Document:

EXHIBIT
10.10

PROMISSORY
NOTE

June 21, 2006

1.             Key Terms

Borrower:                                                                                                W&G
Partnership, Ltd.

 

Borrower’s Mailing
Address:                                                             6
Desta Drive, Suite 6500

                                                                                                                 Midland,
Texas 79701

 

Lender:                                                                                                    Behringer
Harvard Operating Partnership I

                                                                                                                 LP,
a Texas limited partnership

 

Place for Payment:                                                                                c/o
Behringer Harvard REIT I, Inc.

                                                                                                                 15601
Dallas Parkway, Suite 600

                                                                                                                 Addison,
Texas 75001-6026

                                                                                                                 Attention:
Treasurer

 

Principal Amount:                                                                                 $3,000,000.00

 

Annual Interest
Rate:                                                                           7.75%
per annum

 

Maturity Date:                                                                                       June 21,
2013

 

Default Rate:                                                                                          12%
per annum

 

2.                                       Terms of Payment (principal and interest):

Interest only, calculated at the annual rate of 6.50%,
shall be due and payable monthly as it accrues on the 15th day of each month,
beginning July 15, 2006, and continuing through the Maturity Date. The
difference between the Annual Interest Rate and 6.50% shall be accrued and
added to the Principal Amount annually on the anniversary date of this Note. On the Maturity Date, the unpaid Principal Amount balance
and accrued, unpaid interest will be payable in full. Payments will be applied
first to accrued interest and the remainder to reduction of the Principal
Amount.

Borrower shall have the right to prepay all or any
part of the Principal Amount at any time. Partial releases of the Development
Land shall be accomplished under the terms of the Deed of Trust described
below.

3.                                       Security for Payment: This Note is secured by a deed of
trust of even date herewith from W&G Partnership, Ltd. to Randall S.
Osborne, Trustee, for the benefit of Lender (“Deed of Trust”), which covers the
real property described on Exhibit “A” of the Deed of Trust (referred to
as the “Development Land”)

4.                                       Promise to Pay/Default Interest. Borrower promises to pay to
the order of Lender the Principal Amount plus interest at the Annual Interest
Rate. This Note

 

is payable at the Place for Payment and according to
the Terms of Payment. All unpaid amounts are due by the Maturity Date. After
maturity or so long as any other Event of Default has occurred and is
continuing, then notwithstanding anything in this Note to the contrary,
interest under this Note shall accrue on the unpaid principal balance at the
Default Rate.

5.                                       Acceleration.        If
Borrower defaults in the payment of this Note or in the performance of any
obligation in any instrument securing or collateral to this Note, Lender may
declare the unpaid principal balance, earned interest, and any other amounts
owed on the Note immediately due after ten (10) days written notice to
Borrower.

6.                                       Loan Charges. Interest on the debt evidenced by this Note
will not exceed the maximum rate or amount of nonusurious interest that may be
contracted for, taken, reserved, charged, or received under law. Any interest
in excess of that maximum amount will be credited on the Principal Amount or,
if the Principal Amount has been paid, refunded. On any acceleration or
required or permitted prepayment, any excess interest will be canceled
automatically as of the acceleration or prepayment or, if the excess interest
has already been paid, credited on the Principal Amount or, if the Principal
Amount has been paid, refunded. This provision overrides any conflicting
provisions in this Note and all other instruments concerning the debt.

7.                                       Late
Charge. If any monthly installment of interest or principal and interest or
other amount payable under this Note or under the Deed of Trust or any other
Loan Document is not received in full by Lender within ten (10) days after
the installment or other amount is due, counting from and including the date
such installment or other amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to five percent
(5%) of such installment or other amount due (unless applicable law requires a lesser
amount be charged, in which event such lesser amount shall be substituted).

8.                                       Exculpation. Except as otherwise provided in this Section 9,
Borrower shall have no personal liability under this Note, the Security
Instrument or any other Loan Document for the repayment of the Indebtedness or
for the performance of any other obligations of Borrower under the Loan
Documents and Lender’s only recourse for the satisfaction of the Indebtedness
and the performance of such obligations shall be Lender’s exercise of its
rights and remedies with respect to the Mortgaged Property and to any other
collateral held by Lender as security for the Indebtedness. Borrower shall be
personally liable to Lender for the performance of all of Borrower’s
obligations under Section 8.2 of the Deed of Trust (relating to
environmental matters).

9.                                       When
the context requires, singular nouns and pronouns include the plural. Capitalized
terms used herein shall have the meaning given in the Deed of Trust unless
otherwise defined.

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  W&G PARTNERSHIP, LTD.,

  
	
   

  	
   

  	
  a Texas limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  ClayDesta, L.P., its managing general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  ClayDesta Operating L.L.C.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ L. Paul Latham

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  L. Paul Latham

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President

  

 

 3EXHIBIT
10.11

Prepared by, and after recording

return to:

Randall
S. Osborne

Powell & Coleman, L.L.P.

8080 North Central Expressway, Suite 1380

Dallas, Texas 75206

DEED OF TRUST

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL
PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM
THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR
SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

DEED OF TRUST

This Deed
of Trust (herein referred to as the “Deed of Trust”), is entered into as
of June 21, 2006 by W&G
Partnership, Ltd., a Texas limited partnership, Desta Three Partnership, Ltd.,
a Texas limited partnership, and Desta Six Partnership, Ltd., a Texas limited
partnership, whose mailing address for notice hereunder is 6 Desta Drive, Suite 6500,
Midland, Texas 79705, to Randall S. Osborne, Trustee, whose address is c/o
Powell & Coleman, 8080 N. Central Expressway, Suite 1380, Dallas,
Texas  75206, for the benefit of the
hereinafter described Beneficiary.

W I T N E S S E T H:

ARTICLE I

DEFINITIONS

1.1           Definitions. As used herein, the following terms have the following meanings:

Beneficiary:  Behringer Harvard Operating
Partnership I LP, a Texas limited partnership  whose address
for notice hereunder is 15601 Dallas Parkway, Suite 600, Addison, Texas
75001-6026, and the subsequent holder or holders, from time to time, of
the Note.

Charges:  All fees, charges and/or other things of
value, if any, contracted for, charged, received, taken or reserved by
Beneficiary in connection with the transactions relating to the Note and the
other Loan Documents, which are treated as interest under applicable law.

Constituent
Party:  Any signatory to this Deed of
Trust that signs on Grantor’s behalf that is a corporation, general partnership,
limited partnership, limited liability company, joint venture, trust, or other
type of business organization.

Contracts:  All of the right, title, and interest of
Grantor, including equitable rights, in, to, and under any and all (i) contracts
and agreements for the sale of all or any portion of the Mortgaged Property,
whether such contracts or agreements are now or at any time hereafter existing,
including any and all earnest money or other deposits escrowed or to be
escrowed or letters of credit provided or to be provided by the purchasers
under the contracts, including all amendments and supplements to and renewals
and extensions of the contracts at any time made, and together with all
payments, earnings, income, and profits arising from the sale of all or any
portion of the Mortgaged Property or from the contracts and all other sums due
or to become due under and pursuant thereto; (ii) contracts, licenses,
permits, and rights relating to living unit equivalents or other entitlements
for water, wastewater, and other utility services whether executed, granted, or
issued by a private person or entity or a Governmental Authority or quasi-governmental
agency, which are directly or indirectly related to, or connected with, the
development, ownership, maintenance or operation of the Mortgaged Property, now
or at any time thereafter existing; (iii) arrangements relating to the
financing or purchase of all or any portion of the Mortgaged Property by future
purchasers; and (iv) all other contracts which in any way relate to the
use, enjoyment, occupancy, operation, maintenance, repair, management or
ownership of the Mortgaged Property, including maintenance and service
contracts and management agreements.

 2
 

 

Debtor
Relief Laws:  Title 11 of the United States Code
and any other applicable law, domestic or foreign, relating to bankruptcy,
insolvency, liquidation, receivership, reorganization, arrangement or
composition, extension or adjustment of debts, or similar laws affecting the
rights of creditors.

Default
Rate:  The rate of interest specified in
the Note as the “Default Rate.”

Disposition:  Any sale, lease, exchange, assignment,
conveyance, transfer, trade, or other disposition of all or any portion of the
Mortgaged Property (or any interest therein) or all or any part of the legal
and beneficial ownership interest in Grantor, except as may be expressly
permitted by this Deed of Trust or the other Loan Documents.

Environmental
Law:  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, including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9601 et
seq.; Resource, Conservation and Recovery Act (“RCRA”), 42 U.S.C. §
6901 et seq. as amended by the Superfund Amendments and Reauthorization
Act of 1986 (“SARA”), Pub. L. 99-499, 100 Stat. 1613; the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq.; Emergency Planning and
Community Right to Know Act of 1986, 42 U.S.C. § 1101 et seq.; Clean
Water Act (“CWA”), 33 U.S.C. § 1251 et seq.; Clean Air Act (“CAA”),
42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act (“FWPCA”),
33 U.S.C. § 1251 et seq.; and any corresponding state laws or ordinances
including 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,
statutes and regulations.

ERISA:  The Employee Retirement Income Security Act
of 1974, 29 U.S.C. § 1001 et  seq.

Event of
Default:  Any happening or occurrence
described in Article VI hereof.

Governmental
Authority:  The United States, each state,
each county, each city, and each other political subdivision in which all or
any portion of the Mortgaged Property is located, and each other political
subdivision, agency, or instrumentality exercising jurisdiction over
Beneficiary, Grantor or any Mortgaged Property.

Grantor:  The party or parties, whether one or more,
who execute this Deed of Trust and who are identified as such in the initial
paragraph of this Deed of Trust, as well as the successors, assigns, heirs and
legal representatives of such party or parties.

Hazardous
Substance:  Any substance, product, waste, or
other material which is or becomes listed, regulated, or addressed as being a
toxic, hazardous, polluting, or similarly harmful substance under any
Environmental Law, including:  (i) any
substance included within the definition of (A) “hazardous waste” pursuant
to Section 1004 of RCRA, (B) “hazardous substance” pursuant to Section 101
of CERCLA, (C) “regulated substance” pursuant to Section 26.342(11)
of TWC, (D) “hazardous substance” pursuant to Section 361.003(11) of
THSC, (E) “waste” pursuant to Section 30.003(b) of TWC , or (F) “pollutant”
pursuant to Section 26.001(13) of TWC; (ii) asbestos or asbestos-containing
materials in any form that is or could become 

 3
 

 

friable; (iii) polychlorinated biphenyls; (iv) petroleum
products; (v) underground or above-ground storage tanks, whether
empty, filled or partially filled with any substance; (vi) any radioactive
materials, urea formaldehyde foam insulation or radon; and (vii) any other
chemical, material or substance now or in the future defined as a “hazardous
substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic
pollutant,” “contaminant,” or “pollutant” within the meaning of any
Environmental Law.

Impositions:  (i) All real estate and personal
property taxes, charges, assessments, standby fees, excises, and levies and any
interest, costs, or penalties with respect thereto, general and special,
ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which at any time prior to or after the execution hereof may be
assessed, levied, or imposed upon the Mortgaged Property or the ownership, use,
occupancy, or enjoyment thereof, or any portion thereof, or the sidewalks,
streets, or alleyways adjacent thereto; (ii) any charges, fees, license
payments, or other sums payable for or under any easement, license, or
agreement maintained for the benefit of the Mortgaged Property; (iii) water,
gas, sewer, electricity, and other utility charges and fees relating to the
Mortgaged Property; and (iv) assessments and charges arising under any
subdivision, condominium, planned unit development, or other declarations,
restrictions, regimes, or agreements affecting the Mortgaged Property.

Indebtedness:  (i) The principal of, interest on, or
other sums evidenced by the Notes or the Loan Documents; (ii) any other
amounts, payments, or premiums payable under the Loan Documents; (iii) such
additional or future sums (whether or not obligatory), with interest thereon,
as may hereafter be borrowed or advanced from Beneficiary by or to the then
record owner of the Mortgaged Property, when evidenced by a promissory note
which, by its terms, is secured hereby (it being contemplated by Grantor and
Beneficiary that such future indebtedness may be incurred); (iv) any and
all other indebtedness, obligations, and liabilities of any kind or character
of Grantor to Beneficiary, now or hereafter existing, absolute or contingent,
due or not due, arising by operation of law or otherwise, or direct or
indirect, primary or secondary, joint, several, joint and several, fixed or
contingent, secured or unsecured by additional or different security or
securities, voluntarily or involuntarily incurred, known or unknown, or
originally payable to Beneficiary or to a third party and subsequently acquired
by Beneficiary.

