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293 Watkins .CONSTRUCTION LOAN AGREEMENT ( "Loan Agreement ") NEIGHBORHOOD STABILIZATION PROGRAM Awarding Federal Agency: United States Department of Housing and Urban Development ( "HUD ") TDHCA Federal Award Number: B- 08 -DN -48 -0001 Federal Award Year (Year of Award from HUD to TDHCA): 2008 TDHCA Award Year (Year of TDHCA Board Approval): 2009 THIS Neigh hood Stabilization Program ( "NSP ") CONSTRUCTION LOAN AGREEMENT dated this day of June, 2012 is made by and between the TEXAS DEPARTMENT OF HOUSING COMMUNITY AFFAIRS, a public and official agency of the State of Texas ( "Lender "), whose address is 221 E. 11t1i Street., P.O. Box 13941, Austin, Travis County, Texas 78711 -3941, and CITY OF HUNTSVILLE, a political subdivision of the State of Texas ( "Borrower), whose address is 1212 Avenue M, Huntsville, Walker County, Texas 77340, in connection with a loan in the original principal sum of Ninety Six Thousand Six Hundred Nine and 70/100 Dollars ($96,609.70), which are for construction costs. The acquisition cost of Lot as described herein, were outside of the loan. GENERAL Borrower is engaged in the business of construction, which includes rehabilitation and new construction, under NSP and the sale of single - family residences on certain lot(s) located in Walker County, Texas as described as BEING 0.133 of an acre of land, more or less, situated in the P. GRAY LEAGUE, A -24, within the City Limits of Huntsville, Walker County, Texas, and being more particularly described by metes and bounds on Exhibit "A" attached hereto and made a part hereof. The Loan that is the subject of this NSP Construction Loan Agreement is to be used by Borrower to finance the acquisition and construction of a single - family residence, in accordance with the Neighborhood Stabilization Program Contract (as defined herein) for the single- family dwelling to be constructed or rehabilitated, as those terms are hereinafter defined. ARTICLE 1 - DEFINITIONS For purposes of this Loan Agreement, the following terms shall have the respective meanings assigned to them. 1.1 Advance. The terms "Advance" or "Advances" shall mean a disbursement by Lender of any of the proceeds of the Note and/or the Borrower's Deposit (defined herein) based on an interim inspection supported by appropriate documentation as to be determined by Lender. 1.2 Affidavit of Borrower. The term "Affidavit of Borrower" shall mean a sworn affidavit of Borrower (and such other parties as Lender may require) to the effect that all statements, invoices, bills, and other expenses incident to construction of Improvements incurred to a specified date, whether or not specified in the Approved Budget for such Improvements, have been paid in T:Udld\Loan Docs \NSP\Interim Construction Loans \1265 City of 13untsville\lnterim Construction Loan Agreement 20120319_v5.doc Page 1 of 58 OArE: 1.1ARC1t 31, 2711 SCALE: 1-.2V FILE hoa WA[xrr . 5$ tRAC' 1 DRAWN q!: JW cItECKED Br: 4[71, T:lldld\Loan DOGS \NSP\Interim Construction Loans11265 City of Huntsville \Interim Construction Deed of Trust 20120227_ v4.doc Page 35 of 35 mg O CC z„.) NEIGHBORHOOD STABILIZATION PROGRAM , ° =.yarding Federal Agency: United States Department of Housing and Urbankelopment TDHCA Federal Award Number: B- 08 -DN -48 -0001 Federal Award Year (Year of Award from HUD to TDHCA): 200 �, • TDHCA Award Year (Year of TDHCA Board Approval): 0t� NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL 'ARSON, 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 INTERIM CONSTRUCTION DEED OF TRUST (WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS) ( "Deed of Trust ") THE STATE OF TEXAS § COUNTY OF WALKER § herein. 1.01 Grantor: CITY OF HUNTSVILLE, a political subdivision of the State of Texas 1.02 Grantor's mailing address: 1212 Avenue M, Huntsville, Walker County, Texas 77340 1.03 Beneficiary: TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, a public and official agency of the State of Texas, and any lawful owner, holder, pledgee, or assignee of any indebtedness secured hereby. 1.04 Beneficiary's mailing address: P.O. Box 13941, Austin, Travis County, Texas 78711- 3941. 1.05 Trustee: Timothy K. Irvine of Travis County, Texas. 1.06 Mortgaged Property: The Real Property and the Personal Property. 1.07 Project: Single- family dwelling to be constructed or rehabilitated on the Real Property. ARTICLE I Definitions The following terms shall have the respective meanings assigned to them when used T:\idld \Loan Docs\NSP\Interim Construction Loans \1265 City of Huntsville\Interim Construction Deed of Trust 20120227 v4.doc — Page 1 of 35 1.08 NSP: Neighborhood Stabilization Program or ( "Program ") as authorized by the Housing and Economic Recovery Act of 2008 as an adjunct to the Community Development Block Grant Program. (Housing and Economic Recovery Act of 2008, Pub. L. 110 -289, 112 STAT 2850.) 1.09 NOFA: Notice of Funding Availability issued by TDHCA for the NSP issued in 2009. 1.10 NOFA -R: Notice of Funding Availability Re- Allocation. 1.11 NOFA -R- SERIES 2: Neighborhood Stabilization Program Re- allocation — Series 2 (NSPR- Series 2) issued in 2010. 1.12 Eligible Household: Individual or families whose income[s] do not exceed 120% of area median income ( "AMI ") as defined in the Housing and Economic Recovery Act 2301 (f)(3)(A)(i) and (ii) of 2008. 1.13 Financing Mechanisms: Mechanisms that provide affordable homeownership opportunities to assist homebuyers to purchase and redevelop a foreclosed property at a discount and/or rehabilitate the property as defined in the Housing and Economic Recovery Act 2301 (c)(3)(A) of 2008. 1.14 Real Property: The real property as more particularly described as BEING 0.133 of an acre of land, more or less, situated in the P. GRAY LEAGUE, A -24, within the City Limits of Huntsville, Walker County, Texas, and being more particularly described by metes and bounds on Exhibit "A" attached hereto and made a part hereof, together with (i) all improvements thereon, all rights, hereditaments and appurtenances belonging thereto including rights of ingress and egress, easements, licenses, and all reversionary rights or interests of Grantor; (ii) all fixtures and personal property now or hereafter attached to the Real Property; (iii) all renewals or replacements thereof or articles in substitution therefore, whether or not now or later attached to the Project in any manner; and (iv) all other interests of every kind which Grantor now has or at any time hereafter acquires in and to the Real Property. 1.15 Personal Property: (i) all furniture, equipment and other personal property now or hereafter owned by Grantor, located on the Mortgaged Property, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are or shall be attached to the Project in any manner; (ii) all building materials and equipment now or hereafter delivered to the Mortgaged Property and all building and construction materials, equipment and parts intended to be installed in or on the Real Property or Project; (iii) all plans and specifications for the Project; (iv) all contracts and subcontracts relating to the Project; (v) all deposits (including tenants security deposits, if any), funds, accounts (including any accounts in which escrows are deposited as a reserve for the payment of taxes, assessments and insurance on the Mortgaged Property), contract rights, instruments, documents, general intangibles (including trademarks, trade names and symbols used in connection therewith), and notes or chattel paper arising from or by virtue of any transactions related to the Mortgaged Property; (vi) all permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Mortgaged Property; (vii) all bank accounts in which rental income from the Mortgaged Property is deposited; (viii) all proceeds arising from or by virtue of the sale, lease or other disposition of any of the Real or Personal Property; (ix) all proceeds (including premium refunds) payable or to T: \Idld\L.oan Does\NSP\Interim Construction Loans \1265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc — Page 2 of 35 be payable under each policy of insurance relating to the Project; (x) all proceeds arising from the taking of all or a part of the Real Property or any rights appurtenant thereto, including change of grade of streets, curb cuts or other rights of access, for any public or quasi -public use under any law, or by rights of eminent domain, or by private or other purchase in lieu thereof; (xi) all other interests of every kind and character which Grantor now has or at any time hereafter acquires in and to the Personal Property and all property which is used or useful in connection therewith. 1.16 Construction Loan Agreement: The NSP Construction Loan Agreement ( "Loan Agreement ") of even date herewith executed by and between Grantor (Borrower in Loan Agreement or the maker of the Note if different from Grantor) and Beneficiary (Lender in Loan Agreement), which Loan Agreement sets forth, among other things, the procedure and requirements for disbursing the loan proceeds to be evidenced by the Note. 1.17 Note: The NSP promissory note ( "Note ") of even date herewith executed by Grantor payable to the order of Beneficiary in the original principal sum of $96,609.70 payable as therein provided and finally maturing as therein provided, and all modifications, extensions and renewals thereof. 1.18 Loan Documents: The NSP Note, this Deed of Trust, the Construction Loan Agreement, and any and all other documents or instruments heretofore or hereafter executed by Grantor (or the maker of the Note if different from Grantor) securing, evidencing or in any way pertaining to the indebtedness evidenced by the Note and hereafter are the ( "Loan Documents. ") 1.19 Governmental Requirements. All laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the city, or any other political subdivision in which the Mortgaged Property is located, and any other political subdivision, agency or instrumentality exercising jurisdiction over Grantor or the Mortgaged Property including, without limitation, the following: the Civil Rights Act of 1964 (42 U.S.C. 2000(d); Executive Order 11063, as amended by Executive Order 12259; Executive Order 11246; Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.); Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.); Fair Credit Reporting Act (15 U.S.C. 1681 et seq.); Fair Housing Act (42 U.S.C. 3601 et seq.); the Americans with Disabilities Act of 1990 (P.L. 101 -336); of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations (24 CFR Part 8); Architectural Barriers Act of 1968 (42 U.S.C. 4151 et seq.); Federal Drug Free Workplace Act of 1988 and the regulations promulgated thereunder including, without limitation, 54 CFR Part 4956, Section 3 of the Housing and Urban Development Act of 1968; Executive Orders 11625, 12432 and 12138, as amended; the Copeland "Anti - Kickback" Act (18 U.S.C. § 874 et seq.); the Davis -Bacon Act (40 U.S.C. § 276a et seq.); Sections 103 and 107 of the Work Hours and Safety Standards Act. (40 U.S.C. § 327 et seq.); the Uniform Relocation Assistance and Real Property Acquisition Policies Act (42 U.S.C. § 4201 et seq.); the Housing and Community Development Act of 1974; the National Environmental Policy Act (42 U.S.C. § 4321 et seq.); ( "NEPA "); the Lead -Based Paint Poisoning Prevention Act (42 U.S.C. § 4321 et seq.); The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; the State of Texas Senate Bill 1356; Title 8, and Chapter 92 of the Texas Property Code; Solid Waste Disposal Act TEX. HEALTH & SAFETY CODE Ann. Ch. 361; Comprehensive Municipal Solid Waste Management, Resource T: \Idld \Loan D0cs\NSP\lnterim Construction Loans \1265 City of Huntsville\lnterim Construction Deed of Trust 20120227 v4.doc Page 3 of 35 Recovery, and Conservation Act. TEX. HEALTH & SAFETY CODE Ann. Ch 363; County Solid Waste Control Act. TEX. HEALTH & SAFETY CODE Ann. Ch 364; Texas Clean Air Act, TEX. HEALTH AND SAFETY CODE Ann. Ch.; and Hazardous Communication Act, TEXAS HEALTH AND SAFETY CODE Ann. Ch. 502; and such Governmental Requirements as may be from time to time amended or superseded and all of their implementing regulations, as may be amended. 1.20 Anti- Terrorism Laws. Any and all present and future judicial decisions, statutes, rulings, rules, regulations, permits, certificates, orders and ordinances of any Governmental Authority relating to terrorism or money laundering, including, without limiting the generality of the foregoing, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Pub. L. No. 107 -56); the Trading the Enemy Act (50 U.S.C.A. App. 1, et seq.); the International Emergency Economic Powers Act (50 U. S. C. A. §1701 -06); Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (relating to "Blocking Property and Prohibiting Transactions With Persons Who Commit, Threatened to Commit, or Support Terrorism ") and the United States Treasury Department's Office of Foreign Assets Control list of "Specifically Designated National and Blocked Persons" (as published from time to time in various mediums, including, without limitation, at http:www.treas.goviofacitl 1 sdn.pdf). 1.21 Prohibited Person. Any person or entity that (i) is specifically named or listed in, or otherwise subject to, any Anti- Terrorism Laws, (ii) is owned or controlled by, or acting for or on behalf of any person or entity specifically named or listed in, or otherwise subject to, any Anti - Terrorism Laws, (iii) Beneficiary is prohibited from dealing with, or engaging in any transaction with, pursuant to an Anti- Terrorism Laws, or (iv) is affiliated with any person or entity described in clauses (i) - (iii) of this definition. 1.22 Environmental Laws and Regulations. Any federal, state, or local law, statute, ordinance, or regulation, whether now or hereafter in effect, pertaining to health, industrial hygiene, or the environmental conditions on, under, or about the Land or the Improvements, including without limitation, the following, as now or hereafter amended, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ( "CERCLA "), 42 U.S.C.A. §9601 et seq.; Resource, Conservation and Recovery Act ( "RCRA "), 24 U.S.C.A. §6901 et seq. as amended by the Superfund Amendments and Reauthorization Act of 1986 ( "SARA "), Pub. L. No. 99 -499, 100 Stat. 1613; the Toxic Substances Control Act, 15 U.S.C.A. §2601 et seq.; Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C.A. §1101 et seq.; Clean Water Act ( "CWA "), 33 U.S.C.A. §1251 et seq., Clean Air Act ( "CAA "), 42 U.S.C.A. §7401 et seq.; Federal Water Pollution Control Act ( "FWPCA "), 33 U.S.C.A. §1251 et seq.;); Protection of Wetlands (Executive Order 11990, Mary 24, 1977); Coastal Management Act (Sections 307 (c) and (d)); Safe Water Driving Act (42 U.S.C. 201, 300(f) and 21U.S.C. 349); Protection of the Environment, Sole Source Aquifers (40 CFR 149); Endangered Species Act (50 CFR 402); Wild and Scenic Rivers Act (16 U.S.C. 1271 et seq. as amended, particularly section 7(b) and (c)); Farmland Protection Policy Act (7 CFR 658); Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations (Executive Order 12898, February 11, 1994); Parts of Environmental Review Procedures for Entities Assuming HUD Environmental Responsibilities: Noise Abatement and Control (24 CFR 51B); Explosive T: \1d1d1Loan Does \NSP\Interim Construction Loans \1265 City of Huntsville\Interim Construction Deed of Trust_20120227_ v4.doc Page 4 of 35 and Flammable Operations (24 CFR 51C); Toxic Chemicals and Radioactive Materials (24 CFR 58.5(a); Airport Clear zones and Accident Potential Zones (24 CFR51 D); and any corresponding state laws or ordinances including but not limited to the Texas Water Code ( "TWC ") §26.001 et seq.; Texas Health & Safety Code ( "THSC ") §361.001 et seq.; Texas Solid Waste Disposal Act, Tex. Rev. Civ. Stat. Ann. Art. 4477 -7; and regulations, rules, guidelines, or standards promulgated pursuant to such laws, statute and regulations, as such statutes, regulations, rules, guidelines, and standards are amended from time to time. The environmental effects of each activity carried out with funds provided under the NSP program must be assessed in accordance with the provisions of the Texas NSP NOFA, National Environmental Policy Act of 1969 (NEPA) and the related activities listed in HUD's implementing regulations at 24 CFR Parts 50, 51, 55 and 58. Each such activity must have an environmental review completed and support documentation prepared complying with the National Environmental Policy Act of 1969 and regulations at 24 CFR Parts 50, 51, 55 and Part 58. No funds may be requested or committed to an activity before the completion of the environmental review process, including the requirements of 24 CFR §58.6, and written clearance has been provided by the Department. 1.23 Permitted Exceptions. The exceptions from coverage found in Schedule B of the commitment for mortgagee policy of title insurance issued by Walker County Title Company, a Texas corporation, as agent for Fidelity National Title Insurance Company, GF #201108782, issued April 18, 2012 to Beneficiary herein. ARTICLE 11 Conveyance in Trust 2.01 Grant. Grantor, for and in consideration of the debt evidenced by the Note, has granted, assigned, and conveyed, and by these presents does grant, assign and convey the Mortgaged Property, in trust unto the Trustee, his successors and assigns, to have and to hold the Mortgaged Property, unto Trustee, his successors and assigns, forever. To the extent permitted by law, the Personal Property shall be deemed to be a part of and affixed to the Real Property. In the event the estate of the Grantor in and to any of the Mortgaged Property is a leasehold estate, this conveyance shall include and the lien and security interest and assignment 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 Grantor in or to the property demised under the lease creating such leasehold estate and including Grantor's rights, if any, to purchase the property demised under such lease and, if fee simple title to any of such property shall ever become vested in Grantor, such fee simple interest shall be encumbered by this Deed of Trust in the same manner as if Grantor had fee simple title to such property as of the date of execution hereof. Grantor hereby binds itself, its successors and assigns, to warrant and forever defend the Mortgaged Property unto Trustee, his successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof. 2.02 Security. This conveyance is made in trust, however, to secure and enforce the payment of the Note, the obligations of Grantor (and /or the maker of the Note, if different from Grantor) under the other Loan Documents and payment of the Other Indebtedness as defined herein. If T: \1d1d1Loan Does \NSP \Interim Construction Loans\1265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc Page 5 of 35 Grantor shall perform the covenants and agreements herein contained, then, and only then, this conveyance shall become null and void and shall be released at Grantor's expense; otherwise it shall remain in full force and effect. No release of this conveyance, or of the lien or security interest or assignment created and evidenced hereby, shall be valid unless executed by Beneficiary. 2.03 Other Indebtedness. This Deed of Trust shall secure, in addition to the Note, all funds hereafter advance d by Beneficiary to or for the benefit of Grantor as contemplated by any provision herein or for any other purpose, and all Other Indebtedness, of whatever kind or character, owing or which may hereafter become owing by Grantor to Beneficiary, whether such indebtedness is evidenced by note, open account, overdraft, endorsement, surety agreement, guaranty, or otherwise, it being contemplated that Grantor may hereafter become indebted to Beneficiary in further sum or sums ( "Other Indebtedness "); provided, however, in no event shall this Deed of Trust secure payment of any installment loan or any open -end line of credit established under Chapter 3, Chapter 4 or Chapter 15 of the Texas Finance Code. This Deed of Trust shall also secure all renewals and extensions of any of the Other Indebtedness secured hereby. If the Note or Other Indebtedness shall be collected by legal proceedings, whether through a probate or bankruptcy court or otherwise, or shall be placed in the hands of an attorney for collection after maturity, whether matured by the expiration of time or by any option given to the Beneficiary to mature same, Grantor agrees to pay Beneficiary's attorney's and collection fees in the amount set forth in the Note, and such fees shall be a part of the indebtedness secured hereby. ARTICLE III Grantor's Covenants and Representations Grantor hereby covenants, warrants and represents to and agrees with Beneficiary and with Trustee as follows: 3.01 Payment and Performance. Grantor (i) will pay all of the indebtedness secured hereby, together with the interest thereon, when the same shall become due, in accordance with the terms of the Note or any other instrument evidencing, securing, or pertaining to such indebtedness or evidencing any renewal or extension of such indebtedness, or any part thereof, and (ii) will punctually and properly perform all of Grantor's covenants, obligations, and liabilities under any other security agreement, mortgage, deed of trust, collateral pledge agreement, contract, assignment, loan agreement or any other instrument or agreement of any kind now or hereafter existing as security for, executed in connection with, or related to the indebtedness or other obligations secured hereby, or any part thereof. 3.02 Title and Right to Convey. Grantor (i) has in its own right good and indefeasible title in fee simple, except as otherwise provided herein, to the Mortgaged Property which is free from encumbrance superior to the indebtedness hereby secured, except as otherwise provided herein, and (ii) has full right to make this conveyance. 