20-73420-734
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF DENTON APPROVING A CONSENT TO
COLLATERAL ASSIGNMENT OF AN AIRPORT LEASE BETWEEN 3KAM REAL
ESTATE, LLC, COVERING PROPERTY AT 4858 LOCKHEED LANE, AND ACCESSBANK
TEXAS; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, 3KAM Real Estate, LLC (“3KAM”) leased property from the City of
Denton, a Texas home-rule municipal corporation (the “City”) at the Denton Enterprise Airport,
as evidenced by that certain Airport Land Lease Agreement executed May 7, 2019 (the “Lease”);
and
WHEREAS, 3KAM has agreed to collaterally assign its interest in the Lease to
AccessBank Texas and will use the Deed of Trust attached hereto; and
WHEREAS, the Lease requires written consent of the City for the Collateral Assignment
to be effective and 3KAM has requested the City for such consent; and
WHEREAS, the City Council deems it in the public interest to give consent to the
collateral assignment contemplated above; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The findings and recitations contained in the preamble of this Ordinance
are incorporated herein by reference.
SECTION 2. The City Manager, or his designee, is hereby authorized to execute a
Consent to the Collateral Assignment of Lease in the form attached hereto as Exhibit “A“ and
made a part of this Ordinance for all purposes.
SECTION 3. This Ordinance shall become effective immediately upon its passage and
approval.
The motion to )rove this ordinance was made by
seconded by the ordinance wasC v\ in D<
RyAn ,„d
passed and approved by
the following vote n - E :
Aye Nay Abstain Absent
Chris Watts, Mayor:
Gerard Hudspeth, District 1 :.r
7
7
Keely Briggs, District 2:
Jesse Davis, District 3 :
John Ryan, District 4:7
J
/
Deb Armintor, At Large Place 5 :
Paul Meltzer, At Large Place 6:
PASSED AND APPROVED thi, th, ag+/h 2020
gP%gBRg+V2JI8
mtIm
CHRIS WATTS, MAYOR
ATTEST:
ROSA RIOS, CITY SECRETARY
BY:.aO;a
APPROVED AS TO LEGAL FORM:
AARON LEAL. CITY ATTORNEY
DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E
EXHIBIT A
CONSENT TO COLLATERAII ASSIGNMENT OF LEASE
This Consent to Collateral Assignment of Lease is made between the City of Denton, a
Texas home rule municipal corporation (“City” or “Landlord”), 3KAM Real Estate, LLC, a Texas
limited liability company (“Assignor”) and AccessBank Texas, a Texas state banking association
(“Assignee”).
WHEREAS, the City is the sole owner and landlord of a pad site at Denton Enterprise
Airport located at 4858 Lockheed Lane, Denton Enterprise Airport (the “Property”); and
WHEREAS, the Property is subject to a ground lease, described as the Airport Lease
Agreement dated effective May 7, 2019, by and between the City, as Lessor, and 3KAM Real
Estate, LLC, as Lessee (the “Lease”); and
WHEREAS, Assignee provided financing for the purchase of the Leasehold Estate and
certain improvements on such ground leased property (the “Leasehold Estate”); and
WHEREAS, for the purpose of securing and enforcing the payment obligations ofAssignor
to Assignee, Assignor now wishes to collaterally assign the Lease to the Assignee through the
Leasehold Deed of Trust attached hereto as Exhibit “A;” and
WHEREAS, Section 8.4 of the Lease provides that it may not be collaterally assigned
without the written consent of City, at City’s sole discretion, and Assignor has requested the City’s
consent; and
WHEREAS, Section 8.5 of the Lease provides preconditions that must be met before the
City will consent to a collateral assignment and those preconditions have been satisfied or are
satisfied herein;
NOW THEREFORE, in consideration of the mutual covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the City hereby consents to Assignor’s collateral assignment of the Leasehold
Estate to Assignee, through the Leasehold Deed of Trust (the “Collateral Assignment”) attached
as Exhibit “A,” under the following terms and conditions:
1. Assignor shall pay to the City a transfer fee of One Thousand Dollars ($1,000.00) in
connection with the City providing its consent to the Collateral Assignment of the
Leasehold Estate.
2. Assignee certifies that it has reviewed the Lease and accepts the provisions applicable
to the Assignee as Lender, including but not limited to Section 8.5.
3. Assignee shall give the City copies of any written notice which Assignee gives to
Assignor of any default by Assignor under any financing agreement, promissory note,
or the Collateral Assignrnent at the same time it gives notice to the Assignor. Any such
notice shall be delivered as follows:
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City Manager
City of Denton
215 E. McKinney
Denton, Texas 76201
with copies to:
Airport Manager
Denton Enterprise Airport
5000 Airport Road
Denton, Texas 76207
City Attorney
City of Denton
215 E. McKinney
Denton, Texas 76201
4.The City agrees to provide Assignee a contemporaneous copy of all written notices
provided to Assignor under the Lease. Wherein a notice of default or breach has been
provided by the City to Assignor and Assignee, Assignee shall be entitled, at its option,
to cure such default or breach, and the City shall accept such cure from Assignee. If
the default or breach is not cured as provided under the Lease, the City shall have the
remedies available to it as set out therein. Any notice to be delivered from City to
Assignee shall be delivered to the following:
AccessBank Texas
AHn: Weston Thaggard
320 W. Eagle Drive, Suite 100
Denton, Texas 76201
5.Should Assignee foreclose or otherwise obtain Assignor’s rights and interest in the
Leasehold Estate, the City will not unreasonably withhold its consent to an assignment
by Assignee to future successors upon being provided with the potential successor’s (i)
financial statement, (ii) confirmation of no outstanding taxes, liens, or judgments, and
(iii) compliance with all applicable Minimum Operating Standards. The City shall be
the sole judge of any potential successor’s qualifications, which shall be reasonably
exercised.
6. In the event of any inconsistency between the terms and conditions of the Lease and
the terms and conditions of this Consent, then the Lease shall govern and control.
7. If any provisions of this Consent shall be held or deemed to be illegal, inoperative, or
unenforceable, the same shall not affect any other provisions contained herein; the
remaining provisions to remain in full force and effect.
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8. The City hereby represents and warrants that this Consent is made with proper authority
under Ordinance.
9.Assignee, its authorized representatives or agents, may, upon reasonable advanced
notice (written or oral) to Assignor and City and at any reasonable times, enter the
Property for the purposes of inspecting, repairing, or removing personal property.
Assignee may further, upon reasonable advanced written notice to City and Assignor
and at reasonable times, enter upon the Property to exhibit or conduct a sale(s) of any
or all of the collateral pledged to Assignee, subject to the City’s interests under the
Lease
10. This Consent to Collateral Assignment shall be governed by and construed in
accordance with the laws of the State of Texas. Exclusive venue for any action related
to this Consent shall be solely in a court of competent jurisdiction in Denton County,
Texas
11 . This Consent to Collateral Assignment of Lease will bind and inure to the benefit of
the parties, their heirs, executors, administrators, successors in interest, and assigns.
IN WITNESS HEREOF, the parties have executed this Consent to Collateral Assignment
of Lease as of the Date written below.
[Signatures on following page\
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Dated:
ASSIGNOR:
3KAM Real Estate, LLC, a Texas
limited liability company
by:
By:
Name :
Title: Elected Officer
ASSIGNEE:
AccessBank Texas
br
laggariiBy:
Name :
Title: Svp
CITY OF DENTON
Landlord
By:
Name :
Title:
a a /b
\DTodd Hi
City her
ATTEST:
ROSA RIOS, CITY SECRETARY
_az_xL;/
THIS AGREEMENT HAS BEEN
BOTH REVIEWED AND APPROVED
as to financial and operational
obligations and business terms.
DowSigned by:
a# dq%
S
Director–Airport , Capital
Title Planning, FacilitiesAirport
Department
Date Signed:7/13/2020
Page 4
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APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
By:
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DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E Exhibit A
“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: YOURSOCIALSECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.”
DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT
("Deed of Trust")
STATE OF TEXAS
COUNTY OF DENTON 9
This instrument is entered into between 3KAM REAL ESTATE LLC, a Texas limited liability company
(hereafter called "Mortgagor," whether one or more), whose address is 2421 Fort Worth Dr., Denton, Texas
76205, and KEVIN L. HODGES (hereafter called "Trustee") as trustee for the benefit of ACCESSBANK TEXAS,
a Texas state banking association (hereafter called "Mortgagee"), whose address is 320 W. Eagle Drive,
Suite 100, Denton, Texas 76201.
SEcrION I. DEFINITIONS.