Land:  All that certain real property or interest
therein more particularly described in Exhibit “A”, which is
attached hereto and incorporated herein by this reference, together with all
right, title, interest, and privileges of Grantor in and to (i) all
streets, ways, roads, alleys, easements, rights-of-way, licenses,
rights of ingress and egress, vehicle parking rights and public places,
existing or proposed, abutting, adjacent, used in connection with or pertaining
to such real property or the improvements thereon; (ii) any strips or
gores of real property between such real property and abutting or adjacent
properties; (iii) all water and water rights, timber and crops pertaining
to such real estate; and (iv) all appurtenances and all reversions and
remainders in or to such real property.

Legal
Requirements:  (i) Any and
all present and future judicial decisions, statutes (including Architectural
Barrier Laws and Environmental Laws), rulings, rules, regulations, permits,
certificates, or ordinances of any Governmental Authority in any way applicable
to Grantor, any Constituent Party or the Mortgaged Property, including the
ownership, use, occupancy, possession, operation, maintenance, alteration,
repair, or reconstruction thereof, (ii) any and all covenants, conditions,
and restrictions contained in any deeds, other forms of conveyance, or in any
other instruments of any nature that relate in any way or are applicable to 

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the Mortgaged Property or the ownership, use, or occupancy
thereof, (iii) Grantor’s presently or subsequently effective bylaws and
articles of incorporation, operating agreement and articles of organization or
partnership, limited partnership, joint venture, trust, or other form of
business association agreement, (iv) any and all Contracts, and (v) any
and all leases other than those described in (iv) above and other
contracts (written or oral) other than those described in (vi) above of
any nature that relate in any way to the Mortgaged Property and to which
Grantor may be bound, including any lease or other contract pursuant to which
Grantor is granted a possessory interest in and to the Land.

Loan
Documents:  The Note and  this Deed of Trust and all other instruments,
documents or other writings now or hereafter evidencing, governing, securing,
guaranteeing or otherwise relating to or executed pursuant to or in connection
with any of the Indebtedness or any Loan Document, whether executed and
delivered prior to, concurrently with or subsequent to this Deed of Trust, as
such documents may have been or may hereafter be amended from time to time.

Maximum
Lawful Rate:  The maximum lawful rate of
interest which may be contracted for, charged, taken, received or reserved by
Beneficiary in accordance with the applicable laws of the State of Texas (or
applicable United States federal law to the extent that it permits Beneficiary
to contract for, charge, take, receive or reserve a greater amount of interest
than under Texas law), taking into account all Charges (as herein defined) made
in connection with the transaction evidenced by the Note and the other Loan
Documents. To the extent that Beneficiary is relying on Chapter 303 of the
Texas Finance Code to determine the Maximum Lawful Rate payable on the Note
and/or any other portion of the Indebtedness, Beneficiary will utilize the
weekly ceiling from time to time in effect as provided in such Chapter 303. To
the extent United States federal law permits Beneficiary to contract for,
charge, take, receive or reserve a greater amount of interest than under Texas
law, Beneficiary will rely on United States federal law instead of such Chapter
303 for the purpose of determining the Maximum Lawful Rate. Additionally, to
the extent permitted by applicable law now or hereafter in effect, Beneficiary
may, at its option and from time to time, utilize any other method of
establishing the Maximum Lawful Rate under such Chapter 303 or under other applicable
law by giving notice, if required, to Grantor as provided by applicable law.

Minerals:  All substances in, on, under, or above the
Land which are now, or may become in the future, intrinsically valuable (that
is, valuable in themselves) and which now or in the future may be enjoyed
through extraction or removal from the Land, including without limitation, oil,
gas, and all other hydrocarbons, coal, lignite, carbon dioxide and all other
nonhydrocarbon gases, uranium and all other radioactive substances, and gold,
silver, copper, iron and all other metallic substances or ores.

Mortgaged
Property:  The Land, Minerals, Contracts, and
any interest of Grantor now owned or hereafter acquired in and to the Land,
Minerals, Contracts, together with any and all other security and collateral of
any nature whatsoever, now or hereafter given for the repayment of the
Indebtedness or the performance and discharge of the Obligations. The term “Mortgaged
Property” is expressly defined as meaning all or, where the context permits
or requires, any portion of the foregoing items in this definition and all or,
where the context permits or requires, any interest therein.

Note
(individually and/or collectively, as the context may require):  That certain Promissory Note of even date
herewith, incorporated herein by this reference, executed by W&G 

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Partnership, Ltd. and payable to the order of Beneficiary in
the stated principal amount of $3,000,000.00, and any and all renewals,
modifications, amendments, rearrangements, consolidations, reinstatements,
enlargements, increases or extensions of such promissory note or notes given in
renewal, substitution or replacement therefor. The Note shall mature on June     , 2013
unless renewed or extended in accordance with the express terms of the Loan
Documents or unless the maturity shall be accelerated for any reason.

Obligations:  Any and all of the covenants, conditions,
warranties, representations, and other obligations (other than to repay the
Indebtedness) made or undertaken by Grantor or any other person or party to the
Loan Documents to Beneficiary, Trustee, or others as set forth in the Loan
Documents, and in any deed, lease, sublease, or other form of conveyance, or
any other agreement pursuant to which Grantor is granted a possessory interest
in the Land.

Permitted
Exceptions:  All matters shown on Schedule B of
the Mortgagee Policy of Title Insurance issued in Beneficiary’s name insuring
the lien of this Deed of Trust

Release:  The terms “release,” “removal,” “environment,”
and “disposal” shall have the meanings given such terms in CERCLA, and the term
“disposal” shall also have the meaning given it in RCRA; provided that in the
event either CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment, and provided further that to the extent the laws of the
State of Texas establish a meaning for “release,” “removal,” “environment,” or “disposal,”
which is broader than that specified in either CERCLA and RCRA, such broader
meaning shall apply.

Remedial
Work:  Any investigation, site
monitoring, containment, cleanup, removal, restoration, or other work of any
kind or nature reasonably necessary in the sole opinion of Beneficiary under
any applicable Environmental Law or desirable in connection with the current or
future presence, suspected presence, release, or suspected release of a
Hazardous Substance in or into the air, soil, ground water, surface water, or
soil vapor at, on, about, under, or within the Mortgaged Property, or any part
thereof. The parties contemplate that any Remedial Work will result in
decontamination of the Mortgaged Property to permit any future use of the
Property, including as residential property, and shall not comprise any
restrictions or conditions in connection with future development of the
Mortgaged Property.

Subordinate
Mortgage:  Any mortgage, deed of trust,
pledge, lien (statutory, constitutional, or contractual), security interest,
encumbrance or charge, or conditional sale or other title retention agreement,
covering all or any portion of the Mortgaged Property, the lien of which is
subordinate and inferior to the lien of this Deed of Trust.

Tax Code:  The U.S. Internal Revenue Code of 1986, as amended,
any and all U.S. Department of Treasury Regulations issued pursuant thereto in
temporary or final form, and any and all federal, state, county, municipal and
city rules and rulings, notices, requirements, statutes, regulations or
laws governing or relating to taxes and/or taxation, and any and all successor
statutes thereof.

Trustee:  The individual described as Trustee in the
initial paragraph of this Deed of Trust.

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1.2           Additional Definitions and General Usage. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided for in this Deed of Trust, the
following shall govern:

(a)           “Hereof,” “hereby,” “hereto,”
“hereunder,” “herewith,” and similar terms mean of, by, to, under and with
respect to, this Deed of Trust or to the other documents or matters being
referenced.

(b)           “Heretofore” means before,
“hereafter” means after, and “herewith” means concurrently with, the date of
this Deed of Trust.

(c)           “Including” means
including, without limitation.

(d)           “Person” includes a
natural person, corporation, limited liability company, partnership, trust,
unincorporated association, government, Governmental Authority and any other
entity.

(e)           The phrase “attorneys fees”
and “legal fees” include any and all counsel, attorney, paralegal and law clerk
fees and disbursements, including at the pre-trial, trial and appellate
levels incurred or paid by Beneficiary or Trustee in protecting Beneficiary’s
interest in the Mortgaged Property or enforcing its rights hereunder, whether
with respect to retained firms, the reimbursement for the expenses of in-house
staff or otherwise.

(f)            All pronouns, whether in
masculine, feminine or neuter form, shall be deemed to refer to the object of
such pronoun whether same is masculine, feminine or neuter in gender, as the
context may suggest or require.

(g)           All terms used herein,
whether or not defined in Section 1.1 hereof, and whether used in
singular or plural form, shall be deemed to refer to the object of such term
whether such is singular or plural in nature, as the context may suggest or
require.

(h)           References to “Legal
Requirements,” “Environmental Laws,” “Debtor Release Laws,” “applicable law,”
any other specifically named law and any other similar terms also refer to such
laws and items as now or hereafter amended or modified.

ARTICLE II

GRANT

2.1           Grant. To
secure the full and timely payment of the Indebtedness and the full and timely
performance and discharge of the Obligations, Grantor has GRANTED, BARGAINED,
SOLD and CONVEYED, and by these presents does GRANT, BARGAIN, SELL and CONVEY,
unto Trustee, in trust, the Mortgaged Property, subject, however, to the
Permitted Exceptions, TO HAVE AND TO HOLD the Mortgaged Property unto Trustee,
forever, and Grantor does hereby bind itself, its successors, and assigns to
WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Trustee
against every person whomsoever lawfully claiming or to claim the same or any
part thereof. If Grantor shall pay (or cause to be paid) the Indebtedness as
and when the same shall become due and payable and shall fully perform and
discharge (or cause to be fully performed and discharged) the Obligations on or
before the date the same are to be performed and discharged, then the liens,
security interests, estates, and 

 7
 

 

rights granted by the Loan Documents shall terminate, in
accordance with the provisions hereof, otherwise the same shall remain in full
force and effect. A certificate or other written statement executed on behalf
of Trustee or Beneficiary confirming that the Indebtedness has not been fully
paid or the Obligations have not been fully performed or discharged shall be
sufficient evidence thereof for the purpose of reliance by third parties on
such fact.

2.2           Future Indebtedness. It is specifically contemplated by Grantor and Beneficiary that the
Indebtedness secured hereby may be increased and rearranged by subsequent
amendments, restatements, supplements and other modifications and additions to
the Loan Documents and that additional promissory notes and loan agreements may
be issued and entered into in connection therewith. Grantor and each person
who, at any time, may claim an interest in or lien or encumbrance against all
or any portion of the Mortgaged Property agree that all Indebtedness shall be
secured by this Deed of Trust with the same priority as if all had been
advanced, had arisen or had become owing or performable on the date of this
Deed of Trust. This Deed of Trust shall remain in full force and effect as to
all future Indebtedness and to all subsequent advances or subsequently arising
portions of the Indebtedness without loss of priority until (a) the
Indebtedness is fully and finally paid, performed and satisfied, and (b) all
agreements and obligations, if any, of Beneficiary for further advances or for
the extension of additional credit have been terminated (including, without
limitation, any loans made by Beneficiary to Grantor even if advances or loans
thereunder shall be optional or non-obligatory), and (c) this Deed
of Trust has been released of record by Beneficiary.

ARTICLE III

WARRANTIES AND REPRESENTATIONS

Grantor
hereby unconditionally warrants and represents to Beneficiary, as of the date
hereof and at all times during the term of this Deed of Trust, as follows:

3.1           Organization and Power. Grantor and each Constituent Party that is not a
natural person (a) is duly incorporated or duly organized with a legal
status separate from its affiliates, validly existing and in good standing
under the laws of the state of its formation or existence, and has complied
with all conditions prerequisite to its doing business in the state in which
the Land is located, and (b) has all requisite power and all governmental
certificates of authority, licenses, permits, qualifications, and documentation
to own, lease, and operate its properties and to carry on its business as now
being, and as proposed to be, conducted.

3.2           Validity of Loan Documents. The execution, delivery, and performance by
Grantor, and by each Constituent Party on behalf of Grantor, of and under the
Loan Documents (a) are within Grantor’s and each Constituent Party’s
powers and have been duly authorized by Grantor’s and each Constituent Party’s
board of directors, shareholders, partners, members, managers, venturers,
trustees, or other necessary parties, as the case may be, and all other
requisite action for such authorization has been taken, (b) have received
any and all requisite prior approvals of Governmental Authorities in order to
be legally binding and enforceable in accordance with the terms thereof, and (c) will
not violate, be in conflict with, result in a breach of, or constitute (with
due notice or lapse of time, or both) a default under or violation of any Legal
Requirement or result in the creation or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any of Grantor’s property or assets,
except as contemplated by the provisions of the Loan Documents. The Loan
Documents constitute the legal, valid, and binding obligations of Grantor
enforceable in accordance with their respective terms.