3.03 Insurance. Grantor shall require the builder and/or its general contractor to obtain and maintain at said builder's and/or general contractor's sole expense: (1) all -risk insurance with T: \ldld\Loan Docs\TISP \Interim Construction Loans \1265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc _ Page 6 of 35 respect to all insurable Mortgaged Property, against Ioss or damage by fire, lightning, windstorm, explosion, hail,' tornado and such hazards as are presently included in so- called "all- risk" coverage and against such other insurable hazards as Beneficiary may reasonably require, in an amount not less than the unpaid balance of the Note, or if available and requested by Beneficiary 100% of the full replacement cost, including the cost of debris removal, without deduction for depreciation and sufficient to prevent Grantor and Beneficiary from becoming a coinsurer, such insurance to be in Builder's Risk (non - reporting) form during and with respect to any construction on the Real Property; (2) if and to the extent any portion of the Project is in a special flood hazard area, a flood insurance policy in an amount equal to the lesser of the principal face amount of the Note or the maximum amount available; (3) commercial general liability insurance, on an "occurrence" basis, against claims for bodily injury, death or property damage occurring on or about the Project, to afford protection in a "single limit" of not less than $1,000,000 in the event of bodily injury to, or death of, any number of persons or of damage to property arising out of one occurrence, for the benefit of Grantor and Beneficiary as named insured; and (4) such other insurance on the Mortgaged Property as may from time to time be reasonably required by Beneficiary, if available, (including but not limited to rent loss or boiler and machinery insurance) and against other insurable hazards or casualties which at the time are commonly insured against in the case of premises similarly situated, due regard being given to the height, type, construction, location, use and occupancy of buildings and improvements. All insurance policies shall be issued and maintained by insurers, in amounts, with deductibles, and in form reasonably satisfactory to Beneficiary, and shall require not less than fifteen (15) days' prior written notice to Beneficiary of any cancellation or change of coverage. All insurance policies maintained, or caused to be maintained, by Grantor with respect to the Mortgaged Property, except for public liability insurance, shall provide that each such policy shall be primary without right of contribution from any other insurance that may be carried by Grantor or Beneficiary and that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured. If any insurer which has issued a policy of hazard, liability or other insurance required pursuant to this Deed of Trust becomes insolvent or the subject of any bankruptcy, receivership or similar proceeding or if in Beneficiary's reasonable opinion the financial responsibility of such insurer is or becomes inadequate, Grantor shall, in each instance promptly upon the request of Beneficiary and at Grantor's expense, obtain and deliver to Beneficiary a like policy (or, if and to the extent permitted by Beneficiary, a certificate of insurance) issued by another insurer, which insurer and policy meet the requirements of this Deed of Tnist. All such policies for loss of or damage to the Mortgaged Property shall contain a standard mortgage clause (without contribution) naming Beneficiary as mortgagee with loss proceeds payable to Beneficiary notwithstanding (i) any act, failure to act or negligence of or violation of any warranty, declaration or condition contained in any such policy by any named insured; (ii) the occupation or use of the Mortgaged Property for purposes more hazardous than permitted by the terms of any such policy; (iii) any foreclosure or other action by Beneficiary under this Deed of Trust; or (iv) any change in title to or ownership of the Mortgaged Property or any portion thereof, such proceeds to be held for application as provided in this Deed of Trust. A copy of each initial insurance policy (or a satisfactory certificate of insurance) shall be delivered to Beneficiary at the time of execution of this Deed of Trust, with premiums fully paid, and each renewal or substitute policy (or certificate) shall be delivered to Beneficiary, with premiums fully paid, at least ten (10) days before the termination of the policy it renews or replaces. Grantor shall pay all premiums on policies required T:\ldld\Loan Docs\NSP\interim Construction Loans \1265 City of Huntsville\lnterim Construction Deed of Trust 20120227 v4.doc — — Page 7 of 35 hereunder as they become due and payable and promptly deliver to Beneficiary evidence satisfactory to Beneficiary of the timely payment thereof. If any loss occurs at any time when Grantor has failed to perform Grantor's covenants and agreements in this section, Beneficiary shall nevertheless be entitled to the benefit of all insurance covering the loss and held by or for Grantor, to the same extent as if it had been made payable to Beneficiary. Upon any foreclosure hereof or transfer of title to the Mortgaged Property in extinguishment of the whole or any part of the secured indebtedness, all of Grantor's right, title and interest in and to the insurance policies referred to in this section (including unearned premiums) and all proceeds payable thereunder shall thereupon vest in the purchaser at foreclosure or other such transferee, to the extent permissible under such policies. Beneficiary shall have the right (but not the obligation) to receive the proceeds of, all insurance for loss of or damage to the Mortgaged Property. If Grantor fails to act reasonably and promptly in making proof of loss for, or settling or adjusting any claim under, any such insurance, then Beneficiary shall have the right to make such proof and settle and /or adjust, such claim; and the expenses incurred by Beneficiary in the adjustment and collection of insurance proceeds shall be a part of the secured indebtedness and shall be due and payable to Beneficiary on demand. Beneficiary shall not be, under any circumstances, liable or responsible for failure to collect or exercise diligence in the collection of any of such proceeds or for the obtaining, maintaining or adequacy of any insurance or for failure to see, to the proper application of any amount paid over to Grantor. Any such proceeds received by Beneficiary shall, after deduction therefrom of all reasonable expenses actually incurred by Beneficiary, including attorneys' fees, at Beneficiary's option be (a) released to Grantor, or (b) applied (upon compliance with such reasonable terms and conditions as may be required by Beneficiary) to repair or restoration, either partly or entirely, of the Mortgaged Property so damaged, or (c) applied to the payment of the secured indebtedness in such order and manner as Beneficiary, in its sole discretion, may elect, whether or not due; provided, however, that Beneficiary shall make such proceeds available to Grantor to pay for restoration or repair of the Mortgaged Property, so damaged, if either (i) the amount of such proceeds is less than 5% of the construction costs, or (ii) Grantor agrees to reasonable, Construction Loan provisions (primarily regarding advances of those proceeds and Beneficiary's "pricing" of its activities and expenses connected therewith) and amendments to the Loan Documents executed in connection with the Note, as then proposed by Beneficiary. In any event, the unpaid portion of the secured indebtedness shall remain in full force and effect and the payment thereof shall not be excused. Grantor shall at all times comply with the requirements of the insurance policies required hereunder and of the issuers of such policies and of any board of fire underwriters or similar body as applicable to or affecting the Mortgaged Property. 3.04 Taxes and Other Impositions. Grantor will pay all taxes and assessments against or affecting the Mortgaged Property as the same become due and payable, and, if Grantor fails to do so, Beneficiary may pay them, together with all costs and penalties thereon, at Grantor's expense or out of an individual reserve account created to fund any necessary repairs for Mortgaged Property maintained by a first lien lender or bank trustee. Grantor, however, may in good faith, in lieu of paying such taxes and assessments as they become due and payable, contest by appropriate proceedings the validity thereof, and pending such contest Grantor shall not be deemed in default hereunder because of such nonpayment, (i) if prior to delinquency of the asserted tax or assessment, Grantor furnishes Beneficiary an indemnity bond, conditioned that such tax or assessment with interest, cost and penalties be paid as herein stipulated, secured by a T:\Idid \Loan Docs'NSP\Interim Construction Loans11265 City of Huntsville\Interim Construction Deed ofTrust_20120227 v4.doc Page 8 of 35 deposit in cash, or security or surety acceptable to Beneficiary, in the amount of the contested tax or assessment, and a reasonable additional sum to pay all possible costs, interest and penalties imposed or incurred in connection therewith, and (ii) if Grantor promptly pays any amount adjudged by a court of competent jurisdiction to be due, with all costs, penalties and interest thereon, before such judgment becomes final or before any writ or order is issued under which the Mortgaged Property may be sold pursuant to such judgment, whichever first occurs. Grantor shall provide to Beneficiary, on or before January 31 of each year during the term of the Note secured hereby, written evidence that all ad valorem taxes and other assessments against the Mortgaged Property have been paid in full. 3.05 Tax and Insurance Escrow. Intentionally omitted. 3.06 Assignment of Awards. If the lien secured by this Deed of Trust is first and superior, Grantor will hereby assign all judgments, decrees and awards for injury or damage to the Mortgaged Property, all awards or settlements pursuant to proceedings for condemnation thereof, in their entirety to Beneficiary, who may apply the same to the indebtedness secured hereby in such manner as it may elect. Grantor will further hereby authorize Beneficiary to execute and deliver valid acquittances for, and to appeal from, any such award, judgment or decree in the name of Grantor. In the event Beneficiary, as a result of any such judgment or decree of award, believes that the payment or performance of any obligation secured by this Deed of Trust is impaired, Grantor authorizes Beneficiary to declare, without notice, all of the indebtedness secured hereby immediately due and payable. 3.07 Trustee's Title and Future Laws. If, while this trust is in force, the title of Trustee to, or the interest of Beneficiary in, the Mortgaged Property or any part thereof, shall be endangered or shall be attacked directly or indirectly, Grantor authorizes Beneficiary, at Grantor's expense, to take all necessary and proper steps for the defense of such title or interest, including the employment of counsel, the prosecution or defense of litigation, and the compromise or discharge of claims made against such title or interest. If 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 Note, or any part thereof, Grantor shall immediately pay all such taxes. In the alternative, Grantor may, in the event of the enactment of such a law, and must, if it is unlawful for Grantor to pay such taxes, prepay the Note and the Other Indebtedness in full within sixty (60) days after demand therefore by Beneficiary. Grantor shall at any time and from time to time, furnish promptly, upon request, a written statement or affidavit, in such form as may be required by Beneficiary, stating the unpaid balance of the Note, and that there are no offsets or defenses against full payment of the Note and performance of the terms hereof, or if there are any such offsets and defenses, specifying them. 3.08 Repayment to Beneficiary. If, pursuant to any covenant contained herein or in any other instrument executed in connection with the loan evidenced by the Note or in connection with any Other Indebtedness secured hereby, Beneficiary shall expend any money chargeable to Grantor or subject to reimbursement by Grantor under the terms of such covenant or agreement, Grantor will repay the same to Beneficiary immediately at the place where the Note or Other T:Udld\Loan Does \NSPUnterim Construction Loans\1 265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc — — Page 9 of 35 Indebtedness secured hereby is payable, together with interest thereon at the rate of interest payable on account of the Note or such Other Indebtedness in the event of a default hereunder from and after the date of Beneficiary's making such payment. The sum of each such payment shall be added to the indebtedness hereby secured and thereafter shall form a part of the same, and it shall be secured by this Deed of Trust and, by subrogation to all of the rights of the person or entity receiving such payment. 3.09 Condition of Property. Upon completion of certain renovations, additions and improvements to the Project, Grantor will keep every part of the Mortgaged Property in good condition and presenting a good appearance, making promptly all repairs, renewals and replacements necessary to such end, and doing promptly all else necessary to such end. Grantor will discharge all claims for labor performed and material furnished therefore, and will not suffer any lien of mechanics or materialman to attach to any part of the Mortgaged Property. Grantor will guard every part of the Mortgaged Property from removal, destruction and damage, and will not do or suffer to be done any act whereby the value of any part of the Mortgaged Property may be lessened. 3.10 Successors. If the ownership, control or management of the Mortgaged Property or any part thereof becomes vested in a person other than Grantor, or in the event of a change of ownership of more than thirty percent (30 %) interest in any Grantor other than an individual, Grantor agrees that Beneficiary may, without notice to Grantor, deal with such successor or successors in interest with reference to this Deed of Trust and to the indebtedness hereby secured in the same manner as with Grantor without in any way vitiating or discharging Grantor's liability hereunder or upon the indebtedness hereby secured. No sale of the Mortgaged Property, and no forbearance on the part of Beneficiary, and no extension of the time for the payment of the indebtedness hereby secured, given by Beneficiary, shall operate to release, discharge, modify, change or affect the original liability of Grantor or the liability of any guarantors or sureties of Grantor, either in whole or in part. 3.11 Compliance with Governmental Requirements. Grantor covenants that the Mortgaged Property and the improvements now or hereafter erected thereupon and the intended use thereof by Grantor comply with all Governmental Requirements, including, without limitation, all applicable restrictive covenants, zoning ordinances, subdivision and building codes, flood disaster laws, applicable health and Environmental Laws and Regulations and all other ordinances, orders or requirements issued by any state, federal or municipal authorities having or claiming jurisdiction over the Mortgaged Property. Any rehabilitation of an abandoned or foreclosed upon home or residential property under NSP shall be to the extent necessary to comply with applicable, laws, codes, and other requirements related to housing safety, quality, and habitability, in order to sell, rent, or redevelop such homes and properties. Rehabilitation may include improvements to increase the energy efficiency or conservation of such homes and properties or provide a renewable energy source or sources for such homes and properties. Housing and Economic Recovery Act Section 2301 (d)(2) of 2008. The eligibility of renewable energy equipment on existing structures shall be determined by the Beneficiary. T:\ldld \Loan Docs \NSP \Interim Construction Loans \1265 City of 1- Iuntsville\Interim Construction Deed of Trust 20120227 v4.doc Page 10 of 35 Housing that is constructed, including new construction, or rehabilitation with NSP funds must meet all applicable local codes, rehabilitation standards, ordinances, and zoning ordinances at the time of completion. In the absence of a Local code for new construction or rehabilitation, the housing must meet the most current International Building Code. In addition, all NSP funded housing must meet the Texas Minimum Construction Standards, as published in the Texas NSP NOFA. NSP assisted new construction or rehabilitation will comply with HUD Program lead - based paint requirements including lead screening in housing built before 1978 in accordance with 24 CFR Part 92.355 and 24 CFR Part 35, subparts A, B, J", K, M, and R. Multifamily housing assisted with NSP funds must meet the accessibility requirements at 24 CFR part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 794) and covered multifamily dwellings, as defined at 24 CFR 100.201, and the design and construction requirements at 24 CFR 100.205, which implement the Fair Housing Act (42 U.S.C. 3601 - 3619). Finally, NSP assisted housing must meet Energy Efficiency Standards in accordance with Section 2306.187 of the Texas Government Code. 3.12 Money Laundering; Anti- Terrorism Laws. (a) Grantor will furnish all of the funds for the purchase of the Mortgaged Property, other than funds supplied by Beneficiary, and such funds will not be from sources that are described in 18 U.S.C.A. §1956 and §1957 as funds or property derived from "specified unlawful activity." (b) None of Grantor, and constituent party nor Guarantor, if applicable, (nor any person or entity owning an interest in Grantor, and constituent party or Guarantor, if applicable) (i) is a Prohibited Person, or (ii) has violated any Anti- Terrorism Laws. No Prohibited Person holds or owns any interest of any nature whatsoever in Grantor, any constituent party or Guarantor, if applicable, as applicable, and none of the funds of Grantor, any constituent party or Guarantor, if applicable, have been derived from any activity in violation of Anti- Terrorism Laws. 3.13 No Foreign Person. Neither Maker, nor Guarantor, if applicable, is a "foreign person" within the meaning of §1445(f)(3) of the Tax Code. 3.14 Payment of Labor and Materials. Grantor will promptly pay all bills for labor, materials, and specifically fabricated materials incurred in connection with the Mortgaged Property and never permit to exist in respect of the Mortgaged Property or any party thereof any lien or security interest, even though inferior to the liens and security interest, hereof, for any such bill, and in any event never permit to be created or exist in respect of the Mortgaged 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 interest hereof, except for the Permitted Exceptions. 