SECOND AMENDED AND RESTATED
SECURED LINE OF CREDIT PROMISSORY NOTE
U.S. $45,000,000.00 June 20, 2006
FOR VALUE RECEIVED, the undersigned, United Development Funding, L.P.,
a Nevada limited partnership (the "Borrower"), hereby makes this Second Amended
and Restated Secured Line of Credit Promissory Note (this "Note") and promises
to pay to the order of United Mortgage Trust, a real estate investment trust
organized under the laws of the State of Maryland or its assigns (the "Lender"),
the sum of up to Forty-Five Million and NO/100 Dollars ($45,000,000.00) in
Principal (as hereinafter defined), or, if greater or less, the aggregate
unpaid Principal amount advanced to Borrower under this Note, together with
accrued, unpaid interest thereon, pursuant to the terms and conditions
set forth in this Note. All amounts are payable to Lender in lawful money
of the United States of America at the address for Lender provided in this
Note, or at such other address as from time to time may be designated by Lender.
This Note supercedes and replaces, and amends and restates in its entirety,
that certain First Amended and Restated Secured Line of Credit Promissory Note
date September 30, 2004 in the principal amount of $30,000,000 (the "Prior
Note").
1. This Note shall be subject to the following terms:
Date of this Note: June 20, 2006
Borrower: United Development Funding, L.P., a Nevada limited
partnership
▇▇▇▇▇▇▇▇'s Address ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇: ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ No. (▇▇▇) ▇▇▇-▇▇▇▇
Lender: United Mortgage Trust
▇▇▇▇▇▇'s Address ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
For Notice and Payment: Richardson, Texas 75080
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ No. (▇▇▇) ▇▇▇-▇▇▇▇
Principal Amount: Up to $45,000,000.00, or such amount of Principal that is
actually advanced under this Note (the "Loan").
Revolver: This Note is a revolver and thus, Borrower may borrow,
repay and then reborrow the Principal amount of this Note,
subject to the other terms of this Note.
Purpose of Loan: The purpose of the Loan is to finance ▇▇▇▇▇▇▇▇'s
investments in real estate development projects.
Outstanding Principal: On and as of the date of this Note, the outstanding
principal amount of the Prior Note, plus accrued and unpaid interest
and any unpaid fees and charges thereon, shall
automatically and without further action on the part of
Lender or Borrower, become Principal under this Note.
Maturity: Subject to the provisions of this Note requiring scheduled
payments during the term hereof and subject to any
permitted acceleration of this Note, this Note shall mature,
and all outstanding Principal and unpaid accrued interest
under this Note and any other Indebtedness due under the
other Loan Documents shall be due and payable in full, on
or before 5:00 p.m., Dallas, Texas time on December 31,
2009 (the "Maturity Date").
Base Rate: Unless the Default Rate (defined below) shall apply,
interest on the outstanding Principal balance of this Note
shall accrue at the lesser of (i) 15% per annum, accrued and
compounded annually, or (ii) the Highest Lawful Rate
(defined below) (the "Base Rate").
Default Rate: Upon the occurrence and during the continuation of an
Event of Default, interest on the outstanding Principal
balance of this Note which is delinquent (which may be the
entire Principal balance of this Note in circumstances
where this Note matures or has been accelerated), together
with any accrued and unpaid interest then due, shall accrue
at the lesser of (i) 18% per annum, accrued and
compounded annually, or (ii) the Highest Lawful Rate (the
"Default Rate").
2. Definitions. In addition to the terms which are defined
elsewhere in this Note, the following terms have the meanings indicated for
purposes of this Note:
(a) "Advance" means any advance of funds by Lender to Borrower
pursuant to the terms of this Note.
(b) "Borrowing Base Report" shall mean, at any time, the calculation
of the Borrowing Base prepared by Borrower and approved by Lender in its
reasonable discretion, including a detailed summary of (i) the Retail Appraised
Value of all loans and equity interests for land development and/or land
acquisition owned by Borrower, to the extent such loans and equity interests
are included in the calculation of the Borrowing Base, (ii) the date of the
last payment made on each Loan and confirmation that all regular payments have
been made in a timely manner, (iii) all asset-specific debt senior to such
loans and equity interests owned by ▇▇▇▇▇▇▇▇, (iv) all outstanding Senior Debt,
(v) all amounts outstanding under this Note, and (vi) the remaining Principal
amounts available under this Note.