 8
 

 

3.3           Title and Lien. Grantor has good and indefeasible title to the Land, except the Permitted
Exceptions. This Deed of Trust constitutes a valid, subsisting first lien on
the Land; a valid, subsisting first priority security interest in and to the
Contracts; all in accordance with the terms hereof, and all subject to the
Permitted Exceptions.

3.4           Business Purposes. The loan evidenced by the Note is solely for the purpose of carrying on
or acquiring a business of Grantor, and is not for personal, family, household,
or agricultural purposes. The Mortgaged Property forms no part of any property
owned, used or claimed by Grantor as a residence or business homestead and is
not exempt from forced sale under the laws of the State in which the Mortgaged
Property is located. Grantor hereby disclaims and renounces each and every
claim to all or any portion of the Mortgaged Property as a homestead.

3.5           Taxes. Grantor and each Constituent Party have filed all
federal, state, county, municipal, and city income and other tax returns
required to have been filed by them (including, those required under the Tax
Code) and have paid all taxes and related liabilities which have become due
pursuant to such returns or pursuant to any assessments received by them. Neither
Grantor nor any Constituent Party knows of any basis for any additional
assessment in respect of any such taxes and related liabilities. Grantor and
each Constituent Party believe that their respective tax returns properly reflect
the income and taxes of Grantor and each Constituent Party for the periods
covered thereby, subject only to reasonable adjustments required by the
Internal Revenue Service or other applicable tax authority upon audit.

3.6           Mailing Address. Grantor’s mailing address, as set forth in the opening paragraph hereof
or as changed pursuant to the provisions hereof, is true and correct.

3.7           Relationship of Grantor and Beneficiary. Notwithstanding any prior business or personal
relationship between Grantor and Beneficiary, or any officer, director or
employee of Beneficiary, the relationship between Grantor and Beneficiary is
solely that of debtor and creditor, Beneficiary has no fiduciary or other
special relationship with Grantor, Grantor and Beneficiary are not partners or
joint venturers, and no term or condition of any of the Loan Documents shall be
construed so as to deem the relationship between Grantor and Beneficiary to be
other than that of debtor and creditor.

3.8           No Reliance on Beneficiary. Grantor is experienced in the ownership and
operation of properties similar to the Mortgaged Property, and Grantor and
Beneficiary have and are relying solely upon Grantor’s expertise and business
plan in connection with the ownership and operation of the Mortgaged Property. Grantor
is not relying on Beneficiary’s expertise or business acumen in connection with
the Mortgaged Property.

3.9           Environmental and Hazardous Substances. The following representations and warranties of
Grantor are made without regard to whether Beneficiary has, or hereafter
obtains, any knowledge or report of the environmental condition of the
Mortgaged Property. To the best knowledge, information and belief of Grantor:

(a)           The
Mortgaged Property and the operations conducted thereon do not violate any
applicable law, statute, ordinance, rule, regulation, order, or determination
of any Governmental Authority or any restrictive covenant or deed restriction
(recorded or otherwise), including without limitation all applicable zoning
ordinances and building codes, flood disaster laws and Environmental Laws.

 9
 

 

(b)           Without
limitation of subsection (a) immediately preceding, the Mortgaged
Property and operations conducted thereon by the current owner or operator of
such Mortgaged Property, are not in violation of or subject to any existing,
pending, or threatened action, suit, investigation, inquiry, or proceeding by
any governmental or nongovernmental entity or person or to any remedial
obligations under any Environmental Law.

(c)           All
notices, permits, licenses, or similar authorizations, if any, required to be
obtained or filed in connection with the ownership, operation, or use of the
Mortgaged Property, including, the past or present generation, treatment,
storage, disposal, or release of a Hazardous Substance into the environment,
have been duly obtained or filed.

(d)           The
Mortgaged Property does not contain any Hazardous Substance.

(e)           Grantor
has taken all steps necessary to determine and has determined that no Hazardous
Substances have been generated, treated, placed, held, located, or otherwise
released on, under, from, or about the Mortgaged Property.

(f)            Grantor
has not undertaken, permitted, authorized, or suffered and will not undertake,
permit, authorize, or suffer the presence, use, manufacture, handling,
generation, transportation, storage, treatment, discharge, release, burial, or
disposal on, in, under, from or about the Mortgaged Property of any Hazardous
Substance or the transportation to or from the Mortgaged Property of any
Hazardous Substance.

(g)           There
is no pending or threatened litigation, proceedings, or investigations before
or by any administrative agency in which any person or entity alleges or is
investigating any alleged presence, release, threat of release, placement on,
in, under, from or about the Mortgaged Property, or the manufacture, handling,
generation, transportation, storage, treatment, discharge, burial, or disposal
on, under, from or about the Mortgaged Property, or the transportation to or
from the Mortgaged Property, of any Hazardous Substance.

(h)           Grantor
has not received any notice, and has no actual or constructive knowledge, that
any Governmental Authority or any employee or agent thereof has determined, or
threatens to determine, or is investigating any allegation that there is a
presence, release, threat of release, placement on, in, under, from or about
the Mortgaged Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on, in,
under, from or about the Mortgaged Property, or the transportation to or from
the Mortgaged Property, of any Hazardous Substance.

(i)            There
have been no communications or agreements with any Governmental Authority or
any private entity, including, but not limited to, any prior owners or
operators of the Mortgaged Property, relating in any way to the presence,
release, threat of release, placement on, under or about the Mortgaged
Property, or the use, manufacture, handling, generation, transportation,
storage, treatment, discharge, burial, or disposal on, in, under or about the
Mortgaged Property, or the transportation to or from the Mortgaged Property, of
any Hazardous Substance.

(j)            Neither
Grantor nor, to the best knowledge, information and belief of Grantor, any
other person, including, but not limited to, any predecessor owner, tenant,
licensee, occupant, user, or operator of all or any portion of the Mortgaged
Property, has ever caused, permitted, 

 10
 

 

authorized
or suffered, and Grantor will not cause, permit, authorize, or suffer, any
Hazardous Substance to be placed, held, located, or disposed of, on, in, under
or about any other real property, all or any portion of which is legally or
beneficially owned (or any interest or estate therein which is owned) by
Grantor in any jurisdiction now or hereafter having in effect a so-called
“superlien” law or ordinance or any part thereof, the effect of which law or
ordinance would be to create a lien on the Mortgaged Property to secure any
obligation in connection with the “superlien” law of such other jurisdiction.

(k)           Grantor has been issued all required federal, state,
and local licenses, certificates, or permits relating to, and Grantor and its
facilities, business assets, property, leaseholds, and equipment are in
compliance in all respects with all applicable federal, state, and local laws,
rules, and regulations relating to, air emissions, water discharge, noise
emissions, solid or liquid waste disposal, hazardous waste or materials, or
other environmental, health, or safety matters.

3.10         No Litigation. Except as disclosed in writing to Beneficiary, there are no (i) judicial,
administrative, mediation or arbitration actions, suits, or proceedings, at law
or in equity, before any Governmental Authority or arbitrator pending or threatened
against or affecting Grantor or any Constituent Party or involving the
Mortgaged Property, (ii) outstanding or unpaid judgments against Grantor,
any Constituent Party, or the Mortgaged Property, or (iii) defaults by
Grantor with respect to any order, writ, injunction, decree, or demand of any
Governmental Authority or arbitrator.

3.11         ERISA. Grantor
is not an “employee benefit plan,” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA and the assets of Grantor do not
constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101 (1998).

3.12         No Bankruptcy. No bankruptcy or insolvency proceedings are pending or contemplated by
Grantor or, to the best knowledge, information and belief of Grantor, against
Grantor or by or against any endorser, cosigner or guarantor of the Note.

3.13         Compliance with Legal Requirements. To the best knowledge, information and belief of
Grantor, the Land and the intended use thereof by Grantor comply with all Legal
Requirements, including, 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.

3.14         Separate Tax Parcel;
Legal Lot. The Land, are taxed
separately without regard to any other real property and the Land constitutes a
legally subdivided lot under all applicable Legal Requirements (or, if not
subdivided, no subdivision or platting of the Land is required under applicable
Legal Requirements), and for all purposes may be mortgaged, conveyed or
otherwise dealt with as an independent parcel.

 11

 

ARTICLE IV

AFFIRMATIVE COVENANTS

Grantor
hereby unconditionally covenants and agrees with Beneficiary, until the entire
Indebtedness shall have been paid in full and all of the Obligations shall have
been fully performed and discharged as follows:

4.1           Payment and Performance. Grantor will pay the Indebtedness as and when
specified in the Loan Documents, and will perform and discharge all of the
Obligations, in full and on or before the dates the same are to be performed.

4.2           Existence.
Grantor will and will cause each Constituent Party to preserve and keep in full
force and effect its existence (separate and apart from its affiliates), good
standing, rights, franchises, trade names, trademarks and other associated
goodwill whether existing at common law or as a federal or state registration.

4.3           Compliance with Legal Requirements. Grantor will promptly and faithfully comply with,
conform to, and obey all Legal Requirements, whether the same shall necessitate
structural changes in, improvements to, or interfere with the use or enjoyment
of, the Mortgaged Property.

4.4           First Lien Status. Grantor will protect and preserve the first lien and security interest
status of this Deed of Trust and the other Loan Documents and will not permit
to be created or to exist in respect of the Mortgaged Property or any part
thereof any lien or security interest on a parity with, superior to, or
inferior to any of the liens or security interests hereof, except for the
Permitted Exceptions.

4.5           Payment of Impositions. Subject to the applicable sections of this Deed of
Trust, Grantor will duly pay and discharge, or cause to be paid and discharged,
the Impositions not later than the earlier to occur of (i) the due date
thereof, (ii) the date any fine, penalty, interest, or cost may be added
thereto or imposed, or (iii) the date prior to any date any lien may be
filed for the nonpayment thereof (if such date is used to determine the due
date of the respective item), and Grantor shall deliver to Beneficiary a
written receipt evidencing the payment of the respective Imposition.

4.6           Insurance.
Grantor will, at Grantor’s own expense, obtain and maintain and keep in full
force and effect insurance upon and relating to the Mortgaged Property in such
amounts and covering such risks as shall be requested by and satisfactory to
Beneficiary, from time to time.

4.7           Payment for Labor and Materials. Subject to the applicable provisions of this Deed
of Trust, 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
part thereof any lien or security interest, even though inferior to the liens
and security interests hereof, for any such bill, and in any event never permit
to be created or exist in respect of the 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 interests hereof, except for the
Permitted Exceptions.

4.8           Further Assurances and Corrections. From time to time, at the request of Beneficiary,
Grantor will (i) promptly correct any defect, error, or omission which may
be discovered in the contents of this Deed of Trust or in any other Loan
Document or in the execution or acknowledgment thereof; (ii) 

 12
 

 

execute, acknowledge, deliver, record and/or file
such further instruments (including, further deeds of trust, security
agreements, financing statements, continuation statements and assignments of
rents) and perform such further acts and provide such further assurances as may
be necessary, desirable, or proper, in Beneficiary’s opinion, to carry out more
effectively the purposes of this Deed of Trust and the Loan Documents and to
subject to the absolute assignments, liens and security interests hereof and
thereof any property intended by the terms hereof or thereof to be covered
hereby or thereby, including without limitation, any renewals, additions,
substitutions, replacements, or appurtenances to the Mortgaged Property; (iii) execute,
acknowledge, deliver, procure, file, and/or record any document or instrument
(including without limitation, any financing statement) deemed advisable by
Beneficiary in Beneficiary’s sole discretion to protect the liens and the
security interests herein granted against the rights or interests of third
persons; and (iv) pay all costs connected with any of the foregoing.

4.9           Statement of Unpaid Balance. At any time and from time to time, Grantor will
furnish promptly, upon the request of Beneficiary, a written statement or
affidavit, in form satisfactory to Beneficiary, stating the unpaid balance of
the Indebtedness and that there are no offsets or defenses against full payment
of the Indebtedness and the terms hereof, or if there are any such offsets or
defenses, specifying them.