3.15 Sources and Uses of Funds. Without limiting the requirements of Section 3.12 hereof, Grantor has taken, and shall continue to take until the Indebtedness is fully repaid and each and all of the Obligations are satisfied in full, such measures as are required by any and all Anti- Terrorism Laws to assure that the funds invested in Grantor and/or used to make payments on the Indebtedness or the Obligations are derived from (a) transactions and sources that do not violate T: \ldld\Loan Does \NSP\Interim Construction Loans11265 City ofHuntsville\Interim Construction Deed of Trust 20120227 v4.doc — — Page 11 of 35 any Anti- Terrorism Laws, nor to the extent such funds originate outside the United States, do not violate the laws of the jurisdiction from which they originated; and (b) permissible sources under Anti- Terrorism Laws or, to the extent such funds originate outside the United States, under the laws of the jurisdiction from which they originated. If Beneficiary reasonably believes that Grantor, Guarantor, if applicable, any constituent party, or any affiliate of any such parties may have breached any of the representations, warranties or covenants set forth in this Deed of Trust or the other Loan Documents relating to any Anti - Terrorism Laws, any violations of the Byrd Amendment referenced herein and Section 3.16 hereof, or the identity of any person or entity as a Prohibited Person, or person influencing or attempting to influence the federal persons referenced herein and Section 3.16 hereof, then, Beneficiary shall have the right, with or without notice to Grantor, to (1) notify the appropriate governmental authority and to take such action as such governmental authority or applicable Anti- Terrorism Laws or Byrd Amendment may direct; (2) withhold Loan advances and segregate the assets constituting the Loan or any of Grantor's funds or assets deposited with or otherwise controlled by Beneficiary pursuant to the Loan Documents; (3) decline any payment (or deposit such payment with an appropriate United States governmental authority or court) or decline any prepayment or consent request; and/or (4) declare an Event of Default and immediately accelerate the Loan in connection therewith, Grantor agrees that none of Grantor, Guarantor, if applicable, nor any constituent party will assert any claim (and hereby waives, for itself and on behalf of its affiliates, successors, assigns, representatives or agents for any form of damages as a result of any of the foregoing actions, regardless of whether or not Beneficiary 's reasonable belief is ultimately demonstrated to be accurate. Without limiting the requirements of Section 3.11 hereof, Grantor has taken, and shall continue to take until the Indebtedness is fully repaid and each and all of the Obligations are satisfied in full, such measures as are required by the Byrd amendment to the fiscal 1990 appropriations measures for the United States Department of the Interior (P. L. 101 -121) and any guidelines and rules issued by any federal entity in connection therewith, if applicable, to assure that no federal appropriated funds have been paid or will be paid, by or on behalf of Grantor, (i) to any person influencing or attempting to influence, or (ii) for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this award and loan under the NSP. 3.16 Byrd Amendment: Prohibition for Influencin>r Federal Entities. Grantor covenants that, to the best of Grantor's knowledge, Grantor has complied with all restrictions, certifications and disclosure requirements contained in the Byrd amendment to the fiscal 1990 appropriations measures for the United States Department of the Interior (P.L. 101 -121) and with any guidelines and rules issued by any federal entity in connection therewith, if applicable. ARTICLE IV Events of Default 4.01 Events of Default. The following shall be events of default ( "Events of Default ") hereunder: (a) The sale of the Mortgaged Property, or any part thereof without, the prior written consent of Beneficiary, except the sale to an Eligible Household. T:Vd1d\Loan Docs'NSP \Interim Construction Loans \1265 City of Huntsville\Interim Construction Deed of Trust_20120227_ v4.doc Page 12 of 35 (b) Grantor's agreement to or the granting of an easement, restrictive covenant or other encumbrance affecting the Mortgaged Property without the prior written consent of Beneficiary. (c) If Grantor is a corporation, partnership, or limited liability company, more than thirty percent (30 %) of ownership of Grantor (determined by interest held and not by number of the shareholders, partners or members, as applicable) changes other than changes resulting from the transfer of shares or interest among the present owners of Grantor, such determination to be made by aggregating all ownership changes (other than those involving only the present owners of Grantor) occurring subsequent to the date hereof. (d) Grantor's failure to promptly pay when due the indebtedness secured hereby, or any part thereof and such failure continues for a period of thirty (30) days after written notice of such failure is given by Beneficiary to Grantor; or Grantor's failure to keep and perform any of the covenants (other than the failure to pay the indebtedness) or agreements contained herein or in any of the other Loan Documents within thirty (30) days after written notice of such failure is given by Beneficiary to Grantor. (e) Beneficiary's discovery that any statement, representation or warranty in the Note, this Deed of Trust or the other Loan Documents, or in any other writing delivered to Beneficiary in connection with the indebtedness secured hereby is false, misleading or erroneous in any material respect. (f) If Grantor, or any person liable for the indebtedness secured hereby, or any part thereof, including any guarantor of or surety for the performance of any obligation hereunder, (i) files a voluntary petition in bankruptcy; (ii) makes an assignment for the benefit of any creditor; (iii) suffers an order for relief in bankruptcy to be entered against it (iv) admits in writing its inability to pay its debts generally as they become due; (v) applies for or consents to the appointment of a receiver, trustee, or liquidator of Grantor or of any such guarantor or surety or of all or a substantial part of its assets; (vi) takes advantage of or seeks any relief under any bankruptcy, reorganization, debtor's relief or other insolvency law now or hereafter existing; (vii) files an answer admitting the material allegations of, or consenting to, or defaulting in, a petition against Grantor or any such guarantor or surety, in any bankruptcy, reorganization, or other insolvency proceedings; or (viii) institutes or voluntarily is or becomes a party to any other judicial proceedings intended to effect a discharge of the debts of Grantor or of any guarantor or surety, in whole or in part, or to effect a postponement of the maturity or the collection thereof, or to effect a suspension of any of the rights or powers of Beneficiary granted in the Note, this Deed of Trust or in any other instrument evidencing or securing the indebtedness secured hereby. (g) If an order, judgment or decree shall be entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of Grantor or of any guarantor or surety or of all or any substantial part of the assets of Grantor or of any such guarantor or surety; or if Grantor or any guarantor or surety shall fail to pay any money judgment against it within thirty (30) days after any such judgment becomes final and non - appealable. Tadld\Loan Docs1NSP1lnterim Construction Loans11265 City of Huntsvillellnterim Construction Deed of Trust 20120227 v4.doc — — Page 13 of 35 (h) If Grantor or any such guarantor or surety shall fail to have discharged any attachments, sequestration, or similar proceedings against any assets of Grantor or of any guarantor or surety which remains undischarged and unstayed for a period of thirty (30) consecutive days; or if the Mortgaged Property is placed under control or in the custody of any court, or if Grantor abandons any of the Mortgaged Property. (i) Grantor's execution or delivery of any pledge, security agreement, mortgage or deed of trust covering all or any portion of the Mortgaged Property ( "Subordinate Mortgage ") without the prior written consent of Beneficiary (which consent may be withheld). In the event of consent by Beneficiary to the foregoing or in the event the foregoing prohibition is determined by a court of competent jurisdiction to be unenforceable by the provisions of any applicable law, Grantor will not execute or deliver any Subordinate Mortgage unless there shall have been delivered to Beneficiary not Less than ten (10) days prior to the date thereof a copy thereof which shall contain express covenants to the effect: (i) That the Subordinate Mortgage is in all respects unconditionally subject and subordinate to the lien, security interest and assignment evidenced by this Deed of Trust and each term and provision hereof; (ii) That if any action or proceeding shall be instituted to foreclose the Subordinate Mortgage (regardless of whether the same is a judicial proceeding or pursuant to a power of sale contained therein), no tenant of any portion of the Mortgaged Property will be named as a party defendant, nor will any action be taken with respect to the Mortgaged Property which would terminate any occupancy or tenancy of the Mortgaged Property without the prior written consent of Beneficiary; (iii) That all of the rents, royalties (including, but not limited to, royalties arising out of the sale of oil, gas, and any other minerals produced from the Mortgaged Property, or any properties pooled with the Mortgaged Property), issues, profits, revenue, income and other benefits derived from the Mortgaged Property or arising from the use or enjoyment of any portion thereof or from any lease or agreement pertaining thereto, if collected through a receiver or by the holder of the Subordinate Mortgage, shall be applied first to the obligations secured by this Deed of Trust, including principal and interest due and owing on or to become due and owing on the Note and the Other Indebtedness secured hereby and then to the payment of maintenance, operating charges, taxes, assessments, and disbursements incurred in connection with the ownership, operating and maintenance of the Mortgaged Property; and (iv) That if any action or proceeding shall be brought to foreclose the Subordinate Mortgage, written notice of the commencement thereof will be given to Beneficiary contemporaneously with the commencement of such action or proceeding. (j) The liquidation, termination, dissolution, merger, consolidation or failure to maintain good standing in the State of Texas (or in the case of an individual, the death or legal incapacity) of the owner of the Mortgaged Property or any person obligated to pay any part of the secured indebtedness. T:11dld\Loan Docs\NSP\Interim Construction Loans11265 City of HuntsvillelInterim Construction Deed of Trust 20120227_ v4.doc Page 14 of 35 (k) The liens, mortgages or security interests of Beneficiary in any of the Mortgaged Property become unenforceable in whole or in part, or cease to be of the priority herein required, or the validity or enforceability thereof, in whole or in part, shall be challenged or denied by Grantor or any person obligated to pay any part of the secured indebtedness. (1) If the ownership of any of the Mortgaged Property is forfeited or otherwise transferred to any governmental agency under a federal or state law for which forfeiture of property is a potential penalty or remedy. (m) A default or event of default occurs under any other documents executed as security for or in connection with the Note or under any other documents evidencing a loan or indebtedness owed by Grantor to Beneficiary or any other agency of the State of Texas, and the same is not remedied within the applicable period for curing such default (if any). (n) Any portion of the surface of the Mortgaged Property is disturbed or otherwise used by any person in connection with the exploration for or production of any oil, gas or other minerals without the prior written consent of Beneficiary. (o) If Grantor, without Beneficiary's consent, (i) seeks or acquiesces in a zoning reclassification, zoning variance or special exception to zoning of all or any portion of the Mortgaged Property, (ii) grants or consents to any easement, dedication, plat, or restriction (or allows any easement to become enforceable by prescription), (iii) seeks or acquiesces to any imposition of any addition of Governmental Requirements or any amendment or modification thereof, covering all or any portion of the Mortgaged Property. 4.02 Remedies. Upon the occurrence of any Event of Default, Beneficiary, at its sole option, may declare the Note and all Other Indebtedness secured hereby immediately due and payable and/or may pursue any rights and remedies it may have hereunder or at law or in equity. ARTICLE V Nonjudicial Foreclosure and Sale 5.01 Trustee's Sale. Upon an Event of Default, Grantor authorizes and empowers the Trustee, at the request of Beneficiary, at any time during the continuance of any default, to sell all or any portion of the Mortgaged Property, at public auction, to the highest bidder, for cash or for credit against the indebtedness secured hereby if Beneficiary is the highest bidder, at the county court house of the county in Texas in which such Mortgaged Property or any part thereof is situated, as herein described, in the area designated by the commissioners court for such purpose pursuant to a recordation of such designation in the real property records of such county, or if no such recorded designation by the commissioners court has been made, in the area at the county court house designated in the notice of proposed sale posted, filed and served in accordance with the further provisions of this paragraph, between the hours of 10:00 o'clock A.M. and 4 :00 o'clock P.M. on the first Tuesday of any month. The Trustee shall give notice of the time, place and terms of said sale, and of the property to be sold, as follows: T : \ldld\Loan Docs \NSP\Interim Construction Loans11265 City of Huntsvillellnterim Construction Deed of Trust_20120227_ v4.doc Page 15 of 35 Notice of such proposed sale shall be given by posting written notice thereof at feast twenty -one (21) days preceding the date of the sale at the court house door, and by filing a copy of the Notice in the office of the county clerk of the county in which the sale is to be made, and if the property to be sold is situated in more than one county, one notice shall be posted at the court house door and filed with the county clerk of each county in which the property to be sold is situated. In addition, Beneficiary shall, at least twenty -one (21) days preceding the date of sale, serve written notice of the proposed sale by certified mail on each debtor obligated to pay the debt secured hereby according to the records of beneficiary. Service of such notice shall be completed upon deposit of the notice, enclosed in a postpaid wrapper, properly addressed to such debtor at the most recent address as shown by the records of Beneficiary, 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 such service was completed shall be prima facie evidence of the fact of service. Any notice that is required or permitted to be given to Grantor may be addressed to Grantor at Grantor's mailing address. Any notice that is to be given by certified mail to any other debtor may, if no address for such other debtor is shown by the records of Beneficiary, be addressed to such other debtor at Grantor's mailing address. Notwithstanding the foregoing provisions of this paragraph, notice of such sale given in accordance with the requirements of the applicable law of the State of Texas in effect at the time of such sale shall constitute sufficient notice of such sale. Grantor hereby authorizes and empowers the Trustee to sell all or any portion of the Mortgaged Property, together or in lots or parcels, as the Trustee may deem expedient, and to execute and deliver to the purchaser or purchasers of such property, good and sufficient deeds of conveyance of fee simple title with covenants of general warranty made on behalf of the Grantor. In no event shall the Trustee be required to exhibit, present or display at any such sale, any of the personalty described herein to be sold at such sale. The Trustee making such sale shall receive the proceeds thereof and shall apply the same as follows: (i) first, he shall pay the reasonable expense of executing this trust including a reasonable Trustee's fee or commission; (ii) second, he shall pay, so far as may be possible, the indebtedness secured hereby, discharging first that portion of the indebtedness arising under the covenants or agreements herein contained and not evidenced by the Note; (iii) third, he shall pay the residue, if any, to the person or persons legally entitled thereto. Payment of the purchase price to the Trustee shall satisfy the obligation of the purchaser at such sale therefore, and such purchaser shall not be bound to look after the application thereof. The sale or sales by the Trustee of less than the whole of the Mortgaged Property shall not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property shall be sold; and if the proceeds of such sale or sales of less than the whole of such Mortgaged Property shall be less than the aggregate of the indebtedness secured hereby and the expense of executing this trust, this Deed of Trust and the lien, security interest and assignment hereof shall remain in full force and effect as to the unsold portion of the Mortgaged Property just as though no sale or sales had been made; provided, however, that Grantor shall never have any right to require the sale or sales of less than the whole of the Mortgaged Property, but Beneficiary shall have the right, at its sole election, to request the Trustee to sell less than the whole of the Mortgaged Property. If default is made hereunder, the holder of the indebtedness or any part thereof on which the payment is delinquent shall have the option to proceed with foreclosure in satisfaction of such item either through T:11dld1Loan Docs\NSP\Interim Construction Loans11265 City of Huntsvillellnterim Construction Deed of Trust 20120227 v4.doc Page 16 of 35 judicial proceedings or by directing the Trustee to proceed as if under a full foreclosure, conducting the sale as herein provided without declaring the entire indebtedness secured hereby due, and if sale is made because of default of an installment, or a part of an installment, such sale may be made subject to the unmatured part of the Note and Other Indebtedness secured by this Deed of Trust; and it is agreed that such sale, if so made, shall not in any manner affect the unmatured part of the indebtedness secured by this Deed of Trust, but as to such unmatured part, this Deed of Trust shall remain in full force and effect 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 secured hereby. 5.02 Successor Trustee. If the Trustee shall die or become disqualified from acting in the execution of this trust, or shall fail or refuse to execute the same when requested by Beneficiary to do so; or if, for any reason, Beneficiary shall prefer to appoint a substitute Trustee to act instead of the Trustee named herein, Beneficiary shall have full power to appoint, by written instrument, a substitute Trustee, and, if necessary, several substitute Trustees in succession, who shall succeed to all the estate, rights, powers, and duties of the original Trustee named herein. Such appointment may be executed by any authorized agent of Beneficiary; and if Beneficiary is a corporation and such appointment is executed in its behalf by any officer of such corporation, such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation. In the event of an assignment of the interests of Beneficiary under this Deed of Trust, all rights and remedies granted to Beneficiary in this Deed of Trust shall inure to the benefit of, and may be exercised by, the assignee. 5.03 Acts and Statements of Trustee. Grantor hereby agrees, in its behalf and in behalf of its heirs, executors, administrators, successors, personal representatives and assigns, that any and all statements of fact or other recitals made in any deed of conveyance given by the Trustee, with respect to the identity of Beneficiary, or with respect to the occurrence or existence of any default, or with respect to the acceleration of the maturity of any indebtedness secured hereby, or with respect to the request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the time, place, terms, and manner of sale, and receipt, distribution, and application of the money realized therefrom, or with respect to the due and proper appointment of a substitute Trustee, and, without being limited by the foregoing, with respect to any other act or thing having been duly done by the Beneficiary or by the Trustee hereunder, shall be taken by all courts of law and equity as prima facie evidence that the statements or recitals state facts and are without further question to be so accepted, and Grantor hereby ratifies and confirms every act that Trustee or any substitute Trustee hereunder may lawfully do in the premises by virtue hereof. 5.04 Disaffirmance by Purchaser. The purchaser at any trustee's or foreclosure sale hereunder may disaffirm any easement granted, or rental, lease or other contract made, in violation of any provision of this Deed of Trust, and may take immediate possession of the Mortgaged Property free from, and despite the terms of, such grant of easement and rental or lease contract, subject to the Protecting Tenants at Foreclosure Act of 2009, Title VII of the Helping Families Save Their Homes Act of 2009 (Public Law 111 -22, §702) and other governmental requirements. T:11dld\Loan Docs\NSPllnterim Construction Loans\1 265 City of Huntsville\Interim Construction Deed of Trust 20120227 v4.doc Page 17 of 35 5.05 Beneficiary May Bid. Beneficiary shall have the right to become the purchaser at all sales to enforce this trust, being the highest bidder, and to have the amount of which such property is sold credited on the indebtedness secured hereby which is then owing. ARTICLE VI Hazardous Materials 6.01 Definitions. For the purpose of this Deed of Trust, Grantor, Beneficiary and Trustee agree that, unless the context otherwise specifies or requires, the following terms shall have the meaning herein specified: (a) Hazardous Materials: Any substance the presence of which on the Mortgaged Property is regulated by any Governmental Requirements and Environmental Laws and Regulations, including but not limited to: (i) any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as amended from time to time, and regulations promulgated thereunder; (ii) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ( "CERCLA" or "SuperFund "), as amended from time to time, and regulations promulgated thereunder; (iii) asbestos; (iv) polychlorinated biphenyls; (v) any petroleum -based products; and (vi) underground storage tanks, whether empty, filled or partially filled with any substance. (b) Hazardous Materials Contamination: The contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or other elements on, over or under the Mortgaged Property by Hazardous Materials, or the contamination of the improvements, facilities, soil, ground - water, air or other elements on, over or under any other property as a result of Hazardous Materials at any time (whether before or after the date of this Deed of Trust) emanating from the Mortgaged Property. 