be delivered to Beneficiary a receipt showing payment of the premium therefor. Upon request,Grantor shall also carry additional insurance or additional reasonable amounts of insurance covering Grantor or the Property as Beneficiary shall reasonably require, insuring against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in the region where the Property is located. 7 #1254476 2016007612 Page 8 of 27 If thc Property or any part thereof has been or at any time during the term of this Deed of • Trust or any extension or renewal thereof is designated as a flood-prone or flood-risk area pursuant to the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each have been or may be amended, or any successor law, Grantor shall obtain flood insurance in such total amounts as Beneficiary may from time to time require and shall otherwise j. comply with the requirements of the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, or any successor law. All insurance required under this Deed of Trust shall be fully paid for, non-assessable, and such policies shall contain such provisions,endorsements,and expiration dates as Beneficiary shall reasonably require. Such policies shall be issued by insurance companies authorized and licensed to transact business in the State of Texas with ratings acceptable to Beneficiary in its sole and absolute discretion and shall name Beneficiary as an additional insured. D. Operations. Grantor will abstain from and not permit the commission of waste in or about the Property, will maintain the Property in good operating condition and repair at all times, ordinary wear and tear excepted, will not remove or demolish the buildings or other improvements now or hereafter constituting a partt of the Property, or alter the design or structural character of any buildings or improvements unless Beneficiary shall first consent thereto in writing, which consent shall be granted or denied in Beneficiary's reasonable • discretion, and will comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the Property or the use thereof, which consent shall not be unreasonably withheld, delayed or conditioned. Grantor will not seek or acquiesce in a zoning reclassification of all or any portion of the Property or grant or consent to any easement, dedication,plat, or restriction (or allow any casement to become enforceable by prescription), or f, any amendment or modification thereof, covering all or any portion of the Property, without Beneficiary's prior written consent. Grantor will not, without the prior written consent of Beneficiary, permit any drilling or exploration for or extraction, removal, or production of, any Minerals from the surface or subsurface of the Land regardless of the depth thereof or the method of mining or extraction thereof E. Obligations Under Other Loan Documents. Grantor hereby agrees to comply with and perform all of its obligations under the other Loan Documents and agrees to be bound by the representations, warranties and covenants made by Grantor contained in the Loan Documents. All of representations, warranties and covenants contained in the other Loan Documents are hereby fully incorporated herein. is F. Casualty and Condemnation Proceeds. Subject to the terms of the Loan Agreement and the Intercreditur Agreement (as defined below), in the event of any fire or other F: casualty to the Property or eminent domain proceedings resulting in condemnation of the Property t. or any part thereof, Grantor shall have the right to rebuild the Property, and to use all available insurance or condemnation proceeds therefor,provided that(a) such proceeds are sufficient to keep the Indebtedness in balance and rebuild the Project in a manner that provides adequate security to Beneficiary for repayment of the Indebtedness or if such proceeds are insufficient then Grantor 8 #1254476 2016007612 Page 9 of 27 shall have funded any deficiency, (b) Beneficiary shall have the right to approve plans and specifications for any major rebuilding and the right to approve disbursements of insurance or condemnation proceeds for rebuilding under a construction escrow or similar arrangement, which approval Beneficiary shall not withhold if the senior lender approves the same,and(c)no Default then • exists under the Loan Documents.If the casualty or condemnation affects only part of the Property and total rebuilding is infeasible,then proceeds may be used for partial rebuilding and partial repayment of the Indebtedness in a manner that provides adequate security to Beneficiary for repayment of the remaining balance of the Indebtedness. Ca,, Failure to Pay. All taxes and any assessments that are due and payable affecting the Property shall be paid and discharged in full prior to execution and delivery of this Deed of Trust, or as they subsequently become due and payable and prior to delinquency. If Grantor fails to pay any tax,assessment, charge or insurance premium called for herein, Beneficiary may, at its option, pay the same, or if Grantor fails to perform any of Grantor's covenants or agreements herein, Beneficiary may, at its option, correct or cause to be corrected the same and pay any sums in connection therewith as Beneficiary shall determine to be necessary or advisable, and all • taxes, assessments, charges, insurance premiums and sums paid by Beneficiary in connection with such matters (collectively, whether one or more, an "Assessment") shall be immediately repayable by Grantor to Beneficiary, together with interest on each amount at the default rate provided in the Note from the date the sum is paid by Beneficiary, until the same is refunded to Beneficiary and all such amounts and interest thereon,shall be secured hereby.Notwithstanding the ;. foregoing, Grantor shall have the right to object and protest to ad valorem taxes on the Property in good faith and with due diligence provided that (i) no Default exists under this Deed of Trust or any of the other Loan Documents, (ii) Grantor gives Beneficiary