4.10         Expenses. Grantor
will pay on demand all reasonable and bona fide out-of-pocket
costs, fees, and expenses and other expenditures, including, but not limited
to, reasonable attorneys’ fees and expenses, paid or incurred by Beneficiary or
Trustee to third parties incident to this Deed of Trust or any other Loan
Document (including without limitation, reasonable attorneys’ fees and expenses
in connection with the negotiation, preparation, and execution hereof and of
any other Loan Document and any amendment hereto or thereto, any release
hereof, any consent, approval or waiver hereunder or under any other Loan
Document, the making of any advance under the Note, and any suit to which Beneficiary
or Trustee is a party involving this Deed of Trust or the Mortgaged Property)
or incident to the enforcement of the Indebtedness or the Obligations or the
exercise of any right or remedy of Beneficiary under any Loan Document.

4.11         Address. Grantor
shall give written notice to Beneficiary and Trustee of any change of address
of Grantor at least five (5) business days prior to the effective date of
such change of address. Absent such official written notice of a change in
address for Grantor, Beneficiary and Trustee shall be entitled for all purposes
under the Loan Documents to rely upon Grantor’s address as set forth in the
initial paragraph of this Deed of Trust, as same may have been theretofore
changed in accordance with the provisions hereof.

4.12         ERISA. If
and to the extent that Grantor is obligated under any plan governed by or
subject to ERISA, Grantor shall fully discharge and satisfy all of its
obligations and funding requirements under such plan, ERISA and the Tax Code. Furthermore,
Grantor shall comply in all material respects with any and all applicable
provisions of ERISA and the Tax Code and will not incur or permit to exist any
unfunded liabilities to the Pension Benefit Guaranty Corporation (“PBGC”)
or to such plan under ERISA or the Tax Code. As soon as possible but in any
event not later than 30 days after Grantor knows that any event which would
constitute a reportable event under § 4043(b) of Title IV of ERISA with
respect to any “employee plan” subject to ERISA has occurred, or that the PBGC
has instituted or will institute proceedings under ERISA to terminate that
plan, Grantor will deliver to Beneficiary a certificate of a responsible
officer of Grantor setting forth details as to such reportable event and the
action which Grantor or an affiliate of Grantor (as defined under ERISA), as
the case may be, proposes to take with respect to same, together with a copy of
any notice of such reportable event that may be required to be filed with the
PBGC, or any notice delivered by the PBGC evidencing its intent to institute
those 

 13
 

 

proceedings or any notice to the PBGC that the plan
is to be terminated, as the case may be. For all purposes of this Section 4.12,
Grantor is deemed to have all knowledge of all facts attributable to the plan
administrator under ERISA.

4.13         Delivery of Contracts. Grantor will deliver to Beneficiary a true, correct
and complete copy of each Contract promptly after the execution of same by all
parties thereto. Within twenty (20) days after a request by Beneficiary,
Grantor shall prepare and deliver to Beneficiary a complete listing of all
Contracts, showing date, term, parties, subject matter, concessions, whether
any defaults exist, and other information specified by Beneficiary, of or with
respect to each of such Contracts, together with a true, correct and complete
copy thereof (if so requested by Beneficiary).

4.14         Environmental and Hazardous
Substances. Grantor will:

(a)           not
use, generate, manufacture, produce, store, release, discharge, treat, or
dispose of on, in, under, from or about the Mortgaged Property or transport to
or from the Mortgaged Property any Hazardous Substance or allow any other
person or entity to do so;

(b)           keep
and maintain the Mortgaged Property in compliance with, and shall not cause or
permit the Mortgaged Property to be in violation of, any Environmental Law;

(c)           establish
and maintain, at Grantor’s sole expense, a system to assure and monitor
continued compliance with Environmental Laws and the exclusion of Hazardous
Substances from the Mortgaged Property, by any and all owners or operators of
the Mortgaged Property, which system shall include annual reviews of such
compliance by employees or agents of Grantor who are familiar with the
requirements of the Environmental Laws and, at the request of Beneficiary no
more than once each year, a detailed review of such compliance of the
environmental condition of the Mortgaged Property (the “Environmental Report”)
in scope satisfactory to Beneficiary by an environmental consulting firm
approved in advance by Beneficiary; provided, however, that if any
Environmental Report indicates any violation of any Environmental Law or a need
for Remedial Work, such system shall include at the request of Beneficiary a
detailed review of the status of such violation (a “Supplemental Report”)
by such environmental consultant. Grantor shall furnish an Environmental Report
or such Supplemental Report to Beneficiary within sixty (60) days after
Beneficiary so requests, together with such additional information as
Beneficiary may reasonably request;

(d)           give
prompt written notices to Beneficiary of: 
(i) any proceeding or inquiry by any governmental or
nongovernmental entity or person with respect to the presence of any Hazardous
Substance on, in, under, from or about the Mortgaged Property, the migration
thereof from or to other property, the disposal, storage, or treatment of any
Hazardous Substance generated or used on, under or about the Mortgaged
Property, (ii) all claims made or threatened by any third party against
Grantor or the Mortgaged Property or any other owner or operator of the
Mortgaged Property relating to any loss or injury resulting from any Hazardous
Substance, and (iii) Grantor’s discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Mortgaged Property that
could cause the Mortgaged Property or any part thereof to be subject to any
investigation or cleanup of the Mortgaged Property pursuant to any
Environmental Law;

(e)           permit
Beneficiary to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Mortgaged Property in
connection with any 

 14
 

 

Environmental
Law or Hazardous Substance, and Grantor shall pay all attorneys’ fees incurred
by Beneficiary in connection therewith;

(f)            if
any Remedial Work is reasonably necessary or desirable in the opinion of
Beneficiary, Grantor shall commence and thereafter diligently prosecute to
completion all such Remedial Work within thirty (30) days after written demand
by Beneficiary for performance thereof (or such shorter period of time as may
be required under any Legal Requirement). All Remedial Work shall be performed
by contractors approved in advance by Beneficiary, and under the supervision of
a consulting engineer approved by Beneficiary. All costs and expenses of such
Remedial Work shall be paid by Grantor including, Beneficiary’s reasonable
attorneys’ fees and costs incurred in connection with monitoring or review of
such Remedial Work. If Grantor shall fail to timely commence, or cause to be
commenced, or fail to diligently prosecute to completion, such Remedial Work,
Beneficiary may, but shall not be required to, cause such Remedial Work to be
performed, and all costs and expenses thereof, or incurred in connection
therewith, shall become part of the Indebtedness. THE COVENANT
CONTAINED IN THIS SECTION SHALL SURVIVE THE RELEASE OF THE LIEN OF THIS
DEED OF TRUST, OR THE EXTINGUISHMENT OF THE LIEN BY FORECLOSURE OR ACTION IN
LIEU THEREOF.

ARTICLE V

NEGATIVE COVENANTS

Grantor
hereby unconditionally covenants and agrees with Beneficiary until the entire
Indebtedness shall have been paid in full and all of the Obligations shall have
been fully performed and discharged as follows:

5.1           Use Violations. Grantor will not use, maintain, operate, or occupy, or allow the use,
maintenance, operation, or occupancy of, the Mortgaged Property in any manner
which (i) violates any Legal Requirement, (ii) may be dangerous,
unless safeguarded as required by law and/or appropriate insurance, (iii) constitutes
a public or private nuisance, or (iv) makes void, voidable, or
cancellable, or increases the premium of, any insurance then in force with
respect thereto.

5.2           Change in Zoning. Grantor will not (i) seek or acquiesce in a zoning reclassification,
zoning variance or special exception to zoning of all or any portion of the
Mortgaged Property, (ii) grant or consent to any easement, dedication,
plat, or restriction (or allow any easement to become enforceable by
prescription), (iii) seek or acquiesce to any imposition of any addition
of a Legal Requirement or any amendment or modification thereof, covering all
or any portion of the Mortgaged Property, without Beneficiary’s prior written
consent.

5.3           No Drilling. Grantor will not, without the prior written consent of Beneficiary,
permit any drilling or exploration for or extraction, removal, or production
of, any Minerals from the surface or subsurface of the Land regardless of the
depth thereof or the method of mining or extraction thereof.

5.4           No Disposition. Grantor will not make a Disposition without obtaining Beneficiary’s prior
written consent to the Disposition. Notwithstanding the above, nothing in this
Deed of Trust shall prevent the transfer of a legal and beneficial ownership interest
in the Grantor, so long as Grantor is directly or indirectly controlled by
Clayton W. Williams, Modesta S. Williams or a child of Clayton W. Williams, Jr.

 15
 

 

5.5           No Subordinate Mortgages. Grantor will not create, place, or permit to be
created or placed, or through any act or failure to act, acquiesce in the
placing of, or allow to remain any Subordinate Mortgage regardless of whether
such Subordinate Mortgage is expressly subordinate to the liens or security
interests of the Loan Documents with respect to the Mortgaged Property, other
than the Permitted Exceptions.

5.6           Additional Obligations. Grantor shall not guarantee, endorse or otherwise
become contingently liable in connection with any obligations of any other
person or entity, and shall not create or incur any additional liability,
whether contingent or non-contingent, with respect to either Grantor or
the Mortgaged Property, except as specifically allowed or contemplated pursuant
to the Loan Documents.

5.7           Business Change. Grantor shall not make or permit to occur or exist a material change in
the character of its business activities as such existed on the date hereof,
without Beneficiary’s prior written consent.

ARTICLE VI

EVENTS OF DEFAULT

The term “Event
of Default,” as used herein and in the Loan Documents, shall mean the
occurrence or happening, at any time and from time to time, of any one or more
of the following:

6.1           Payment of Indebtedness. Grantor shall fail, refuse, or neglect to pay, in
full, any installment or portion of the Indebtedness as and when the same shall
become due and payable, whether at the due date thereof stipulated in the Loan
Documents, upon acceleration or otherwise, and such failure continues for a
period of ten (10) days after the date the same is due; provided, however,
that if such installment or portion of the Indebtedness becomes due and payable
as a result of Beneficiary’s accelerating the maturity of the Indebtedness in
accordance with the Loan Documents, the ten (10) day period for payment
set forth in this Section shall not apply to the accelerated due date.

6.2           Performance of Obligations. Grantor shall fail, refuse or neglect or cause the
failure, refusal, or neglect to comply with, perform and discharge fully and
timely as and when required any of the Obligations other than a failure, breach
or default referred to in Sections 6.1, 6.3, 6.5, 6.6, 6.8 and 6.9,
(inclusive) and such failure, breach or default shall either not be curable or,
if curable, shall remain uncured for a period of thirty (30) days after the
earlier to occur of (i) the date Beneficiary (or Trustee) gives written
notice thereof to Grantor or (ii) the date upon which Grantor had actual
knowledge of the term to be performed; provided, however, that if such failure,
breach or default is curable but requires work to be performed, acts to be done
or conditions to be remedied which, by their nature, cannot be performed, done
or remedied, as the case may be, within such thirty (30) day period, no Event
of Default shall be deemed to have occurred if Grantor commences same within
such thirty (30) day period and thereafter diligently and continuously
prosecutes the same to completion within sixty (60) days after such notice or
date of actual knowledge.

6.3           False Representation. Any representation, warranty, or statement made by
Grantor or others under or pursuant to the Loan Documents or any affidavit or
other instrument executed or delivered with respect to the Loan Documents or
the Indebtedness is determined by Beneficiary to be false or misleading in any
material respect as of the date hereof or when made.

 16
 

 

6.4           Default Under Other Lien Document. Grantor shall default or commit an event of default
under and pursuant to any other mortgage or security agreement which covers or
affects any part of the Mortgaged Property.

6.5           Insolvency; Bankruptcy. Grantor (i) shall execute an assignment for
the benefit of creditors or an admission in writing by Grantor of Grantor’s
inability to pay, or Grantor’s failure to pay, debts generally as the debts
become due; or (ii) shall allow the levy against the Mortgaged Property or
any part thereof, of any execution, attachment, sequestration or other writ
which is not vacated within sixty (60) days after the levy; or (iii) shall
allow the appointment of a receiver, Trustee or custodian of Grantor or of the
Mortgaged Property or any part thereof, which receiver, Trustee or custodian is
not discharged within sixty days after the appointment; or (iv) files as a
debtor a petition, case, proceeding or other action pursuant to, or voluntarily
seeks the benefit or benefits of any Debtor Relief Law, or takes any action in
furtherance thereof; or (v) files either a petition, complaint, answer or
other instrument which seeks to effect a suspension of, or which has the effect
of suspending any of the rights or powers of Beneficiary or Trustee granted in
the Note, herein or in any Loan Document; or (vi) allows the filing of a
petition, case, proceeding or other action against Grantor as a debtor under
any Debtor Relief Law or seeks appointment of a receiver, Trustee, custodian or
liquidator of Grantor or of the Mortgaged Property, or any part thereof, or of
any significant portion of Grantor’s other property; and (a) Grantor
admits, acquiesces in or fails to contest diligently the material allegations
thereof, or (b) the petition, case, proceeding or other action results in
the entry of an order for relief or order granting the relief sought against
Grantor, or (c) the petition, case, proceeding or other action is not
permanently dismissed or discharged on or before the earlier of trial thereon
or thirty (30) days next following the date of filing.