1.1 The term "Mortgaged Premises" means the following described real property and personal
property which is or will become fixtures (list personal property by item or type):
Being the leasehold interest (the “Leasehold Estate”), whether now owned or hereafter acquired
by Mortgagor, in and to that certain real property which leasehold interest is more particularly
described in that certain Airport Land Lease Agreement (herein referred to as the "Ground
Lease"), executed by and between City of Denton (herein referred to as the "City"), as lessor,
and Mortgagor, as lessee, encumbering that certain real property identified in the Ground Lease
as Lease Premises, consisting of approximately 1.704 acres of land as more particularly as
follows
BEING A TRACT OF 1.704 ACRES LYING AND BEING SITUATED IN THE WILLIAM NEIL SURVEY,
ABSTRACT NUMBER 970, CITY OF DENTON, DENTON COUNTY, TEXAS, AND BEING PART OF LOT
1, BLOCK 1, THE SOUTHEAST AIRPORT ADDITION, RECORDED UNDER COUNTY CLERK’S
DOCUMENT NUMBER 2014-205, PLAT RECORDS, DENTON COUNTY, TEXAS; TOGETHER WITH
CERTIFICATE OF CORRECTION FILED NOVEMBER 19, 2014, UNDER CC#2014-117507, OFFICIAL
RECORDS OF DENTON COUNTY, TEXAS AND BEING MORE PARTICULARLY DESCRIBED ON EXHIBIT
A ATIACHED HERETO AND MADE A PART HEREOF FOR ALL PURPOSES.
TOGETHER WITH all improvements now or hereafter placed upon such property and all appurtenances,
servitudes, rights, ways, privileges, prescriptions and advantages in any way thereunto belonging or
appertaining.
1.2 The term "Obligations" means:
A. A promissory note dated of even date herewith in the principal sum of $1,182,829.00 executed by
Mortgagor and payable to the order of Mortgagee at 320 W. Eagle Drive, Suite 100, Denton, Texas 76201,
with interest at the rate as therein specified and on terms as therein contained (hereafter called the
Note")
B. All promissory notes evidencing additional loans which Mortgagee may hereafter make to
Mortgagor (although it is understood that Mortgagee is under no obligation to do so);
DEED OF TRUn, SECURITY AGREEMEVr AND FINANCING STATEMENT PAGE 1
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C. All other indebtedness and liabilities of all kinds of Mortgagor to Mortgagee, now existing or
hereafter arising, whether fixed or contingent, joint and/or several, direct or indirect, primary or secondary
and regardless of how created or evidenced.
D. All sums advanced or costs or expenses incurred by Mortgagee (whether by it directly or on its
behalf by the Trustee) which are made or incurred pursuant to, or allowed by, the terms of this instrument,
plus interest thereon at the rate of eighteen percent (18%) per annum from the date paid until reimbursed;
and
E. All renewals, extensions and/or modifications of all of the above whether or not Mortgagor
executes any renewal, extension or modification agreement;
Provided, however, the term “Obligations” shall not include any extension of credit described in or intended
to comply with Texas Constitution Article 16 Section 50(a)(6).
SEcrION ll. CONVEYANCE IN TRUST.
In consideration of Mortgagee's advancing or extending to Mortgagor the funds or credit constituting the
Obligations and in further consideration of the mutual covenants herein contained, Mortgagor by this
instrument conveys to Trustee the above-described Mortgaged Premises, in trust, for the purpose of
securing such Obligations. TO HAVE AND TO HOLD the Mortgaged Premises, together with the rights,
privileges and appurtenances thereto belonging unto the Trustee and his substitutes or successors forever,
and Mortgagor is hereby bound to warrant and forever defend the Mortgaged Premises unto the Trustee,
his substitutes or successors and their assigns, against the claims of all persons claiming any interest in the
Mortgaged Premises or any part thereof, subject, however, to those exceptions in title listed in the
Mortgagee’s policy of title insurance furnished to and accepted by Mortgagee in connection with the loan
evidenced by the Note (but excluding any exceptions related to the mineral estate which do not make
specific reference, by recording information, to mineral reservations or conveyances, it being the intention
that all of Mortgagor’s right, title and interest in the oil, gas and other minerals in and under and that may
be produced from the Mortgaged Premises be included as part of the Mortgaged Premises and covered by
Mortgagor’s warranty of title).
SEcrioN III. MORTGAGOR'S REPRESENTATIONS AND WARRANTIES.
In order to induce Mortgagee to extend or continue the indebtedness represented by the Obligations,
Mortgagor represents and covenants that:
A. Accurate Loan Information. All information contained in statements furnished or to be furnished
Mortgagee by or on behalf of Mortgagor in connection with the Obligations secured by this instrument is
or will be complete and accurate.
B. Valid Title. Mortgagor has valid and indefeasible title to the Mortgaged Premises and has a legal
right to grant and convey same to Trustee for the benefit of Mortgagee, and Mortgagor shall, if requested
by Mortgagee, execute all proper additional assurances of title.
C. Free From Encumbrances. The Mortgaged Premises are free from all liens, security interests or
other encumbrances, except as specifically set forth above or as permitted by the provisions of Paragraph
D of Section IV hereof.
D. Property Included as Fixtures. All awnings, door and window screens, storm windows and doors,
mantels, cabinets, rugs, carpeting, floor coverings, stoves, shades, blinds, oil and other fuel-burning systems
and equipment, water heaters and all plumbing, heating, lighting, cooking, ventilating, cooling, air-
conditioning and refrigerating apparatus and equipment and such goods and chattels and personal property
DEED OF TRUn. SECURITY AGREEMEVr AND FINANCING STATEMENT PAGE 2
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as are usually furnished by landlords in letting an unfurnished building, or which are or shall be attached to
said building by nails, screws, bolts, pipe connections, masonry or in other manner, and all additions thereto
and replacements thereof and such built-in equipment as shown by plans and specifications, are and shall
be deemed to be fixtures and accessions to the Mortgaged Premises, being hereby agreed to be
immovables and a part of the realty as between the parties hereto and shall be deemed to be a part of the
Mortgaged Premises.
E. Representations, Warranties and Covenants of Corporate Mortgagor. If Mortgagor is a
corporation (i) it is, and shall continue to be, (a) duly organized and existing under the laws of the state in
which it is incorporated, (b) duly authorized to execute and deliver the written instruments comprising the
Obligations and this instrument and to observe and perform its duties thereunder and hereunder, (ii) its
officers executing the instruments comprising part or all of the Obligations are the legally elected, qualified
and acting officers of the corporation and have been expressly authorized to execute such instruments by
resolution of the corporation's board of directors, and (iii) it shall not, without Mortgagee's prior written
consent, reorganize, consolidate or merge with any other corporation.
SEcrioN IV. MORTGAGOR'S COVENANTS.
As long as any of the Obligations remains unpaid, Mortgagor shall (at Mortgagor's own expense):
A. Maintain Premises and Permit Inspection. Cause the Mortgaged Premises to be maintained in
good condition and repair and cause to be made all repairs, renewals, replacements, additions and
improvements thereof or thereto and permit the Trustee and Mortgagee (through its agents and
employees) to enter into or upon the Mortgaged Premises for the purpose of investigating and inspecting
the condition and operation of the Mortgaged Premises; provided, however, Mortgagor shall not make any
material alterations to the Mortgaged Premises without Mortgagee's prior written consent.
B. Prevent Vacancies. Keep occupied habitable improvements on the Mortgaged Premises so as not
to impair the insurance carried thereon, and in the event any such improvements become vacant and
remain vacant for more than thirty (30) consecutive days, Mortgagee may require the Trustee to take
possession of such improvements, rent them and the rent so received, less the reasonable costs and
expenses of collection thereof, shall be applied as part payment of the Obligations.
C. No Sale of Premises. Not sell, assign or convey any part or all of the Mortgaged Premises
(regardless of whether the buyer or assignee "assumes" the Obligations, takes the Mortgaged Premises
"subject to" such Obligations, or purchases under a contract for deed) without first obtaining Mortgagee's
prior written consent. Any transfer of more than twenty percent (20%) of the ownership interest in any
corporation, partnership or joint venture that is a mortgagor hereunder without obtaining Mortgagee's
prior written consent shall be deemed to be a transfer in violation of this covenant.
D. Prevent Other Encumbrances. Cause the Mortgaged Premises to be kept free and clear of liens,
charges, security interests and encumbrances of every character, other than (i) the liens and other
encumbrances created by this instrument, (ii) taxes constituting a lien, but not due and payable, (iii) defects
or irregularities in title and liens, security interests, charges or encumbrances which in Mortgagee's opinion
are not such as to interfere materially with the development, operation or value of the Mortgaged Premises
and not such as to affect materially title thereto, (iv) those above set forth in Paragraph 1.1 of Section 1
hereof, (v) those being contested in good faith by Mortgagor in such manner as not to jeopardize
Mortgagee's rights in and to the Mortgaged Premises, and (vi) those consented to in writing by Mortgagee;
and Mortgagor covenants that it shall preserve and maintain the liens and other encumbrances hereby
created as a valid and enforceable lien on the Mortgaged Premises.
E. Carry Insurance. Carry insurance in respect of the improvements now or hereafter located on the
Mortgaged Premises against loss or damage by fire, windstorm and any other hazards as may reasonably
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be required from time to time by Mortgagee during the term of the Obligations hereby secured to the
extent of the total amount of the Obligations hereby secured, or to the extent of the full insurable value of
said improvements, whichever is the lesser, in such form and with such insurance company or companies
as may be approved by Mortgagee. Mortgagor shall deliver to Mortgagee such insurance policies naming
Mortgagee as loss payee and having attached thereto standard mortgagee clauses. Mortgagor shall also
deliver renewals of such policies to Mortgagee at least twenty (20) days before any such insurance policies
shall expire. All such insurance policies shall provide the maximum prior written notice to Mortgagee of
cancellation which the insurance companies will provide. Mortgagor hereby assigns to Mortgagee all of
Mortgagor's rights, title and interest in all such policies of insurance and authorizes Mortgagee to collect
for, adjust or compromise any losses under any insurance policy on the Mortgaged Premises; and all loss
proceeds (less expenses of collection) shall, at Mortgagee's option, be applied to payment of the Obligations
(regardless of whether the Obligations, or any part thereof, are then due) or to the restoration of the
Mortgaged Premises, or may be released to Mortgagor, but any such application or release shall not cure
or waive any default.