(c) "Borrowing Base" shall mean, at any time, an amount equal to the
outstanding balances of all secured land acquisition and development loans made
by Borrower and all equity interests owned by Borrower, the repayment of which
is secured; in each case, whether payment or priority of liens is subordinate
to payment or priority of liens in favor of any other creditor, provided that
the Borrowing Base shall at no time exceed a Combined Loan-to-Value Ratio of
85% of 80% (68%) of the Retail Appraised Value of all subordinate loans and
equity interests for land development and/or land acquisition owned by Borrower
and 75% of the Retail Appraised Value for first lien secured loans for land
development and/or land acquisition owned by Borrower.
(d) "Combined Loan-to-Value Ratio" shall mean the ratio of (i) all
Senior Debt and all other debt (senior or subordinated to this Note) issued be
Borrower to (ii) the Retail Appraised Value of the Borrowing Base. For
purposes of the definition of Combined Loan-to-Value Ratio, Senior Debt shall
include all asset specific debt, including any asset specific Senior Debt and
indebtedness senior to the loans and equity interests owned by Borrower and
shall exclude any unfunded portions of the Senior Debt.
(e) "Indebtedness" shall mean and shall include by way of example,
but not by way of limitation: (i) all indebtedness, obligations and liabilities
of Borrower and/or any Guarantors under the Loan or arising under any of the
Loan Documents, of whatsoever kind, nature and description, primary or
secondary, direct, indirect or contingent, due or to become due, and whether
now existing or hereafter arising, and including without limitation of the
generality of the foregoing, all indemnities, defenses and hold harmless
obligations of Borrower and/or any Guarantor(s) to Lender in connection with
the Loan as evidenced by this Note; (ii) all present and future Advances made
by ▇▇▇▇▇▇ in connection with the Loan and the Loan Documents, and whether made
at Lender's option or otherwise, from time to time; (iii) all future Advances
made by Lender for the protection or preservation of Lender's rights and
interest in the Collateral (as defined in the Security Agreement), as provided
herein or in the Loan Documents, including, without limitation, advances for
taxes, levies, assessments, insurance or maintenance of the Collateral; (iv)
all costs and expenses incurred by Lender in connection with or arising out
of the protection, enforcement or collection of any of the foregoing,
including, without limitation, Lender's actual attorney fees; and (v) all
costs and expenses incurred by ▇▇▇▇▇▇ in connection with, or arising
out of, the sale, disposition, liquidation or other realization including,
but not by way of limitation, the taking , retaking or holding, and all
proceedings (judicial or otherwise) of the Collateral, including, without
limitation, ▇▇▇▇▇▇'s actual attorney fees.
(f) "Material Adverse Effect" shall mean any material adverse effect
whatsoever upon: (a) the validity, performance, or enforcement of any Loan
Documents; (b) the properties, contracts, business operations, prospects,
profits, or condition (financial or otherwise) of Borrower; or (c) the ability
of Borrower to fulfill its obligations under the Loan Documents.
(g) "Principal" shall mean the principal amounts outstanding from
time to time pursuant to the terms of this Note.
(h) "Retail Appraised Value" means the value (determined by an
appraiser if such value was so determined in connection with Senior Debt or
otherwise requested by ▇▇▇▇▇▇) of the real property securing the loans and
equity interests for land development and/or land acquisition owned by Borrower
based on the market value of the finished sites sold to a merchant builder
reflecting all estimated costs to carry and sell the finished building lots.
(i) "Senior Debt" shall mean, collectively, all indebtedness due and
owing by Borrower pursuant to (i) that certain loan guaranty to Colonial Bank
in the amount of $8,750,000, (ii) that certain loan to OU Land Acquisition, L.P.
in the principal amount of $25,000,000, (iii) a line of credit provided by
Textron Financial Group in the amount of $30,000,000, and (iv) all other
indebtedness of Borrower to any national or state chartered banking association
or other institutional lender that is approved by Lender in writing.