6.6           Dissolution; Disability. Grantor or any Constituent Party, shall die,
dissolve, terminate or liquidate, or merge with or be consolidated into any
other entity, or become permanently disabled.

6.7           No Further Encumbrances. Grantor creates, places, or permits to be created
or placed, or through any act or failure to act, acquiesces in the placing of,
or allows to remain, any Subordinate Mortgage, regardless of whether such
Subordinate Mortgage is expressly subordinate to the liens or security
interests of the Loan Documents, with respect to the Mortgaged Property, other
than the Permitted Exceptions.

6.8           Disposition of Mortgaged Property and Beneficial
Interest in Grantor. Grantor makes a
Disposition, without the prior written consent of Beneficiary. Notwithstanding
the foregoing, no Event of Default shall be deemed to have occurred upon the
transfer of interests in Grantor, any general partner of Grantor or any
managing member of Grantor by devise or descent or by operation of law upon the
death of a person.

6.9           Condemnation. Any condemnation proceeding is instituted or threatened which would, in
Beneficiary’s sole judgment, materially impair the use and enjoyment of the
Mortgaged Property for its intended purposes.

6.10         Event of Default in Loan Documents. An Event of Default as defined in any of the Loan
Documents.

 17
 

 

ARTICLE
VII

REMEDIES

7.1           Beneficiary’s Remedies Upon Default. Upon the occurrence of an Event of Default or any
event or circumstance which, with the lapse of time, or the giving of notice,
or both, would constitute an Event of Default, Beneficiary may, at Beneficiary’s
option, and by or through Trustee, by Beneficiary itself or otherwise, do any
one or more of the following:

(a)           Right
to Perform Grantor’s Covenants. If
Grantor has failed to keep or perform any covenant whatsoever contained in this
Deed of Trust or the other Loan Documents, Beneficiary may, but shall not be
obligated to any person to do so, perform or attempt to perform said covenant,
and any payment made or expense incurred in the performance or attempted
performance of any such covenant shall be and become a part of the
Indebtedness, and Grantor promises, upon demand, to pay to Beneficiary, at the
place where the Note is payable, all sums so advanced or paid by Beneficiary,
with interest from the date when paid or incurred by Beneficiary at the Default
Rate. No such payment by Beneficiary shall constitute a waiver of any Event of
Default. In addition to the liens and security interests hereof, Beneficiary
shall be subrogated to all rights, titles, liens, and security interests
securing the payment of any debt, claim, tax, or assessment for the payment of
which Beneficiary may make an advance, or which Beneficiary may pay.

(b)           Right
to Accelerate. Beneficiary may,
without notice, demand, presentment, notice of nonpayment or nonperformance,
protest, notice of protest, notice of intent to accelerate, notice of
acceleration, or any other notice or any other action, all of which are hereby
waived by Grantor and all other parties obligated in any manner whatsoever on
the Indebtedness, declare the entire unpaid balance of the Indebtedness
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Indebtedness shall be immediately due and payable. The failure
to exercise any remedy available to Beneficiary shall not be deemed to be a
waiver of any rights or remedies of Beneficiary under the Loan Documents, at
law or in equity.

(c)           Foreclosure-Power
of Sale. Beneficiary may request
Trustee to proceed with foreclosure under the power of sale which is hereby
conferred, such foreclosure to be accomplished in accordance with the following
provisions:

(i)            Public
Sale. Trustee is hereby authorized
and empowered, and it shall be Trustee’s special duty, upon such request of
Beneficiary, to sell the Mortgaged Property, or any part thereof, at public
auction to the highest bidder for cash, with or without having taken possession
of same. Any such sale (including notice thereof) shall comply with the
applicable requirements, at the time of the sale, of Section 51.002 of the
Texas Property Code or, if and to the extent such statute is not then in force,
with the applicable requirements, at the time of the sale, of the successor
statute or statutes, if any, governing sales of Texas real property under
powers of sale conferred by deeds of trust. If there is no statute in force at
the time of the sale governing sales of Texas real property under powers of
sale conferred by deeds of trust, such sale shall comply with applicable law,
at the time of the sale, governing sales of Texas real property under powers of
sale conferred by deeds of trust.

 18
 

 

(ii)           Right
to Require Proof of Financial Ability and/or Cash Bid. At any time during the bidding, the Trustee may
require a bidding party (A) to disclose its full name, state and city of
residence, occupation, and specific business office location, and the name and
address of the principal the bidding party is representing (if applicable), and
(B) to demonstrate reasonable evidence of the bidding party’s financial
ability (or, if applicable, the financial ability of the principal of such
bidding party), as a condition to the bidding party submitting bids at the
foreclosure sale. If any such bidding party (the “Questioned Bidder”)
declines to comply with the Trustee’s requirement in this regard, or if such
Questioned Bidder does respond but the Trustee, in Trustee’s sole and absolute
discretion, deems the information or the evidence of the financial ability of
the Questioned Bidder (or, if applicable, the principal of such bidding party)
to be inadequate, then the Trustee may continue the bidding with reservation;
and in such event (1) the Trustee shall be authorized to caution the
Questioned Bidder concerning the legal obligations to be incurred in submitting
bids, and (2) if the Questioned Bidder is not the highest bidder at the
sale, or if having been the highest bidder the Questioned Bidder fails to
deliver the cash purchase price payment promptly to the Trustee, all bids by
the Questioned Bidder shall be null and void. The Trustee may, in Trustee’s
sole and absolute discretion, determine that a credit bid may be in the best
interest of Grantor and Beneficiary, and elect to sell the Mortgaged Property
for credit or for a combination of cash and credit; provided, however, that the
Trustee shall have no obligation to accept any bid except an all cash bid. In
the event the Trustee requires a cash bid and cash is not delivered within a
reasonable time after conclusion of the bidding process, as specified by the
Trustee, but in no event later than 3:45 p.m. local time on the day of
sale, then said contingent sale shall be null and void, the bidding process may
be recommenced, and any subsequent bids or sale shall be made as if no prior
bids were made or accepted.

(iii)          Sale
Subject to Unmatured Indebtedness. In
addition to the rights and powers of sale granted under the preceding
provisions of this subsection, if default is made in the payment of any
installment of the Indebtedness, Beneficiary may, at Beneficiary’s option, at
once or at any time thereafter while any matured installment remains unpaid,
without declaring the entire Indebtedness to be due and payable, orally or in
writing direct Trustee to enforce this trust and to sell the Mortgaged Property
subject to such unmatured Indebtedness and to the rights, powers, liens,
security interests, and assignments securing or providing recourse for payment
of such unmatured Indebtedness, in the same manner, all as provided in the
preceding provisions of this subsection. Sales made without maturing the
Indebtedness may be made hereunder whenever there is a default in the payment
of any installment of the Indebtedness, without exhausting the power of sale
granted hereby, and without affecting in any way the power of sale granted
under this subsection, the unmatured balance of the Indebtedness or the rights,
powers, liens, security interests, and assignments securing or providing
recourse for payment of the Indebtedness.

(iv)          Partial Foreclosure. Sale of a part of the Mortgaged Property shall not exhaust the power of
sale, but sales may be made from time to time until the Indebtedness is paid
and the Obligations are performed and discharged in full.

(v)           Trustee’s
Deeds. After any sale under this
subsection, Trustee shall make good and sufficient deeds, assignments, and
other conveyances to the purchaser or purchasers thereunder in the name of
Grantor, conveying the Mortgaged Property or any 

 19
 

 

part
thereof so sold to the purchaser or purchasers with general warranty of title
by Grantor. It is agreed that in any deeds, assignments or other conveyances
given by Trustee, any and all statements of fact or other recitals therein made
as to the identity of Beneficiary, the occurrence or existence of any Event of
Default, the notice of intention to accelerate, or acceleration of, the
maturity of the Indebtedness, the request to sell, notice of sale, time, place,
terms and manner of sale, and receipt, distribution, and application of the
money realized therefrom, the due and proper appointment of a substitute
Trustee, and any other act or thing having been duly done by or on behalf of
Beneficiary or by or on behalf of Trustee, shall be taken by all courts of law
and equity as prima  facie evidence that such statements or
recitals state true, correct, and complete facts and are without further
question to be so accepted, and Grantor does hereby ratify and confirm any and
all acts that Trustee may lawfully do in the premises by virtue hereof.

(d)           Beneficiary’s
Judicial Remedies. Beneficiary, or
Trustee, upon written request of Beneficiary, may proceed by suit or suits, at
law or in equity, to enforce the payment of the Indebtedness and the
performance and discharge of the Obligations in accordance with the terms
hereof, of the Note, and the other Loan Documents, to foreclose the liens and
security interests of this Deed of Trust as against all or any part of the
Mortgaged Property, and to have all or any part of the Mortgaged Property sold
under the judgment or decree of a court of competent jurisdiction. This remedy
shall be cumulative of any other nonjudicial remedies available to Beneficiary
with respect to the Loan Documents. Proceeding with a request or receiving a
judgment for legal relief shall not be or be deemed to be an election of
remedies or bar any available nonjudicial remedy of Beneficiary.

(e)           Beneficiary’s
Right to Appointment of Receiver. Beneficiary,
as a matter of right and without regard to the sufficiency of the security for
repayment of the Indebtedness and performance and discharge of the Obligations,
without notice to Grantor and without any showing of insolvency, fraud, or
mismanagement on the part of Grantor, and without the necessity of filing any
judicial or other proceeding other than the proceeding for appointment of a
receiver, shall be entitled to the appointment of a receiver or receivers of
the Mortgaged Property or any part thereof, and Grantor hereby irrevocably
consents to the appointment of a receiver or receivers. Any receiver appointed
pursuant to the provisions of this subsection shall have the usual powers and
duties of receivers in such matters.

(f)            Other
Rights. Beneficiary may (i) apply
the reserve for Impositions and insurance premiums, if any, required by the
provisions of this Deed of Trust, toward payment of the Indebtedness, and (ii) exercise
any and all other rights and remedies which Beneficiary may have at law or in
equity, or by virtue of any Loan Document or under the Code, or otherwise.

(g)           Beneficiary as Purchaser. Beneficiary may be the purchaser of the Mortgaged
Property or any part thereof, at any sale thereof, whether such sale be under
the power of sale herein vested in Trustee or upon any other foreclosure of the
liens and security interests hereof, or otherwise, and Beneficiary shall, upon
any such purchase, acquire good title to the Mortgaged Property so purchased,
free of the liens and security interests hereof, unless the sale was made
subject to an unmatured portion of the Indebtedness. Beneficiary, as purchaser,
shall be treated in the same manner as any third party purchaser and the
proceeds of Beneficiary’s purchase shall be applied in accordance with Section 7.4
of this Deed of Trust.

 20

 

7.2           Other Rights of Beneficiary. Should any part of the Mortgaged Property come into
the possession of Beneficiary, whether before or after an Event of Default,
Beneficiary may (for itself or by or through other persons, firms, or entities)
hold, lease, manage, use, or operate the Mortgaged Property for such time and
upon such terms as Beneficiary may deem prudent under the circumstances (making
such repairs, alterations, additions, and improvements thereto and taking such
other action as Beneficiary may from time to time deem necessary or desirable)
for the purpose of preserving the Mortgaged Property or its value, pursuant to
the order of a court of appropriate jurisdiction or in accordance with any
other rights held by Beneficiary in respect of the Mortgaged Property. Grantor
covenants to promptly reimburse and pay to Beneficiary on demand, at the place
where the Note is payable, the amount of all reasonable expenses (including
without limitation the cost of any insurance, Impositions, or other charges) incurred
by Beneficiary in connection with Beneficiary’s custody, preservation, use, or
operation of the Mortgaged Property, together with interest thereon from the
date incurred by Beneficiary at the Default Rate, and all such expenses, costs,
taxes, interest, and other charges shall be and become a part of the
Indebtedness. It is agreed, however, that the risk of loss or damage to the
Mortgaged Property is on Grantor, and Beneficiary shall have no liability
whatsoever for decline in value of the Mortgaged Property, for failure to
obtain or maintain insurance, or for failure to determine whether insurance in
force is adequate as to amount or as to the risks insured. Possession by
Beneficiary shall not be deemed an election of judicial relief, if any such
possession is requested or obtained, with respect to any Mortgaged Property or
collateral not in Beneficiary’s possession.