F. Pay Recording Expenses and Maintain Liens. File at Mortgagor's expense this and every other
instrument in addition or supplemental thereto, including applicable financing statements in such offices
and at such times and as often as may be necessary in Mortgagee's opinion to preserve, protect and renew
the liens and other encumbrances herein created as a first lien or prior encumbrance on real or personal
property as the case may be; and Mortgagor shall do and perform all matters or things necessary or
expedient to be done or observed by reason of any law or regulation of any state or of the United States or
of any other competent authority for the purpose of effectively creating, maintaining and preserving the
liens and other encumbrances created therein.
G. Pay Charges Accruing to Premises. Promptly pay or cause to be paid prior to delinquency (i) all
rentals payable in respect of the Mortgaged Premises, (ii) all expenses including insurance premiums
incurred in or arising from the normal use and ownership of the Mortgaged Premises, and (iii) all taxes,
assessments and governmental charges legally imposed upon the Mortgaged Premises, the interest therein
created by this instrument, or upon Mortgagor in connection with the normal use and operation of the
Mortgaged Premises. Mortgagor shall furnish Mortgagee receipts showing payment of all such items to
Mortgagee; provided, however, if prepayment deposits are required as a result of Paragraph H below, the
obligations imposed by this paragraph shall be deemed to have been satisfied by Mortgagor's making such
prepayment deposits as and when due, and it will be unnecessary for Mortgagor to exhibit to Mortgagee
receipts showing payment of such items. In the event of foreclosure of this Deed of Trust lien, the obligation
of Mortgagor under this paragraph to pay any taxes or other charges which accrued at or prior to such
foreclosure, shall survive the foreclosure.
H. Reserve for Expenses. Upon request by Mortgagee the Mortgagor shall deposit with Mortgagee
with and in addition to installment payments on the Obligations (if any) a sum equal to one-twelfth (1/12th)
of the estimated annual ground rents, taxes, hazard insurance premiums and other charges referred to in
Paragraph G herein next due on the Mortgaged Premises. If the amount so paid is not sufficient to pay such
items as and when they become due, then Mortgagor shall deposit immediately with Mortgagee an amount
sufficient to pay such items. If there occurs an "Event of Default" (as hereinafter defined), Mortgagee may
at anytime thereafter apply the balance then remaining of the funds accumulated under this provision as a
credit against the amount then remaining unpaid under the Obligations hereby secured. No interest shall
accrue or be allowed on any payments made under the provisions of this paragraph.
I. Construction Loan. To the extent all or any part of the Obligations are advanced by Mortgagee to
construct and complete certain improvements on the Mortgaged Premises according to plans and
specifications submitted by Mortgagor to Mortgagee, any such improvements, all materials and supplies
placed on the Mortgaged Premises and the Mortgaged Premises themselves shall be impressed with, and
the same are hereby impressed with and charged with, not only the liens created by this Deed of Trust, but,
in addition thereto, an express Mechanic's, Materialman's and Laborer's Lien for all advances made
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hereunder, with the express understanding that failure to complete the improvements as agreed shall not
invalidate such liens, but they shall remain in full force and effect as security for payment in full of the
Obligations hereby secured; and Mortgagor shall further carry workmen's compensation insurance and
public liability and property damage insurance in amounts and with companies satisfactory to Mortgagee
and subject to the same requirements contained in Paragraph E of Section IV herein, dealing with insurance
on the Mortgaged Premises.
J. Furnish Financial Information. Mortgagor shall furnish and shall cause all guarantors of the
Obligations (or any portion thereof) to furnish to Mortgagee annual, current financial statements accurately
and completely setting forth the financial condition of Mortgagor and guarantors, as applicable, in such
form as Mortgagee shall reasonably require.
SEcrioN V. PROVISIONS REGARDING SECURiTY INTEREST IN FIXTURES.
To the extent permitted by law, this Deed of Trust also shall be construed to be a security agreement
whereby and whereunder Mortgagor, as debtor, creates and grants to Mortgagee, as secured party, a
security interest in and to all fixtures and improvements now or hereafter erected upon or affixed to any of
the above-described property as additional (but not substituted) security and collateral for the payment of
the Obligations hereby secured. As secured party, Mortgagee shall have all of the rights, remedies and
reliefs accorded to a secured party under the Texas Business and Commercial Code, including, but not
limited to, the right to require the Mortgagor, as debtor, to assemble the collateral and make it available to
Mortgagee, as secured party, at a place to be designated by Mortgagee, as secured party, which is
reasonably convenient to Mortgagee and to the Mortgagor. In addition, this Deed of Trust also shall be
construed to be a financing statement. This Deed of Trust is to be filed for record in the Deed of Trust
Records of the county in which the Mortgaged Premises are located.
SEcrION VI. ADDITIONAL SECURITY.
As additional security for the payment and performance of the Obligations hereby secured, Mortgagor
hereby transfers and assigns to Mortgagee, the following:
A. All the rents, royalties, issues, profits, revenue, income and other benefits derived from the
Mortgaged Premises or arising from the use or enjoyment of any portion thereof or from any lease or
agreement pertaining thereto (hereinafter called the "Rents and Profits") are hereby collaterally assigned,
transferred, conveyed and set over to Mortgagee to be applied by Mortgagee in payment of the principal
and interest and all other sums payable on the Note, and all other indebtedness secured hereby. Mortgagor
will not (i) execute an assignment of any of its right, title or interest in the Rents and Profits, or (ii) except
where the lessee is in default thereunder, terminate or consent to the cancellation or surrender of any lease
of the Mortgaged Premises or any part thereof, now or hereafter existing having an unexpired term of one
(1) year or more, except that any lease may be canceled, provided that promptly after the cancellation or
surrender thereof, a new lease is entered into with a new lessee having a credit standing, in the judgment
of Mortgagee at least equivalent to that of the lessee whose lease was canceled, on substantially the same
terms as the terminated or canceled lease, or (iii) modify any lease of the Mortgaged Premises or any part
thereof so as to shorten the unexpired term thereof or so as to decrease the amount of the rent payable
thereunder, or (iv) accept prepayments of any installments of rent to become due under any of such leases
in excess of one (1) month, except prepayments in the nature of security for the performance of the lessee
thereunder, or (v) in any other manner impair the value of the Mortgaged Premises or the security of this
Deed of Trust. Mortgagor will not execute any lease of all or any substantial portion of the Mortgaged
Premises, except for actual occupancy by the lessee thereunder and will at all times promptly and faithfully
perform, or cause to be performed, each covenant, condition and agreement contained in each lease of the
Mortgaged Premises now or hereafter existing, on the part of lessor thereunder to be kept and performed.
Mortgagor shall furnish to Mortgagee within ten (10) days after a request by Mortgagee to do so, a written
statement containing the names of all lessees of the Mortgaged Premises, the terms of their respective
DEED OF TRUg, SECURITY AGREEMENT AND FINANCING STATEMENT PAGE 5
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leases, the spaces occupied and the rentals payable thereunder. If the Obligations hereby secured are not
paid at maturity, howsoever such maturity may be brought about or if an Event of Default occurs under this
Deed of Trust, thereupon or at anytime thereafter, while such or any subsequent default continues,
Mortgagee may, personally or through an agent selected by Mortgagee, take or have the Trustee take
possession and control of the Mortgaged Premises or any part thereof, and receive and collect all rents,
revenues, profits and income theretofore accrued or thereafter accruing therefrom so long as any of the
Obligations remain unpaid or until the foreclosure of this Deed of Trust, applying the sums so collected, first
to the ordinary and necessary expense incident to such possession, control and collection, and second, to
the payment of the Obligations, irrespective of whether then mature, paying the balance, if any, to
Mortgagor. In the event Mortgagor shall execute a separate assignment to Mortgagee of the Leases and
Rents, the terms and conditions of the separate assignment shall control over any conflicting provisions of
this Section VIA. This assignment shall be construed as, constitute and serve as a security instrument under
Tex. Prop. Code, Chapter 64 and as a security agreement under Chapter 9 of the Texas Business and
Commerce Code with regard to the Rents and Profits and the proceeds thereof.
B. All judgment, awards of damages and settlements hereafter made resulting from condemnation
proceedings (or threatened condemnation proceedings) or the taking of all or any part of the Mortgaged
Premises under the power of eminent domain, or for any damage (whether caused by such taking or
otherwise) to the Mortgaged Premises or any part thereof, or to any rights appurtenant thereto, including
any award for change of grade of streets. Mortgagee is hereby authorized, but shall not be required, on
behalf of and in the name of Mortgagor, to execute and deliver acquittances for, and to appeal from, any
such judgments or awards. Mortgagee may apply all such sums or any part thereof so received, after the
payment of all expenses, including costs and attorneys' fees, on the Note and other obligations hereby
secured in such manner as Mortgagee elects.