6.02 Representations and Warranties. Grantor hereby represents and warrants that to the best of the Grantor's knowledge: (a) No Hazardous Materials are located on the Mortgaged Property or have been released into the environment, or deposited, discharged, placed or disposed of at, on, under or near the Mortgaged Property, or transported to or from the Mortgaged Property. No portion of the Mortgaged Property is being used or, to the best of Grantor's knowledge, has been used at any previous time, for the disposal, storage, treatment, processing, manufacturing or other handling of Hazardous Materials nor is any part of the Mortgaged Property affected by any Hazardous Materials Contamination. (b) No Hazardous Materials are located on property adjoining the Mortgaged Property. No property adjoining the Mortgaged Property has ever been used at any previous time for the disposal, storage, treatment, processing, manufacturing or other handling of Hazardous Materials. No property adjoining the Mortgaged Property is affected by Hazardous Materials Contamination. T: \ldld\Loan Docs\NSP\]nterim Construction Loans \1265 City of Huntsville\Interim Construction Deed of Trust 20120227 v4.doc Page 18 of 35 (c) No asbestos or asbestos containing materials have been installed, used, incorporated into, or disposed of on the Mortgaged Property. (d) No polychlorinated biphenyls or materials containing polychlorinated biphenyls are located on or in the Mortgaged Property, in the form of electrical transformers, fluorescent light fixtures with ballasts, cooling oils, or any other device or form. (e) No underground storage tanks are located on the Mortgaged Property or, to the best of Grantor's knowledge, were previously located on the Mortgaged Property and subsequently removed or filled. (f) No investigation, administrative order, consent order, agreement, litigation or settlement with respect to Hazardous Materials or Hazardous Materials Contamination is proposed, threatened, anticipated or in existence with respect to the Mortgaged Property. The Mortgaged Property and its existing and prior uses comply and at all times have complied with any applicable Governmental Requirements relating to environmental matters or Hazardous Materials. There is no condition on the Mortgaged Property which is in violation of any applicable Governmental Requirements relating to Hazardous Materials, and Grantor has received no communication from or on behalf of any Governmental Authority that any such condition exists. The Mortgaged Property is not currently on, and to the best of Grantor's knowledge, has never been on, any federal, state or local "Superfund" or "Superlien" list. (g) Except for studies, audits, and reports pertaining to the Mortgaged Property which have been made available to Beneficiary, there have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by or which are in the possession of or available to Grantor in relation to the Mortgaged Property. (h) All representations and warranties contained in this Section 6.02 shall survive the consummation of the transactions contemplated by this Deed of Trust. 6.03 Covenants. Grantor agrees: (a) that Grantor shall not receive, store, dispose or release any Hazardous Materials on or to the Mortgaged Property or transport any Hazardous Materials to or from the Mortgaged Property or permit the existence of any Hazardous Materials Contamination; (b) to give written notice to Beneficiary immediately upon Grantor's acquiring knowledge of the presence of any Hazardous Materials on the Mortgaged Property or of the transport of any Hazardous Materials to or from the Mortgaged Property or of the existence of any Hazardous Materials Contamination, with a full description thereof; (c) promptly, at Grantor's sole cost and expense, to comply with any Governmental Requirements requiring the removal, treatment or disposal of such Hazardous Materials or Hazardous Materials Contamination and provide Beneficiary with satisfactory evidence of such compliance; (d) to provide Beneficiary, within thirty (30) days after demand by Beneficiary, with financial assurance evidencing to Beneficiary's satisfaction that the necessary funds are available to pay the cost of removing, treating and disposing of such Hazardous Materials or Hazardous Materials Contamination and discharging any assessments which may be established on the Mortgaged Property as a result thereof; and (e) to insure that all Ieases, licenses, and agreements of any kind T : \Idld\Loan Docs\NSP \Interim Construction Loans11265 City of Huntsville\Interin Construction Deed of Trust 20120227 v4.doc Page 19 of 35 now or hereafter executed which permit any party to occupy, possess, or use in any way the Mortgaged Property or any part thereof, whether written or oral, include an express prohibition on the disposal or discharge of any Hazardous Materials at or affecting the Mortgaged Property, and a provision that failure to comply with such prohibition shall expressly constitute a default under any such agreement. 6.04 Liens. Grantor shall not cause or suffer any liens to be recorded against the Mortgaged Property as a consequence of, or in any way related to, the presence, remediation or disposal of Hazardous Materials in or about the Mortgaged Property, including any so- called state, federal or local "Superfund" lien relating to such matters. 6.05 Site Assessments. Beneficiary (by its officers, employees and agents) at any time and from time to time, either prior to or after the occurrence of an Event of Default, may contract for the services of persons (the "Site Reviewers ") to perform environmental site assessments ( "Site Assessments ") on the Mortgaged Property for the purpose of determining whether there exists on the Mortgaged Property any environmental condition which could result in any liability, cost or expense to the owner, occupier or operator of such Mortgaged Property arising under any Governmental Requirements relating to .Hazardous Materials. The Site Assessments may be performed at any time or times, upon reasonable notice, and under reasonable conditions established by Grantor which do not impede the performance of the Site Assessment. The Site Reviewers are hereby authorized to enter upon the Mortgaged Property for such purposes. The Site Reviewers are further authorized to perform both above and below - ground testing for environmental damage or the presence of Hazardous Materials or Hazardous Materials Contamination on the Mortgaged Property and such other tests on the Mortgaged Property as may be necessary to conduct the Site Assessments in the reasonable opinion of the Site Reviewers. Grantor will supply to the Site Reviewers such historical and operational information regarding the Mortgaged Property as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments and will make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters. On request, Beneficiary shall make the results of such Site Assessments fully available to Grantor, which (prior to an Event of Default) may at its election participate under reasonable procedures in the direction of such Site Assessments and the description of tasks of the Site Reviewers. The cost of performing such Site Assessments shall be paid by Grantor upon demand of Beneficiary and any such obligations shall be indebtedness secured by this Deed of Trust. 6.06 INDEMNIFICATION GRANTOR SHALL AT ALL TIMES RETAIN ANY AND ALL LIABILITIES ARISING FROM THE PRESENCE, HANDLING, TREATMENT, STORAGE, TRANSPORTATION, REMOVAL OR DISPOSAL OF HAZARDOUS MATERIALS ON THE MORTGAGED PROPERTY. REGARDLESS OF WHETHER ANY SITE ASSESSMENTS ARE CONDUCTED HEREUNDER, AND REGARDLESS OF WHETHER ANY EVENT OF DEFAULT (AS DEFINED IN SECTION 4.01 OF THIS DEED OF TRUST) SHALL HAVE OCCURRED AND BE CONTINUING OR ANY REMEDIES IN RESPECT TO THE MORTGAGED PROPERTY ARE EXERCISED BY BENEFICIARY, GRANTOR SHALL, TO THE EXTENT AUHORIZED BY LAW AND SUBJECT TO FUNDS LEGALLY AVAILABLE FOR THE PURPOSE, DEFEND, INDEMNIFY AND HOLD HARMLESS BENEFICIARY AND TRUSTEE (AND ANY T:Udld\Loan Docs1NSP'Interim Construction Loans11265 City of Huntsvil.te \Interim Construction Deed of Trust 20120227 v4.doc Page 20 of 35 SUCCESSOR TO THE TRUSTEE) FROM AND AGAINST ANY AND ALL LIABILITIES (INCLUDING STRICT LIABILITY), SUITS, ACTIONS, CLAIMS, DEMANDS, PENALTIES, DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, CONSEQUENTIAL DAMAGES, INTEREST, PENALTIES, FINES AND MONETARY SANCTIONS), LOSSES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND REMEDIAL COSTS) (THE FOREGOING ARE HEREINAFTER COLLECTIVELY REFERRED TO AS "LIABILITIES ") WHICH MAY NOW OR IN THE FUTURE (WHETHER BEFORE OR AFTER THE CULMINATION OF THE TRANSACTIONS CONTEMPLATED BY THIS DEED OF TRUST) BE INCURRED OR SUFFERED BY BENEFICIARY OR TRUSTEE (OR ANY SUCCESSOR TO THE TRUSTEE) BY REASON OF, RESULTING FROM, IN CONNECTION WITH, OR ARISING IN ANY MANNER WHATSOEVER OUT OF THE BREACH OF ANY WARRANTY OR COVENANT OR THE INACCURACY OF ANY REPRESENTATION OF GRANTOR CONTAINED OR REFERRED TO IN THIS ARTICLE VI OR IN ANY LOAN AGREEMENT MADE AND ENTERED INTO BETWEEN GRANTOR AND BENEFICIARY RELATING TO THE MORTGAGED PROPERTY OR WHICH MAY BE ASSERTED AS A DIRECT OR INDIRECT RESULT OF THE PRESENCE ON OR UNDER, OR ESCAPE, SEEPAGE, LEAKAGE, SPILLAGE, DISCHARGE, EMISSION OR RELEASE FROM THE MORTGAGED PROPERTY OF ANY HAZARDOUS MATERIALS OR ANY HAZARDOUS MATERIALS CONTAMINATION OR ARISE OUT OF OR RESULT FROM THE ENVIRONMENTAL CONDITION OF THE MORTGAGED PROPERTY OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS RELATING TO HAZARDOUS MATERIALS. SUCH LIABILITIES SHALL INCLUDE, WITHOUT LIMITATION: (I) INJURY OR DEATH TO ANY PERSON; (II) DAMAGE TO OR LOSS OF THE USE OF ANY PROPERTY; (III) THE COST OF ANY DEMOLITION AND REBUILDING OF ANY IMPROVEMENTS NOW OR HEREAFTER SITUATED ON THE MORTGAGED PROPERTY OR ADJACENT PROPERTY, AND THE COST OF ANY REPAIR OR REMEDIATION OF ANY SUCH IMPROVEMENTS; (IV) THE COST OF ANY ACTIVITY REQUIRED BY ANY GOVERNMENTAL AUTHORITY; (V) ANY LAWSUIT BROUGHT, GOOD FAITH SETTLEMENT REACHED, OR GOVERNMENTAL ORDER RELATING TO THE PRESENCE, DISPOSAL, RELEASE OR THREATENED RELEASE OF ANY HAZARDOUS MATERIALS, ON, FROM OR UNDER THE MORTGAGED PROPERTY; AND (VI) THE IMPOSITION OF ANY LIENS ON THE MORTGAGED PROPERTY ARISING FROM THE ACTIVITY OF GRANTOR OR GRANTOR'S PREDECESSORS IN INTEREST ON THE MORTGAGED PROPERTY OR FROM THE EXISTENCE OF HAZARDOUS MATERIALS UPON THE MORTGAGED PROPERTY OR HAZARDOUS MATERIALS CONTAMINATION. THE COVENANTS, WARRANTIES, AGREEMENTS AND INDEMNIFICATIONS CONTAINED IN THIS ARTICLE VI SHALL SURVIVE THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS DEED OF TRUST. T :Udld\Loan DocsW SPllntcrim Construction Loans11265 City of Huntsvillellnterim Construction Deed of Trust 20120227 v4.doc — — Page 21 of 35 6.07 Right of Entry. Beneficiary shall have the right but not the obligation, without in any way limiting Beneficiary's other rights and remedies under this Deed of Trust, to enter onto the Mortgaged Property or to take such other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the impact of, or otherwise deal with, any Hazardous Materials or Hazardous Materials Contamination on or under the Mortgaged Property following receipt of any notice from any person or entity asserting the existence of any Hazardous Materials or Hazardous Materials Contamination pertaining to the Mortgaged Property, or any part thereof which, if true, could result in an order, notice, suit, imposition of a lien on the Mortgaged Property, or other action, and/or which, in Beneficiary's sole opinion, could jeopardize Beneficiary's security upon this Deed of Trust. All costs and expenses paid or incurred by Beneficiary in the exercise of any such rights shall be indebtedness secured by this Deed of Trust and shall be payable by Grantor upon demand. ARTICLE VII Additional Provisions 7.01 Rights of Beneficiary. If any of the indebtedness hereby secured shall become due and payable, Trustee or Beneficiary shall have the right and power to proceed by a suit or suits in equity or at law, whether for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder or for the sale of the Mortgaged Property under the judgment or decree of any court or courts of competent jurisdiction or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Mortgaged Property under the order of a court or courts of competent jurisdiction. or under executory or other legal process, or for the enforcement of any other appropriate legal or equitable remedy. Grantor agrees, to the full extent that it lawfully may, that in case one or more of the Events of Default hereunder shall have occurred and shall not have been remedied, then, and in every such case, the Beneficiary shall have the right and power to enter into and upon and take possession of all or any part of the Mortgaged Property in the possession of the Grantor, its successors or assigns, or its or their agents or servants, and may exclude Grantor, its successors or assigns, and all persons claiming under Grantor, and its or their agents or servants, wholly or partly therefrom; and, holding the same, the Beneficiary may use, administer, manage, operate and control the Mortgaged Property and conduct the business thereof to the same extent as Grantor, its successors or assigns, might at the time do and may exercise all rights and powers of Grantor, in the name, place and stead of Grantor, or otherwise as the Beneficiary shall deem best; and in the exercise of any of the foregoing rights and powers Beneficiary shall not be liable to Grantor for any loss or damage thereby sustained. 7.02 The Lien. Any part of the Mortgaged Property may be released by the Beneficiary without affecting the lien, security interest and assignment hereof against the remainder. The lien, security interest and other rights granted hereby shall not affect or be affected by any other security taken for the same indebtedness or any part thereof. The taking of additional security, or the extension or renewal of the indebtedness secured hereby or any part thereof, shall not release or impair the lien, security interest and other rights granted hereby, or affect the Iiability of any endorser, guarantor or surety, or improve the right of any permitted junior lienholder; and this Deed of Trust, as well as any instrument given to secure any renewal or extension of the indebtedness secured hereby, or any part thereof, shall be and remain a first and prior lien, except T:\Idld \Loan Docs \NSP\lnterim Construction Loans \1265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc Page 22 of 35 as otherwise provided herein on all of the Mortgaged Property not expressly released until the indebtedness secured hereby is completely paid. 7.03 Waiver. To the extent that Grantor may lawfully do so, Grantor agrees that Grantor shall not assert and hereby expressly waives, any right under any statute or rule of law pertaining to the marshalling of assets, the exemption of homestead, the administration of estates of decedents, or other matter whatever to defeat, reduce or affect the right of Beneficiary, under the terms of this Deed of Trust, to sell the Mortgaged Property for the collection of the indebtedness secured hereby (without any prior or different resort for collection) or the right of Beneficiary, under the terms of this Deed of Trust, to the payment of such indebtedness out of the proceeds of sale of the Mortgaged Property in preference to every other person and claimant whatever (only reasonable expenses of such sale being first deducted). No provision of this Deed of Trust or any other document securing or pertaining to the Note shall be construed to impose on Beneficiary any duty to sell the Mortgaged Property or any other collateral for the Note for collection of the indebtedness secured by this Deed of Trust or to pursue any other remedy in Beneficiary's power whatsoever. Grantor expressly waives and relinquishes any right or remedy which it may have or be able to assert by reason of the provisions of Chapter 34 of the Business and Commerce Code of the State of Texas, pertaining to the rights and remedies of sureties. To the full extent permitted by applicable law, Grantor waives any right to require Beneficiary to use diligence in collection of any indebtedness secured by this Deed of Trust, to proceed against or exhaust any security or collateral for the loan evidenced by the Note, to mitigate Beneficiary's damages in connection with the loan evidenced by the Note, or to pursue any other remedy in Beneficiary's power whatsoever. 7.04 Subrogation. To the extent that proceeds of the Note are used to pay an outstanding lien, charge or encumbrance against or affecting the Mortgaged Property, such proceeds have been advanced by Beneficiary at Grantor's request, and Beneficiary shall be subrogated to all rights, interests and liens owned or held by any owner or holder of such outstanding liens, charges and encumbrances, irrespective of whether such liens, charges or encumbrances are released of record. 7.05 Limitation on Interest. All agreements between Grantor and Beneficiary, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to Beneficiary for the use, forbearance, or detention of the money to be loaned pursuant to the Note or otherwise, or for the performance or payment of any covenant or obligation contained herein, exceed the maximum amount permissible under applicable law. If from any circumstance whatsoever fulfillment of any provision hereof at the time performance of such provision shall be due shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance Beneficiary shall ever receive as interest under such Note or this Deed of Trust or otherwise an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing under the Note or on account of the Other Indebtedness secured hereby and not to the payment of interest or if such excessive interest exceeds the unpaid balance of principal of the Note and such Other Indebtedness, such excess shall be refunded to Grantor, or to the maker of the Note or other evidence of T:1ldld\Loan Docs1NSP\Interim Construction Loans11265 City of Huntsville'Jnterim Construction Deed of Trust 20I20227 v4.doc Page 23 of 35 indebtedness if other than Grantor. All sums paid or agreed to be paid to Beneficiary for the use, forbearance, or detention of the indebtedness secured hereby shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the actual rate of interest on account of such indebtedness is uniform throughout the term thereof. The terms and provisions of this Section shall control and supersede every other provision of all agreements between Grantor, the maker of the Note or other evidence of indebtedness if other than Grantor, and Beneficiary. 7.06 Waiver and Invalidity. No waiver of any default on the part of Grantor or breach of any of the provisions of this Deed of Trust or of any other instrument executed in connection with the indebtedness secured hereby shall be considered a waiver of any other or subsequent default or breach, and no delay or omission in exercising or enforcing the rights and powers herein granted shall be construed as a waiver of such rights and powers, and likewise no exercise or enforcement of any rights or powers hereunder shall be held to exhaust such rights and powers, and every such right and power may be exercised from time to time. If any provision of this Deed of Trust is held to be illegal, invalid, or unenforceable under present or future laws effective while this Deed of Trust is in effect, the legality, validity, and enforceability of the remaining provisions of this Deed of Trust shall not be affected thereby, and in lieu of each such illegal, invalid, or unenforceable provision there shall be added automatically as a part of this Deed of Trust a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. If any of the liens, security interest or assignment of rents created by this Deed of Trust shall be invalid or unenforceable, the unsecured portion of the indebtedness secured hereby shall be completely paid prior to the payment of the remaining and secured portion of such indebtedness and all payments made on account of such indebtedness shall be considered to have been paid on and applied first to the complete payment of the unsecured portion of such indebtedness. 7.07 Tenancy at Will. In the event of a trustee's sale hereunder and if at the time of such sale the Grantor occupies the portion of the Mortgaged Property so sold, or any part thereof, Grantor shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of either tenant or landlord, at a reasonable rental per day based upon the value of the portion of the Mortgaged Property so occupied, such rental to be due and payable daily to the purchaser. An action of forcible detainer shall lie if the tenant holds over after a demand in writing for possession of such Mortgaged Property and premises; and this agreement and any trustee's deed shall constitute a lease and agreement under which the tenants possession, each and all, arose and continued. 7.08 Security Agreement. With respect to any portion of the Mortgaged Property which constitutes personal property or fixtures governed by the Uniform Commercial Code of the State of Texas (hereinafter called the "Code "), this Deed of Trust shall constitute a security agreement between Grantor as the Debtor and Beneficiary as the Secured Party, and Grantor hereby grants to Beneficiary a security interest in such portion of the Mortgaged Property. Cumulative of all other rights of Beneficiary hereunder, Beneficiary shall have all of the rights conferred upon secured parties by the Code. Grantor will execute and deliver to Beneficiary all financing statements that may from time to time be required by Beneficiary to establish and maintain the validity and priority of the security interest of Beneficiary, or any modification thereof, and all T: \1d1d1Loan Docs \NSP\Interim Construction Loans \1265 City of Huntsvillellnterim Construction Deed of Trust 20120227 v4.doc Page 24 of 35 costs and expenses of any searches reasonably required by Beneficiary. Beneficiary may exercise any or all of the remedies of a secured party available to it under the Code with respect to such property, and it is expressly agreed that if upon default Beneficiary should proceed to dispose of such property in accordance with the provisions of the Code, then (10) days' notice by Beneficiary to Grantor shall be deemed to be reasonable notice under any provision of the Code requiring such notice; provided, however, that Beneficiary may at its option dispose of such property in accordance with Beneficiary's rights and remedies with respect to the real property pursuant to the provisions of this Deed of Trust, in lieu of proceeding under the Code. 7.09 Changes in Grantor's Identity. Grantor shall give advance notice in writing to Beneficiary of any proposed change in Grantor's name, address, identity, or corporate structure and will execute and deliver to Beneficiary, prior to or concurrently with the occurrence of any such change, all additional financing statements that Beneficiary may require to establish and maintain the validity and priority of Beneficiary's security interest with respect to any Mortgaged Property described or referred to herein. 