2. Applicable Interest Rate. The outstanding Principal amount shall
bear interest on each day outstanding at the Base Rate in effect on such day,
unless the Default Rate shall apply. Upon the occurrence and during the
continuation of an Event of Default, the outstanding Principal amount, and all
past-due interest thereon, shall bear interest on each day outstanding at the
Default Rate automatically and without the necessity of notice, until such
delinquent amount is paid or such breach or default is otherwise cured to
the satisfaction of Lender or waived by Lender in writing. Notwithstanding
anything to the contrary contained in this Note, (a) this Note shall never
bear interest in excess of the Highest Lawful Rate, and (b) if at any time the
rate at which interest is payable on this Note is limited by the Highest Lawful
Rate by the foregoing clause (a) or by reference to the Highest Lawful Rate in
the definitions of Base Rate and Default Rate, then this Note shall bear
interest at the Highest Lawful Rate and shall continue to bear interest at the
Highest Lawful Rate until such time as the total amount of interest accrued on
this Note equals (but does not exceed) the total amount of interest
which would have accrued on this Note, had there been no Highest Lawful Rate
applicable to this Note. As used in this Note, the term "Highest Lawful Rate"
shall mean the lesser of (a) 18%, or (b) the maximum lawful rate of interest
which may be contracted for, charged, taken, received or reserved by Lender
in accordance with the applicable laws of the State of Texas (or applicable
United States federal law, to the extent that it permits Lender to contract
or charge, take, receive or reserve a greater amount of interest than under
Texas law), taking into account all fees and expenses if any, contracted for,
charged, received, taken or reserved by Lender in connection with the
transaction relating to this Note and the indebtedness evidenced hereby or
by the other Loan Documents which are treated as interest under applicable law.
3. Security; Loan Documents. This Note is secured by, and entitled
to the benefits of, an amended and restated security agreement dated September
30th 2004 (the "Security Agreement") between Borrower and Lender, pursuant to
which the Borrower has granted to Lender, a security interest in the Collateral
(as defined in the Security Agreement). This Note, the Security Agreement, all
UCC financing statements, amendments thereto and continuation statements
(collectively, "Financing Statements") filed by or in favor of Lender, all
Advance Requests (herein so called) and any instruments, agreements, or
certificates executed, entered into or delivered by any party in connection
with this Note, are collectively referred to in this Agreement as the "Loan
Documents".
4. Use of Proceeds. The proceeds of this Note shall be used
solely for business and commercial purposes and shall be used to acquire assets
to seek income that qualifies under the Real Estate Investment Trust provisions
of the Internal Revenue Code. In no event shall any funds advanced under this
Note be used, directly or indirectly, by any person for personal, family,
household or agricultural purposes or for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any "margin stock"
(as such term is defined in Regulation U promulgated by the Board of Governors
of the Federal Reserve System). Further, no funds advanced under this Note
may be used by Borrower to either: (a) finance indebtedness associated with any
real estate development project upon which Borrower has a first priority lien
to the extent such indebtedness, including indebtedness financed by funds
advanced hereunder and indebtedness financed by funds advanced from any other
source, including without limitation Senior Debt, exceeds 75% of the of the
Retail Appraised Value of such real estate development project; or (b)
finance indebtedness associated with any real estate development project
upon which ▇▇▇▇▇▇▇▇ has a junior priority lien to the extent such
indebtedness, including indebtedness financed by funds advanced hereunder and
indebtedness financed by funds advanced from any other source, including
without limitation Senior Debt, exceeds 85% of 80% (68%) of the Retail
Appraised Value of such real estate development project.
5. Advances and Advance Procedures.
(a) Advance Request. Borrower may request, upon and at any time
after the date of this Note until 30 days prior to the Maturity Date, that
Lender advance an amount of Principal (as the case may be) to Borrower under
this Note (each, an "Advance") by presenting an Advance Request to Lender in
the form attached as Exhibit "A". Subject to the other provisions of this
Note, within three business days after its receipt of the Advance Request,
Lender shall fund the requested Advance. At no time shall the amount of an
Advance cause the outstanding Principal to exceed the Borrowing Base as set
forth in the immediately preceding Borrowing Base Report delivered by Borrower
to Lender. At any time that the outstanding Principal exceeds the Borrowing
Base, Borrower shall immediately pay Lender an amount equal to such excess.