C. Mortgagor also grants to the Trustee a security interest in all oil, gas, and other minerals that might
be produced from the Mortgaged Premises covered by this deed of trust. This Deed of Trust (i) is to be filed
in the real property records of the county in which the Mortgaged Premises are located, (ii) covers all “as-
extracted collateral,” as defined in Texas Business and Commerce Code §9.102, attributable to the
Mortgaged Premises, (iii) serves as a security agreement covering the as-extracted collateral, (iv) serves as
an assignment of all payments made for damages or anticipated damages to the Mortgaged Premises, and
(v) serves as a financing statement covering as-extracted collateral and fixtures as provided in Texas
Business and Commerce Code §9.502. The provisions of this paragraph are cumulative of all other
provisions of this Deed of Trust.
D. As additional security, Mortgagor also grants to the Trustee a security interest in all contracts for
the sale of all or any portion of the Mortgaged Premises and any earnest money deposited thereunder and
any deposit accounts into which such earnest money is deposited
E. Mortgagor authorizes Mortgagee to file such financing statements as Mortgagee may determine
are necessary in connection with any and all security interests created by this Deed of Trust and any
separate Assignment of Leases and Rents covering rents, income, revenues and/or proceeds and other
benefits derived from the Mortgaged Premises.
SEcrioN VII. EVENTS OF DEFAULT.
7.1 Acts Constituting Default. Mortgagor will be in default under this Deed of Trust upon the
happening of any of the following events or conditions (hereafter called an "Event of Default"):
A. The occurrence of an Event of Default under that certain Loan Agreement of even date herewith
between Mortgagor and Mortgagee regarding the loan by Mortgagee to Mortgagor evidenced by the Note
(the “Loan Agreement").
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B. Within ten (10) days after the notice thereof from Mortgagee given in accordance with the terms
of the Loan Agreement, Mortgagor fails to cure a failure in the due performance or observance of any
covenant or agreement contained in this Deed of Trust (other than payment of the Obligations).
C. Subsequent to the date of execution of this Deed of Trust, there is passed any law which deducts
any lien on the Mortgaged Premises from the value of the Mortgaged Premises for purposes of state or
local taxation of deeds of trust and security agreements or debts secured thereby, or which changes the
manner of collection of any such taxes in such a way that Mortgagee's interest in the Mortgaged Premises
is adversely affected.
D. A substantial portion of the improvements on the Mortgaged Premises are damaged or destroyed,
or Mortgagor's title to the Mortgaged Premises or any substantial part thereof becomes the subject matter
of litigation which would or might, in Mortgagee's opinion, upon final determination result in substantial
impairment or loss of the security provided by this Deed of Trust.
7.2 Acceleration upon Default. Upon the occurrence of any such Event of Default, or at anytime
thereafter, Mortgagee may, at its option, declare the entire unpaid principal of and the interest accrued on
the Obligations to be forthwith due and payable without any notice, presentment, protest, notice of protest
or demand of any kind, all of which are hereby expressly waived, including, without limitation, notice of
intent to accelerate and notice of acceleration.
SEcrioN VIII. MORTGAGEE'S RIGHTS UPON DEFAULT.
8.1 Operation of Property by Trustee. Upon the occurrence of an Event of Default, or at anytime
thereafter, and in addition to all other rights herein conferred on the Trustee, the Trustee (or any person,
firm or corporation designated by the Trustee) may, but will not be obligated to, enter upon and take
possession of any of the Mortgaged Premises, exclude Mortgagor therefrom, and hold, use, administer,
manage and operate the same to the extent that Mortgagor could do so. If the Mortgaged Premises consist
of any type of business enterprise, the Trustee may operate and manage such business without any liability
to Mortgagor resulting therefrom (excepting failure to use ordinary care of the operation and management
of the Mortgaged Premises); and the Trustee may collect, receive and receipt for all proceeds accruing from
such operation and management, make repairs and purchase needed additional property and exercise
every power, right and privilege of Mortgagor with respect to the Mortgaged Premises. When and if the
expenses of such operation and management have been paid and the Obligations paid, the Mortgaged
Premises shall be returned to Mortgagor (providing there has been no foreclosure sale).
8.2 Judicial Proceedings. Upon the occurrence of an Event of Default, or at anytime thereafter, the
Trustee, in lieu of or in addition to exercising the power of sale hereafter given, may proceed by legal action
to require the specific performance of any covenant or agreement herein contained or to aid in the
execution of any power herein granted; to have appointed a receiver pending any foreclosure hereunder
or any sale of the Mortgaged Premises; to enforce any other appropriate legal or equitable remedy, and/or
in lieu of the non-judicial power of sale hereafter given, to proceed by suit for a foreclosure of its lien on
the Mortgaged Premises. In connection with any such judicial proceeding instituted for the purpose of
foreclosing on and selling the Mortgaged Premises, Mortgagor agrees not to assert in the same proceeding
any counterclaims Mortgagor may have against Mortgagee.
8.3 Foreclosure by Sale.
A. Mechanics of Sale. Upon the occurrence of any Event of Default, or at anytime thereafter, the
Trustee shall, in response to Mortgagee's request (which Mortgagor agrees will be presumed to have been
given), enforce this trust or agreement by selling the Mortgaged Premises in their entirety or in parcels, as
the Trustee may elect, to the highest bidder or bidders for cash at public auction in the following manner.
Written or printed notices containing the time, place and terms of sale shall be posted at the courthouse
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door and a copy thereof filed with the County Clerk, of the county or counties where the Mortgaged
Premises are located, at least twenty-one (21) days prior to the sale. In addition, Mortgagee shall, at least
twenty-one (21) days preceding the date of sale, serve written notice of the proposed sale by certified mail,
return receipt requested, on Mortgagor and all other debtors obligated to pay the Note and other
indebtedness secured hereby according to the records of the Mortgagee. Service of such notices shall be
completed upon deposit of the notices, enclosed in postpaid wrappers, properly addressed to Mortgagor
and to such debtors at the most recent address for each as shown by Mortgagee's records, in a post office
or official depository under the care and custody of the United States Postal Service. Thereafter, the sale
shall take place at the courthouse door of the county where the Mortgaged Premises are located on the
first Tuesday in any month between the hours of 10:00 o'clock a.m. and 4:00 o'clock p.m., provided,
however, if the Mortgaged Premises are located in more than one (1) county, such sale may take place at
the courthouse door of any of the counties wherein a portion of the Mortgaged Premises is located, and
the aforesaid notices shall specify the county of sale. Any purchaser or purchasers will be provided with a
general warranty conveyance binding Mortgagor. Sale of a part of the Mortgaged Premises will not exhaust
the power of sale, and sales may be made from time to time until all the property is sold or the Obligations
are paid in full. The Trustee will have the authority to appoint an attorney-in-fact to act as trustee in
conducting the foreclosure sale and executing a deed to the purchasers. In the event of any inconsistency
between the foregoing provisions relating to the mechanics of sale and the provisions of Section 51.002 of
the Texas Property Code, the provisions of Section 51.002 (or its successor), shall govern the mechanics of
sale
B. Certain Aspects of Sale. Mortgagee will have the right to become the purchaser at any sale of the
Mortgaged Premises, and Mortgagee will have the right to credit upon the amount of the bid made
therefore the amount payable out of the net proceeds of such sale to it. Recitals contained in any
conveyance to any purchaser at any sale made hereunder will conclusively establish the truth and accuracy
of the matters therein stated, including, without limiting the generality of the foregoing, non-payment of
the unpaid principal sum of (and the interest accrued on) the written instruments constituting part or all of
the Obligations after the same have become due and payable, advertisement and conduct of such sale in
the manner provided herein and appointment of any successor trustee hereunder. Mortgagor does hereby
ratify and confirm all legal acts that the Trustee may do in carrying the Trustee's duties and obligations
under this Deed of Trust.
C. Receipt to Purchaser. Upon any sale made under the power of sale herein granted, the receipt of
the Trustee will be sufficient discharge to the purchaser or purchasers at any sale for his, her, its or their
purchase money; and such purchaser or purchasers will not, after paying such purchase money and
receiving such receipt of the Trustee, be obliged to see to the application of such purchase money or be in
anywise answerable for any loss, misapplication or non-application thereof.
D. Effect of Sale. Any sale or sales of the Mortgaged Premises will operate to divest all right, title,
interest, claim and demand whatsoever either at law or in equity, of Mortgagor in and to the premises and
the property sold, and will be a perpetual bar, both at law and in equity, against Mortgagor, Mortgagor's
successors or assigns and against any and all persons claiming or who shall thereafter claim all or any of the
property sold from, through or under Mortgagor, or Mortgagor's successors or assigns. Nevertheless, if
requested by the Trustee so to do, Mortgagor shall join in the execution and delivery of all property
conveyances, assignments and transfers of the properties so sold. The purchaser or purchasers at the
foreclosure sale will receive, as incident to his, her, its or their ownership, immediate possession of the
property purchased, and Mortgagor agrees that if Mortgagor, or any person claiming under Mortgagor,
whether tenant or otherwise, retains possession of the Mortgaged Premises, or any part thereof,
subsequent to such sale, Mortgagor will be considered a tenant at sufferance of the purchaser or purchasers
and will, if Mortgagor remains in possession after demand to remove, be guilty of forcible detainer and will
be subject to eviction and removal, forcible or otherwise, with or without process of law; and all damages
by reason thereof are hereby expressly waived. All rental or lease agreements hereafter entered into by
Mortgagor in connection with the Mortgaged Premises shall be expressly made subject to this provision.