7.10 Fixtures. Some of the items of Mortgaged Property described herein are goods that are or are to become fixtures related to the real estate described herein, and it is intended that as to those goods, this Deed of Trust shall be effective as a financing statement filed as a fixture filing from the date of its filing for record in the real estate records of the county in which the Mortgaged Property is situated. Information concerning the security interest created by this instrument may be obtained from Beneficiary, as secured party, at the address of Beneficiary stated above. The mailing address of the Grantor, as debtor, is as stated in Section 1.02. 7.11 NSP Subrecipient Activity Report. Until all NSP requirements are met, the NSP Subrecipient Activity Report shall be submitted monthly. Thereafter, the NSP Subrecipient Activity Report shall be submitted quarterly. The Beneficiary shall determine whether all NSP obligation requirements have been met and may amend this rule from time to time or as needed. 7.12 Applicable Law. All references in this Deed of Trust to the "law" or to "lawful rate" shall be construed to be the laws of the State of Texas and the United States, whichever is applicable. "Applicable law" as used herein means (a) the law pertaining to maximum rates of interest that is now in effect, and (b) any law that comes into effect at any time in the future allowing a higher maximum rate than the law now in effect. 7.13 Binding Effect. The covenants herein contained shall bind, and the benefits and advantages shall inure to, the respective heirs, executors, administrators, personal representatives, successors and assigns of the parties hereto, and to any substitute Trustee. Whenever used, the singular number shall include the plural and the singular, and the use of any gender shall be applicable to all genders. The duties, covenants, conditions, obligations and warranties of Grantor in this Deed of Trust shall be joint and several obligations of Grantor and each Grantor if more than one, and Grantor's heirs, personal representatives, successors and assigns. Each party who executes this Deed of Trust (other than Beneficiary), and each subsequent owner of the Mortgaged Property, or any part thereof, covenants and agrees that it will perform, or cause to be performed, each condition, term, provision, and covenant of this Deed of Trust. T: \ldld\Loan Docs\NSP\Interim Construction Loans\1265 City of Huntsvi11e1Intcrim Construction Deed of Trust_20I20227 v4.doc Page 25 of 35 7.14 Right to inspect. Beneficiary shall have at all times a right of access to and upon the Mortgaged Property for purposes of inspection and, at Beneficiary's option, for purposes of performing any obligations required of Grantor hereunder. 7.15 Notices. All notices, requests, consents, demands and other communications required or which any part desires to give hereunder shall be in writing. Notice will be deemed effective upon deposit in the United States mail, postage prepaid, by certified mail, return receipt requested, addressed to the party to whom directed at the addresses specified in Article I of this Deed of Trust (unless changed by notice in writing given by the particular party whose address is to be changed). Notice given in any other manner shall be deemed effective only if and when received by the party to be notified. Provided, however, service of a notice required by Texas Property Code Section 51.002, as amended, shall be considered complete when the requirements of that statute are met. Notwithstanding the foregoing, no notice of change of address shall be effective except upon receipt. This section shall not be construed in any way to affect or impair any waiver of notice or demand provided in the Note or any other instrument securing the Note or to require giving of notice or demand to or upon any person in any situation or for any reason. 7.16 Assignment of Rents. All of the rents, royalties (including, but not limited to, royalties arising out of the sale of oil, gas, and any other minerals produced from the Mortgaged Property, or any properties pooled with the Mortgaged Property), issues, profits, revenue, income and other benefits derived from the Mortgaged Property 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 assigned, transferred, conveyed and set over to Beneficiary as security for (i) payment of the principal and interest and all other sums payable on the Note, (ii) payment of any Other Indebtedness secured hereby and (iii) the performance and discharge of each and every obligation, covenant and agreement of Grantor set forth herein or in the Note or in any other instrument securing payment of the Note. Prior to the occurrence of any Event of Default hereunder, Grantor shall collect and receive all Rents and Profits, and Grantor shall apply the funds so collected first to the payment of the principal and interest and all other sums payable on the Note and in payment of all Other Indebtedness secured hereby and thereafter, so long as no Event of Default hereunder has occurred, the balance shall be distributed to the account of Grantor. Grantor will not (i) execute an assignment of any of its right, title or interest in the Rents and Profits, or (ii) except in the ordinary course of business, including but not limited to where the lessee is in default thereunder, terminate or consent to the cancellation or surrender of any lease of the Mortgaged Property or any part thereof, now or hereafter existing having an unexpired term of one 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 Beneficiary, 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) except in the ordinary course of business, modify any lease of the Mortgaged Property or any part thereof so as to shorten the unexpired term thereof or so as to decrease any 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 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 Property or the security of this Deed of Trust. Upon an Event of Default in the T: \ldld\Loan Docs \NSP\Interim Construction Loans \1265 City of Huntsville \Interim Construction Deed of Trust_20120227_ v4.doc Page 26 of 35 payment of the Note or any Other Indebtedness secured hereby, Beneficiary may, at its option, and without notice to Grantor receive and collect all Rents and Profits. Effective upon such Event of Default and for the foregoing purpose Grantor has irrevocably made, constituted and appointed, and by these presents does irrevocably make, constitute and appoint Beneficiary as its true and lawful attorney for it and in its name, place and stead to receive and collect the Rents and Profits, compromise and settle all claims therefore, and execute, deliver, cancel, modify and to release any and all leases and lessees, giving and granting unto Beneficiary full power and authority to do and perform all and every act and thing whatsoever, requisite and necessary to be done in connection therewith, as fully, to all intents and purposes, as Grantor might or could do if personally present and also giving and granting unto Beneficiary full power to substitute one or more attorney or attorneys under it, concerning such matters. Default shall be presumed upon Beneficiary's filing with the County Clerk of the County in which the Mortgaged Property is Iocated of an affidavit to the effect that an Event of Default has occurred hereunder and all persons dealing with Beneficiary may rely upon such affidavit. Grantor agrees that all persons dealing with Beneficiary and its substitutes that this power of attorney shall remain effective for so long as there is an Event of Default under the terms hereof. Grantor agrees to indemnify and hold Beneficiary and its substitutes harmless from any and all liability arising out of Beneficiary's or its substitutes' acts pursuant to the authority herein granted to the extent allowed by law. This power of attorney is one coupled with an interest. 7.17 Construction Mortgage. This Deed of Trust constitutes a "Construction Mortgage" as defined in the Texas Business and Commerce Code and secures an obligation incurred for the construction of improvements on the Real Property described herein. 7.18 Loan Agreement. It is understood and agreed that all or a portion of the funds to be advanced under the Note are to be used in the construction or Rehabilitation of the Project in accordance with the NSP Construction Loan Agreement dated on even date herewith made by and between Grantor (Borrower in Loan Agreement or the Maker of the Note if different from Grantor) and Beneficiary (Lender in Loan Agreement), which said Loan Agreement is incorporated herein by reference to the same extent and effect as if fully set forth herein and made a part hereof. This Deed of Trust secures the payment of all sums and the performance of all covenants required by Grantor (or the Maker of the Note if different from Grantor) under the Loan Agreement, and upon the failure of Grantor (or the maker of the Note if different from Grantor) to keep and perform all the covenants, conditions and agreements of the Loan Agreement, the indebtedness secured hereby shall, at the option of Beneficiary, become due and payable, anything herein contained to the contrary notwithstanding. 7.19 Attorney in Fact. Grantor has irrevocably made, constituted and appointed, and by these presents does irrevocably make, constitute and appoint Beneficiary its true and lawful attorney, for it and in its name, place and stead in the Event of Default to contract for the sale of and convey all or any part of the Mortgaged Property, giving and granting unto Beneficiary full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection therewith, as fully, to all intents and purposes, as Grantor might or could do if personally present and also giving and granting unto Beneficiary full power to substitute one or more attorneys under it, in or concerning such matters. Grantor agrees that this power of attorney shall be effective upon an Event of Default in the payment of the Note or T:\ldld'Loan Docs\NSP \Interim Construction Loans \1265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc Page 27 of 35 under any instrument executed as security therefore, and Grantor agrees and represents to those dealing with Beneficiary, and its substitute or substitutes, that this power of attorney shall be effective upon Beneficiary's filing with the County Clerk of the county in which the Mortgaged Property is situated, an affidavit to the effect that an Event of Default has occurred under the terms of the Note or any instruments executed as security therefore and such persons may rely upon Beneficiary's representation with regard to the continuation of such default, Grantor agrees with all persons dealing with Beneficiary, its substitute and substitutes that this power of attorney shall remain effective for so long as there is an Event of Default under the terms of the Note or any instruments executed as security therefore, and further agrees with such persons that they may rely upon the representations of Beneficiary, its substitute and substitutes, with regard to the continuation of such default. TO THE EXTENT AUTHORIZED BY LAW AND SUBJECT TO THE LIMITATIONS CONTAINED HEREIN, AND FUNDS LEGALLY AVAILABLE FOR THE PURPORSE, GRANTOR AGREES TO INDEMNIFY AND HOLD BENEFICIARY AND ITS SUBSTITUTES HARMLESS FROM ANY AND ALL LIABILITY ARISING OUT OF BENEFICIARY'S OR ITS SUBSTITUTES' ACTS PURSUANT TO THE AUTHORITY HEREIN GRANTED TO THE EXTENT .ALLOWED BY LAW. THIS POWER OF ATTORNEY IS ONE COUPLED WITH AN INTEREST. 7.20 Covenants Running with the Land. All of the covenants, conditions, warranties, representations and other obligations made or undertaken by Grantor 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 Mortgaged Property until the lien of this Deed of Trust has been fully released by Beneficiary. 7.21 Foreclosure. If the Mortgaged Property becomes the subject of a foreclosure proceeding that results in the sale of part or all of the Mortgaged Property, all sums in excess of those paid to superior lien holders shall be paid to Beneficiary to apply to the outstanding balance under the Note. If there are insufficient funds to pay off the Note secured herein, Beneficiary may in its own discretion waive the payment of any or all of the outstanding loan balance under the Note. 7.22 Non - Recourse. Notwithstanding anything herein to the contrary, Beneficiary shall have no recourse against Grantor, nor against any guarantor, if any, for payment and performance of all of the obligations, covenants and agreements of Grantor under the Note and the documents securing same including, but not limited to this Deed of Trust (said documents hereafter collectively called "Security Documents "), except to the full extent of all of the Mortgaged Property which constitutes security for the Note. If default occurs in the timely and proper payment of any portion of such indebtedness or in the timely performance of any of such obligations, agreement or covenants, any judicial proceedings brought by Beneficiary against Grantor or any guarantor shall be limited to the protection and preservation of the Mortgaged Property, the preservation, enforcement and foreclosure of the liens, mortgages, assignments, rights and security interests now or at any time hereafter securing the payment of the Note, and enforcement and collection of obligations, covenants and indebtedness for which Grantor and any guarantors remain liable as provided in this paragraph. If there is a foreclosure of any such liens, mortgages, assignments, rights, and security interests securing the payment of the Note, by power of sale or otherwise, no judgment for any deficiency upon such indebtedness shall be sought or obtained by Beneficiary against Grantor. Notwithstanding the foregoing provisions of T: \ldld\Loan DOC\NSP\Interim Construction Loans 1265 City of Huntsville\Interim Construction Deed of Trust_20120227_ v4.doc Page 28 of 35 this paragraph or any other agreement, Beneficiary shall have full recourse against Grantor and all guarantors, if any, for: (a) fraud or misrepresentation by Grantor or any guarantor in connection with the tramactions herein contemplated; (b) failure to pay taxes, assessments, charges for labor or materials or other charges that can create liens on any portion of the Mortgaged Property; (c) the misapplication of (i) proceeds of insurance covering any portion of the Mortgaged Property, or (ii) proceeds of the sale or condemnation of any portion of the Mortgaged Property, or (iii) rentals received by or on behalf of Grantor subsequent to the date on which Beneficiary gives written notice of the posting of foreclosure notices, (d) failure to prevent waste to the Mortgaged Property unless Beneficiary is compensated therefore by insurance proceeds collected by Grantor; (e) the return to Beneficiary of all unearned advance rentals and security deposits paid by tenants of the Mortgaged Property and not refunded to or forfeited by such tenants, (f) the return of, or reimbursement for, all personalty taken from the Mortgaged Property by or on behalf of Grantor, (g) all court costs and for all attorneys' fees provided for in any instrument governing, securing or pertaining to the payment of the Note; and (h) failure to comply with any indemnification provision or covenants pertaining to environmental matters contained in the Security Documents. 7.23 Release. Subject to the following terms, Beneficiary will release the entire Mortgaged Property or individual lots on the Mortgaged Property from all liens securing the Note upon closing of a permanent mortgage loan (purchase money) with an Eligible Household utilizing the Financing Mechanisms available under the NSP, when applicable: (a) Grantor must not be in default under this Deed of Trust, Loan Agreement or the Note at the time of the request for lot release. (b) The release must be on a form approved by Beneficiary that is prepared and recorded at Grantor's expense. (c) The purchase price of Mortgaged Property to the Eligible Household shall be the lesser of one the following amounts: (1) the cost to acquire and construct or rehabilitate the Project to a decent, safe, and habitable condition; or (2) one hundred percent (100 %) of the appraised value of the Mortgaged Property after rehabilitation or construction. In no instance shall the purchase price of the Mortgaged Property to the Eligible Household exceed either of the amounts set out in this section 7.23(c.) (d) The constructed or rehabilitated single family dwelling must be made available for sale to Eligible Households within twelve (12) months from the date of acquisition under the NOFA or from completion of Rehabilitation under the NOFA -R. (e) The lot to be released must be improved with a single- family dwelling completed in a good and workmanlike manner in accordance with plans and specifications approved by Beneficiary and must, at a minimum, meet the Texas Minimum Construction Standards (TMCS) and the NSP Rehabilitation Standards as noted herein, and must incorporate construction requirements imposed for single family affordable housing as cited as Texas Government Code, Section 2306.514, as may be amended from time to time. T:Udld\Loan DocsWSP\Interim Construction Loans11265 City of HuntsvilleUnterim Construction Deed of Trust_20120227 v4.doc Page 29 of 35 (1) The lot release price upon closing of the permanent mortgage made to an Eligible Household will be $96,609.70, the full unpaid principal balance of the Note. Upon receipt of payment of the release price from the Grantor, Beneficiary shall immediately credit said amount against the principal balance of the Note. As provided herein, Beneficiary may forgive some or all of the lot release price and said amount shall be immediately credited against the principal balance of the Note as stated in sections 7.23(g) and (h) of this Deed of Trust. (g) If Grantor utilizes Financing Mechanisms under NSP and the Eligible Household qualifies, then in lieu of payment of the full lot release price, the Beneficiary may forgive up to $30,000.00 in a deferred forgivable down payment assistance loan from Beneficiary to an Eligible Household whose income exceeds fifty percent (50 %) but is less than one hundred twenty (120 %) of the area median income as defined by NSP for the payment of down payment assistance, reasonable closing costs, principal reductions and gap financing in conjunction with a permanent mortgage loan for the purchase of the single family dwelling from a private mortgage lender to said Eligible Household. The full amount of any partial release price for the Mortgaged Property shall be immediately credited against the principal balance of the Note upon receipt of the fully, executed subordinate, deferred forgivable down payment assistance loan in a form approved by Beneficiary in addition to payment of the remaining balance of the lot release price. (h) If Grantor utilizes Financing Mechanisms under NSP, and the Eligible Household qualifies, then in lieu of payment of the lot release price, Beneficiary may forgive up to an amount equal to the full unpaid principal balance of the Note by the execution of a thirty (30) year, zero percent (0 %) interest, fully amortizing permanent mortgage loan from Beneficiary to an Household whose income does not exceed fifty percent (50 %) of area median income as defined by NSP for the purchase of the single - family dwelling. For an Eligible Household whose income does not exceed fifty percent (50 %) of the area median income as defined by NSP, Grantor, in lieu of payment, may also convert up to $30,000.00 of the unpaid principal balance of the Note per individual lot to a deferred forgivable down payment assistance loan from Beneficiary to said Eligible Household for the payment of principal reductions and gap financing in conjunction with and in addition to the permanent mortgage loan from Beneficiary to said Eligible. The full amount of any partial release price for the Mortgaged Property shall be immediately credited against principal balance of the Note upon receipt of fully, executed permanent mortgage loan documents and, if applicable, homebuyer assistance loan documents, in a form approved by Beneficiary. (i) Grantor must provide Beneficiary ten (10) days notice of any requested release. At the time a release is requested, the party requesting the release must furnish to the holder of the Note a calculation of area by field notes and a plat or survey, indicating the area to be released and its relationship to the portion of the Property not to be released and shall provide evidence that the lot is being sold to an Eligible Household by submitting an income certification in a form prescribed by Beneficiary. All expenses incident to the granting of release will be borne by the party requesting the release, including but not limited to the cost of the survey, Beneficiary's attorney's fees, and recording costs. 