7.3           Possession After Foreclosure. If the liens or security interests hereof shall be
foreclosed by power of sale granted herein, by judicial action, or otherwise,
the purchaser at any such sale shall receive, as an incident to purchaser’s
ownership, immediate possession of the property purchased, and if Grantor or
Grantor’s successors shall hold possession of said property or any part thereof
subsequent to foreclosure, Grantor and Grantor’s successors shall be considered
as tenants at sufferance of the purchaser at foreclosure sale (without
limitation of other rights or remedies, at a reasonable rental per day, due and
payable daily, based upon the value of the portion of the Mortgaged Property so
occupied and sold to such purchaser), and anyone occupying such portion of the
Mortgaged Property, after demand is made for possession thereof, shall be
guilty of forcible detainer and shall be subject to eviction and removal,
forcible or otherwise, with or without process of law, and all damages by
reason thereof are hereby expressly waived.

7.4           Abandonment of Sale. At any time before a sale at foreclosure under power of sale is commenced
by Trustee in accordance with this Deed of Trust, Trustee may abandon the sale,
and Beneficiary may then institute suit for the collection of the Indebtedness
and for the foreclosure of the liens and security interests hereof and of the
Loan Documents. If Beneficiary should institute a suit for the collection of
the Indebtedness and for a foreclosure of the liens and security interests,
Beneficiary may, at any time before the entry of a final judgment in said suit,
dismiss the same and require Trustee to sell the Mortgaged Property or any part
thereof in accordance with the provisions of this Deed of Trust.

7.5           Payment of Fees. If the Note or any other part of the Indebtedness shall be collected or
if any of the Obligations shall be enforced 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 an option given to Beneficiary to mature same, or if
Beneficiary becomes a party to any suit in which this Deed of Trust or the
Mortgaged Property or any part thereof is involved, Grantor agrees to pay
Beneficiary’s attorneys’ fees and expenses incurred, and such fees shall 

 21
 

 

be and become a part of the Indebtedness and shall bear
interest from the date such costs are incurred at the Default Rate.

7.6           Miscellaneous.

(a)           Discontinuance
of Remedies. In case Beneficiary
shall have proceeded to invoke any right, remedy, or recourse permitted under
the Loan Documents and shall thereafter elect to discontinue or abandon same
for any reason, Beneficiary shall have the unqualified right to do so and, in
such event, Grantor and Beneficiary shall be restored to their former positions
with respect to the Indebtedness, the Loan Documents, the Mortgaged Property or
otherwise, and the rights, remedies, recourses and powers of Beneficiary shall
continue as if same had never been invoked.

(b)           Other
Remedies. In addition to the
remedies set forth in this Article, upon the occurrence of an Event of Default,
Beneficiary and Trustee shall, in addition, have all other remedies available
to them at law or in equity.

(c)           Remedies
Cumulative; Non-Exclusive; Etc. All rights, remedies, and recourses of Beneficiary granted in the Note,
this Deed of Trust, the other Loan Documents, any other pledge of collateral,
or otherwise available at law or equity (i) shall be cumulative and
concurrent; (ii) may be pursued separately, successively, or concurrently
against Grantor, the Mortgaged Property, or any one or more of them, at the
sole discretion of Beneficiary; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Grantor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Beneficiary exercising or
pursuing any remedy in relation to the Mortgaged Property prior to Beneficiary
bringing suit to recover the Indebtedness or suit on the Obligations; and (vi) in
the event Beneficiary elects to bring suit on the Indebtedness and/or the
Obligations and obtains a judgment against Grantor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Deed of Trust, shall remain in full force
and effect and may be exercised at Beneficiary’s option.

(d)           Partial Release; Etc. Beneficiary may release, regardless of consideration,
any part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating, or releasing the lien or security
interests evidenced by this Deed of Trust or the other Loan Documents or
affecting the obligations of Grantor or any other party to pay the Indebtedness
or perform and discharge the Obligations. For payment of the Indebtedness,
Beneficiary may resort to any of the collateral therefor in such order and
manner as Beneficiary may elect. No collateral heretofore, herewith, or
hereafter taken by Beneficiary shall in any manner impair or affect the
collateral given pursuant to the Loan Documents, and all collateral shall be
taken, considered, and held as cumulative.

(e)           Waiver
and Release by Grantor. Grantor
hereby irrevocably and unconditionally waives and releases (i) all
benefits that might accrue to Grantor by virtue of any present or future law
exempting the Mortgaged Property from attachment, levy or sale on execution or
providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption, or extension of time for payment; (ii) all
notices of any Event of Default or of Trustee’s exercise of 

 22
 

 

any right,
remedy, or recourse provided for under the Loan Documents; and (iii) any
right to a marshaling of assets or a sale in inverse order of alienation.

(f)            No
Implied Covenants. Grantor and
Beneficiary mutually agree that there are no, nor shall there be any, implied
covenants of good faith and fair dealing or other similar covenants or
agreements in this Deed of Trust and the other Loan Documents. All agreed
contractual duties are set forth in this Deed of Trust, the Note, and the other
Loan Documents.

ARTICLE VIII

SPECIAL PROVISIONS

8.1           Condemnation Proceeds. Beneficiary shall be entitled to receive any and
all sums which may be awarded and become payable to Grantor for condemnation of
the Mortgaged Property or any part thereof, for public or quasi-public
use, or by virtue of private sale in lieu thereof, and any sums which may be
awarded or become payable to Grantor for damages caused by public works or
construction on or near the Mortgaged Property. All such sums are hereby
assigned to Beneficiary, and Grantor shall, upon request of Beneficiary, make,
execute, acknowledge, and deliver any and all additional assignments and documents
as may be necessary from time to time to enable Beneficiary to collect and
receipt for any such sums. Beneficiary shall not be, under any circumstances,
liable or responsible for failure to collect, or exercise diligence in the
collection of, any of such sums.

8.2           INDEMNITY. GRANTOR SHALL
INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS BENEFICIARY AND TRUSTEE, THEIR
RESPECTIVE PARENTS, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, AGENTS, SUCCESSORS, AND ASSIGNS FROM AND AGAINST ANY AND ALL
LIABILITY, DAMAGE, LOSS, COST, OR EXPENSE (INCLUDING, ATTORNEYS’ FEES AND
EXPENSES), ACTION, PROCEEDING, CLAIM OR DISPUTE INCURRED OR SUFFERED BY THE
FOREGOING PARTIES SO INDEMNIFIED WHETHER OR NOT AS THE RESULT OF
THE NEGLIGENCE OF ANY PARTY SO INDEMNIFIED, WHETHER
VOLUNTARILY OR INVOLUNTARILY INCURRED OR SUFFERED, IN RESPECT OF THE FOLLOWING:

(i)            ANY AND ALL LOSS, DAMAGE, COSTS, EXPENSE,
ACTION, CAUSES OF ACTION, OR LIABILITY (INCLUDING ATTORNEYS’ FEES AND COSTS)
DIRECTLY OR INDIRECTLY ARISING FROM OR ATTRIBUTABLE TO THE USE, GENERATION,
MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE,
DISPOSAL, OR PRESENCE OF A HAZARDOUS SUBSTANCE ON, IN, UNDER OR ABOUT THE
MORTGAGED PROPERTY, WHETHER KNOWN OR UNKNOWN AT THE TIME OF THE EXECUTION
HEREOF, INCLUDING WITHOUT LIMITATION (A) ALL FORESEEABLE CONSEQUENTIAL
DAMAGES OF ANY SUCH USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE,
THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE, AND (B) THE COSTS OF
ANY REQUIRED OR NECESSARY ENVIRONMENTAL INVESTIGATION OR MONITORING, ANY
REPAIR, CLEANUP, OR DETOXIFICATION OF THE MORTGAGED PROPERTY, AND 

 23
 

 

THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL, OR OTHER
REQUIRED PLANS.

BENEFICIARY
AND/OR TRUSTEE MAY EMPLOY AN ATTORNEY OR ATTORNEYS TO PROTEST OR ENFORCE
ITS RIGHTS, REMEDIES AND RECOURSES UNDER THIS DEED OF TRUST AND THE OTHER LOAN
DOCUMENTS, AND TO ADVISE AND DEFEND BENEFICIARY AND/OR TRUSTEE WITH RESPECT TO
ANY SUCH ACTIONS AND OTHER MATTERS. GRANTOR SHALL REIMBURSE BENEFICIARY AND/OR
TRUSTEE FOR THEIR RESPECTIVE ATTORNEYS’ FEES AND EXPENSES (INCLUDING EXPENSES
AND COSTS FOR EXPERTS) IMMEDIATELY UPON RECEIPT OF A WRITTEN DEMAND THEREFOR,
WHETHER ON A MONTHLY OR OTHER TIME INTERVAL, AND WHETHER OR NOT AN ACTION IS
ACTUALLY COMMENCED OR CONCLUDED. ALL OTHER REIMBURSEMENT AND INDEMNITY
OBLIGATIONS HEREUNDER SHALL BECOME DUE AND PAYABLE WHEN ACTUALLY INCURRED BY
BENEFICIARY AND/OR TRUSTEE.

8.3           Waiver of Subrogation. Grantor hereby waives any and all right to claim,
recover, or subrogation that arises or may arise in its favor and against
Beneficiary or its officers, directors, employees, agents, attorneys, or
representatives hereto for any and all loss of, or damage to, Grantor, the
Mortgaged Property, Grantor’s property, or the property of others under Grantor’s
control from any cause insured against or required to be insured against by the
provisions of the Loan Documents. Said waiver shall be in addition to, and not
in limitation or derogation of, any other waiver or release contained in this
Deed of Trust with respect to any loss or damage to property of the parties
hereto. Inasmuch as the above waivers preclude the assignment of any aforesaid
claim by way of subrogation (or otherwise) to an insurance company (or any
other person), Grantor hereby agrees to immediately give to each insurance
company which has issued to it any such insurance policy whether or not it is
required to be insured against by the provisions of the Loan Documents written
notice of the terms of said waivers, and to have said insurance policies
properly endorsed, if necessary, to prevent the invalidation of said insurance
coverage by reason of said waiver.

8.4           Waiver of Setoff. The Indebtedness, or any part thereof, shall be paid by Grantor without
notice, demand, counterclaim, setoff, deduction, or defense and without
abatement, suspension, deferment, diminution, or reduction by reason of:  (i) any damage to, destruction of, or
any condemnation or similar taking of the Mortgaged Property; (ii) any
restriction or prevention of or interference with any use of the Mortgaged
Property; (iii) any title defect or encumbrance or any eviction from the
Mortgaged Property by superior title or otherwise; (iv) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation,
or other like proceeding relating to Trustee, Beneficiary, or Grantor, or any
action taken with respect to this Deed of Trust by any Trustee or receiver of
Beneficiary or Grantor, or by any court, in any such proceeding; (v) any
claim which Grantor has or might have against Trustee or Beneficiary; (vi) any
default or failure on the part of Beneficiary to perform or comply with any of
the terms hereof or of any other agreement with Grantor; or (vii) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not Grantor shall have notice or knowledge of any of the foregoing. Except
as expressly provided herein, Grantor waives all rights now or hereafter
conferred by statute or otherwise to any abatement, suspension, deferment,
diminution, or reduction of the Indebtedness.

8.5           Setoff. Beneficiary
shall be entitled to exercise both the rights of setoff and banker’s lien, if
applicable, against the interest of Grantor in and to each and every account
and other property of Grantor which are in the possession of Beneficiary to the
full extent of the outstanding balance of the Indebtedness.