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E. Application of Proceeds. The proceeds of any sale of the Mortgaged Premises or any part thereof,
whether under the power of sale herein granted and conferred or by virtue of judicial proceedings, will be
applied as follows: FIRST - To the payment of all expenses incurred by Mortgagee in preparing for and
completing the foreclosure, including, without limiting the generality of the foregoing, court costs,
compensation of agents and employees, legal fees, appraisal fees, title examination or reports,
environmental audit costs and a commission of five percent (5%) to the Trustee, plus expenses of any entry
or taking of possession, sale, advertising or conveyance thereof; SECOND - To the payment of the
Obligations; and THIRD - Any surplus thereafter remaining will be paid to Mortgagor or such other persons
entitled by law to receive same; provided that in the event of a dispute over any such surplus, Mortgagee
and/or the Trustee shall be entitled to interplead such surplus with a court of competent jurisdiction
without liability to Mortgagor and Mortgagee shall be entitled to recover its costs and legal fees incurred.
F. Waiver of Laws. Mortgagor waives the benefit of all laws now existing or hereafter enacted
providing for (i) any appraisement before sale of any portion of the Mortgaged Premises (commonly known
as Appraisement Laws), or (ii) any extension of time for the enforcement of the collection of the Obligations
or any creation or extension of a period of redemption from any sale made in collecting the Obligations
(commonly known as Stay Laws and Redemption Laws); and Mortgagor hereby agrees and contracts that
the laws of the State of Texas, save as above excepted, now in force relative to the collection of the
Obligations and the application to the payment thereof, are expressly adopted and made a part hereof.
Mortgagor hereby waives all rights of marshalling of assets. To the full extent allowed by law, Mortgagor
waives any rights Mortgagor has under, or any requirements imposed by (i) the suretyship law of the State
of Texas, including without limitation, any rights Mortgagor may have pursuant to Sections 51.003 - 51.005
of the Texas Property Code, as in effect on the date of this Deed of Trust, and as it may be amended from
time to time
SEcrION IX. MISCELLANEOUS.
9.1 Appraisal. In the event (i) bank examiners require an appraisal, or (ii) Mortgagee reasonably
believes that the value of the Mortgaged Premises has declined such that Mortgagee's collateral position is
likely impaired, then at the request of Mortgagee, Mortgagor shall furnish to Mortgagee, at Mortgagor's
expense, an appraisal of the Mortgaged Premises, to be prepared by an appraiser reasonably acceptable to
Mortgagee and in accordance with appraisal guidelines furnished by Mortgagee. In addition, if Mortgagor
is in default hereunder, Mortgagee may obtain an appraisal of the Mortgaged Premises and the costs of
such appraisal shall be reimbursed by Mortgagor upon demand. All sums advanced by Mortgagee for
appraisals shall bear interest at the highest lawful rate and shall be secured by this Deed of Trust.
9.2 Compliance with Applicable Laws. Mortgagor shall at its sole cost and expense cause the
Mortgaged Premises to be in compliance at all times with all applicable laws, rules, regulations and
ordinances applicable to the Mortgaged Premises (collectively, "Applicable Laws"), including, without
limitation, all such Applicable Laws dealing with (i) environmental matters, (ii) fair housing laws, and (iii)
disabled persons (including American with Disabilities Act). Mortgagor warrants and represents to
Mortgagee that as of the date hereof (i) no hazardous materials or substances are located upon, within or
under the Mortgaged Premises, (ii) no underground fuel storage tanks are located on the Mortgaged
Premises, except those which are disclosed to Mortgagee in writing and are registered with the Texas Water
Commission with all registration fees being paid current. In the event Mortgagee should reasonably believe
that the Mortgaged Premises are in violation of (or are likely to be in violation of) Applicable Laws pertaining
to environmental matters, or in the event Mortgagee should commence judicial or non-judicial foreclosure
proceedings hereunder, Mortgagee shall have the right to hire consultants to perform an environmental
study of the Mortgaged Premises. Such consultants are hereby authorized by Mortgagor to enter the
Mortgaged Premises to conduct such above and below-ground tests as such consultants deem necessary
to perform an environmental study as requested by Mortgagee. The cost of performing such environmental
test shall be paid by Mortgagor and shall be secured by this Deed of Trust. Mortgagor hereby indemnifies
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and agrees to hold Mortgagee, its directors, officers, employees and agents harmless from all loss, liability,
claims, damages and expenses suffered by or asserted against any of the indemnified parties and arising
out of a violation or claimed violation of any Applicable Laws pertaining to the Mortgaged Premises. Such
indemnity and hold harmless agreement shall survive any foreclosure of this Deed of Trust lien.
9.3 Successor Trustee. The Trustee (and any successor trustee appointed hereunder) may resign in
writing addressed to Mortgagee or be removed at anytime with or without cause by an instrument in
writing duly executed by Mortgagee. In case of death, resignation or removal of the Trustee (or any
successor trustee appointed hereunder), a successor may be appointed by Mortgagee without other
formality than an appointment and designation in writing. Such appointment and designation will be full
evidence of the right and authority to make the same and of all facts therein recited, and upon the making
of any such appointment and designation, this conveyance will vest in the named successor trustee all the
estate and title of the Trustee in all of the Mortgaged Premises and said successor will thereupon succeed
to all the rights, powers, privileges, immunities and duties hereby conferred upon the Trustee. All
references in this instrument to the Trustee will be deemed to refer to the Trustee and any successor
trustee from time to time acting hereunder,
9.4 Advances by Mortgagee or the Trustee. Each and every covenant herein contained shall be
performed and kept by Mortgagor solely at Mortgagor's expense. If Mortgagor fails to perform or keep any
of the covenants of whatsoever kind or nature contained in this instrument, Mortgagee, or the Trustee or
any receiver appointed hereunder, may, but will not be obligated to, make advances to perform the same
in the Mortgagor's behalf, and Mortgagor hereby agrees to repay such sums and any attorneys' fees
incurred in connection therewith upon demand plus interest at the maximum rate permitted by applicable
law. This amount will be in addition to any sum of money which may, pursuant to the terms and conditions
of any written instruments comprising part or all of the Obligations, be due and owing apart from the
principal and interest thereon. No such advance will be deemed to relieve Mortgagor from any default
hereunder
9.5 Defense of Claims. Mortgagor shall promptly notify Mortgagee in writing of the commencement
of any legal proceedings affecting Mortgagee's interest in the Mortgaged Premises, or any part thereof, and
shall take such action, employing attorneys agreeable to Mortgagee, as may be necessary to preserve
Mortgagor's and Mortgagee's rights affected thereby; and should Mortgagor fail or refuse to take any such
action, Mortgagee may take such action on behalf of and in the name of the Mortgagor and at Mortgagor's
expense. Moreover, Mortgagee may take such independent action in connection therewith as in its own
discretion it deems proper and Mortgagor hereby agrees to make reimbursement for all sums advanced
and all expenses incurred in such action plus interest at the maximum rate permitted by applicable law.
9.6 Termination. If all the Obligations are paid in full and the covenants herein contained are well and
truly performed, then the Mortgaged Premises will revert to Mortgagor and the entire estate, right, title
and interest of the Trustee and Mortgagee will thereupon cease; and the Trustee in such case shall, upon
the request of Mortgagor at Mortgagor's cost and expense, deliver to Mortgagor instruments
acknowledging satisfaction of this instrument.
9.7 Renewals, Amendments and Other Security. Renewals and extensions of the written instruments
constituting part or all of the Obligations may be given at anytime, amendments may be made to
agreements relating to any part of such written instruments or the Mortgaged Premises, and Mortgagee
may take or hold other security for the Obligations without notice to or consent of Mortgagor. The Trustee
or Mortgagee may resort first to such other security or any part thereof, or first to the security herein given
or any part thereof, or from time to time to either or both, even to the partial or complete abandonment
of either security, and such action will not be a waiver of any rights conferred by this instrument. All
amendments to and modifications of this instrument must be in writing signed by Mortgagee.
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9.8 Instrument an Assignment, Etc. This instrument will be deemed to be and may be enforced from
time to time as an assignment, chattel mortgage, contract, deed of trust, financing statement, real estate
mortgage, or security agreement, and from time to time, as any one (1) or more thereof if appropriate
under applicable state law.