7.24 Low and Moderate Income Requirement. It is the intent of Beneficiary and Grantor that 100% of the funds made available under NSP are to be used to meet the low and moderate T:11dld\Loan Docs\NSP \Interim Construction Loans\1265 City of Huntsville\Interim Construction Deed of Trust 20120227 v4.doc Page 30 of 35 income requirement established in the Housing and Economic Recovery Act Section 2301 (f)(3)(A)(i) and (ii). The low and moderate income requirement includes individuals and families whose incomes do not exceed 120% of area median income as defined therein. Such individuals and families will be considered an Eligible Household, as determined by Beneficiary as stated herein or in accordance with any corresponding provision of federal law or provisions of succeeding laws as may be amended from time to time. The determination of whether a purchaser is an Eligible Household shall be made by Beneficiary, in its sole absolute discretion. 7.25 NSP Contract. Each term and provision of this Deed of Trust is expressly subject to the terms and condition of the Neighborhood Stabilization Program Contract Number 77099999126 executed between Office of Rural Affairs established within the Department of Agriculture, a public and official agency of the State of Texas, formerly known as Texas Department of Rural Affairs, and Grantor herein, dated to be effective September 1, 2009, in the original amount of $1,050,000.00, as amended and extended and as may be further amended from time to time, as assigned and transferred to Beneficiary by Assignment of Contract on August 30, 2011, ( "NSP Contract ") which is incorporated herein by reference. The lot or lots securing this loan must be improved with a single family dwelling completed in good and workmanlike manner and sold to an Eligible Household who will maintain the affordability period for rental or homeownership in accordance with the NSP. The terms of the NSP Contract shall govern over any conflicting provision hereof. 7.26 Due on Transfer - Nonresidential Property. BENEFICIARY MAY DECLARE THEE DEBT SECURED BY THIS DEED OF TRUST IMMEDIATELY DUE AND PAYABLE AND INVOKE ANY REMEDIES PROVIDED IN THIS DEED OF TRUST FOR DEFAULT IF GRANTOR TRANSFERS ANY OF THE MORTGAGED PROPERTY TO A PERSON WHO IS NOT A PERMITTED TRANSFEREE WITHOUT BENEFICIARY'S CONSENT. "PERMITTED TRANSFEREE" FOR A NATURAL PERSON MEANS THAT PERSON'S SPOUSE OR CHILDREN, ANY TRUST FOR THAT PERSON'S BENEFIT OR THE BENEFIT OF THE PERSON'S SPOUSE OR CHILDREN, OR ANY CORPORATION, PARTNERSHIP, OR LIMITED LIABILITY COMPANY IN WHICH THE DIRECT AND BENEFICIAL OWNER OF ALL THE EQUITY INTEREST IS A NATURAL PERSON OR THAT PERSON'S SPOUSE OR CHILDREN OR ANY TRUST FOR THE BENEFIT OF THEM; AND THE HEIRS, BENEFICIARIES, EXECUTORS, ADMINISTRATORS, OR PERSONAL REPRESENTATIVES OF A NATURAL PERSON ON THE DEATH OF THAT PERSON OR ON THE INCOMPETENCY OR DISABILITY OF THAT PERSON FOR PURPOSES OF THE PROTECTION AND MANAGEMENT OF THAT PERSON'S ASSETS; AND FOR A PERSON THAT IS NOT A NATURAL PERSON, ANY OTHER PERSON CONTROLLING, CONTROLLED BY, OR UNDER COMMON CONTROL 'WITH THAT PERSON. 7.27 Entire Agreement; Amendment. THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, T:\Idld\Loan Docs\NSP\Interim Construction Loans11265 City of Huntsville\Interim Construction Deed of Trust 20120227 v4.doc Page 31 of 35 REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions hereof and the other Loan Documents may be amended or waived only by an instrument in writing signed by Grantor and Beneficiary. T:\Idld\Loan Docs\NSPllnterim Construction Loans\1265 City of Huntsvillellnterim Construction Deed of Trust_20120227_ v4.doc Page 32 of 35 EXECUTED this THE STATE OF T COUNTY OF day of June, 2012. GRANTOR: CITY OF HUNTSVILLE,Aa political subdivision of the State of Texas By: Name: Mac'Woodward Title: Mayor This instrument was acknowledged before me on this / day of by Mac Woodward, Mayor of City of Huntsville, a political subdivision o acting on behalf of said political subdivision and in the capacity herein stat �a JUDY ANN THORN ON MY COMMISSION EXPIRES Auguet14,2014 PREPARED BY: Texas Department of Housing and Community Affairs Legal Services Division P.O. Box 13941 Austin, Texas 78711 -3941 (512) 475 -2574 2012, e State of Texas, Not Public,J$tate of Texas AFTER RECORDING RETURN TO: Walker County Title Company 1109 University Ave. Huntsville, Texas 77340 Attn: Judy Thorton GF # 201108782 T: \ldld \Loan Docs \NSP\Interim Construction Loans \1265 City of Huntsville \Interim Construction Deed of Trust_20120227 v4.doc Page 33 of 35 I, 0 EXHIBIT A LAND SURVEYING .S& MAPPING 0.133 Acres P. Cray League, A-24 Walker County, Texas Being 0.133 acres of land, being situated In the P. Cray League, A -24, also being w[thla the City limits, of Huntsville, Texas, according to the recorded deed thereof in Volume 696, Page 74 of the Deed Records of Walker County, Texas, said 0.133 acres being more particularly described by metes and bounds as follows: BEGINNING ata 1/2" Iron rod set for the southeast corner of the herein described tract, also being N 08 degrees 28 minutes 44 seconds East, a distance of 731.75 feet from a City of Huntsville GIS monument having a Texas State Plane coordinate of 10,260,407 370 Xe3,802,656.225t THENCE North 82 degrees 39 minutes 07 seconds Weat, a distance of 117.00 feet along an old partially downed wire fence line to a 1/2" iron rod set for the southwest corner of herein described tract; THENCE North 00 degrees 25 minutes 40 seconds West, * distance of 50.00 feet to a 1/2" iron rod set for the northwest corner of herein described tract; • THENCE South 82 degrees 39 minutes 07 seconds East, a distance of 117.00 feet to a 1(2" iron rod set for the northeast corner of herein described tract, being South 00 degrees 47 minutes 51 seconds West, a distance of 230.87 feet from a found 1/2" galvanized iron pipe described to be the northwest corner of a 2.04 acre tract in a deed found in volume 526 page 55 of the Official Records of Walker County, Texas; THENCE South 00 degrees 25 minutes 40 seconds East, a distance ot30.00 feet to the POINT OF BEGINNING and containing 0.133 acres of land. :;g.a•.,r•,-, -,•i •.. orb; • EXfl BIT "A° T : \ldld\Loan Docs \NSP\Interim Construction Loans\1265 City of Huntsville \Interim Construction Deed of Trust 20120227 v4.doc — — Page 34 of 35 July 27, 2012 Texas Department of Housing and Community Affairs 221 East 11th Street Austin, Texas 78701 RE: GF No.: 201108782 Loan to: City of Huntsville Property: 293 Watkins Street, P Gray League (0.133 acres), Abstract #24; Lot 46, Woodlawn East Gentlemen: In connection with the above transaction, we enclose your Loan Title Policy together with the original recorded Deed of Trust and UCC.. It is a pleasure to be of service to you. Cordially, WALKER COUNTY TITLE COMPANY Judy Thornton Escrow Officer Enc. Fidelity National Title Insurance Company Policy No.: TX0311- 82- 201108782- 2012.8239943- 86417041 LOAN POLICY OF TITLE INSURANCE (T-2) Issued by Fidelity National Title Insurance Company Any notice of claim and any other notice or statement in writing required to be given the Company under this Policy must be given to the Company at the address shown in Section 17 of the Conditions. COVERED RISKS SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS, FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California corporation (the "Company ") insures, as of Date of Policy and, to the extent stated in Covered Risks 11, 13 and 14, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of: 1. Title being vested other than as stated in Schedule A. 2. Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is not limited to insurance against loss from: (a) A defect in the Title caused by: (i) forgery, fraud, undue influence, duress, incompetency, incapacity or impersonation; (ii) failure of any person or Entity to have authorized a transfer or conveyance; (iii) a document affecting Title not properly created, executed, witnessed, sealed, acknowledged, notarized or delivered; (iv) failure to perform those acts necessary to create a document by electronic means authorized by law; (v) a document executed under a falsified, expired or otherwise invalid power of attorney; (vi) a document not properly filed, recorded or indexed in the Public Records including failure to perform those acts by electronic means authorized by law; or (vii)a defective judicial or administrative proceeding. (b) The lien of real estate taxes or assessments imposed on the Title by a governmental authority due or payable, but unpaid. (c) Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term "encroachment" includes encroachments of existing improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land. 3. Lack of good and indefeasible Title. 4. No right of access to and from the Land. 5. The violation or enforcement of any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting or relating to: (a) the occupancy, use or enjoyment of the Land; (b) the character, dimensions or location of any improvement erected on the Land; (c) subdivision of land; or (d) environmental protection if a notice, describing any part of the Land, is recorded in the Public Records setting forth the violation or intention to enforce, but only to the extent of the violation or enforcement referred to in that notice. 6. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 5 if a notice of the enforcement action, describing any part of the Land, is recorded in the Public Records, but only to the extent of the enforcement referred to in that notice. 7. The exercise of the rights of eminent domain if a notice of the exercise, describing any part of the Land, is recorded in the Public Records. 8. Any taking by a governmental body that has occurred and is binding on the rights of a purchaser for value without Knowledge. 9. The invalidity or unenforceability of the lien of the Insured Mortgage upon the Title. This Covered Risk includes but is not limited to insurance against loss from any of the following impairing the lien of the Insured Mortgage: (a) forgery, fraud, undue influence, duress, incompetency, incapacity or impersonation; (b) failure of any person or Entity to have authorized a transfer or conveyance; (c) the Insured Mortgage not being properly created, executed, witnessed, sealed, acknowledged, notarized or delivered; (d) failure to perform those acts necessary to create a document by electronic means authorized by law; (e) a document executed under a falsified, expired or otherwise invalid power of attorney; 2739943 (2/10) Loan Policy of Title Insurance T -2. (2/01 /10) (f) a document not properly filed, recorded or indexed in the Public Records including failure to perform those acts by electronic means authorized by law; or (g) a defective judicial or administrative proceeding. 10. The lack of priority of the lien of the Insured Mortgage over any other lien or encumbrance. 11. The lack of priority of the lien of the Insured Mortgage: (a) as security for each and every advance of proceeds of the loan secured by the Insured Mortgage over any statutory or constitutional mechanic's, contractor's, or materialman's lien for services, labor or material having its inception on or before Date of Policy; and (b) over the lien of any assessments for street improvements under construction or completed at Date of Policy. 12. The invalidity or unenforceability of any assignment of the Insured Mortgage, provided the assignment is shown in Schedule A, or the failure of the assignment shown in Schedule A to vest title to the Insured Mortgage in the named Insured assignee free and clear of all liens. 13. The invalidity, unenforceability, lack of priority or avoidance of the lien of the Insured Mortgage: (a) resulting from the avoidance in whole or in part, or from a court order providing an alternative remedy, of any transfer of all or any part of the title to or any interest in the Land occurring prior to the transaction creating the lien of the Insured Mortgage because that prior transfer constituted a fraudulent or preferential transfer under federal bankruptcy, state insolvency or similar creditors' rights laws; or (b) because the Insured Mortgage constitutes a preferential transfer under federal bankruptcy, state insolvency or similar creditors' rights laws by reason of the failure of its recording in the Public Records: (i) to be timely, or (ii) to impart notice of its existence to a purchaser for value or a judgment or lien creditor. 14. Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 13 that has been created or attached or has been filed or recorded in the Public Records subsequent to Date of Policy and prior to the recording of the Insured Mortgage in the Public Records. The Company will also pay the costs, attorneys' fees and expenses incurred in defense of any matter insured against by this Policy, but only to the extent provided in the Conditions. Authorized Signatory TX0311 201108782 Walker County Title Company 1109 University Ave Huntsville, TX 77340 Tel: (936) 295 -8173 Fax: (936) 295 -0371 Fidelity National Title Insurance Company Sy: aTT2sT tit Seerntary 2739943 (2/10) Loan Policy of Title Insurance T -2 (2/01/10) TLTA T -2 LOAN POLICY (2/1/10) Fidelity National Title Insurance Company SCHEDULE A Name and Address of Title Insurance Company: File No.: 201108782 Property Address: (For Reference Only) Amount of Insurance: Date of Policy: 1. Name of Insured: 293 Watkins Street Huntsville, Texas 77340 $96,609.70 June 27, 2012 P oli cy No.: 8239943 - 86417041 Fidelity National Title Insurance Company P.O. Box 45023, Jacksonville, FL 32232- 5023 Policy No.: 8239943 - 86417041 Premium: $824.00 Texas Department of Housing and Community Affairs, and each successor in ownership of the indebtedness secured by the insured mortgage except a successor who is an obligor under the provisions of Section 12 (c) of the Conditions and Stipulations. 2. The estate or interest in the land that is encumbered by the Insured Mortgage is: Fee Simple 3. Title is insured as vested in: City of Huntsville 4. The insured Mortgage, and its assignments, if any, are described as follows: Deed of Trust dated June 19, 2012, executed by City of Huntsville to Timothy K. Irvine, Trustee, securing the payment of one note of even date therewith in the principal sum of $96,609.70, payable to Texas Department of Housing and Community Affairs, filed for record with the County Clerk of Walker County, Texas on June 27, 2012, recorded in Volume 1029, Page 210 of the Official Public Records, Walker County, Texas. 5. The Land referred to in this policy is described as follows: BEING 0.133 of an acre of land, more or less, situated in the P. GRAY LEAGUE, A -24, within the City Limits of Huntsville, Walker County, Texas, and being more particularly described by metes and bounds on Exhibit "A" attached hereto and made a part hereof. NOTE: The Company is prohibited from Insuring the area or quantity of land described herein. Any statement in the above legal description of the area or quantity of land is not a representation that such area or quantity is con-ect, but is made only for informational and/or identification purposes and does not override Item 2 of Schedule B hereof. 6. This policy incorporates by reference those endorsements selected below: ❑ T -5 (Leasehold Mortgagee Policy Endorseme,) ❑ T -17 (Planned Unit Development) ❑ T -19 (Restrictions, Encroachments and Minerals Endorsement) h1e1■16 701108782 08 TLTA— T -2 Loan Policy Page 1 of 4 TLTA T -2 LOAN POLICY (2/1/10) Policy No.: 8239943 - 86417041 ❑ T -19.2 (Minerals and Surface Damage) ❑ T -19.3 (Minerals and Surface Damage) ❑ T -28 (Condominium) ❑ T -31 (Manufactured Housing) referring to manufactured housing unit serial number: ❑ T -31.1 (Supplemental Coverage Manufactured Housing Unit) ❑ T -33 (Variable Rate Mortgage) ❑ T -33.1 (Variable Rate Mortgage— Negative Amortization) ❑ T -35 (Revolving Credit/Future Advance) ❑ T -36 (Environmental Protection Lien) referring to the following state statutes: TEX. HEALTH & SAFETY CODE Sec. 361.194; TEX. HEALTH & SAFETY CODE Sec. 342.007, 342.008; TEX. LOCAL GOV'T CODE Sec 214.0015(b), (d), and (e), 214.001; TEX. NAT. RES. CODE Sec. 134.150, if applicable ❑ T -39 (Balloon Mortgage) ❑ T-42 (Equity Loan Mortgage) and subparagraph 2(f) of the Equity Loan Mortgage Endorsement as set forth in Procedural Rule P- 44.C(2) 0 is El is not added. ❑ ENDORSEMENT T-42.1 (Supplemental Coverage Equity Loan Mortgage) ❑ ENDORSEMENT T -43 (Texas Reverse Mortgage) Section 13 of the Conditions of this policy, which relates to Arbitration, is hereby deleted. File No.: Z0T10s /82 08 TLTA — T -2 Loan Policy TLTA T -2 LOAN POLICY (2/1/10) Policy No.: 8239943- 86417041 Fidelity National Title Insurance Company SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of the terms and conditions of leases and easements, if any, shown in Schedule A, and the following matters: 1. The following restrictive covenants of record itemized below, but the Company insures that any such restrictive covenants have not been violated so as to affect, and that future violation thereof will not affect, the validity or priority of the mortgage hereby insured (insert specific recording data or delete this exception): This exception is hereby deleted. 2. Any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements. ❑ Item 2 of Schedule B is hereby amended to read: "shortages in area ". 3. Standby fees, taxes and assessments by any taxing authority for the year 2012, and subsequent years; and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership, but not those taxes or assessments for prior years because of an exemption granted to a previous owner of the property under Section 11.13, Texas Tax Code, or because of improvements not assessed for a previous tax year. ❑ Item 3 of Schedule B is hereby amended to delete: "and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership," ❑ Item 3 of Schedule B is hereby amended to add the following: "Company insures that standby fees, taxes and assessments by any taxing authority for the year 2012 are not yet due and payable." 4. Item 4 is hereby deleted. 5. (Insert here all other specific exceptions as to superior liens, easements, outstanding mineral and royalty interests, etc.) a. Pending Disbursement of the full proceeds of the loan secured by the lien instrument set forth under Schedule A hereof, this policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects in, or objections to, the title up to the face amount of this policy. Nothing contained in this paragraph shall be construed as limiting any exception under Schedule B, or any printed provisions of this policy. b. Completion of improvements on said land and any and all liens arising by reason of unpaid bills or claims for work performed or materials furnished in connection with improvements placed, or to be placed, upon the subject land. However, the Company does guarantee that no such liens have been filed with the County Clerk of Walker County, Texas, prior to the date hereof. c. All matters as set out on plat dated March 31, 2011, prepared by Jarrod Antley, R.P.L.S. NO. 6071. -Fil No.- 201108782 08 TLTA — T -2 Loan Policy Page 3 of 4 TLTA T -2 LOAN POLICY (2/1/10) Policy No.: 8239943- 86417041 d. Any easements that may affect the property, such as roadways, sewer, telephone, water and/or electrical lines. WALKER COUNTY TITLE COMPANY BY: ..� _ Ii _ << _ UGC! Au orized Countersignature - -Pilcp -108782 08 TLTA — T -2 Loan Policy ft LAND SURVEYING &%MAPPING 0.133 Acres P. Cray League, A -24 Walker County, Texas Being 0.133 acres of land, being situated in the P. Gray League, A -24, also being within the City limits of Huntsville, Texas, according to the recorded deed thereof in Volume 696, Page 74 of the Deed Records of Walker County, Texas, said 0.133 acres being more particularly described by metes and bounds as follows: BEGINNING at a 1/2" iron rod set for the southeast corner of the herein described tract, also being N 08 degrees 28 minutes 44 seconds East, a distance of 731.75 feet from a City of Huntsville GIS monument having a Texas State Plane coordinate of Y= 10,260,407.370 X =3,802,656.225; • THENCE North 82 degrees 39 minutes 07 seconds West, a distance of 117.00 feet along an old partially downed wire fence line to a 1/2" iron rod set for the southwest corner of herein described tract; THENCE North 00 degrees 25 minutes 40 seconds West, a distance of 50.00 feet to a 1/2" iron rod set for the northwest corner of herein described tract; THENCE South 82 degrees 39 minutes 07 seconds East, a distance of 117.00 feet to a 1/2" iron rod set for the northeast corner of herein described tract, being South 00 degrees 47 minutes 51 seconds West, a distance of 230.87 feet from a found 1/2" galvanized iron pipe described to be the northwest corner of a 2.04 acre tract in a deed found in volume 526 page 55 of the Official Records of Walker County, Texas; THENCE South 00 degrees 25 minutes 40 seconds East, a distance of 50.00 feet to the POINT OF BEGINNING and containing 0.133 acres of land. EXHIBIT OFt1 If�1-IL PAGE i SET I /2' r.R. a SET 1/2' I.R. IN FENCELINE S 82•39'07» FND. 1/2' I.P. STREET 0.133 ACRES VOL 898 PG. 74 W.C.D.R. N 82'3g•07, w 117,00• 117,00' RENDIE EDWARD$ VOL 169 PG, 334 W. C.D.R. A 0 0 No O b1H7 SET 1/2' I.R. SET 1/2' I.R. W FENCEUNE w 1 HERBST CRNFY THAT DES SURN -ry WAS YAOE rn THE GRCUNO. NAT Nil RAT CORRECTLY REPRESENTS 1HE FACTS FOUND AT ME TWE or SURVEY AND THAT NM ARE NO ENCROACHMENTS AHONTCH. PPARENT OS THE ORON ; EXCEPT Al WORE HUNTSVILLE CIS ALLUMINUM DISK Y- 10,2ao,407.370�� X>- 3,802,858.225 I 0.133 ACRES SITUATED IN 1HE P. GRAY LEAGUE, A -24, WALKER COUNTY TEXAS, BEING WITHIN THE CM( UNITS OF HUNTSVILLE, TEkAS ACCORDING TO THE DEED RECORDED IN VOLUME 595 PAGE 74. OF THE OEEgD RECORDS OF WALKER COUNTY, IVIAS. motet wow= ARE BAUD ow YONILOMS FOND kT THE CRT CF UENrS ALES OLN. NENCRIL 7 THS NA V W NTSPoiOng MINAJT TIC 10117ir O' A CJANbd TRUE LEGAL. OF5CRIPTION t3l E Y LANI1 S [L1t31.EY-I- P4G- &- M -A-P -P 1 N G TDS TRACE COURT MONTGOMERY, TEXAS 77310 PH. (WO) 522 -5710 .CON DATE: AXA.RCH .31. 