prior written notice of its intent to contest an Assessment; (iii) Grantor demonstrates to Beneficiary's reasonable satisfaction that(A)the Property will not be sold to satisfy the Assessment prior to the final determination of the legal proceedings, (B) Grantor has taken such actions as are required or permitted to accomplish a stay of any such sale, and (C) Grantor has either (1)furnished a bond or surety (satisfactory to Beneficiary in form and amount) sufficient to prevent a sale of the Property or (2) at Beneficiary's option, deposited one hundred fifty percent (150%) of the full amount necessary to pay any unpaid portion of any Assessment with Beneficiary; and (iv) such proceeding shall be permitted under any other instrument to which Grantor or the Property is • subject(whether superior or inferior to this Instrument). H. Title Litigation. Subject to title insurance coverage, in case of any litigation involving the title to any part of the Property, or the validity of this Deed of Trust,Beneficiary may be represented in the litigation through attorneys of its own selection and Grantor shall, upon demand, promptly reimburse Beneficiary for all court costs and reasonable attorneys' fees incurred by Beneficiary in defending and/or protecting its rights in any litigation L Default. Subject to applicable notice provisions, if a Default (as defined in the Loan Agreement) occurs, the whole of the Indebtedness, at the option of Beneficiary, shall become immediately due and payable,without further notice or demand. ). Tenancy at Sufferance. Following any sale of the Property,or any part thereof,under the provisions of this Deed of Trust, and to the extent permissible under applicable law, all 9 #1254476 2016007612 Page 10 of 27 persons and parties in possession of the Property sold shall be obligated to immediately vacate the premises and prior to such vacation shall be tenants at sufferance of the purchaser of the Property sold and shall be subject to eviction in an action of forcible detainer; provided, the provisions of this Subparagraph J shall be subject to any agreements made in writing by Beneficiary with reference to any existing and/or future leases; provided, further, the purchaser at any foreclosure sale shall have the option to affirm any then existing leases or tenancies or otherwise to succeed to the rights of Grantor thereunder. K. Subrogation. To the extent that any of the Indebtedness represents funds utilized • to satisfy any outstanding Indebtedness or obligations secured by liens, rights, or claims against the Property or any part thereof, Beneficiary shall be subrogated to any and all liens,rights, superior titles and equities owned or claimed by the holder of any outstanding indebtedness or obligation so satisfied, however remote, regardless of whether the liens, rights, superior titles and equities are assigned to Beneficiary or released by the holder(s)thereof Homestead Disclaimer. Grantor represents and covenants that the Property forms no part of any property owned, used, or claimed by Grantor as a business or residential homestead, or as exempt from forced sale under the laws of the State of Texas and disclaims and renounces all and every such claim thereto. M. Additional Transfers and Encumbrances. Beneficiary shall have the right to declare the Indebtedness secured hereby immediately due and payable in the event the Grantor sells, transfers, assigns, or conveys its interest, whether voluntarily or involuntarily, in the Property, or any part thereof, without the prior written consent of Beneficiary, such request not to be unreasonably withheld, delayed or conditioned or in the event any junior or subordinate mortgage, lien, deed of trust, or other encumbrance is placed upon the Property without the prior written consent of Beneficiary,provided the foregoing shall not prohibit the removal of worn or obsolete Personalty • that is replaced with new items of the same or similar quality. If Beneficiary consents to the sale, transfer, assignment, or conveyance of Grantor's interest in the Property, or any part thereof, and waives in writing its right to accelerate the Indebtedness secured hereby as provided in this Subparagraph M, Beneficiary may require that the transferee assume all the obligations of Grantor under this Deed of Trust, the Loan Agreement and the Note in a form reasonably acceptable to Beneficiary and its legal counsel. For purposes of this Subparagraph M, "transfer" of the Property shall not include the transfer of any direct or indirect ownership interests in Grantor and such transfers shall not require the consent of Beneficiary hereunder. NI. No Reliance on Beneficiary. Grantor is experienced in the ownership and • operation of properties similar to the Property, and Beneficiary is relying solely upon Grantor's expertise and business plan in connection with the construction of the Improvements and ownership and operation of the Property. Grantor is not relying on Beneficiary's expertise or ;! business acumen in connection with the Property or in connection with the construction of the Improvements. • • o. No Litigation. Except as disclosed in writing to Beneficiary, there arc no (i) actions, suits,_or proceedings, at law or in equity, before any Governmental Authority or arbitrator pending or threatened against or affecting Grantor, any guarantor, or involving the Property, (ii) 10 • #1254476 2016007612 Page 11 of 27 outstanding or unpaid judgments against the Grantor or the Property,or(iii) defaults by Grantor with respect to any order, writ, injunction, decree, or demand of any Governmental Authority or arbitrator. P. Payment for Labor and Materials. Grantor will promptly pay all bills for labor, materials,and specifically fabricated materials incurred in connection with the Property(which shall be deemed an Assessment on the Property) and never pemiit to exist in respect of the Property or any part thereof any unbonded lien or security interest, even though inferior to