 24
 

 

8.6           Consent to Disposition. It is expressly agreed that Beneficiary may
predicate Beneficiary’s decision to grant or withhold consent to a Disposition
on such terms and conditions as Beneficiary may require, in Beneficiary’s sole
discretion, including without limitation (i) consideration of the
creditworthiness of the party to whom such Disposition will be made and its
management ability with respect to the Mortgaged Property, (ii) consideration
of whether the security for repayment of the Indebtedness and the performance
and discharge of the Obligations, or Beneficiary’s ability to enforce its
rights, remedies, and recourses with respect to such security, will be impaired
in any way by the proposed Disposition, (iii) an increase in the rate of
interest payable under the Note or any other change in the terms and provisions
of the Note and other Loan Documents, (iv) reimbursement of Beneficiary
for all costs and expenses incurred by Beneficiary in investigating the
creditworthiness and management or consulting ability of the party to whom such
Disposition will be made and in determining whether Beneficiary’s security will
be impaired by the proposed Disposition, (v) payment to Beneficiary of a
transfer fee to cover the cost of documenting the Disposition in its records, (vi) payment
of Beneficiary’s reasonable attorneys’ fees in connection with such
Disposition, (vii) the express assumption of payment of the Indebtedness
and performance and discharge of the Obligations by the party to whom such
Disposition will be made (with or without the release of Grantor from liability
for such Indebtedness and Obligations), (viii) the execution of assumption
agreements, modification agreements, supplemental loan documents, and financing
statements, satisfactory in form and substance to Beneficiary, (ix) endorsements
(to the extent available under applicable law) to any existing mortgagee title
insurance policies insuring Beneficiary’s liens and security interests covering
the Mortgaged Property, and (x) requiring additional security for the
payment of the Indebtedness and performance and discharge of the Obligations.

8.7           Payment After
Acceleration. If, following the
occurrence of an Event of Default, and an acceleration of the Indebtedness or
any part thereof but prior to a foreclosure sale of the Mortgaged Property,
Grantor shall tender to Beneficiary the payment of an amount sufficient to
satisfy the entire Indebtedness or the part thereof which has been accelerated,
such tender shall be deemed a voluntary prepayment pursuant to the Indebtedness
and, accordingly, Grantor, to the extent permitted by applicable law, shall
also pay to Beneficiary the premium, if any, then required under the
Indebtedness or the Loan Documents in order to exercise the prepayment
privilege contained therein.

8.8           Contest of Certain Claims. Grantor shall not be in default for failure to pay
or discharge any Imposition or mechanic’s or materialman’s lien asserted
against the Mortgaged Property if, and so long as, (a) Grantor shall have
notified Beneficiary of same within five (5) days of obtaining knowledge
thereof; (b) Grantor shall diligently and in good faith contest the same
by appropriate legal proceedings which shall operate to prevent the enforcement
or collection of the same and the sale of the Mortgaged Property or any part
thereof, to satisfy the same; (c) Grantor shall have furnished to
Beneficiary a cash deposit, or an indemnity bond satisfactory to Beneficiary
with a surety satisfactory to Beneficiary, in the amount of the Imposition or
mechanic’s or materialman’s lien claim, plus a reasonable additional sum to pay
all costs, interest and penalties that may be imposed or incurred in connection
therewith, to assure payment of the matters under contest and to prevent any
sale or forfeiture of the Mortgaged Property or any part thereof; (d) Grantor
shall promptly upon final determination thereof pay the amount of any such
Imposition or claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith; (e) the failure to
pay the Imposition or mechanic’s or materialman’s lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property; and (f) notwithstanding
the foregoing, Grantor shall immediately upon request of Beneficiary pay (and
if Grantor shall fail so to do, Beneficiary may, but shall not be 

 25
 

 

required to, pay or cause to be discharged or bonded
against) any such Imposition or claim notwithstanding such contest, if in the
reasonable opinion of Beneficiary the Mortgaged Property shall be in jeopardy
or in danger of being forfeited or foreclosed. Beneficiary may pay over any
such cash deposit or part thereof to the claimant entitled thereto at any time
when, in the judgment of Beneficiary, the entitlement of such claimant is
established.

ARTICLE IX

PARTIAL RELEASES.

Grantor shall be entitled to partial releases of the
lien of the Deed of Trust on the following terms and conditions:

9.1           Releases
will be granted for each tract of the Land described in Exhibit “A”. At
such time as Grantor determines to develop any tract of the Land, Grantor shall
notify Beneficiary and to obtain a release of each such tract and tender
Beneficiary an amount equal to the outstanding principal of the Note multiplied
by the ratio of the buildable square feet of the parcel to be released to the
total buildable square feet of the total Land (authorized at the time of the
Release) which remains as security under this Deed of Trust (the “Release Price”).

9.2           To
obtain a partial release of any tract of the Property from this Deed of Trust,
the Release Price shall be paid in cash by Grantor. All payments for partial
releases shall be applied as a prepayment on the Note.

9.3           All
expenses incident to the granting of partial releases shall be born by Grantor.

ARTICLE
X

INTENTIONALLY DELETED

ARTICLE XI

TRUSTEE

11.1         No Required Action. Trustee shall not be required to take any action toward the execution and
enforcement of the trust hereby created or to institute, appear in, or defend
any action, suit, or other proceeding in connection therewith where, in Trustee’s
opinion, such action would be likely to involve Trustee in expense or
liability, unless requested so to do by a written instrument signed by
Beneficiary and, if Trustee so requests, unless Trustee is tendered security
and indemnity satisfactory to Trustee against any and all cost, expense, and
liability arising therefrom. Trustee shall not be responsible

 26
 

 

for the execution, acknowledgment, or validity of the
Loan Documents, or for the proper authorization thereof, or for the sufficiency
of the lien and security interest purported to be created hereby, and Trustee
makes no representation in respect thereof or in respect of the rights,
remedies, and recourses of Beneficiary.

11.2         Certain Rights. With the approval of Beneficiary, Trustee shall have the right to take
any and all of the following actions:  (i) select,
employ, and advise with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Loan Documents, and shall be fully
protected in relying as to legal matters on the advice of counsel, (ii) execute
any of the trusts and powers hereof and perform any duty hereunder either
directly or through Trustee’s agents or attorneys, (iii) select and
employ, in and about the execution of Trustee’s duties hereunder, suitable
accountants, engineers and other experts, agents and attorneys-in-fact,
either corporate or individual, not regularly in the employ of Trustee, and
Trustee shall not be answerable for any act, default, negligence, or misconduct
of any such accountant, engineer or other expert, agent or attorney-in-fact,
if selected with reasonable care, or for any error of judgment or act done by
Trustee in good faith, or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee’s gross negligence or bad faith,
and (iv) any and all other lawful action as Beneficiary may instruct
Trustee take to protect or enforce Beneficiary’s rights hereunder. Trustee
shall not be personally liable in case of entry by Trustee, or anyone entering
by virtue of the powers herein granted to Trustee, upon the Mortgaged Property
for debts contracted for or liability or damages incurred in the management or
operation of the Mortgaged Property. Trustee shall have the right to rely on
any instrument, document, or signature authorizing or supporting any action
taken or proposed to be taken by Trustee hereunder, believed by Trustee in good
faith to be genuine. Trustee shall be entitled to reimbursement for expenses
incurred by Trustee in the performance of Trustee’s duties hereunder and to
reasonable compensation for such of Trustee’s services hereunder as shall be
rendered. Grantor will, from time to time, pay the compensation due to Trustee
hereunder and reimburse Trustee for, and save Trustee harmless against, any and
all liability and expenses which may be incurred by Trustee in the performance
of Trustee’s duties.

11.3         Retention of Money. All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by applicable law) and Trustee shall be under no
liability for interest on any moneys received by Trustee hereunder.

11.4         Successor Trustees. Trustee may resign by the giving of notice of such resignation in writing
or orally to Beneficiary. If Trustee shall die, resign, or become disqualified
from acting in the execution of this trust, or if, for any reason, Beneficiary
shall prefer to appoint a substitute Trustee or multiple substitute Trustees,
or successive substitute Trustees or successive multiple substitute Trustees,
to act instead of the aforenamed Trustee, Beneficiary shall have full power to
appoint a substitute Trustee (or, if preferred, multiple substitute Trustees)
in succession who shall succeed (and if multiple substitute Trustees are
appointed, each of such multiple substitute Trustees shall succeed) to all the
estates, rights, powers, and duties of the aforenamed Trustee. Such appointment
may be executed by any authorized agent of Beneficiary, and if such Beneficiary
be a corporation and such appointment be 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. Grantor
hereby ratifies and confirms any and all acts which the aforenamed Trustee, or
Trustee’s successor or successors in this trust, shall do lawfully by virtue
hereof. If multiple substitute Trustees are appointed, each of such multiple
substitute Trustees shall be empowered and authorized to act alone without the
necessity of the joinder of the other multiple 

 27
 

 

substitute Trustees, whenever any action or
undertaking of such substitute Trustees is requested or required under or
pursuant to this Deed of Trust or applicable law.

11.5         Perfection of Appointment. Should any deed, conveyance, or instrument of any
nature be required from Grantor by any Trustee or substitute Trustee to more
fully and certainly vest in and confirm to the Trustee or substitute Trustee
such estates, rights, powers, and duties, then, upon request by the Trustee or
substitute Trustee, any and all such deeds, conveyances and instruments shall
be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Grantor.

11.6         Succession Instruments. Any substitute Trustee appointed pursuant to any of
the provisions hereof shall, without any further act, deed, or conveyance,
become vested with all the estates, properties, rights, powers, and trusts of
its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of Beneficiary or of the substitute Trustee, the Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers,
and trusts of the Trustee so ceasing to act, and shall duly assign, transfer
and deliver any of the property and moneys held by such Trustee to the
substitute Trustee so appointed in the Trustee’s place.

11.7         No Representation by Trustee or Beneficiary. By accepting or approving anything required to be
observed, performed, or fulfilled or to be given to Trustee or Beneficiary
pursuant to the Loan Documents, including without limitation, any officer’s
certificate, balance sheet, statement of profit and loss or other financial
statement, survey, appraisal, or insurance policy, neither Trustee nor
Beneficiary shall be deemed to have warranted, consented to, or affirmed the
sufficiency, legality, effectiveness, or legal effect of the same, or of any
term, provision, or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or affirmation with respect thereto by
Trustee or Beneficiary.

ARTICLE XII

MISCELLANEOUS

12.1         Release. If
the Indebtedness is paid in full in accordance with the terms of this Deed of
Trust, the Note, and the other Loan Documents, and if Grantor shall well and
truly perform each and every of the Obligations to be performed and discharged
in accordance with the terms of this Deed of Trust, the Note and the other Loan
Documents, then this conveyance shall become null and void and be released at
Grantor’s request and expense, and Beneficiary shall have no further obligation
to make advances under and pursuant to the provisions hereof or in the other
Loan Documents.

12.2         Performance at Grantor’s Expense. Grantor shall (i) pay all legal fees incurred
by Beneficiary in connection with the preparation of the Loan Documents
(including any amendments thereto or consents, releases, or waivers granted
thereunder); (ii) reimburse Beneficiary, promptly upon demand, for all
amounts expended, advanced, or incurred by Beneficiary to satisfy any
obligation of Grantor under the Loan Documents, which amounts shall include
(without limitation) all court costs, attorneys’ fees (including, for trial,
appeal, or other proceedings), fees of auditors and accountants and other
investigation expenses reasonably incurred by Beneficiary in connection with
any such matters; and (iii) any and all other costs and expenses of
performing or complying with any and all of the Obligations. Except to the
extent that costs and expenses are included within the definition of “Indebtedness,”
the 

 28
 

 

payment of such costs and expenses shall not be
credited, in any way and to any extent, against any installment on or portion
of the Indebtedness.

12.3         Survival of Obligations. Each and all of the Obligations shall survive the
execution and delivery of the Loan Documents and the consummation of the loan
called for therein and shall continue in full force and effect until the
Indebtedness shall have been paid in full; provided, however, that nothing
contained in this Section shall limit the obligations of Grantor as
otherwise set forth herein.

12.4         Recording and Filing. Grantor will cause the Loan Documents requested by
Beneficiary and all amendments and supplements thereto and substitutions
therefor to be recorded, filed, re-recorded, and refiled in such manner
and in such places as Trustee or Beneficiary shall reasonably request, and will
pay all such recording, filing, re-recording and refiling taxes,
documentary stamp taxes, fees, and other charges.

12.5         Notices. All
notices and other communications provided for in this Deed of Trust or
contemplated hereby, given hereunder or required by law to be given, shall be
in writing (unless expressly provided to the contrary). If personally
delivered, such notices shall be effective when delivered, and in the case of
mailing or delivery by overnight courier, such notices shall be effective when
placed in an envelope and deposited at a post office or official depository
under the exclusive care and custody of the United States Postal Service or
delivered to an overnight courier, postage prepaid, in each case addressed to
the parties as set forth in this Deed of Trust, or to such other address as a
party shall have designated to the other in writing in accordance with this
Section. In the case of mailing, the mailing shall be by certified or first
class mail. The giving of at least five (5) days’ notice before
Beneficiary shall take any action described in any notice shall conclusively be
deemed reasonable for all purposes; provided, that this shall not be deemed to
require Beneficiary to give such five (5) days’ notice, or any notice, if
not specifically required to do so in this Deed of Trust. For purposes of this
Section, the address of Grantor and the Beneficiary shall be that address set
forth on Page 1 hereof.