(b) Advance Schedule. Attached to this Note as Schedule 1 is a
list of the Advances by type made under this Note, any payments applied to
reduce Principal outstanding under this Note, and the aggregate amount of
Principal outstanding under this Note (the "Advance Schedule"). The amount
of Principal owing on this Note at any given time shall be equal to (i) the
aggregate amount of all Principal advanced by Lender under this Note, minus
(ii) all payments made on this Note and applied by Lender to reduce the
Principal amount of this Note in accordance with Section 6(c). The Advance
Schedule shall be revised by ▇▇▇▇▇▇ from time to time as appropriate.
(c) Advances. Subject to the terms of this Note, ▇▇▇▇▇▇ agrees to
make one or more advances to Borrower from time to time from the date hereof to
and including the Maturity Date, provided that the aggregate amount of all
Advances at any time outstanding shall not exceed the lesser of the Borrowing
Base or the maximum amount of Principal Amount of this Note.
6. Payment.
(a) Mandatory Payments. Mandatory payments equal to the amount of
unpaid accrued interest on the outstanding Principal balance of this Note from
time to time shall be due and payable on the 15th day of each month for the
prior calendar month interest due during the term of this Note, commencing on
July 1, 2006.
(b) Maturity. Subject to any acceleration of this Note, the outstanding
Principal, together with accrued, unpaid interest thereon, shall be due and
payable on the Maturity Date.
(c) Application of Payments. Payments made on this Note
will be applied first to unpaid, accrued interest, next, to any unpaid
collection costs, fees and other charges permitted under this Note, and last,
to reduce the Principal outstanding under this Note, subject, however, to any
adjustments required or permitted by this Note or applicable law.
(d) General. Borrower will make each payment that it owes under this
Note to Lender (interest, any applicable fees and charges, and outstanding
Principal) in full and in lawful money of the United States, without set-off,
deduction or counterclaim. All payments shall be made by check or wire
transfer of immediately available funds. Should any such payment become due
and payable on a day other than a business day, the date for such payment shall
be extended to the next succeeding business day, and, in the case of a payment
of Principal or past-due interest, interest shall accrue and be payable on such
amount for the period of such extension. Each such payment must be received by
Lender not later than 5:00 p.m., Dallas, Texas time on the date such payment
becomes due and payable. Any payment received by ▇▇▇▇▇▇ after such time will
be deemed to have been made on the next succeeding business day. Borrower
shall designate on each payment made to Lender whether such payment is made
with respect to the Long Term Loan or the Bridge Loan Investment Loan.
7. Prepayment; ▇▇▇▇▇▇'s Rights. Borrower may prepay this Note,
or any portion of this Note, at any time and from time to time, without the
payment of any fee or penalty.
8. Representations and Warranties. Borrower represents and warrants to
Lender that:
(a) Organization and Good Standing. Borrower is a limited
partnership, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, having all limited partnership powers
required to carry on its business and to enter into and carry out the
transactions contemplated by this Note and the other Loan Documents. Borrower
has taken all appropriate actions and complied in all material respects with
all laws applicable to it in each jurisdiction within and without outside the
United States where Borrower owns or leases any properties or conducts any
business.
(b) Authorization; Validity. Borrower has the limited partnership
power, authority and legal right to execute, deliver and perform its
obligations under, this Note and the other Loan Documents. The execution and
delivery by Borrower of the Loan Documents and the performance of its
obligations under each such Loan Document have been duly authorized by proper
limited partnership proceedings. The Loan Documents to which Borrower is a
party constitute the legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
(c) Approvals. Except for any approvals required by the holders of the
Senior Debt, no authorization, approval or other action by, and no notice to or
other filing with, any governmental authority or regulatory body is required,
either (i) for the execution, delivery or performance of this Note by ▇▇▇▇▇▇▇▇,
or (ii) for the exercise by Lender of its rights and remedies under this Note.
(d) No Conflicts. The execution, delivery, and performance by
Borrower of this Note and the other Loan Documents will not conflict with, or
result in a violation of or a default under, (i) any applicable law, ordinance,
regulation, or rule (federal, state, or local); (ii) any judgment, order, or
decree of any arbitrator, other private adjudicator, or governmental authority
to which Borrower is a party or by which Borrower or any of the assets of
Borrower is bound; (iii) or any agreement, document, or instrument to which
Borrower is a party or by which Borrower or any of the assets of Borrower is
bound.