2011 SCALE: 1 -.25. FILE tic .: YJATkIrJ; ST TRACT DRAWII D'!: ,JGA CMECKED HY: .JGA 6/19/12 1:22 PM OMB No. 2502 -0265 A. U.S. Department or Housing and Urban Development Settlement Statement B. Type of Loan 1. (] FHA 2. (] FMHA 3. [) Conv. Unins. 4. [ ] VA 5. [X] Conv. Ins. 6. File Number 201108782 7. Loan Number 8. Mortgage Ins. Case No. C. Note: This form Is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agent are shown. Items marked ("POC") were paid outside the closing: they are shown here for information purposes and are not included in the totals. D. Name of Borrower. City of Huntsville, 1212 Avenue M, Huntsville, TX 77340 E. Name of Seller: F. Name of Lender: Texas Department of Housing and Community Affairs, 221 East 11th Street, Austin, TX 78701 G. Property Location: P Gray League (0.133 acres), Abstract #24; Lot46, Woodlawn East 293 Watkins Street, Huntsville, TX 77340 H. Settlement Agent Walker County Title Company (936) 295 -8173 TIN: 742113306 Place of Settlement: 1109 University Avenue, Huntsville, TX 77340 L Settlement Date: 6/15/2012 Proration Date: 6/15/2012 T't }t TiFAI v u7f1>yi r", 11 p1 i:riR . l iltp1WiiNI N��.., * rib, af«119f1�+3i[triri. tgG ,1 xIIrua[?i�r;lIL11L'S:IiIG:rm ∎ ri nl i Abi,4 r: , r 4.11t1NvI���1 I'1`(r`EME,i �il� :IFktdiht1d allailial L 400. ;1 7111.:3 tly 1^ f4 V' 9`�19nV'l({tkt 1"pIU iliiitifri iu t?:ti�jl�t , au i 1,L,Li�7'4„. :,6;4 II nVOioimultlln4l '.m110,,�mit!',,i,- iiA�iwiid:i i:Ill iii Gross amount due to seller: r �: i I I M 100. Gross amount due from borrower. 101. Contract sales price 401. Contract sales price 102. Personal property 402. Personal property 103. Settlement charges to borrower (line 1400) 1,432.00 403. 104. 404. 106. Construction Funds Held by Lender 96,609.70 405. YIP 1q,i1 r)iK[t Nnrn n PUi ti?tl� �p 'pp� �O1� J6xm, i::∎1, d w .o,llrvi2, 1 � .:�miOied�-u , r,intiiFan�., ".1�').;Jiiiii N6Il�����IEEZIIIWI 106. City/town taxes P1 1(' ��p� t�R>iq'1[lnll �r+.��VwS�LlaulroL,l�nn�ll,l,1 406. gUl��I6! JLlWili� ['4Vr ut✓jJ1L'. Il7fflq'N}7U1U' ,,il4���CU ,Jn:,n,:.i t,miViih,21111111� I } ty ip�j� Y�1ill�ll���lTIIII1� �{ I�P� (�j�(f � ��.� 9({fL" City/town taxes 107. County taxes 407. County taxes 108. Assessments 408. Assessments 109. Property Taxes 409. Property Taxes 110. 410. 111. 411. 112. 412. 120. Gross amount due from borrower: 98,041.70 420. Gross amount due to seller: 0.00 1���, .,. ,.,,, , X114 W!N INNNiI l Iia SIX N A INAVIN gin': I��ilNM 101111111121 I'NNNNNGiISIINIIMI 501, Excess deposit (see instructions) P 201. Deposit or earnest money 202. Principal amount of new loan(s) 96,609.70 502. Settlement charges to seller One 1400) 0.00 203. Existing loan(s) taken subject to 503. Existing loan(s) taken subject to 204. 504. Payoff of first mortgage loan 205. 505. Payoff of second mortgage loan 206. 506. 207. 507. 208. 508. 209. 509. 17 1711 m�'rrmmraa'tn I w. wn1 ula i 1 I TII I IP le rt , s. ,._ �.,;. ��,,, �,.,, �la���I .t[�I�i�l�Cl�i1111.,��11F� i fi�.'a,l;r�;flr 1I,�f, J17^�77 rrm,u VnVnnr ', 19711• ii,t ;,l r Ir ,i „l, ,, ddelLlnl ;l,,..f.:;�r.,n`D,.�,I„7 � ,L,IH�iI!PT �liaail,6fllL011jli t t,', ��11�l���N�ji.l�r, ill 210. City/town taxes 510. City/town taxes 211. County axes 511. County axes 212. Assessments 512. Assessments 213. Property Taxes 513. Property Taxes 214. 514. 215. 515. 216. 516. 217. 517. 218. 518. 219. 519. 220. Total paid by/for borrower: 96,609.70 520 Total reduction In amount due seller: 0.00 0.00 1 i ! U 1 7 ill" 341 1I,I'!riilfPll 1 l`S; ;i ) /i1I, 98,041.70 I1i,i 1 ltli i1I qI 1.F. 11. I,;F 1, mnti, l leNAp l i,f,lil ti i1' 601. Gross amount due to seller (line 420) 301. Gross amount due from borrower (line 120) 302. Less amount paid by/for borrower (line 220) 96,609.70 602. Less total reduction in amount due seller-One 520) 0.00 303. CASH (X)FROM OTO BORROWER 1,432.00 603. CASH ()FROM ()TO SELLER 0.00 SUBSTITUTE FORM 1099 SELLER STATEMENT - The information contained in Blocks E G, H and land on line 401 (or, if line 401 Is asterisked, lines 403 and 404), 408, 407 and 408 -412 (applicable part of buyers real estate tax reportable to the IRS) is important tax information and Is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction will be Imposed on you if thls hem Is required o be reported and the IRS determines that it has not been reported. SELLER INSTRUCTION - If this real estate was your principle residence, file form 2119, Sale or Exchange of Principal Residence, for any gain, with your Income tax return; for other transactions, complete the applicable parts of form 4767, Form 8252 and/or Schedule D (Form 1040). You are required by law to provide Walker County Title Company (938) 295 -8173 with your correct taxpayer identification number. If you do not provide Walker County Title Company (938) 295 -8173 with your correct taxpayer tdentification number, you may be subject to civil or criminal penaltles. ry •lr liapr.i- u1n.n1 n :r rp'nr 700. Total sales/broker commission Division of commission (line 700 as follows: 701. 702. 703. Commission paid at settlement 704. 705. 708. 801. Loan origination fee 802. Loan discount 803. Appraisal fee 804. Credit report 805. Lenders inspection fee 806. Mortgage insurance application fee 807. Assumption fee 808. 809. 810. 811. 812. 813. 814. Yield Spread Premium +I I'll �v n 11 4mui Paid From Borrower's Funds at Settlement Paid From Seller's Funds at Settlement �ti. -• nl nn ., r 'me [ik�' i 1 I I ti:°�"� I p 1 �{ � plml'r f l I l' �_'� . 1 Ili 1 1 1 t 11 I l i p �:.;AIJL�Iu, . ,l' �L�i��i. i�( :1 1 � 1 � I� 1t�.,,i � �114L � ,I bra tiIL I,I ; i L , Itla ,a, ! ,I�t�i II�; ti ..Ct _ � ' 901. Interest from 902. Mort.a•e insurance premium for 903. Hazard insurance premium for 904. 905. VA Funding Fee r.. iu a u _p 'r 1 1 a r { ill i nil iii t V 1 I 1 1 1 I I ,+ ��...I.; �.,. �,��;�1li,�w 1, .,�.�_ � � 1�.L��fll,;lk.l,fla �l l l� : �':,�. � 11r �.�;a�;i[i,�.w 11 ��.!i� ,� �, lil � fii��f � fF I;;;71,;][, I; lir;'J '1,i1LI I I ill I Eilill'ill1111711317 1001. Hazard insurance 1002. Mo •a•e Insurance 1003. Ci property taxes 1004. County property taxes 1005. Annual assessments (maint.) 1006. 1007. 1008. 1009. Aggregate Adjustment 1 ,1! 4i 1 f._ , .r1E '1'1' :1, +,�utii aE `_i191;ialidtir11t 1 "1141;1;PfTl!i i',iihi? I`; ti ;n ;;II:E'i'sl,5;;;l!:111,.LIh 1 1111,V7;I II. ;1h:(;!;1;1.' I� (1.1 iiii!.�r i�mIp't 1101. Settlement or closin • fee 1102. Abstract or title search 1103. Title examination 1104. Title insurance binder 1105. Document preparation 1106. Notary fees 1107. Attorney's fees to includes above items no.: 1108. Title insurance to Walker County Title Company Includes above Items no.: 1109. Lender's .cover - • e $96,609.70 5824.00 1110. Owner's coverage 1111. State Guaranty Fee (Owner) 1112. State Guaran Fee G) to Walker Coun Title Company 1113. Escrow /Closing Fee to Walker County Title Company 1114. Tax Certificates h u 824.00 2.00 400.00 .L nl 1 .,� ;� n ��a ,�� °�hf�1 pI uell "h .(;;C'�?P'Kil"fG�I�n f i 1i�� a�1'li.r,1��f IIr 111 u l�[ �I'I'r K' L��L •,I.�! "NIP1�Ii 1201. Recordin• fees: Mort. a... $152.00 Release $24.00 1202. CI /cou tax/stamps: 1203. State tax/stam • s: 1204. 1205. Recordin• UCCc? SecofState to Walker County Title Compan 1206. 176.00 30.00 r 1 „IP T"- 1 1,,m 2 alsnFC 9fi �'I r . 111 iii ! L 11 ';111114j11 ��n, ..,., �,,, C= ���.. �; ��Ilh{. Ilr. k: yi, 1 �, I�> �u�l��r1. �lU�>! Alicl����l����1, 1. I;: �• �1�i��������1,., ��li,�1����11111��,u�f�.i�{f�;i 1301. Surve 1302. Pest inspection 1303. 1304. 1305. 1306. Prope Taxes 1400. Total settlement cha .es (entered on lines 103, section J and 502, section K) 1,432.00 0.00 GE: 201108782 CERTIFICATION I have carefully reviewed the HUD -1 Settlement Statement and to the best of my knowledge and belief, it is a true and accurate statement of all receipts and disbursements made on my account or by me in this transaction. I further certify that I have received a copy of the HUD -1 Settlement Statement. SELLERS: 41746 PURCHASERS: City of Huntsville To the best of my knowledge, the HUD -1 Settlement Statement which I have prepared is a true and accurate account of the funds which were received and have been or will be disbursed by the undersigned as part of the settlement of this transaction. Walker County Title Company WARNING: It is a crime to knowingly make false statements to the United States on this or any other similar form. Penalties upon conviction can include a fine and imprisonment. For details, see: Title 18 U.S. Code Sections I001 and 1010. SET 1/2" IR. 1 0. LE. In 0 Ci ci w- '9 b z z 0 > SET /2- I.R. U FENCEUNE FND. 1/r gr.e.ovneir TK/Ns _ _ STREET S 82-39.07. 117.0cr 0.133 ACRES VOL 696 PG. 74 W.C.D.R. L.1 • *I' 0 q N 0 bin 0 cn SET 1/2" I.R. 1 NEMO' WITS"( 114AT NS 9.11nEY VAS AWE ON DE 31111.313. THAT 1113 PLAT IXIVNECTLY REPRES001 Dl FACES RUPP AT ME OW Or &MKT NI1 NAT DOW NW NO ENCROA0110111 APPMONT ON IC =UM SNOW AI MOWN 1€11121. N 82;39'07" 117.0w RENDIE EDWARDS VOL. 169 PG. 334 W.C.D.R. HUNTSVILLE GIS ALLUMINUM DISK Y-10.260,407.370 X■3.802.1356.225 OF t 0.133 ACM SITUATED IN THE P. GRAY LEAGUE, A-24, WALKER coumrc TEXAS, BEING WITHIN THE CITY LIMITS HUNTSVILLE. TEXAS ACCORDING TO THE DEED RECORDED IN VOLUME 698 PAGE 74 OF TH DEED RECORDS OF WALKER COUNTY. SET 1/2" I.R. IN FENCEUNE 3 NOM t. Mg= ARE MED ON MON111.0113 FOLVO 44 fl o OTT Of wearates US. NoVONIC. 2. 133 NANCY P1Eltmozo NOHOW AC 112/172 oF 13o/1/34 nn5. LEGAL DESCRIPTION ST ' LAND SURVEYING & MAPPING 103 Tito= COURT UCNTGOUERY. TEXAS 77316 PK M36) 342-8711 TAPNLLONTSTARL.ANORNIVEY.O011 DATE; MARCH 31. 2'3 I 1 SCALE: I -=25 . FILE tio.: WATMII' J fRA■:( DRAWN Li 1": JGA CHECKED 8Y: .ICA LAND SURVEYING & MAPPING 0.133 Acres P. Cray League, A -24 Walker County, Texas Being 0.133 acres of land, being situated in the P. Gray League, A -24, also being within the City limits of Huntsville, Texas, according to the recorded deed thereof in Volume 696, Page 74 of the Deed Records of Walker County, Texas, said 0.133 acres being more particularly described by metes and bounds as follows: BEGINNING at a 1/2" iron rod set for the southeast corner of the herein described tract, also being N 08 degrees 28 minutes 44 seconds East, a distance of 731.75 feet from a City of Huntsville GIS monument having a Texas State Plane coordinate of Y =10,260,407.370 X =3,802,656.225; THENCE North 82 degrees 39 minutes 07 seconds West, a distance of 117.00 feet along an old partially downed wire fence line to a 1/2" iron rod set for the southwest corner of herein described tract; THENCE North 00 degrees 25 minutes 40 seconds West, a distance of 50.00 feet to a 1/2" iron rod set for the northwest corner of herein described tract; THENCE South 82 degrees 39 minutes 07 seconds East, a distance of 117.00 feet to a 1/2" iron rod set for the northeast corner of herein described tract, being South 00 degrees 47 minutes 51 seconds West, a distance of 230.87 feet from a found 1/2" galvanized iron pipe described to be the northwest corner of a 2.04 acre tract in a deed found in volume 526 page 55 of the Official Records of Walker County, Texas; THENCE South 00 degrees 25 minutes 40 seconds East, a distance of 50.00 feet to the POINT OF BEGINNING and containing 0.133 acres of land. EXHIBIT "A" PAGE J OF Z UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS (front and back) CAREFULLY A. NAME & PHONE OF CONTACT AT FILER [optional] Judy Thorton 936- 295 -8173 B. SEND ACKNOWLEDGMENT TO: (Name and Address) [ Walker County Title Company 1109 University Ave, !Huntsville, Texas 77340 I GF #201108782 THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1. DEBTORS EXACT FULL LEGAL NAME - insert only= debtor name (la or1 b) -do notabbreviateoreombinenames 1 a. ORGANIZATION'S NAME CITY OF HUNTSVILLE OR 1b. INDIVIDUAL'S LASTNAME lc. MAILING ADDRESS FIRST NAME MIDDLE NAME 1212 AVENUE M CITY HUNTSVILLE Id. SEEINSTRUCTIONZ. ADD'L INFO RE I le. TYPE OF ORGANIZATION 1f. JURISDICTION OF ORGANIZATION ORGANIZATION DEBTOR POLITICAL S/D TEXAS STATE ] POSTAL CODE TX 177340 19. ORGANIZATIONAL ID #, deny 2. ADDITIONAL DEBTOR S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names 2a. ORGANIZATION'S NAME OR 2b. INDIVIDUAL'S LAST NAME 2c. MAILING ADDRESS FIRST NAME MIDDLE NAME CITY STATE POSTAL CODE 2d $EE INSTRUCTIONS ADD'L INFO RE I2e. TYPE OF ORGANIZATION ORGANIZATION DEBTOR 2f. JURISDICTION OF ORGANIZATION 3.S EC URED PARTY'S NAME (orNAMEofTOTAL ASSIGNEE ofASSIGNOR SIP - 'newton' see 29. ORGANIZATIONAL ID*, H any OR 3a. ORGANIZATION'S NAME Texas Department of Housing and Community Affairs 3h, INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 3c. MAILING ADDRESS P.O. Box 13941 CITY Austin STATE TX POSTAL CODE 78711 -3941 COUNTRY USA . ThK t- wANCINO STATEMENT covers the roAawfng collateral: 1. All furniture, equipment and other personal property now or hereafter owned by Debtor and used in connection with, located on or related in any way to the real property more particularly described as BEING 0.133 of an acre of land, more or less, situated in the P. GRAY LEAGUE, A -24, within the City Limits of Huntsville, Walker County, Texas, and being more particularly described by metes and bounds on Exhibit "A" ( "Property") attached hereto and made a part hereof, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are or shall be attached in any manner to the buildings and other improvements now or hereafter erected, constructed or developed on the Property ( "Project"); 2. All building materials and equipment now or hereafter delivered to the Property and all building and construction materials, equipment and parts intended to be installed in or on the Property or Project; 3. All plans and specifications for the Project; 4. All contracts and subcontracts relating to the Project; 5. All deposits (including tenants' security deposits, if any), funds, accounts, contract rights, instruments, documents, general intangibles (including trademarks, trade names and symbols used in connection therewith), and notes or chattel paper arising from or by virtue of any transactions related to the Property; (see Addendum attached hereto and made a part hereof) 5. ALTERNATIVE DESIGNATION da icabl LESSEELESSOR CONSIGNEECONSIGNOR his INANCING – A .N aT to be filed [for recur• or record - •) In the 'Id L 1 • -• ■ ,� .. d e.,iceble S. OPTIONAL FILER REFERENCE DATA NSP #770999991265: City of Huntsville, a political subdivision of the State of Texas BAILEE/BAILOR SELLER/BUYER , heck to -_• - • • -CH ' OR (S) on Debtor(s) ••1 •■: Ra o•;.n -I FILING OFFICE COPY — UCC FINANCING STATEMENT (FORM UCC1) (REV. 05(22102) AG, 1J EN AA Debtors • II Debtor 1 1 International Association of Commercial Administrators (IACA) BORROWER: CITY OF HUNTSVILLE, a political subdivision of the State of Texas By: Name; Mac Woodward Its: Mayor T: \ldld\Loan Docs\NSP\Interim Construction Loans \1265 City of Huntsville \Interim Construction Loan Agreement 20120319 v5.doc Page 27 of 58 UCC FINANCING STATEMENT ADDENDUM FOLLOW INSTRUCTIONS (front and back} CAREFULLY 9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT OR 9a. ORGANIZATION'S NAME CITY OF HUNTSVILLE 9b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME,SUFFIX 10. MISCELLANEOUS: THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 11. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only 0:11 name (11a or 11 b) - do not abbreviate or combine names 11a. ORGANIZATION'S NAME ''' lib. INDIVIDUAL'S LAST NAME RRSTNAME MIDDLE NAME SUFFIX 11c. MAIUNG ADDRESS CITY STATE POSTAL CODE COUNTRY 11d. SEE INSTRUCTION$ ADD'L INFO RE 111e. TYPE OF ORGANIZATION ORGANIZATION DEBTOR 1 11f. JURISDICTION OF ORGANIZATION 11g. ORGANIZATIONAL ID*, if any n NONE 12. OR —1 ADDITIONAL SECURED PARTY'S cr n ASSIGNOR 5 /P'S NAME - Insert only gndnem* (12aor12b) 12a. ORGANIZATIONS NAME 12b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 12c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 13. 14. BEING in Limits being bounds part 15. This FINANCING STATEMENT covers , timber to be cut or 11 as- extracted 16. Additional collateral description: 6. All permits, licenses, franchises, certificates, and other rights and privileges obtained in connection with the Property; 7. All bank accounts in which rental income, if any, from the Property are deposited; 8. All proceeds arising from or by virtue of the sale, lease or other disposition of any of the real or personal property described herein; 9. All proceeds (including premium refunds) payable or to be payable under each policy of insurance relating to the Project; 10. All proceeds arising from the taking of all or a part of the Property or any rights appurtenant thereto, including change of grade of streets, curb cuts or other rights of access, for any public or quasi -public use under any law or by rights of eminent domain, or by private or other purchase in lieu thereof; and, 11. All other interest of every kind and character which Debtor now has or at any time hereafter acquires in and to the above- described personal property and all property which is used or useful in connection therewith. collateral, or Is Ned as • 2 fixture filing. Description of real .state: 0.133 of an acre of land, more or less, situated the P, GRAY LEAGUE, A -24, within the City of Huntsville, Walker County, Texas, and more particularly described by metes and on Exhibit "A" attached hereto and made a hereof. Name and address of a RECORD OWNER of above-described real estate {if Debtor does not have a record interest): 17. Chock only If applicable and check only one box. Debtor is a n Trust or n Trustee acting with respect to property held in trust or n Decedents Estate 18. Check only if applicable and check only one box. — effective 30 years — effective 90 years • Debtor Is aTRANSMI'TTINO UTILITY I Filed in connection with a Manufactured -Home Transaction IIFiled in connection with a Public-Finance Transaction Intemational Association of Commercial Administrators (IACA) FILING OFFICE COPY — UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad) (REV. 05/22102) EXHIBIT A - (2 PAGES) LaDIFi TAR LAND SURVEYING & MAPPING 0.133 Acres P. Gray League, A -24 Walker County, Texas Being 0.133 acres of land, being situated In the P. Gray League, A -24, also being within the City limits of Huntsville, Texas, according to the recorded deed thereof in Volume 646, Page 14 of the Deed Records of Walker County, Texas, said 0.133 acres being more particularly described by metes and bounds as follows: BEGINNING at a 1/2" Iron rod set for the southeast corner of the herein described tract, also being N 08 degrees 28 minutes 44 seconds East, a distance of 731.75 feet from a City of Huntsville GIS monument having a Texas State Plane coordinate of Y+.10,260,407.370 X 4,802,656.221; • THENCE wire fence line to degrees 1/2" iron rod set ffoor the so southwest orn*r of herein described an tractpartially THENCE North 00 degrees 25 minutes 40 seconds West, a distance of 50.00 feet to a 1/2" Iron rod set for the northwest corner of herein described tract; THENCE South 82 degrees 39 minutes 07 seconds East, a distance of 117.00 feet to a 1/2" Iron rod set for the northeast corner of herein described tract, being South 00 degrees 47 minutes 31 seconds West, a distance 01230.87 feet from a found 1/2" galvanized iron pipe described to be the northwest corner of a 2.04 acre tract Inc deed found In volwne 526 page 55 of the Official Records of Walker County, Texas; THENCE South 00 degrees 25 minutes 40 seconds Fast, a distance of 50.00 feet to the POINT 01? BEGINNING and containing 0.133 acres of laud. • EXHIBIT "A" PAGE._j-_OF Z 3net:: unre(,M 31. "sit t SCALD 1--25. FLE tw.t W*T4s sr fah:r NUM! JrA NECKED bh 4Gn GF #: 201108782 Closing Date: 6/15/2012 Seller: Buyer: City of Huntsville Legal: P Gray League (0.133 acres), Abstract #24; Lot 46, Woodlawn East CLOSER: Judy Thornton WALKER COUNTY TITLE COMPANY 1109 University Avenue Huntsville, Texas 77340 Gentlemen: This is to confirm that Judy Thornton is the closer on the above referenced transaction and that the undersigned were made aware of the fact that said Closer is not an attorney. Said closer did not discuss, nor explain, nor interpret any of the legal documentation for any of the closing. Closer merely presented documentation to the undersigned for all signatures and made no representations to the effect of said legal documentation or other documents used in connection with said closing. Closer made no representation concerning city or governmental zoning or use ordinances, statutes or regulations and made no statements or representation concerning the merchantability of the property or fitness for any contemplated use by the Buyer. Buyer acknowledges Closer did not make any comments, statements, explanations or representations concerning arbitration or any arbitration provisions of the title policy(ies). The Buyer and Seller acknowledge that any survey, Wood Destroying Insect Report (or like report) and/or Property Condition/Inspection Report have been ordered by persons other than Closer or any representative and /or employee of Walker County Title Company and that Closer has made no statements, interpretations and/or representation concerning the survey, Wood Destroying Insect Report (or similar report) and/or Property Condition/Inspection Report furnished for this transaction. SELLERS: PURCHASERS: City of Huntsville DELETION OF ARBITRATION PROVISION (Not applicable to the Texas Residential Owner Policy) Arbitration is a common form of alternative dispute resolution. It can be a quicker and cheaper means to settle a dispute with your Title Insurance Company. However, if you agree to arbitrate, you give up your right to take the Title Company to court and your rights to discovery of evidence may be limited in the arbitration process. In addition, you cannot usually appeal an arbitrator's award. Your policy contains an arbitration provision (shown below). It allows you or the Company to require arbitration if the amount of insurance is $2,000,000 or Less. If you want to retain your right to sue the Company in case of a dispute over a claim, you must request deletion of the arbitration provision before the policy is issued. You can do this by signing this form and returning it to the Company at or before the closing of your real estate transaction or by writing to the Company. The arbitration provision in the Policy is as follows: "Either the Company or the Insured may demand that the claim or controversy shall be submitted to arbitration pursuant to the Title Insurance Arbitration Rules of the American Land Title Association ( "Rules "). Except as provided in the Rules, there shall be no joinder or consolidation with claims or controversies of other persons. Arbitrable matters may include, but are not limited to, any controversy or claim between the Company and the Insured arising out of or relating to this policy, any service in connection with its issuance or the breach of a policy provision, or to any other controversy or claim arising out of the transaction giving rise to this policy. All arbitrable matters when the Amount of Insurance is $2,000,000 or less shall be arbitrated at the option of either the Company or the Insured, unless the Insured is an individual person (as distinguished from an Entity). All arbitrable matters when the Amount of Insurance is in excess of $2,000,000 shall be arbitrated only when agreed to by both the Company and the Insured. Arbitration pursuant to this policy and under the Rules shall be binding upon the parties. Judgment upon the award rendered by the Arbitrator(s) may be entered in any court of competent jurisdiction." The Insured hereby requests deletion of the arbitration provision. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, a public and official agency of the State of Texas By: Name: u Its: Duly a v Date: itr k I RVIW orized officer or representative T: \ldld\Loan Does \NSP\Interim Construction Loans \1265 City of Huntsville\Deletion of Arbitration Provision20120209.doc f 4,2 ` U.S. $96 609.7u 4". �`' NEIA 01 B � ILIZATIQN PROGRAM ( « NSP ) Awarding Federal Age United Siiies Department of Housing and Urban Development TDH A Federal Award Number: B- 08 -DN -48 -0001 Federal Award Year (Year of Award from HUD to TDHCA): 2008 TDHCA Award Year (Year of TDHCA Board Approval): 2009 For value received, CITY OF HUNTSVILLE, a political subdivision of the State of Texas( "Maker ") promises to pay to the order of TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, a public and official agency of the State of Texas ( "Payee ") at 221 E. 1 Ith Street, P.O. Box 13941 in the City of Austin, Travis County, Texas 78711 -3941 (or at such other place in Austin, Travis County, Texas, as Payee may from time to time designate by written notice to Maker), the sum of Ninety Six Thousand Six Hundred Nine and 70/100 Dollars $96,609.70, or so much thereof as may be advanced and outstanding, together with interest on the principal balance from the date hereof at a rate equal to Zero percent (0 %) per annum. No interest shall accrue on this Note unless the maturity of this Note has been accelerated as hereinafter provided. PROMISSORY NOTE ( "NOTE ") June , 2012 The principal and interest, if any, of this Note shall be due and payable upon the sale of the developed real property described below or on August 31, 2012, whichever occurs first ( "maturity "). Payee agrees to defer and waive repayment of the principal loan amount, but only in the event Maker: 1. has not been in default under any terms at any time of this Note or any document securing payment of this Note, including without limitation, the Deed of Trust; and 2. has complied with the affordability requirements to wit, the rehabilitated or newly constructed single family residential dwelling must be set aside for an individual or family whose annual income does not exceed 120% of the area median income as defined in the Housing and Economic Recovery Act 2301(f)(3)(A)(i) and (ii) of 2008 ( "Eligible Household "); and 3. has "paid" the lot release price of $96,609.70 by and upon the closing of a permanent mortgage loan made to an Eligible Household; and 4. has sold the rehabilitated or newly constructed single family residential dwelling at a sales price the lessor of one of the following amounts: i. the cost to acquire and construct or rehabilitate the Property (as herein defined) to a decent, safe, and habitable condition, or T:11dld\Loan Docs \NSP\Interim Construction LoansU265 City of Huntsville \Note 20120227 v4.doc Page 1 of 6 4/ Initials one hundred percent (100 %) of the appraised value after rehabilitation or construction to an Eligible Household; and 5. if the Maker has utilized the Financing Mechanisms as defined in the Deed of Trust, and has converted the deferred, waived principal loan amount to permanent mortgage loans and/or down payment assistance loans under the NSP to an Eligible Household, then the Payee may forgive up to $30,000.00 per down payment assistance loan, or; 6. if Maker has utilized the Financing Mechanisms as defined in the Deed of Trust, and has submitted to Payee evidence fully executed and recorded, homebuyer assistance loans in a total amount not to exceed $96,609.70, then Payee may forgive up to an amount equal to the full unpaid principal balance of the Note for the Property to a thirty (30) year, zero percent (0 %), fully amortizing permanent mortgage loan from Payee to an Eligible Household whose income does not exceed fifty (50 %) of the area median income as defined by NSP, if applicable. Upon maturity or the sale of the last developed lot to an Eligible Household, whichever is earlier, any deferred, unpaid and unwaived balance remaining hereunder shall be forgiven, but only in the event Maker has not at any time been in default under any terms of this Note or any document securing same. Computations of interest on the unpaid principal balance of this Note shall be made on the basis of 365 or 366 days in a year, as applicable. After maturity (by acceleration or otherwise) and until paid, the unpaid, unwaived principal balance and accrued interest then due shall bear interest at the lesser of (i) ten percent (10 %) per annum or (ii) the highest interest rate allowed by Applicable Law ( "Default Interest Rate "). Notwithstanding any other provision of this Note, the daily Default Interest Rate shall be calculated by dividing the Default Interest Rate per annum applicable for such day by the actual number of days in the calendar year (whether 365 or 366). This Note may be prepaid in part or in its entirety at any time, without notice or penalty but any amounts prepaid may not be reborrowed. Partial prepayment shall be applied first to accrued and unpaid interest, if any, with the balance to the principal installments in inverse order of maturity. Any payment received more than thirty (30) days before it is due shall be considered a prepayment, unless Maker otherwise designates in writing at the time such payment is made. Any amounts owing on this Note shall be payable at the address of Payee stated above (or at such other place in Austin, Travis County, Texas designated by Payee in writing delivered to Maker at the address of Maker set forth above) in lawful money of the United States of America that is legal tender for public and private debts at the time of payment. The making of any payment in other than immediately available funds, which Payee, at its option, elects to accept shall be subject to collection, and interest shall continue to accrue until the funds by which such payment is made are available to Payee for its use. T:11dId1Loan Docs\NSPIInterim Construction Loans11265 City of Huntsville\Note_20120227_v4.doc /a Page 2 of 6 Initials If any payment required under this Note is not paid within 15 days after it becomes due and payable, then Maker shall pay to Payee, subject to the provisions of this Note limiting the amount of interest, the payment of a late charge (the "Late Charge ") to compensate Payee for the loss of use of funds and for the administrative expenses and costs of handling such delinquent payment equal to a one -time charge of five percent (5.00 %) of the amount of such payment that was not timely paid (but such Late Charge together with all interest payable hereon shall not exceed the maximum lawful rate under Applicable Law). The term "Applicable Law" as used herein means (1) the law pertaining to maximum rates of interest that is now in effect and (2) any law that comes into effect at any time in the future allowing a higher maximum interest rate than the law now in effect. Payee is not obligated to accept any past due payment that is not accompanied by a Late Charge, but may accept such payment without waiving its rights to collect the Late Charge. In no event shall a Late Charge be payable by reason of the acceleration of the indebtedness evidenced by this Note; therefore, a Late Charge would only be due and payable with respect to payments under this Note which became delinquent prior to the acceleration of the indebtedness evidenced hereby. Maker shall pay a charge of $25.00 for any check returned for any. reason. If this Note is placed in the hands of an attorney for collection or is collected by legal proceedings of any kind, Maker agrees to pay all costs of collection, including reasonable attorneys' fee and costs to the extent allowed by law. Except as provided in this Note, Maker and each endorser and guarantor of this Note jointly and severally waive grace, presentment for payment, notice of renewals and extensions, notice of nonpayment, notice of protest, notice of and demand for payment of installments or other amounts coming due under this Note that are not paid when due, notice of intent or election to accelerate maturity or the actual acceleration of maturity of the indebtedness evidenced by this Note, and diligence in the collection of this Note, in filing suit on this Note and in seizing or foreclosing on any collateral securing this Note and agree to one or more extensions of maturity and partial payments before or after maturity without prejudice to rights of the holder of this Note. This Note is secured by the liens and security interests granted in the interim construction deed of trust (with security agreement and assignment of rents) ( "Deed of Trust ") of even date herewith from Maker to Timothy K. Irvine, Trustee for Payee conveying the following property (hereinafter referred to as the "Property "): BEING 0.133 of an acre of land, more or less, situated in the P. GRAY LEAGUE, A -24, within the City Limits of Huntsville, Walker County, Texas, and being more particularly described by metes and bounds on Exhibit "A" attached hereto and made a part hereof. The proceeds of this Note will be advanced to Maker at its special instance and request in accordance with the terms of that certain Construction Loan Agreement dated of even date herewith, between Maker and Payee (collectively, the "Loan Agreement "), and incorporated herein by reference for all purposes. T:11dld \Loan Does WSP \Interim Construction Loans 1265 City of Huntsville \Note 20120227 v4.doc Page 3 of 6 Initials Any default under the Deed of Trust securing this Note shall be deemed to be a default under this Note. IF ANY PART OF THE COLLATERAL SECURING THIS NOTE IS TRANSFERRED OR CONVEYED WITHOUT PAYEE'S PRIOR CONSENT, TIHS NOTE IS IMMEDIATELY DUE AND PAYABLE AND PAYEE MAY INVOKE ANY REMEDIES PROVIDED UNDER THE DEED OF TRUST SECURING THIS NOTE. If the collateral is residential real property containing fewer than five dwelling units or a residential manufactured home occupied by Maker, exceptions to this provision are limited to (a) a subordinate lien or encumbrance that does not transfer rights of occupancy of the property; (b) creation of a purchase money security interest for household appliances; (c) transfer by devise, descent, or operation of law on the death of a co- owner; (d) grant of a leasehold interest of three years or less without an option to purchase; (e) transfer to a spouse or children of owner or between co- owners; (f) transfer to a relative of owner or on owner's death; and (g) transfer to an inter vivos trust in which owner is and remains a beneficiary and occupant of the property. In the event of default in the payment of any part of the principal or interest on this Note and Maker's failure to cure the default within thirty (30) days after Payee's delivery of written notice of default to Maker, or in the event of default in the performance of any other agreement contained in the Loan Agreement or any document securing the payment of this Note or otherwise executed in connection herewith, and Maker's failure to cure the default within thirty (30) days after Payee's delivery of written notice of the default to Maker, then the holder of this Note shall have the unconditional right, without demand, notice, or other action, to declare the unpaid principal balance of this Note, together with interest accrued on the unpaid principal balance, at once due and payable and to foreclose each lien and security interest securing the payment of this Note, either under any power of sale contained in any documents creating such lien or security interest or by court proceedings, as the holder may elect. Notice shall be deemed to have been delivered upon actual receipt or upon deposit, if deposited in an official depository of the United States Postal Service, properly addressed to the party entitled to the notice, marked certified mail, return receipt requested, and containing sufficient postage. For the purpose of notice, Maker's address is 1212 Avenue M, Huntsville, Walker County, Texas 77340. Maker shall have the right to change its address and specify any other address within the United States of America by at least ten (10) days' written notice to Payee. All agreements and transactions between Maker and Payee, whether now existing or hereafter arising, whether contained herein or in any other instrument, and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity hereof, prepayment, demand for payment or otherwise, shall the amount contracted for, charged or received by Payee from Maker for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the maximum amount permissible under Applicable Law, it particularly being the intention of the parties hereto to conform strictly to the law of the State of Texas and of the United States of America, whichever is applicable. Any interest payable hereunder or under any other instrument relating to the loan evidenced hereby that is in excess of the legal maximum under Applicable Law, shall, in the event of acceleration of maturity, prepayment, demand for payment or otherwise, be automatically, as of the date of such acceleration, prepayment, demand or otherwise, applied to a reduction of the principal indebtedness hereof and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of such principal, T:\ldld \Loan Docs \NSP \Interim Construction Loans11265 City of Huntsvillc\Note_20120227_v4.doc Page 4 of 6 Initials such excess shall be refunded to Maker. To the extent permitted by Applicable Law, determination of the legal maximum amount of interest shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the loan, all interest at any time contracted for, charged or received from Maker in connection with the loan, so that the actual rate of interest on account of such indebtedness is uniform throughout the term thereof. This Note shall be governed by and construed in accordance with the laws of the State of Texas and the United States of America from time to time in effect. Notwithstanding anything herein to the contrary, Payee shall have no recourse against Maker, nor against any guarantor, if any, for payment and performance of all of the obligations, covenants and agreements of Maker under this Note and the documents securing same including, but not limited to the Deed of Trust (said documents hereafter collectively Galled "Security Documents "), except to the full extent of all of the Property which constitutes security for this Note. If default occurs in the timely and proper payment of any portion of such indebtedness or in the timely performance of any of such obligations, agreement or covenants, any judicial proceedings brought by Payee against Maker or any guarantor shall be limited to the protection and preservation of the Property, the preservation, enforcement and foreclosure of the liens, mortgages, assignments, rights and security interests now or at any time hereafter securing the payment of the Note, and enforcement and collection of obligations, covenants and indebtedness for which Maker and any guarantors remain liable as provided in this paragraph. If there is a foreclosure of any such liens, mortgages, assignments, rights, and security interests securing the payment of this Note, by power of sale or otherwise, no judgment for any deficiency upon such indebtedness shall be sought or obtained by Payee against Maker. Notwithstanding the foregoing provisions of this paragraph or any other agreement, Payee shall have full recourse against Maker and all guarantors, if any, for: (a) fraud or misrepresentation by Maker or any guarantor in connection with the transactions herein contemplated; (b) failure to pay taxes, assessments, charges for labor or materials or other charges that can create liens on any portion of the Property; (c) the misapplication of (i) proceeds of insurance covering any portion of the Property, or (ii) proceeds of the sale or condemnation of any portion of the Property, or (iii) rentals received by or on behalf of Maker subsequent to the date on which Payee gives written notice of the posting of foreclosure notices, (d) failure to prevent waste to the Property unless Payee is compensated therefor by insurance proceeds collected by Maker; (e) the return to Payee of all unearned advance rentals and security deposits paid by tenants of the Property and not refunded to or forfeited by such tenants, (f) the return of, or reimbursement for, all personalty taken from the Property by or on behalf of Maker, (g) all court costs and for all attorneys' fees provided for in any instrument governing, securing or pertaining to the payment of the Note; and (h) failure to comply with any indemnification provision or covenants pertaining to environmental matters contained in the Security Documents_ Each term and provision of this Note is expressly subject to the terms and conditions of the Neighborhood Stabilization Program Contract # 77099999126 executed between Office of Rural Affairs established within the Department of Agriculture, a public and official agency of the State of Texas, formerly known as Texas Department of Rural Affairs, and Maker herein, dated to be effective September 1, 2009 in the original amount of $1,050,000.00, as assigned and transferred to Payee by Assignment of Contract on August 30, 2011, as amended and extended, and as may be fiirther amended T: \ldld\Loan Docs\NSPUnterim Construction Loans \1265 City of Huntsville\Note 20120227 v4,doc Page 5 of 6 iit4e) Initials from time to time ( "NSP Contract "), which provides acquisition and rehabilitation or new construction of lot(s) development under the NSP; said NSP Contract a incorporated herein by reference. The terms of the NSP Contract shall govern over any conflicting provisions hereof. THIS WRITTEN AGREEMENT AND THE OTHER WRITTEN AGREEMENTS, INCLUDING THE COLLATERAL AGREEMENTS, SIGNED CONTEMPORANEOUSLY WITH THE SIGNING HEREOF REPRESENT 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. MAKER: CITY OF HUNTSVILLE, a political subdivision of the State of Texas By: Al ✓G� Name: Mac Woodward Title: Mayor T: \Idld \Loan DOGS \NSPUnterim Construction Loans \]265 City of Huntsville\Note 20i2D227_v4.doc Page 6 of 6 Initials EXHIBIT A - (2 PAGES) LO LAND SURVEYING & MAPPING 0,133 Acres P. Cray League, A -24 Walker County, Texas Belau 0.133 acres of land, being situated in the P. Gray League, A -24, also being within the City Units of Huntsville, Texas, according to the recorded deed thereof In Volume 696, Page 74 of the Deed Records of Walker County, Texas, said 0.133 acres being more particularly described by meta and bounds as follows: BEGINNING at a U2" iron rod set for the southeast corner of the herein described tract, also being N 08 degrees 28 minutes 44 seconds .Fast, a distance of 731.75 forefront a City of Huntsville GIS monument having a Texas • State Piave coordinate of Y ..10,260,407,370 X.3,802,656.2251 THENCE North 82 degrees 39 minutes 07 seconds West, a distance of 117.00 feet along an old partially downed wire fence line to a 1/2" iron rod set for the southwest corner of hereto described tract; THENCE North 00 degrees 25 minutes 40 seconds West, a distance 0150.00 feet to a 1/2" iron rod set for the northwest corner of berets described traefl • THENCE South 82 degrees 39 minutes 07 seconds East, a, distance of 117.00 feet to a ill° Iron rod set for the northeast corner of herein described tract, being South 00 degrees 47 minutes 51 seconds West, s distance of 230.87 feet from a found 1/2" galvanized Iron pipe described to be the northwest corner of a 2.04 acre tract In a deed found in volume 326 page 55 of the Official Records of Walker County, Texas; THENCE South 00 degrees 23 minutes 40 seconds East, a distance of 50.00 feet to the POINT OF BEGINNING and containing 0.133 acres of land. i'..:t it: )'t:if t:' i r i 1'1 i EXHIBIT I'A" PAGE. OF 04tC: 4NRCM J1, 2711 S4ALE: I " +2S FILE 114,1 WAtFU1i 5( 'NACV MtMMiy L7 P JCA MCCNEU Nv; Div,