the liens and security interests hereof,for any such bill, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest on a parity with, superior, or inferior to any of the liens or security interests hereof, except for the • Permitted Encumbrances and the liens securing the Senior Note. In the event that Grantor becomes aware that such lien has been recorded against the Property, Grantor shall have such lien released within thirty (30) days. If Grantor fails to pay any bills for labor, materials, and specifically fabricated materials incurred in connection with the Property, Beneficiary shall have the rights set forth in Section V.G for Grantor's failure to pay any Assessment_ Q� Fax on Deed of Trust.At any time any law shall be enacted imposing or authorizing f the imposition of any tax upon this Deed of Trust, or upon any rights, titles, liens, or security i< interests created hereby, or upon the Indebtedness or any part thereof, Grantor will immediately • pay all such taxes, provided that if such law as enacted makes it unlawful for Grantor to pay such tax, Grantor shall not pay nor be obligated to pay such tax. Nevertheless, if a law is enacted making it unlawful for Grantor to pay such taxes, then Grantor must prepay the Indebtedness in full within sixty(60)days after demand therefor by Beneficiary. R ERISA. If and to the extent that Grantor is obligated under any plan governed by or subject to the Employee Retirement Income Security Act, as amended ("ERISA"), Grantor shall fully discharge and satisfy all of its obligations and funding requirements under such plan, ERISA and the Internal Revenue Code, as amended ("IRC"). Furthermore, Grantor shall comply in all material respects with any and all applicable provisions of ERISA and the IRC and will not incur or permit to exist any unfunded liabilities to the Pension Benefit Guaranty Corporation or to such plan under ERISA or the IRC. S. Disclosures. If at any time Grantor shall become aware of the existence or occurrence of any financial or economic conditions or natural disasters which are likely to have a material adverse affect on the Property or Grantor's financial condition, Grantor shall promptly notify Beneficiary of the existence or occurrence thereof and of Grantor's opinion as to what effect such may have on the Property or Grantor. Grantor shall also give prompt notice to Beneficiary of(i) the serious illness or death of any principal or key employee of Grantor, (ii) any litigation or dispute,threatened or pending against or affecting Grantor, the Property or any guarantor which could have a material adverse effect on the Property or the financial condition or business of any of the aforementioned parties, (iii) any Default, (iv) any default by Grantor or any acceleration of any indebtedness owed by Grantor under any contract to which Grantor is a party, and(v)any change in the character of Grantor's business as it existed on the date hereof 11 #1254476 2016007612 Page 12 of 27 VI. CAPTIONS The captions contained in this Deed of Trust are for convenience only and shall not be taken into account in determining the meaning of any provision of this Deed of Trust. VII. ASSIGNMENT OF LEASES iI As further security for the payment of the Indebtedness, and subject to the rights of senior lienholders, Grantor hereby assigns to Beneficiary, its successors and assigns, all leases, whether now in existence or hereafter created, covering all or any portion of the Property together with all rents to become due under each such lease, subject, however, to any prior assignment in connection with senior indebtedness. For so long as no Default exists,Grantor may collect the rents, but not more than one (1)month in advance, in the ordinary course of business, unless otherwise provided by the express terms of the leases and approved by Beneficiary. In the event of any Default and at any and all times during the continuance thereof, in addition to all other rights and remedies of Beneficiary, Beneficiary shall have the exclusive right and power (but not the obligation)to enter upon and take possession of the Property or any part thereof,to rent or re-rent • the same, either in the name of Beneficiary or Grantor, to receive all rents, revenues, profits, or other income from the Property and to apply all amounts received first, to the costs and expenses incurred by Beneficiary in protecting and operating the Property and next,to the payment of the Indebtedness in any manner and in any order of priority as Beneficiary shall determine. This • action by Beneficiary shall not operate as a waiver of the Default, or as an affirmance of any lease or of the rights of any tenant of title to that part of the Property covered by the lease or held by the tenant, should the Property, or any part thereof, be acquired by Beneficiary or other purchaser at a foreclosure sale. The right of Beneficiary to receive all rents, revenues,profits, or other income from the Property during the continuance of any Default shall be applicable whether Beneficiary has entered upon or taken possession of the Property, or has otherwise attempted to exercise its rights hereunder and if any rents, revenues, profits, or other income are paid to or received by Grantor, Grantor shall immediately pay the same to Beneficiary, without the necessity of any request or demand therefor. Grantor agrees at any time and from time to time until the Indebtedness is paid in full to execute and to deliver any additional assignments of leases and/or rents, security agreements and other instruments as Beneficiary shall from time to time reasonably require. The substance,form, execution and delivery of additional assignments of leases and/or rents, security agreements and other instruments shall be reasonably satisfactory to Beneficiary. VIII. PERSONALTY This Deed of Trust covers and includes, without limitation, Grantor's interest in the Personalty hereinabove described. 