12.6         Covenants Running with the Land. All Obligations contained in this Deed of Trust and
the other Loan Documents are intended by Grantor, Beneficiary, and Trustee to
be, and shall be construed as, covenants running with the Mortgaged Property
until the lien of this Deed of Trust has been fully released by Beneficiary.

12.7         Successors and Assigns. All of the terms of the Loan Documents shall apply
to, be binding upon, and inure to the benefit of the parties thereto, their
successors, assigns, heirs, and legal representatives, and all other persons
claiming by, through, or under them.

12.8         No Waiver; Severability. Any failure by Trustee or Beneficiary to insist, or
any election by Trustee or Beneficiary not to insist, upon strict performance
by Grantor or others of any of the terms, provisions, or conditions of the Loan
Documents shall not be deemed to be a waiver of same or of any other terms,
provisions, or conditions thereof, and Trustee or Beneficiary shall have the
right at any time or times thereafter to insist upon strict performance by
Grantor or others of any and all of such terms, provisions, and conditions. The
Loan Documents are intended to be performed in accordance with, and only to the
extent permitted by, all applicable Legal Requirements. If any provision of any
of the Loan Documents or the application thereof to any person or circumstance
shall, for any reason and to any extent, be invalid or unenforceable, then
neither the remainder of the instrument in which such provision is contained
nor the application of such provision to other persons or circumstances nor the
other 

 29
 

 

instruments referred to herein shall be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.

12.9         Counterparts. To facilitate execution, this Deed of Trust may be executed in as many
counterparts as may be convenient or required. It shall not be necessary that
the signature and acknowledgment of, or on behalf of, each party, or that the
signature and acknowledgment of all persons required to bind any party, appear
on each counterpart. All counterparts shall collectively constitute a single
instrument. It shall not be necessary in making proof of this Deed of Trust to
produce or account for more than a single counterpart containing the respective
signatures and acknowledgment of, or on behalf of, each of the parties hereto. Any
signature and acknowledgment page to any counterpart may be detached from
such counterpart without impairing the legal effect of the signatures and
acknowledgments thereon and thereafter attached to another counterpart
identical thereto except having attached to it additional signature and
acknowledgment pages.

12.10       Governing Law. This Deed of Trust is executed and delivered as an incident to a lending
transaction negotiated and consummated in Dallas County, Texas, and shall be
governed by and construed in accordance with the laws of the State of Texas.

12.11       Controlling Agreement. In the event of any conflict between the provisions
of this Deed of Trust and any of the other Loan Documents, it is the intent of
the parties hereto that the provisions of this Deed of Trust shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same.

12.12       Subrogation. If any or all of the proceeds of the Note have been
used to extinguish, extend or renew any indebtedness heretofore existing
against the Mortgaged Property, then, to the extent of such funds so used,
Beneficiary shall be subrogated to all of the rights, claims, liens, titles,
and interests existing against the Mortgaged Property heretofore held by, or in
favor of, the holder of such indebtedness and such former rights, claims,
liens, titles, and interests, if any, are not waived but rather are continued
in full force and effect in favor of Beneficiary and are merged with the lien
and security interest created herein as cumulative security for the repayment
of the Indebtedness and the performance and discharge of the Obligations.

12.13       Rights Cumulative. Beneficiary shall have all rights, remedies, and recourses granted in the
Loan Documents and available at law or in equity (including, those granted by
the Code and applicable to the Mortgaged Property or any portion thereof), and
the same (i) shall be cumulative and concurrent, (ii) may be pursued
separately, successively, or concurrently against Grantor or others obligated
for the Indebtedness or any part thereof, or against any one or more of them,
or against the Mortgaged Property, at the sole discretion of Beneficiary, (iii) may
be exercised as often as occasion therefor shall arise, it being agreed by
Grantor that the exercise, discontinuance of the exercise of or failure to
exercise any of the same shall in no event be construed as a waiver or release
thereof or of any other right, remedy, or recourse, and (iv) are intended
to be, and shall be, nonexclusive. All rights and remedies of Beneficiary
hereunder and under the other Loan Documents shall extend to any period after
the initiation of foreclosure proceedings, judicial or otherwise, with respect
to the Mortgaged Property.

12.14       Payments. Remittances
in payment of any part of the Indebtedness other than in the required amount in
funds immediately available at the place where the Note is payable shall not, 

 30
 

 

regardless of any receipt or credit issued therefor,
constitute payment until the required amount is actually received by
Beneficiary in funds immediately available at the place where the Note is
payable (or such other place as Beneficiary, in Beneficiary’s sole discretion,
may have established by delivery of written notice thereof to Grantor) and
shall be made and accepted subject to the condition that any check or draft may
be handled for collection in accordance with the practice of the collecting
bank or banks. Acceptance by Beneficiary of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default.

12.15       Change of Security. Any part of the Mortgaged Property may be released,
regardless of consideration, by Beneficiary from time to time without
impairing, subordinating, or affecting in any way the lien, security interest,
and other rights hereof against the remainder. The lien, security interest, and
other rights granted hereby shall not be affected by any other security taken
for the Indebtedness or Obligations, or any part thereof. The taking of
additional collateral, or the amendment, extension, renewal, or rearrangement
of the Indebtedness or Obligations, or any part thereof, shall not release or
impair the lien, security interest, and other rights granted hereby, or affect
the liability of any endorser or guarantor or improve the right of any junior
lienholder; and this Deed of Trust, as well as any instrument given to secure
any amendment, extension, renewal, or rearrangement of the Indebtedness or
Obligations, or any part thereof, shall be and remain a first and prior lien,
except as otherwise provided herein, on all of the Mortgaged Property not
expressly released until the Indebtedness is fully paid and the Obligations are
fully performed and discharged.

12.16       Headings. The Article, Section, and Subsection entitlements
hereof are inserted for convenience of reference only and shall in no way
alter, modify, or define, or be used in construing the text of such Articles,
Sections, or Subsections.

12.17       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, 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.

12.18       Waiver of Right to Trial by Jury. GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR
COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF ANY OF THE LOAN DOCUMENTS OR THE
ACTS OR FAILURE TO ACT OF OR BY BENEFICIARY IN THE ENFORCEMENT OF ANY OF THE
TERMS OR PROVISIONS OF THIS DEED OF TRUST OR THE OTHER LOAN DOCUMENTS.

12.19       Counting of Days. The term “days” when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Land is located (whether
legal or religious in nature), the period shall be 

 31
 

 

deemed to end on the next
succeeding business day. The term “business day” or “Business Day”
when used herein shall mean a weekday, Monday through Friday, except a legal
holiday or a day on which banking institutions in Dallas, Texas are authorized
by law to be closed.

12.20       Beneficiary’s Discretion. Whenever pursuant to this Deed of Trust,
Beneficiary exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary, the decision of
Beneficiary to approve or disapprove or to decide whether arrangements or terms
are satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Beneficiary and shall be final
and conclusive.

12.21       No Merger of Estates. So long as any part of the Indebtedness and the
Obligations secured hereby remain unpaid and unperformed or undischarged, the
fee and leasehold estates to the Mortgaged Property shall not merge but rather
shall remain separate and distinct, notwithstanding the union of such estates
either in Grantor, Beneficiary, any lessee, or any third party purchaser or
otherwise.

[Balance of this Page Left Intentionally Blank]

 32

 

EXECUTED
as of the date first above written.

NOTICE OF INDEMNIFICATION:

GRANTOR HEREBY ACKNOWLEDGES

AND AGREES THAT THIS DEED OF TRUST

CONTAINS CERTAIN INDEMNIFICATION

PROVISIONS WHICH, IN CERTAIN

CIRCUMSTANCES, COULD INCLUDE AN

INDEMNIFICATION BY GRANTOR OF

BENEFICIARY FROM CLAIMS OR LOSSES

ARISING AS A RESULT OF BENEFICIARY’S

OWN NEGLIGENCE.

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  GRANTOR:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  W & G PARTNERSHIP, LTD.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  a Texas limited
  partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  ClayDesta, L.P., its managing general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  ClayDesta Operating L.L.C.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ L. Paul Latham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  L. Paul Latham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  DESTA THREE PARTNERSHIP,
  LTD.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  a Texas limited
  partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  Desta Three Development
  Corp.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ L. Paul Latham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  L. Paul Latham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  DESTA SIX PARTNERSHIP,
  LTD.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  a Texas limited partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  Desta Six Development
  Corp.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ L. Paul Latham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  L. Paul Latham

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President

  	
   

  
																		

 

 

 

	
  THE STATE OF TEXAS

  	
   

  	
  ‘

  	
   

  
	
   

  	
   

  	
  ‘

  	
   

  
	
  COUNTY OF MIDLAND

  	
   

  	
  ‘

  	
   

  

 

This instrument was acknowledged before me on the 20th day of June,
2006 by L. Paul Latham, President of ClayDesta Operating, L.L.C., a Texas
limited liability company, general partner of ClayDesta, L.P., managing general
partner of W&G Partnership, Ltd., on behalf of said company and
partnerships.

	
  

  	
   

  	
  /s/ Robert v. Rendall, Jr.

  	
   

  
	
  [SEAL]

  	
   

  	
  Notary Public Signature

  	
   

  

 

	
  THE STATE OF TEXAS

  	
   

  	
  ‘

  	
   

  
	
   

  	
   

  	
  ‘

  	
   

  
	
  COUNTY OF MIDLAND

  	
   

  	
  ‘

  	
   

  

 

This instrument was acknowledged before me on the 20th day of June,
2006 by L. Paul Latham, President of Desta Three Development Corp., general
partner of Desta Three Partnership, Ltd., a Texas limited liability company, on
behalf of said company and partnership.

	
  

  	
   

  	
  /s/ Robert v. Rendall, Jr.

  	
   

  
	
  [SEAL]

  	
   

  	
  Notary Public Signature

  	
   

  

 

	
  THE STATE OF TEXAS

  	
   

  	
  ‘

  	
   

  
	
   

  	
   

  	
  ‘

  	
   

  
	
  COUNTY OF MIDLAND

  	
   

  	
  ‘

  	
   

  

 

This instrument was acknowledged before me on the 20th day of June,
2006 by L. Paul Latham, President of Desta Six Development Corp., general
partner of Desta Six Partnership, Ltd., a Texas limited liability company, on
behalf of said company and partnership.

	
  

  	
   

  	
  /s/ Robert v. Rendall, Jr.

  	
   

  
	
  [SEAL]

  	
   

  	
  Notary Public Signature

  	
   

  

 

 

EXHIBIT “A”

Land
Description

< TRACT #1 — (Terrace VI Office Building): Lot(s) 2, Block “B” THE
TERRACE, SECTION SEVEN, a subdivision in Travis County, Texas, according
to the map or plat thereof, recorded under Document No. 200100072 of the
Official Public Records of Travis County, Texas.

TRACT
#2 — (Terrace III Office Building): Lot(s) 2, Block “A” THE TERRACE, SECTION FIVE,
a subdivision in Travis County, Texas, according to the map or plat thereof,
recorded under Document No. 200000361 of the Official Public Records of
Travis County, Texas.

TRACT #3 — (Hotel Site): Lot(s) 1,
Block “A” THE TERRACE, SECTION FIVE, a subdivision in Travis County,
Texas, according to the map or plat thereof, recorded under Document No. 200000361
of the Official Public Records of Travis County, Texas.

TRACT #4 — (Terrace IV Office
Building): Lot(s) 1, Block “B” THE TERRACE, SECTION SEVEN, a
subdivision in Travis County, Texas, according to the map or plat thereof,
recorded under Document No. 200100072 of the Official Public Records of
Travis County, Texas.

TRACT #5 — (Retail Site): Lot 2, Block “E” of
THE TERRACE SECTION SIX, a subdivision in Travis County, Texas, according
to the map or plat thereof, recorded under Document No. 200000362 of the
Official Public Records of Travis County, Texas.

 

Exhibit “B”

Permitted
Exceptions

All restrictions, covenants, easements,
encumbrances, and rights of way of record in the Official Public Records of
Travis County on the date hereof.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]