9.9 Limitation on Interest. No provision of this instrument or of the Note or other written instruments
constituting part or all of the Obligations shall require the payment or permit the collecting of interest in
excess of the maximum rate permitted by applicable law. If any excess of interest in such respect exists
herein or in said Note or other written instruments, or are adjudicated to be so provided for herein or in
said Note or other written instruments, the provisions of this paragraph shall govern, and neither the
Mortgagor nor its successors and assigns shall be obligated to pay such interest to the extent that it is in
excess of the maximum amount permitted by law. If an excess should be collected, it shall be construed as
a mutual mistake of the parties, and the excess shall be credited to principal; however, in the event the
Note and other written instruments have been paid in full, then Mortgagor, its successors and assigns, shall
be entitled to a refund of the excess amount collected. As used herein, the phrase "maximum rate
permitted by applicable law" shall mean the greater as between the highest of such rate in effect on the
date of the Note and the highest of such rate in effect on the date for which a determination of interest
accrued under the Note is made
9.10 Unenforceable or Inapplicable Provisions. If any provision hereof or any of the written instruments
constituting part or all of the Obligations is invalid or unenforceable, the other provisions hereof or of said
written instruments will remain in full force and effect, and the remaining provisions hereof will be liberally
construed in favor of the Trustee and Mortgagee in order to carry out the provisions hereof. If the lien or
other encumbrances created by this instrument are invalid or unenforceable as to any part of the
Obligations, or if the liens or other encumbrances are invalid or unenforceable as to any part of the
Mortgaged Premises, the unsecured or partially secured portion of the Obligations shall be completely paid
prior to the payment of the remaining secured or fully secured portion of the Obligations, and all payments
made on the Obligations, whether voluntary or under foreclosure or other enforcement action or
procedure, shall be considered to have been first paid on and applied to the full payment of that portion of
the Obligations which is not secured or fully secured by the liens or other encumbrances created by this
instrument.
9.11 Rights Cumulative. Each and every right, power and remedy herein given to the Trustee or
Mortgagee will be cumulative and not exclusive; and each and every right, power and remedy, whether
specifically herein given or otherwise existing, may be exercised from time to time and as often and in such
order as may be deemed expedient by the Trustee or Mortgagee, as the case may be, and the exercise, or
the beginning of the exercise of any such right, power or remedy will not be deemed a waiver of the right
to exercise, at the same time or thereafter, any other right, power or remedy. No delay or omission by the
Trustee or by Mortgagee in the exercise of any right, power or remedy will impair any such right, power or
remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.
9.12 Waiver. Any and all covenants in this instrument may from time to time by instrument in writing
signed by Mortgagee be waived to such extent and in such manner as Mortgagee may desire, but no such
waiver will ever affect or impair Mortgagee's rights hereunder, except to the extent specifically stated in
such written instrument. Acceptance by Mortgagee of any payment in an amount less than that portion of
the Obligations then due and owing shall be deemed an acceptance on account only and not a waiver, and
the failure to pay the entire amount then due shall continue to be an Event of Default.
9.13 Joint and Several Liability. The term '’Mortgagor" as used in this instrument will be construed as
singular or plural to correspond with the number of persons executing this instrument as Mortgagor. If
more than one (1) person executes this instrument as Mortgagor, his, her, their or its duties and liabilities
under this instrument will be joint and several.
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9.14 Section and Paragraph Headings. Section and paragraph headings are used in this instrument for
convenience only and shall be given no substantive meaning or significance whatsoever in the construction
and interpretation of the terms and provisions herein contained.
9.15 Rights of Assignee. The terms "Mortgagee" and "Mortgagor" as used in this instrument include
the heirs, executors or administrators, successors, representatives, receiver, trustees and assigns of those
parties. This instrument is binding upon the Mortgagor, his, her or their heirs and legal representatives,
and Mortgagor's successors and assigns, and will inure to the benefit of the Trustee and the Trustee's
successors and Mortgagee and its successors and assigns. It is understood and agreed between the parties
hereto that Mortgagee may assign any part or all of the Obligations and this instrument to a third party
who shall become entitled to all rights and benefits given herein to Mortgagee. In particular, the insurance
policies referred to in Paragraph E of Section IV above shall be rewritten to show such third party as the
mortgagee entitled to exercise all rights given to Mortgagee in such Paragraph E of Section IV.
9.16 Place of Performance. The duties and obligations herein imposed on Mortgagor are performable
in the county of Mortgagee’s office at the address listed for Mortgagee at the end of this document.
9.17 Counterparts. This instrument may be executed in any number of counterparts, each of which will
for all purposes be deemed to be an original, and all of which are identical.
9.18 Subrogation. To the extent that the proceeds of the Note or any of the other Obligations hereby
secured have been or will be advanced to satisfy, discharge or pay, either directly or indirectly, any
indebtedness or other obligation secured by any right, title, interest, lien, benefit, remedy, equity, superior
title and/or security interest (the '’Subrogated Liens") in or against the Mortgaged Premises, the Mortgagee
shall be subrogated to all such Subrogated Liens, and the same shall be renewed, extended, rearranged and
continued in full force and effect, in addition to and cumulative of the lien and security interests of this
Deed of Trust, irrespective of any formal or informal acknowledgment of partial or complete satisfaction or
release of the obligations thereby secured.
SEcrioN X. ADDITIONAL PROVISIONS.
(in the event of a conflict between the printed provisions of this instrument and the additional provisions
(if any) contained in this section, the latter shall control).
10.1 Purchase Money. A portion of the funds advanced under the Note represent funds advanced as a
part of the purchase price of the Mortgaged Premises, and this Deed of Trust is in addition to the vendor's
lien retained in a Deed given to Mortgagor securing the payment of the indebtedness described herein; and
it is expressly agreed that the same shall not operate as a waiver of the lien created by this Deed of Trust,
it being agreed that said lien and rights created by this instrument shall be cumulative and in addition to
said vendor's lien above mentioned, and that the owner or holder of the above described indebtedness
may foreclose under either or both of said liens, as the owner or holder may elect, without waiving the
other; said deed above mentioned, together with its record, being herein referred to and made a part of
this instrument.
10.2 Additional Security Interests for Construction Loan. As additional security for the payment and
performance of the Obligations hereby secured, Mortgagor hereby grants to Mortgagee a security
interest in and to the following:
(1) all fixtures, equipment, systems, machinery, furniture, furnishings, inventory, goods,
building and construction materials, supplies, and articles of personal property, of every kind and
character, now owned or hereafter acquired by Mortgagor, which are now or hereafter attached
to or situated in, on or about the Mortgaged Premises or the improvements thereon (the
“Improvements"), or used in or necessary to the complete and proper planning, development, use,
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occupancy or operation thereof, or acquired (whether delivered to the Mortgaged Premises or
stored elsewhere) for use or installation in or on the Mortgaged Premises or the Improvements,
and all renewals and replacements of, substitutions for and additions to the foregoing, including,
but without limiting the foregoing, any and all fixtures, equipment, machinery, systems, facilities
and apparatus for heating, ventilating, air conditioning, refrigerating, plumbing, sewer, lighting,
generating, cleaning, storage, incinerating, waste disposal, sprinkler, fire extinguishing,
communications, transportation (of people or things, including, but not limited to, stairways,
elevators, escalators and conveyors), data processing, security and alarm, laundry, food or drink
preparation, storage or serving, gas, electrical and electronic, water, and recreational uses or
purposes; all tanks, pipes, wiring, conduits, ducts, doors, partitions, rugs and other floor coverings,
wall coverings, windows, drapes, window screens and shades, awnings, fans, motors, engines and
boilers; and decorative items and art objects (all of which are herein sometimes referred to
together, as the "Accessories");
(2) all (a) plans and specifications for the Improvements; (b) contracts relating to the
Mortgaged Premises, or the Improvements or the Accessories or any part thereof; (c) deposits,
(including, but not limited to, Mortgagor's rights in tenants' security deposits, deposits with
respect to utility services to the Mortgaged Premises, or the Improvements or the Accessories or
any part thereof, and any deposits or reserves hereunder or under any other Loan Document (as
hereinafter defined) for taxes, insurance or otherwise, funds, accounts, contract rights,
instruments, documents, commitments, general intangibles (including, but not limited to,
trademarks, trade names and symbols), notes and chattel paper used in connection with or arising
from or by virtue of any transactions related to the Mortgaged Premises, or the Improvements or
the Accessories or any part thereof; (d) permits, licenses, franchises, certificates and other rights
and privileges obtained in connection with the Mortgaged Premises, or the Improvements or the
Accessories or any part thereof; (e) leases, rents, royalties, bonuses, issues, profits, revenues and
other benefits of the Mortgaged Premises, the Improvements and the Accessories; and (f) other
properties, rights, titles and interests, if any, specified in any Section or any Article of this Deed of
Trust as being part of the Mortgaged Premises; and
(3) all (a) proceeds of or arising from the properties, rights, titles and interests referred to
above in paragraphs (1) and (2), including, but not limited to, proceeds of any sale, lease or other
disposition thereof, proceeds of each policy of insurance relating thereto (including premium
refunds), proceeds of the taking thereof or of any rights appurtenant thereto by eminent domain
or sale in lieu thereof for public or quasi-public use under any law, and proceeds arising out of any
damage thereto whether caused by such a taking (including change of grade of streets, curb cuts
or other rights of access) or otherwise caused; and (b) other interests of every kind and character,
and proceeds thereof, which Mortgagor now has or hereafter acquires in, to or for the benefit of
the properties, rights, titles and interests referred to above in paragraphs (1) and (2) and all
property used or useful in connection therewith, including, but not limited to, remainders,
reversions and reversionary rights or interests. In the event the estate of Mortgagor in and to any
of the Mortgaged Premises is a leasehold estate, this conveyance shall include, and the lien and
security interest created hereby shall encumber and extend to, all other further or additional title,
estates, interest or rights which may exist now or at any time be acquired by Mortgagor in or to
the property demised under the lease creating such leasehold estate and including Mortgagor's
rights, if any, to the property demised under such lease and, if fee simple title to any of such
property shall ever become vested in Mortgagor such fee simple interest shall be encumbered by
this Deed of Trust in the same manner as if Mortgagor had fee simple title to said property as of
the date of execution hereof,
Mortgagor authorizes Mortgagee to file such financing statements as Mortgagee deems necessary
to perfect the security interests granted herein.