12 #1254476 2016007612 Page 13 of 27 LX. USE OF PERSONALTY Grantor represents that all Personalty is property for business use and is not consumer goods. Grantor further covenants that there are and shall be no conditional sales contracts that cover any of the Personalty. X. • SECURITY INTEREST IN PERSONALTY Without limiting any of the provisions of this instrument, Grantor, as referred to in this paragraph as "Debtor," expressly does the following: A. Grant. Debtor hereby grants unto the holder of all Indebtedness, described herein as Secured Party, and referred to in this paragraph as "Secured Party", a security interest in Debtor's interest in the Personalty. B. UCC Remedies. Debtor agrees, in addition to any other remedies granted in this instrument to Secured Party or the Trustee,that Secured Party may,during the existence of any Default, proceed under Chapter 9 of the Texas Uniform Commercial Code(the"UCC")as to all or any part of the Personalty and shall have and may exercise with respect to the Personalty all the rights,remedies and powers of a Secured Party under the UCC,including,without limitation, the right and power to sell at public or private sale or sales,or otherwise to dispose of,to lease,or to utilize the Personalty and any part or parts thereof, in any manner authorized or permitted under the UCC after default by a debtor and to apply the proceeds thereof toward payment of any costs, expenses and attorneys'fees • and legal expenses thereby incurred by Secured Party and toward the payment of Debtor's obligations, including the Note and all other Indebtedness described in this instrument in any order or manner as Secured Party may elect Among the rights of Secured Party during the existence of a Default,and without limitation,Secured Party shall have the right to take possession of the Personalty and to enter upon any premises where same may be situated for this purpose without being deemed guilty of trespass and without liability for damages thereby occasioned and to take any action deemed necessary or appropriate or desirable by Secured Party, at its option and in its discretion, to repair, refurbish or otherwise prepare the Personalty for sale, lease, or other use or disposition as herein authorized.Debtor agrees that if any notice of sale required under the UCC is mailed,postage prepaid, to Debtor at the address shown herein at least ten(10) days before the time of the sale or disposition, the notice shall be deemed reasonable and shall fully satisfy any requirement for giving of the notice. To the extent it may lawfully do so and without limiting iting any rights and/or privileges herein granted to Secured Party, Debtor agrees that Secured Party and/or the above Trustee and any Substitute Trustee, may dispose of any or all of the Personalty at the same time and place and after giving the same notice provided for in this Deed of Trust in connection with a nonjudicial foreclosure sale under the terms and conditions set forth in this Deed of Trust. In this connection, Debtor agrees that the sale may be conducted by the Trustee or the Substitute Trustee; that the sale of the Land and Improvements described in this Deed of Trust and the Personalty or any part thereof,may be sold separately and/or together; and that if the Land and Improvements described herein and the Personalty or any part thereof, are sold together, the Secured Party will not be obligated to allocate the consideration received as between the Land and Improvements and the Personalty. 13 #1254476 2016007612 Page 14 of 27 c. Possession. Debtor hereby grants to Secured Party the right, at its option upon a Default to transfer at any time to itself or to its nominee the Personalty, or any part thereof and to receive the monies,income,proceeds or benefits attributable or accruing thereto and to hold the same as security for Debtor's obligations or to apply it on the principal and interest or other amounts owing on any of Debtor's obligations,whether or not then due,in any order or mariner as Secured Party may elect.All rights with respect to marshalling of assets of Debtor, including with respect to the Personalty, or to a sale in inverse order of alienation,are hereby waived. D. Authority. Debtor hereby covenants, stipulates and agrees that all recitals in any instrument of assigmnent or any other instrument executed by Secured Party incident to the sale, transfer, assignment, lease or other disposition or utilization of the Personalty or any part thereof hereunder shall be prima facie evidence of the matters stated therein and all prerequisites of the sale or other action taken by Secured Party or of any fact, condition or thing incident thereto shall be rebuttably presumed to have been performed or to have occurred. E. Assembly and Expenses. Debtor hereby covenants and agrees that Secured Party upon a Default may require Debtor to assemble the Personalty and to make it available to Secured Party at a place to be designated by Secured Party that is reasonably convenient to both parties. All expenses of retaking, holding,preparing for sale,lease, or other use or disposition, selling,leasing or otherwise using or disposing of the Personalty and the like that are incurred or paid by Secured Party as authorized or_permitted hereunder,including also all attorneys'fees,legal expenses and costs, shall be added to the Indebtedness and Debtor shall be liable therefor. F. Financing Statement. A carbon,photographic, or other reproduction of this Deed of Trust may be filed as a Financing Statement under the UCC between Debtor and Secured Party whose addresses are set forth below. Except for the security interest granted hereby in the Personalty or otherwise expressly stated in EXHIBIT B hereto, Debtor is owner and holder of the Personalty free of any adverse claim, security interest or encumbrance, and Debtor will defend the Personalty against all claims and demands of any person at any time claiming the same or any interest therein. Debtor has not heretofore signed any financing statement and no