(e) Accurate Information. All information in any loan application,
financial statement, report (including those reports required by Section 10
hereof), certificate, or other document, and all other information delivered by
or on behalf of Borrower to Lender in connection with this Note or the
Indebtedness is correct and complete in all material respects as of the date
thereof, and there are no omissions from any such information that result in
any such information being materially incomplete, incorrect, or misleading as
of the date thereof. Borrower does not have knowledge of any material change in
any such information. All financial statements heretofore delivered to Lender
by Borrower were prepared in accordance with Generally Accepted Accounting
Principals and accurately present the financial conditions and results of
operations as at the dates thereof and for the periods covered thereby in
all material respects. Since the date of each respective financial statement
or report, no Material Adverse Effect has occurred.
(f) Legal Proceedings, ▇▇▇▇▇▇▇▇, Inquiries, and Investigations. Except
as disclosed to Lender in writing prior to the date of this Agreement: (i) no
legal proceeding, individually or in the aggregate with related proceedings,
involving a sum of $50,000 or more, is pending or, to best knowledge of
Borrower, threatened before any arbitrator, other private adjudicator, or
governmental authority to which Borrower is a party or by which Borrower or
any assets of Borrower may be bound or affected that if resolved adversely to
Borrower could result in a Material Adverse Effect; (ii) no hearing, inquiry,
or investigation relating to Borrower or any assets of Borrower is pending or,
to the best knowledge of Borrower, threatened by any Governmental Authority
that if resolved adversely to Borrower could result in a Material Adverse
Effect; and/or (iii) neither Borrower nor any Guarantor is in default with
respect to any order, writ, injunction, decree, or demand of any court,
governmental agency, regulatory body, or administrative tribunal, which
default might have consequences which would materially and adversely affect
their respective business or properties.
(g) Usury. ▇▇▇▇▇▇▇▇ has been involved in the structure and
negotiation of the Note and the other Loan Documents. It is the intention of
Borrower that all aspects of the Note and the other Loan Documents, and any
related transaction, comply with all laws, including, specifically, any
applicable usury laws. If for any reason it is determined by a governing
authority that the loan made pursuant to the Note and the other Loan
Documents is usurious in any manner, Borrower hereby represents that, as
to Borrower, such result was unintentional and the result of a bona fide
mistake and, to the extent permitted under law, BORROWER HEREBY WAIVES
ANY AND ALL DEFENSES, CLAIMS AND/OR COUNTERCLAIMS BASED ON USURY.
9. Conditions Precedent. Lender has no obligation to make any
Advance to Borrower unless at the time of such Advance, each of the following
conditions have been fully satisfied:
(a) Borrower shall have paid all amounts then due to Lender under this
Note;
(b) No Event of Default shall exist under this Note, and no "default"
or "event of default" shall exist under any other Loan Document ("default" and
"event of default" having the meaning given to such terms in any of such Loan
Documents); and
(c) Such Advance would not otherwise cause the outstanding Principal
to exceed the Borrowing Base as set forth in the immediately
preceding Borrowing Base Report delivered by Borrower to
Lender.
(d) Borrower shall have provided Lender with: (i) copies of all reports
required by Section 10 of this Note with respect to the
indebtedness that Borrower intends to finance or the equity that
Borrower intends to purchase with such Advance; and (ii) such
further documentation as Lender shall reasonably require.
10. Covenants. Borrower covenants and agrees with ▇▇▇▇▇▇ that it will
deliver each of the following, on a quarterly basis, commencing with the
quarter ending June 30, 2006, in form and substance reasonably satisfactory to
Lender:
(a) Borrowing Base Report. A Borrowing Base Report certified by an
executive officer of the general partner of ▇▇▇▇▇▇▇▇.
(b) Summary of Loans. A summary of each real estate development
loan, bridge loan and equity investment by ▇▇▇▇▇▇▇▇, the borrowers and/or joint
venture partners associated with such loans or equity investments, and a
summary of concentration of credit by borrower, partner and geographical
region.
(c) Schedule of Maturities. A summary of scheduled maturities for
each real estate development loan and bridge loan made by Borrower, payment
status for each such loan, and the status of the real estate development that
is being financed by such loans (including a discussion of any variances from
the initial plans for such project previously delivered to Lender).