DEED OF TRU£r, SECURITY AGREEMEVr AND FINANCING STATEMENT PAGE 13
DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E
10.3 Surface Rights. To the extent Mortgagor has a right to make or participate in any decision
regarding access to and use of the Mortgaged Premises for the purpose of exploring for, developing and/or
producing the oil, gas and/or other minerals in and under, and that may be produced from, the Mortgaged
Premises, or any other purpose incident thereto, Mortgagor shall not allow access to or use of the
Mortgaged Premises for any such purpose without first obtaining the written consent of Mortgagee
thereto
10.4 Ad Valorem Tax Lien. As long as any of the Obligations remains unpaid, Mortgagor shall not,
without the prior written consent of Mortgagee, enter into any third party arrangement for payment of ad
valorem taxes on the Mortgaged Premises that would grant to such third party or result in such third party
acquiring a lien on the Mortgaged Premises pursuant to Section 32.06 of the Texas Tax Code or any similar
statute; and Mortgagor’s authorization to any third party (other than Mortgagee) to pay the ad valorem
taxes and receive transfer of a taxing entity's lien for ad valorem taxes shall be null and void and of no force
and effect unless Mortgagee, within ten days after receiving written notice from Mortgagor, fails to pay the
ad valorem taxes pursuant to Lender's rights as set forth in this instrument.
10.5
A
Leasehold Deed of Trust Provisions
The Ground Lease creating the Leasehold Estate is a legal, valid, binding and enforceable
agreement between the parties thereto, except as limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar law affecting creditors' rights generally,
and the Ground Lease has not been modified or amended in any respect unless a copy of such
modification or amendment has been provided to Mortgagee. Mortgagor is the owner of the
lessee’s interest in the Leasehold Estate, free and clear of any liens, charges, encumbrances,
security interests and adverse claims whatsoever except those approved by Mortgagee. This Deed
of Trust constitutes a valid, subsisting first lien deed of trust on the lessee's interest in the
Leasehold Estate in accordance with the terms hereof. Mortgagor is not in default thereunder, and
to the best of Mortgagor's knowledge, the Landlord under the Ground Lease is not in default
thereunder, and no event exists which, with the passage of time or the giving of notice, or both,
shall constitute an event of default thereunder.
Notwithstanding any conflict between the terms of this Deed of Trust and the Ground Lease, this
Deed of Trust is executed and delivered in conformity with the Ground Lease, and in the event of
such conflict, if any, the terms of this Deed of Trust shall be controlling as between Mortgagor and
Mortgagee
Mortgagor shall timely and fully observe and perform all of the terms, covenants, agreements and
conditions of the Ground Lease required therein to be observed and performed by Mortgagor as
lessee, and will furnish to Mortgagee rental receipts from the Landlord under the Ground Lease or
other satisfactory evidence of payment evidencing the timely payment of all rents due thereunder.
In addition, Mortgagor will not, whether or not in accordance with the terms of the Ground Lease,
do or permit anything to be done, the doing of which, or the omission of which, will terminate or
materially impair of tend to materially impair the security of this Deed of Trust or will be grounds
for terminating the Ground Lease or declaring a forfeiture thereof.
Mortgagor will (i) promptly notify Mortgagee in writing of the receipt by Mortgagor of any notice
(other than notices customarily sent on a regular periodic basis) from the Landlord under the
Ground Lease and of any notice noting or claiming any default by Mortgagor in the performance
or observance of any of the terms, covenants or conditions on the part of Mortgagor to be
performed or observed under the Ground Lease; (ii) promptly notify Mortgagee in writing of the
receipt by Mortgagor of any notice from the Landlord to Mortgagor of termination of the Ground
Lease pursuant to the provisions of the Ground Lease; and (iii) promptly cause a copy of each such
notice received by Mortgagor from Landlord to be delivered to Mortgagee and in any event, within
forty-eight (48) hours after receipt thereof by Mortgagor.
Mortgagor will not consent to any waiver or cancellation of any provision of the Ground Lease nor,
without the prior written consent of Mortgagee, to the subordination of the Ground Lease to any
mortgage of the fee interest of the Landlord in the Leasehold Estate.
B.
C.
D.
E.
DEED OF TRUSr, SECURITY AGREEMEVr AND FINANCING STATEMENT PAGE 14
DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E
F.
G.
Mortgagor will furnish to Mortgagee, upon demand, proof of payment of all items which are
required to be paid by Mortgagor pursuant to the Ground Lease and proof of payment of which is
required to be given to Landlord in the Leasehold Estate.
Mortgagor may exercise any option or right to renew or extend the term of the Ground Lease or
exercise the fee option contained therein without the prior written consent of Mortgagee.
Mortgagor shall give Mortgagee simultaneous written notice of the exercise of such option or right
to renew or extend, together with a copy of the instrument given to the Landlord under the Ground
Lease exercising such option or right, and, thereafter, shall promptly deliver to Mortgagee a copy
of any acknowledgment by the Landlord the Ground Lease with respect to the exercise of such
option or right. If such option or right has not been exercised as aforesaid, then not more than
one hundred eighty (180) and not less than one hundred twenty (120) days before the right of
Mortgagor to exercise any option or right to renew or extend the term of the Ground Lease shall
expire, Mortgagor shall give Mortgagee written notice specifying the date, term and manner for
which such option or renewal is to be exercised. Within ten (10) days of written demand by
Mortgagee, Mortgagor shall exercise any such option or renewal which is necessary to extend the
term of the Ground Lease beyond the term of this Deed of Trust or to comply with any law affecting
Mortgagor or Mortgagee or which is necessary, in Mortgagee’s reasonable judgment, to preserve
the value of the security intended to be afforded by this Deed of Trust. Mortgagor shall promptly
provide evidence of such exercise of such option or right to Mortgagee’s reasonable satisfaction.
In the event that Mortgagor fails to so exercise any such option or right or in the event of any
default hereunder which is continuing beyond the applicable cure periods, Mortgagor hereby
agrees and grants to Mortgagee all right and authority to exercise such option in the name of
Mortgagor or in its own name. Nothing contained herein shall affect or limit any rights of
Mortgagee granted under the Ground Lease.
Mortgagor will execute and deliver on the request of Mortgagee, such instruments as Mortgagee
may deem useful or required to permit Mortgagee to cure any default under the Ground Lease or
permit Mortgagee to take such other actions as Mortgagee considers desirable to cure or remedy
the matter in default and preserve the interest of Mortgagee in the Leasehold Estate.
In the event Mortgagor shall be in default of any of its obligations, covenants or agreements under
the Ground Lease and Mortgagor shall thereafter fail to cure such default within the applicable
grace or curative period provided in the Ground Lease, Mortgagee may take any act it deems
necessary to cure such default. Without limiting such right of access as Mortgagee may otherwise
have to the Mortgaged Premises under this Deed of Trust, Mortgagor shall permit Mortgagee to
enter upon the Mortgaged Premises with or without notice and to do anything thereon or thereto
which Mortgagee shall deem necessary or prudent for the purpose of curing any default by
Mortgagor. Notwithstanding anything herein contained, Mortgagee shall have only the right, but
not the obligation, to cure any default by Mortgagor. Mortgagee's curing of such default shall not
have the effect of waiving or releasing Mortgagor from any of its obligations under the Ground
Lease or this Deed of Trust.
If Mortgagee shall make any payment or perform any act or take any action in accordance with the
preceding subparagraph (i), all monies expended by Mortgagee in connection therewith (including,
but not limited to, legal expenses, including reasonable attorney's fees and disbursements), shall
be paid by Mortgagor to Mortgagee forthwith upon demand by Mortgagee, and shall be Loan
Instrument by this Deed of Trust, and Mortgagee shall have, in addition to any other right or
remedy of Mortgagee, the same rights and remedies in the event of non-payment of any such
sums by Mortgagor as in the case of a default by Mortgagor in the payment of the Obligations.
Mortgagor agrees that in the event Mortgagee elects to make any payments or do any act or thing
required to be paid or done by Mortgagor as lessee of the Ground Lease, Mortgagee shall in
addition to all other remedies of Mortgagee herein be fully subrogated to any and all rights of
Mortgagor as lessee and of the fee owner of the Mortgaged Premises, as lessor, under the terms
and provisions of the Ground Lease arising from or relating to such payment or performance under
the Ground Lease, and any sums advanced by Mortgagee shall be a part of the Obligations secured
by this Deed of Trust.