financing statement signed by Debtor is now on file in any public office except those statements,true and correct copies of which have been delivered to the Secured Party or in connection with the Senior Note (as E' defined below). So long as any amount remains unpaid on any Indebtedness described in this Deed of Trust, Debtor will not execute and there will not be filed in any public office any financing statement or statements affecting the Personalty other than financing statements in favor of the Senior Lender or Secured Party hereunder, unless the prior written specific consent and approval of Secured Party shall have first been obtained. Debtor authorizes Secured Party to file, in jurisdiction where this authorization will be given effect, a financing statement signed only by Secured Party covering the Personalty and at the request of Secured Party, Debtor will join Secured Party in executing one or more financing statements,pursuant to the UCC in form satisfactory to Secured Party and will pay the cost of filing the same or filing or recording this instrument as a financing statement, in all public offices at any time and from time to time whenever filing or recording of any financing statement or of this instrument is deemed by Secured Party to be necessary or desirable. 14 #1254476 2016007612 Page 15 of 27 • XI. ADDRESSES The addresses of Grantor and Beneficiary,are as follows: Grantor: Seahawk Land ng,LLC 3735 Honeywood Court Port Arthur,Texas 77642 Attention:Christopher A.Akbari With a Copy to: Coats Rose 9 Greenway Plaza,Suite 1100 Houston,Texas 77046 Attention:Barry J.Palmer Beneficiary: City of Port Arthur Section 4A Economic Development Corporation 501 Procter Port Arthur,Texas 77640 Floyd Batiste,Executive Director . Trustee: Guy N. Goodson,Trustee Germer PLLC 550 Fannin, Suite 400 Beaumont,Texas 77701 Each party shall have the right to designate from time to time another address within the continental United States for purposes of this Deed of Trust by written notice to the other party. • • Notwithstanding the foregoing agreement to provide courtesy copies, such copies shall be a courtesy only and failure to provide such copies shall have no effect on the validity of a notice properly given to Grantor. Notices under this Deed of Trust shall be effective in the case of utilization of the U.S.Mail Service, upon the earlier of (i) three days after deposit of such notice in the mail, return receipt requested or(ii) delivery. Notices sent by overnight courier services shall be effective one day after deposit with such service. All other notices shall be effective upon delivery. Notwithstanding the foregoing,any foreclosure notices shall be effective upon deposit with the U.S.Mail Service. XII. BORROWER UNDERTAKINGS A. Compliance with Laws. Grantor hereby represents, warrants, covenants and agrees to and with Beneficiary that: CO Grantor will not and will not permit any tenant or occupant of the Property to, i. generate,store,handle or otherwise deal with hazardous or toxic substances in, on,about or under the Property;and 15 is #1254476 2016007612 Page 16 of 27 (ii) Grantor has not at any time engaged in or permitted, nor, to the best of Grantor's knowledge after reasonable and prudent inquiry, which has consisted of the Phase I report, has any current or former tenant, occupant or owner of the Property, or any portion thereof, engaged in or permitted any generation, storage, handling, dumping, discharge, disposal, spillage or leakage of any hazardous or toxic substances, at, on, or about the Property, or any portion thereof, except as disclosed on the Phase I report, deliverable to Beneficiary upon request. Notwithstanding the foregoing, Grantor shall be permitted to have such chemicals, materials and supplies on the Property which are normally used in connection with the prudent operation, use, • maintenance and ownership of a multi-unit student housing facility and which are used in compliance with environmental laws. • B. Indenmifica.tion. GRANTOR HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND (WITH COUNSEL REASONABLY APPROVED BY BENEFICIARY) AND TO HOLD BENEFICIARY, ITS AGENTS, MEMBERS, OFFICERS, REPRESENTATIVES AND ITS EMPLOYEES FREE AND HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS, ADMINISTRATIVE PROCEEDINGS, JUDGMENTS, DAMAGES, PUNITIVE DAMAGES, PENALTIES, FINES, COSTS, LIABILITIES (INCLUDING SUMS PAID IN SETTLEMENT OF CLAIMS), INTEREST OR LOSSES, INCLUDING REASONABLE ATTORNEYS', CONSULTANTS' AND EXPERTS' FEES AND EXPENSES,OF ANY KIND OR NATURE(COLLECTIVELY, THE• "COSTS")THAT • • ARISE DIRECTLY OR INDIRECTLY, FROM OR IN CONNECTION WITH THE • PRESENCE, SUSPECTED PRESENCE,RELEASE OR SUSPECTED RELEASE (A "RELEASE") OF ANY HAZARDOUS OR TOXIC SUBSTANCE, FROM, ON, ABOUT, UNDER OR WITHIN THE PROPERTY, OR ANY PORTION THEREOF WHICH OCCURS DURING OR PRIOR TO SUCH TIME AS GRANTOR OWNS THE PROPERTY. NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, GRANTOR'S LIABILITY HEREUNDER, SUBJECT TO THE DE MINIMIS PROVISIONS OF ARTICLE XII(A)(ii) ABOVE, SHALL NOT INCLUDE ANY LOSS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BENEFICIARY OR ANY EMPLOYEE, AGENT OR REPRESENTATIVE OF BENEFICIARY OR RELEASE OF HAZARDOUS OR TOXIC SUBSTANCES BY BENEFICIARY OR ANY EMPLOYEE, AGENT OR REPRESENTATIVE OF BENEFICIARY AFTER BENEFICIARY HAS TAKEN POSSESSION OF 1'JiE PROPERTY. C. Remediation. If any investigation or monitoring of site conditions, or any cleanup, containment,restoration,removal or other remedial work(collectively,the "remedial work") is required under any applicable federal, state or local law or regulation, by any judicial order, or by any governmental entity,or in order to comply with any agreements affecting the Property because of, or in connection with any release of hazardous or toxic substances, Grantor shall perform, or cause to be performed; the remedial work in compliance with such law, regulation, order or agreement. All 16 #1254476 2016007612 Page 17 of 27 remedial work