(d) Summary of Amounts Loaned/Invested. A summary of the
aggregate amount loaned or invested by Borrower with respect to unimproved
real property projects (including ▇▇▇▇▇▇'s prorated portion of such amounts
loaned to or invested in unimproved real property projects) and the aggregate
amount loaned to or invested by Borrower with respect to real property desi-
gnated for improvement within twelve (12) months of such date (including
▇▇▇▇▇▇'s prorated portion of such amounts loaned to or invested in real
property designated for improvement within twelve (12) months of such date).
(e) Note Proceeds. A summary of all proceeds of this Note that are
allocated by Borrower to each real estate development project (whether in the
form of loans or equity) or for the payment of any Senior Debt.
(f) Certificate. A certificate stating that, to ▇▇▇▇▇▇▇▇'s knowledge,
no Material Adverse Effect has occurred to date.
(g) Estoppels from Borrower's Borrowers. Upon the occurrence of an
Event of Default under this Note or any other Loan Document and for so long as
an Event of Default shall be continuing and upon written request by ▇▇▇▇▇▇, an
estoppel, in a form reasonably requested by ▇▇▇▇▇▇, from each of Borrower's
borrowers, confirming any or all of the information described above with
respect to that borrower's indebtedness to Borrower.
(h) Appraisals. Borrower shall obtain appraisals by an independent
expert on all underlying properties. All appraisals will be addressed to the
Lender.
11. Default.
(a) For purposes of this Note, the following events shall constitute an
"Event of Default":
(i) the default by Borrower in any payment required by this
Note by the fifth day following the date when due, whether on or prior to
the Maturity Date; or
(ii) Borrower breaches any representation or warranty
contained in this Note or any other Loan Document, or fails to perform or
observe any covenant or agreement that is set forth in this Note or any
other Loan Document, and such breach is not cured within 30 days after
written notice of such breach is received from Lender; or
(iii) the entry of a decree or order for relief by a court having
jurisdiction in respect of Borrower in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, which is not
vacated or dismissed within 30 days, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
Borrower for any substantial part of Borrower's property, or ordering the
winding up or liquidation of such person's affairs; or
(iv) the commencement by Borrower of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, or the consent by it to the appointment to or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of Borrower for any substantial part of its property, or the
making by Borrower of any assignment for the benefit of creditors, or the
admission by ▇▇▇▇▇▇▇▇ in writing of ▇▇▇▇▇▇▇▇'s inability to pay its debts
generally as they become due; or
(v) the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
all or a substantial part of its assets or of any part of the Collateral (as
such term is defined in the Security Agreement) in a proceeding brought against
or initiated by ▇▇▇▇▇▇▇▇; or
(vi) Borrower suffers the entry against it of a final judgment for
the payment of money in excess of $50,000 (not covered by insurance
satisfactory to Lender in its discretion), unless the same is discharged
within thirty days after the date of entry thereof or an appeal or
appropriate proceeding for review thereof is taken within such period and
a stay of execution pending such appeal is obtained; or
(vii) Borrower suffers a writ or warrant of attachment or any
similar process to be issued by any tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or warrant of
attachment or any similar process is not stayed or released within thirty
(30) days after the entry or levy thereof or after any stay is vacated or set
aside
Borrower is sold, liquidated or winds up its affairs, without the prior
written consent of Lender or the full payment of the Indebtedness due
under this Note in full; or
(viii) Any "default" or "event of default" is declared under any
Senior Debt; or
(ix) Lender in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure provided that
▇▇▇▇▇▇ notifies Borrower of the related event(s) or condition(s) and
Borrower fails to correct or resolve the same to ▇▇▇▇▇▇'s reasonable
satisfaction within thirty (30) days.