H.
1.
J.
K.
DEED OF TRUSr, SECURITY AGREEMEVr AND FINANCING STATEMENT PAGE 15
DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E
L.Mortgagor covenants and agrees that:
(1) it will not surrender or relinquish the Leasehold Estate created by the Ground Lease, nor
terminate or cancel the Ground Lease or any rights it may have with respect thereto, including but
not limited to, any right of first refusal or purchase option, and that it will not, without the express
prior written consent of Mortgagee, modify, change, supplement, alter or amend the Ground
Lease or any of its rights with respect thereto, either orally or in writing, and as further security for
the repayment of the Obligations and for the performance of the covenants herein and in the
Ground Lease contained, Mortgagor hereby assigns to Mortgagee all of its rights, privileges and
prerogatives as lessee under the Ground Lease to surrender, relinquish, terminate, cancel, modify,
change, supplement, alter or amend the Ground Lease, and any such surrender, relinquishment,
termination, cancellation, modification, change, alteration or amendment of the Ground Lease
without the prior written consent thereby by Mortgagee shall be void and of no force and effect.
As further security to Mortgagee, Mortgagar does hereby deposit with Mortgagee the Ground
Lease which shall be retained by Mortgagee until all Obligations are fully paid; and
(2) No release or forbearance of any obligations of Mortgagor under the Ground Lease pursuant
to the Ground Lease or otherwise, shall release Mortgagor from any of its obligations under this
Deed of Trust, including its obligations with respect to payment or rents as provided for in the
Ground Lease and the performance of all of the terms, provisions, covenants, conditions and
agreements contained in the Ground Lease, to be kept, performed and complied with by the lessee
therein
If there shall be filed by or against the Mortgagor a petition under the Bankruptcy Code, 11 U.S.C.
Section 101 et. seq. (the "Bankruptcy Code"), and the Mortgagor, as lessee under the Ground
Lease, shall determine to reject the Ground Lease, pursuant to Section 365(a) of the Bankruptcy
Code, then the Mortgagor shall give the Mortgagee not less than fifteen (15) days prior written
notice of the date on which the Mortgagor shall apply to the Bankruptcy Court for authority to
reject the Ground Lease. Mortgagee shall have the right, but not the obligation, to serve upon the
Mortgagor within such fifteen (15) day period a notice stating that (1) the Mortgagee demands
that the Mortgagor assume and assign the Ground Lease to the Mortgagee pursuant to Section
365 of the Bankruptcy Code, and (2) the Mortgagee covenants to cure or provide adequate
assurance of prompt cure of all defaults and provide adequate assurance of future performance
under the Ground Lease. If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject the Ground Lease and shall comply with
the demand provided for in clause (1) of the preceding sentence within thirty (30) days after the
notice shall have been given, subject to the performance by the Mortgagee of the covenants
provided for in clause (2) of the preceding sentence.
Effective upon the entry of an order for relief in respect of the Mortgagor under the Bankruptcy
Code, the Mortgagor hereby assigns and transfers to Mortgagee a non-exclusive right to apply to
the bankruptcy court under Section 364(d)(4) of the Bankruptcy Code for an order extending the
period during which the Ground Lease may be rejected or assumed.
So long as any of the Obligations secured by this Deed of Trust shall remain unpaid, unless the
Mortgagee shall otherwise consent in writing, the fee title to and the Leasehold Estate in the
premises demised by the Ground Lease shall not merge, but shall always be kept separate and
distinct, notwithstanding the union of such estates, either in the Landlord or the Mortgagor, or in
a third party by purchase or otherwise.
Mortgagor shall fully perform and comply in all material respects with all covenants, warranties,
representations, and other obligations imposed upon or assumed by it as lessee under the Ground
Lease, and, upon Mortgagor's failure or alleged failure (notwithstanding that the alleged failure
may be contested by Mortgagor) so to do, Mortgagee shall have the absolute and immediate right
to enter upon the Mortgaged Premises and to take such other action, to such extent and as often
as Mortgagee, in its opinion, deems necessary or desirable, to prevent or to cure any such failures
or alleged failures by Mortgagor.
M.
N.
0.
P.
DEED OF TRU£r, SECURITY AGREEMEKr AND FINANCING STATEMENT PACE 16
DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E
THE NOTE IS PAYABLE IN FULL ON OR BEFORE ITS STATED MATURITY DATE. THE BORROWER/MORTGAGOR
MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID INTEREST WHEN DUE. THE
MORTGAGEE/LENDER IS UNDER NO OBLIGATION TO REFINANCE THE NOTE AT THAT TIME. THE
BORROWER/MORTGAGOR WILL, THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS
THAT BORROWER/MORTGAGOR MAY OWN, OR BORROWER/MORTGAGOR WILL HAVE TO FIND A LENDER
WILLING TO LEND BORROWER/MORTGAGOR THE MONEY AT PREVAILING MARKET RATES, WHICH MAY BE
CONSIDERABLY HIGHER THAN THE INTEREST RATE ON THE NOTE.
EXECUTED , 2020
MORTGAGOR/DEBTOR:
3KAM REAL ESTATE LLC
By:
Austin Baker, Member
By:
J. Mike Riley, Member
By:
Kent W. Key, Member
STATE OF TEXAS §
9
gCOUNTY OF DENTON
This instrument was acknowledged before me on , 2020, by Austin Baker,
Member, of 3KAM REAL ESTATE LLC, on behalf of 3KAM REAL ESTATE LLC a Texas limited liability company.
NOTARY PUBLIC, State of Texas
STATE OF TEXAS g
§
§COUNTY OF DENTON
This instrument was acknowledged before me on , 2020, by J. Mike Riley,
Member, of 3KAM REAL ESTATE LLC, on behalf of 3KAM REAL ESTATE LLC a Texas limited liability company.
NOTARY PUBLIC, State of Texas
DEED OF TRUn, SECURITY AGREEMEVr AND FINANCING STATEMENT PAGE 17
DocuSign Envelope ID: 56CD7CD5-B6EB493D-9217-E7DD508C654E
STATE OF TEXAS §
§
§COUNTY OF DENTON
This instrument was acknowledged before me on , 2020, by Kent W. Key,
Member, of 3KAM REAL ESTATE LLC, on behalf of 3KAM REAL ESTATE LLC a Texas limited liability company.
NOTARY PUBLIC, State of Texas
Address of Trustee and Mortgagee:
320 W. Eagle Drive, Suite 100
Denton, Texas 76201
After Recording, Please Return To:
ACCESSBAN K TEXAS
320 W. Eagle Drive, Suite 100
Denton, Texas 76201
Attention: Weston Thaggard
DEED OF TRU£r, SECURIry A6REEMENT AND FINANCING STATEMENT PAGE 18
DocuSign Envelope ID: 56CD7CD5-B6EB-493D-9217-E7DD508C654E
EXHIBIT A
BEING a 1.704 acre tract of land SItuated tn the WIlIIam NaII Survey. Abstract No. 970, City of
Denton. Denton County. Texas. aKi beIng a part of 8 called 331 % ago tract of larxj
dosaltnd in a Dea to the City of Denton. as mended in Volume 305, Page 324 of the Dea
R8cords of Denton County. Texas. and also being a part oF Lat I. Bl(xR 1 of The Souhaast
Airport AddItion, per the Replat recorded in Document No 2014.205 of the Plat R8wrds of
Denton County, Texas. together with a C8dlficate of Correction recorded in Duum8nt No
2014'117507 of the OfficIal Rocords of Denton County. Texas. and beIng more p8nlcularly
described as fotlows,
COMMENCING at a 5 Inch aluminum dISk found br comer at the most Wbstetty Southwest
corner of the above CIted Lot 1 ;
THENCE South 89'40'27' East along tIe most Wbsterty South line of said Lot I. for a dist8na
of 185 38 feet to a 1/2 inch iron rod with cap stamped 'KSA ENG- found at an Interior oII
corner of saId Lot 1.
THENCE Nuth 70'42'27" East departIng saId Interior eII corner of Lot 1. for a distance
of 358 75 feet to a 5/8 Inch Iron rcxI WIth cap stamped -TNP' found for corner at the POINT OF
BEGINNING for the herein described tract, SaId point having a NAD83(204 1) g80graphic
coordInate of Latitude ; 33'1 1'46 04"N, Lm9ituck = 97'11'40,76"W.
THENCE Ncxth 00'33'01" East for a distance of 241 72 feet to a 5/8 Inch Iron raf with cap
stamped 'TNP' found Icy corner.
THENCE South 89'43'43- East for a distana of 307.08 bet to a 5/8 inch irw rcx! with cap
stamped -TNP- set for oom8C
THENCE SaIth 00'33'Ql- West for a dIstance of 241 71 foot to a 5/8 imS irm rod with cap
stamped -TNP' set far wnec
THENCE North 89'43'50" West for a distance of 307.08 bet to the POINT OF BEGINNING.
and containing 1 704 acres of land. more or less,
DEED OF TRUST. SECURITy AGREEMENT AND FINANCING STATEMENT PAGE 19