shall be performed by one or more contractors selected by Grantor and approved in advance, in writing, by Beneficiary and under the supervision of a consulting engineer selected by Grantor and approved in advance, in writing, by Beneficiary. All costs of any remedial work shall be paid by Grantor,including,without limitation,the reasonable charges of contractors)and/or the consulting engineer and Beneficiary's reasonable attorneys' fees and costs incurred in connection with the • monitoring or review of any remedial work. If Grantor shall fail to timely commence or cause to be timely commenced, or fail to diligently prosecute to completion, any remedial work, then Beneficiary may,but shall not be required to, cause such remedial work to be performed and all costs and expenses thereof or incurred in connection therewith, shall be "Costs" within the meaning of Subparagraph B above. All costs shall be due and payable upon demand therefor by Beneficiary,together with interest thereon at the Default Rate provided in the Note from the date such costs are paid by Beneficiary,until the same are refunded to Beneficiary and all such costs and the interest thereon shall be secured hereby. D. Survival.Notwithstanding anything to the contrary contained herein, or in the Note or Loan Agreement,the obligations of Grantor under this Paragraph XII shall survive any assumption of the Indebtedness by a successor to Grantor (whether or not the assumption has been approved or disapproved, or whether or not Grantor was released from liability on the Indebtedness),foreclosure of this Deed of Trust(or transfer of the Property in lieu of foreclosure) and release or termination of this Deed of Trust. `(( XIII. MISCELLANEOUS A. No Waiver. No delay by Beneficiary in exercising any right, option or remedy hereunder, or otherwise afforded by law,shall operate as a waiver thereof or preclude the exercise thereof during the continuance of any Default. B. Cumulative Remedy.All rights and remedies of Beneficiary under this Deed of Trust and any and all other instruments evidencing or securing the Indebtedness, are cumulative and • concurrent and may be exercised singularly,successively,or concurrently. c. No Release_The granting to Grantor or to any other person or party of any extension(s) of time for payment of all or any part of the Indebtedness or the performance of any covenant or agreement contained herein,or the taking of other or additional security for the payment of the whole or any part of the Indebtedness, or the releasing of any part of the security at any time held in connection with the Indebtedness, shall not in any way release Grantor or any other person or party obligated for the payment of the Indebtedness, or release or impair this Deed of Trust or any other security held in connection with the Indebtedness,except to the extent of the person,party or property expressly released in writing by Beneficiary. p Severability. If any provision in this Deed of Trust is invalid or unenforceable in whole or in part,this instrument shall in all other respects remain in full force and effect. 17 #1254476 2016007612 Page 18 of 27 E. Successors and Assigns.All of the provisions hereof shall apply to and be binding upon Grantor and the successors and assigns of Grantor(provided the foregoing shall not be construed as consent to any transfer by Grantor of the Property). F. Further Assurances and Corrections. From time to time, at the request of Beneficiary, Grantor will(i)promptly correct any defect,error,or omission which may be discovered in the contents of this Deed of Trust or in any other Loan Document or in the execution or • acknowledgment thereof; (ii)execute,acknowledge,deliver,record and/or file such further instruments (including, without limitation, further deeds of trust, security agreements, financing statements, • • continuation statements and assignments of rents or leases) and perform such further acts and provide such further assurances as may be necessary,desirable,or proper,in Beneficiary's reasonable opinion, to carry out more effectively the purposes of this Deed of Trust and the Loan Documents and to subject to the liens and security interests hereof and thereof any property intended by the terms hereof or thereof to be covered hereby or thereby, including without limitation, any renewals, additions, substitutions, replacements, or appurtenances to the Property; (iii) execute, acknowledge, deliver, procure, file, and/or record any document or instrument (including without limitation, any financing statement) deemed advisable by Beneficiary to protect the liens and the security interests herein granted against the rights or interests of third persons; and (iv) pay all costs connected with any of the foregoing. • G. Choice of Law. This Deed of Trust shall be performable and enforced in Jefferson • County, Texas,and shall be construed in accordance with the laws of the State of Texas from time to time in effect except to the extent preempted by the United States federal law. Venue shall be appropriate in Jefferson County,as applicable. H. Usury. In no event shall any provision of this Deed of Trust, the Note, the Loan Agreement or any other instrument evidencing or securing the Indebtedness ever obligate Grantor to pay interest on the Note secured hereby at a rate greater than that permitted by law,or obligate Grantor to pay any taxes, assessments, charges, insurance premiums, or other amounts to the extent that the • payments constitute interest under applicable law and when added to the interest payable on the Note secured hereby,would be held to constitute the payment by Grantor of interest at a rate greater than that permitted by law;and this provision shall control over any provision to the contrary. It is expressly stipulated and agreed to be the intent of Grantor and Beneficiary at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the Note or the Indebtedness or applicable United States federal law to the extent that it permits Beneficiary to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law("Highest Lawful Rate"). If the applicable law is ever judicially interpreted so as to render usurious any amount (i) contracted for, charged, taken, reserved or received pursuant to the Note, any of the other Loan Documents or any other communication or writing by or between Grantor and Beneficiary related to the transaction or transactions that are the subject matter of the Loan Documents,(ii)contracted for, charged or received by reason of Beneficiary's exercise of the option • to accelerate the maturity of the Note and/or the Indebtedness, or (iii) Grantor will have paid or Beneficiary will have received by reason of any voluntary prepayment by Grantor of the Note and/or the Indebtedness, then it is Grantor's and Beneficiary's express intent that all amounts charged in • excess of the Highest Lawful Rate shall be automatically cancelled, ab initio, and all amounts in • 18 #1254476 2016007612 Page 19 of 27 excess of the Highest Lawful Rate theretofore collected by Beneficiary shall be credited on the • principal balance of the Note and/or the Indebtedness(or, if the Note and all Indebtedness have been or would thereby be paid in full, refunded to Grantor), and the provisions of the Note and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced,without the necessity of the execution of any new document,so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. Grantor hereby agrees that as a condition precedent to any claim seeking usury penalties against Beneficiary,Grantor will provide written notice to Beneficiary,advising Beneficiary in reasonable detail of the nature and amount of the violation,and Beneficiary shall have sixty(60)days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Grantor, or crediting such excess interest against the Note and/or the Indebtedness then owing by Grantor to Beneficiary. All sums contracted for, charged or received by Beneficiary for the use, forbearance or detention of any debt evidenced by the Note and/or the Indebtedness shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of the Note and/or the Indebtedness (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Note and/or the Indebtedness does not exceed the Highest.Lawful Rate from time to time in effectand applicable to the Note and/or the Indebtedness for so long as debt is outstanding.In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving triparty accounts) apply to the Note and/or the Indebtedness. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents,it is not the intention of Beneficiary to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. 1. Covenants Run with the Land. All Obligations contained in this Deed of Trust and the other Loan Documents are intended by Grantor, Beneficiary and Trustee to be, and shall be •• construed as, covenants running with the Property until the lien of this Deed of Trust has been fully released by Beneficiary. J. JURY WAIVER GRANTOR AND BENEFICIARY ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSUL1) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,AND FOR THEIR MUTUAL BENEFIT,WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE, THE INDEBTEDNESS OR THIS DEED OF TRUST K. Entire Agreement. THIS DEED OF TRUST, TOGETHER WITH THE NOTE AND LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS, AND THE RESTRICTIVE COVENANTS CONSTITUTE A WRITTEN LOAN AGREEMENT AS DEFINED IN SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE. THIS WRITTEN LOAN AGREEMENT CONSTITUTES TILE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE 19 #1254476 2016007612 Page 20 of 27 PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE I. PARTIES. i. L. Subordination. It is the intent of Beneficiary and Grantor that the indebtedness evidenced by the Note shall be subordinate in right of payment to the prior payment in full of the • following indebtedness: (i) Promissory Note in the maximum principal amount of up to FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) to be issued by Grantor and payable to CommunityBank of Texas,N.A. ("Issuer" ), or order,to the extent and in the manner provided in a certain Intercreditor Agreement to be entered into between Beneficiary, Grantor, the Port Arthur Economic Development Corporation (the "EDC"),rp and Senior Lender consisting of Issuer, and CommunityBank of Texas, N.A., a national banking association collectively referred to as "Senior f Lender" (the "Intercreditor Agreement"); and (ii) $1,000,000.00 to be issued by Grantor and payable to the EDC or order, to the extent and in the "Senior Note." This Deed of Trust and all of the other Loan Documents are and shall be subject and subordinate in all respects to the liens,terms, covenants and conditions of the deeds of trust securing the Senior Note as more fully set forth in the Intercreditor Agreement. The rights and remedies of the Beneficiary and each subsequent holder of this Note and the Deed of Trust are subject to the restrictions and limitations set forth in the Intercreditor Agreement. Each subsequent holder of this Note shall he deemed, by virtue of such holder's acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by Beneficiary under the Intercreditor Agreement. [Signatures on following page] • is 20 41254474 A 2016007612 Page 21 of 27 Signature Page • Subordinate Leasehold Estate Deed of Trust,Security Agreement and Financing Statement IN WITNESS WHEREOF, Grantor has executed this Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement on the date set forth in the acknowledgments below but to be effective as of/4a r c '7 , 2016. GRANTOR: i SEAHAWK LANDING,LLC a Texas limited liability company • By: ITEX Advisors,LLC, a Texas limited • company,its Sole Manager By: _ Christop er A. Akbari, President. ATTACHMENTS: EXHIBIT "A" Land EXHIBIT "B" Permitted Encumbrances STATE OF TEXAS�, rte- COUNTY OF 4.1ARIZIS This instrument was acknowledged before me on r<ikc�rclr� j , 2016, by Christopher A. Akbari, the President of 1TEX Advisors, LLC, a Texas limited liability company the sole manager of SEAHAWK LANDING, LLC, a Texas limited liability company on behalf of said limited liability company. NOTARY PULtI.S1C,State of Texas trALY mixt i, � gi{ :r1 t�0 315x1.9 ai:i; E Pres May 18 2Q1 t PRINTED NAME OF NOTARY My COMMISSION EXPIRES: • 21 2016007612 Page 22 of 27 Exhibit "A" LEGAL DESCRIPTION Being 2.204(called 2.203)acres of land,known as LAMAR PORT ARTHUR DORMS,PHASE 1,out of Lakeshore Park to the City of Port Arthur,Jefferson County,Texas,as the same appears upon the map or plat thereof,on file and of record under County Clerks File No.2015041258 Official Public Records of Jefferson County,Texas. 2016007612 Page 23 of 27 TAX CERTIFICATE v IIIII I � II MoPG 2015041258 • S ALLISON NATHAN GETZ,Y.C.C. JEFFERSON COUNTY TAX ASSESSOR-COLLECTOR P.O.BOX 2112,BEAUMONT,TX 77704 EMAIL:PROPERTY()CO.JEFFERSON,TX,US Issued To: Legal Description SOUTEX SURVEYORS,INC OUT OF LAKESHORE PARK LT E BLK 154 TR 2 3737 DOCTORS DRIVE CITY OF PORT ARTHUR 2.200 PORT ARTHUR, TX 77642 Fiduciary Number: 7034 Parcel Address: <- -- Legal Acres: 2.2006 > I Account Number: 053400-000/174540-00000 Print Date: 11/20/2015 Paid Date: Certificate No; 229796418 Issue Date: 11/20/2015 Certificate Fee: $10.00 Operator ID: CINDYY Parent No. 891864 • TAX CERTIFICATES ARE ISSUED WITH THE MOST CURRENT INFORMATION AVAILABLE.ALL ACCOUNTS ARE SUBJECT TO CHANGE PER SECTION 26.15 OF THE TEXAS PROPERTY TAX CODE.THIS IS TO CERTIFY THAT ALL TAXES DUE ON THE ABOVE DESCRIBED PROPERTY HAVE BEEN EXAMINED,UP TO AND INCLUDING THE YEAR 2015.ALL TAXES ARE PAID IN FULL Exemptions: Certified Owner: PRO SCHOOLS LAMAR STATE COLLEGE PORT ARTHUR PO BOX 310 PORT ARTHUR , TX 776410310 • Certified Tax Unit(s): 2015 Value: 8,370 1 JEFFERSON COUNTY 2015 Levy: $0.00 9 PORT ARTHUR ISD 3S CITY OF PORT ARTHUR 2015 Levy Balance: $0.00 43 PORT OF PORT ARTHUR Prior Year Levy Balance: 50.00 51 DRAINAGE DISTRICT#7 55 SABINE•NECHES NAV.DIST. Tot al Levy Due: $0.00 P&1 4-Attorney Fee: 50.00 Re-NAO. Total Amount Due: $0.00 CITY OF PORT ARTHUR 444 4TR STREET PORT ARTHUR TX 71640 FILED AND RECORDED Reference(GF)No: N/A OFFICIAL PUBLIC RECORDS Issued By: � . ALLISOIN NATHAN bliETZ.P.C.C. JEFFERSON COUNTY TAX ASSESSOR-COLLECTOR (409)835-8516,WEBSITE:WWW.JEFFCOTAX.COM Carolyn L. Guidry, County Clerk Jefferson County, Texas December 22, 2015 04:21:58 P11 FEE: $46.00 2015041258 53.1.80 r ' ti 1 • _ 2016007612 Page 24 of 27 !, $ 9 G, , .r 1 I c Cn i 4 ' c, a1P„ 911 ® 6r °agQ,z I �" s wv� •� €� Ti s 7.. • 2 c'� 14- 1iL L7m< 1 ° F I ` f y^Q9 I #? 2016007612 Page 25 of 27 EXHIBIT B PERMITTED ENCUMBRANCES [ATTACH] 2016007612 Page 26 of 27 Permitted Encumbrances A. Leasehold Deed of Trust, Assignment of Rents and Security Agreement and Fixture Filing dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Seahawk Landing, LLC, a Texas limited liability company, to Joe F. West, Trustee for the benefit of CommunityBank of Texas, N.A., given to secure the payment of one • certain promissory note for the sum of$4,000,000.00. B. Thirty (30) foot utility easement in favor of the City of Port Arthur as recorded under County Clerk's Film Code No. 100-76-0128 Real Property Records of Jefferson County,Texas. C. Easement in favor of Gulf States Utilities Company as recorded under County Clerk's Film Code No. 103-07-0624 Real Property Records of Jefferson County,Texas. D. Amended Information form filed by Jefferson County Drainage District No. 7, recorded under County Clerk's File No.2014023296,Official Public Records of Jefferson County,Texas. E. Terms and conditions of that certain Ground Lease for Seahawk Landing, LP between Lamar State College-Port Arthur and Seahawk Landing, LP, a Memorandum of Ground Lease recorded or to be recorded in the Official Public Records of Jefferson County,Texas. • F. UCC-1 Financing Statement from Seahawk Landing, LLC, Debtor, to CommunityBank of Texas, N.A., Secured Party, filed or to be filed in the Official Public Records, Jefferson !=' County,Texas. G. Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Scahawk Landing, LLC, a Texas limited liability company, to Donald R. Ball, Trustee on behalf of Nautical Affordable IIousing, Inc., a Texas non-profit corporation, given to secure the payment of one certain promissory note in the amount of $1,000,000.00. Interereditor and Subordination Agreement by and between Nautical Affordable Housing, Inc., CommunityBank of Texas, N.A. and Seahawk Landing, LLC dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas. Collateral Assignment of Note and Liens dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Nautical Affordable Housing, Inc_ to Guy N. Goodson, Trustee for the benefit of the City of Port Arthur Section 4A Economic Development Corporation. 2016007612 Page 27 of 27 H. UCC-1 Financing Statement from Seahawk Landing, LLC, Debtor, to Nautical Affordable Housing, Inc., Secured Party, filed or to be filed in the Official Public Records, Jefferson County,Texas. 1. Subordinate Leasehold Estate Deed of Trust, Security Agreement and Financing Statement dated March 7, 2016, filed or to be filed in the Official Public Records, Jefferson County, Texas, executed by Seahawk Landing, LLC, a Texas limited liability company, to Guy • N. Goodson, Trustee on behalf of City of Port Arthur Section 4A Economic Development Corporation, a Texas non-profit corporation, given to secure the payment of one certain promissory note in the amount of$1,000,000.00. Intercreditor and Subordination Agreement by and between City of Port Arthur Section 4A Economic Development Corporation, CommunityBank of Texas,N.A. and Seahawk Landing,LLC dated March 7,2016, filed or to be filed in the Official Public Records, Jefferson County,Texas. �. J. UCC-1 Financing Statement from Seahawk Landing,LLC,Debtor, to City of Port Arthur Section 4A Economic Development Corporation, Secured Party, filed or to be filed in the Official Public Records,Jefferson County,Texas. • is