(b) Upon the occurrence of an Event of Default described in
subsection (a)(iii), (iv) or (v) of this Section 11 with respect to Borrower,
all of Borrower's obligations under this Note and the other Loan Documents
(accrued and unpaid interest, outstanding Principal, and fees and charges)
shall thereupon be immediately due and payable, without demand, presentment,
notice of demand or of dishonor and nonpayment, protest, notice of protest,
notice of intention to accelerate, declaration or notice of acceleration,
or any other notice or declaration of any kind, all of which are hereby
expressly waived by ▇▇▇▇▇▇▇▇. During the continuance of any other Event
of Default, then and in every such case the Lender may do any or all of
the following: (i) declare the Principal of this Note together with all
accrued and unpaid interest on the unpaid Principal balance, and other
Indebtedness due to Lender under this Note or the other Loan Documents, to be
due and payable immediately, and the same shall become and be due and payable,
without notices, demands for payment, presentations for payment, notices of
payment default, notices of intention to accelerate maturity, protest and
notice of protest, and any other notices of any kind, all of which are
expressly waived by Borrower and any and all sureties, guarantors and
endorsers of this Note, (ii) exercise its rights under the Security
Agreement or any other Loan Document, and (iii) exercise all other rights and
remedies available to Lender at law or in equity or under this Note and the
other Loan Documents. No delay on the part of Lender in exercising any power
under this Note shall operate as a waiver of such power or right nor shall
any single or partial exercise of any power or right preclude further
exercise of that power or right.
(c) If this Note is placed in the hands of an attorney for collection
after an Event of Default or failure to pay under this Note, or if all or any
part of the indebtedness represented hereby is proved, established or collected
in any court or in any bankruptcy, receivership, debtor relief, probate or other
court proceedings, ▇▇▇▇▇▇▇▇ and all endorsers, sureties and guarantors of this
Note, jointly and severally, agree to pay reasonable attorneys' fees and
collection costs to the Lender in addition to the Principal and interest
payable under this Note.
12. Usury Laws. It is the intention of the parties to this Note
to comply with all applicable laws, including, without limitation, usury laws.
In furtherance thereof, ▇▇▇▇▇▇▇▇ stipulates and agrees with Lender that none of
the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay for the use, forbearance, or detention of
money, or interest, in excess of the maximum amount of interest permitted to be
charged by applicable law in effect from time to time. Neither Borrower nor
any present or future guarantors, endorsers, or other persons or entities
hereafter becoming liable for payment of the obligations hereunder and under
the other Loan Documents shall ever be liable for unearned interest thereon or
shall ever be required to pay interest thereon in excess of the maximum amount
that may be lawfully charged under applicable law from time to time in effect,
and the provisions of this section shall control over all other provisions of
the Loan Documents that may be in conflict or apparent conflict herewith.
Lender expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of this Note is
accelerated. If (a) the maturity of this Note is accelerated for any reason,
(b) this Note is prepaid and as a result any amounts held to constitute
interest are determined to be in excess of the legal maximum, or (c) Lender
or any other holder of the Note shall otherwise collect moneys which are
determined to constitute interest which would otherwise increase the interest
hereon to an amount in excess of that permitted to be charged by applicable
law, then all sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then outstand-
ing Principal of this Note or, at Lender's or such holder's option, promptly
returned to Borrower or the other payor thereof upon such determination. In
determining whether or not the interest paid or payable, under any specific
circumstance, exceeds the maximum amount permitted under applicable law,
Lender and Borrower (and any other payors of this Note) shall to the greatest
extent permitted under applicable law, (a) characterize any non-Principal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of this Note in accordance with the amounts outstanding
from time to time hereunder and the maximum legal rate of interest from time
to time in effect under applicable law in order to lawfully charge the maximum
amount of interest permitted under applicable law. In the event applicable
law provides for an interest ceiling under Chapter 303 of the Texas Finance
Code (the "Texas Finance Code") as amended, for that day, the ceiling shall
be the "weekly ceiling" as defined in the Texas Finance Code. As used in this
section the term "applicable law" means the laws of the State of Texas or the
laws of the United States of America, whichever laws allow the greater
interest, as such laws now exist or may be changed or amended or come into
effect in the future.
13. Notice. All notices and other communications required or
permitted under this Note will be in writing and will be mailed by registered
or certified mail, postage prepaid, sent by facsimile, or otherwise delivered
by hand or by nationally recognized overnight delivery service addressed to
the addresses provided in Section 1 of this Note, or to such other address as
a party may have delivered by like method to the other party for purposes of
notice. Each notice or other communication will be treated as effective or
having been given when delivered if delivered personally, or, if sent by mail,
at the earlier of its receipt or three business days after such notice or
other communication has been deposited in a regularly maintained receptacle
for deposit of United States mail or, if sent by facsimile, upon confirmation
of facsimile transfer or, if sent by nationally recognized overnight delivery
service, upon confirmation of delivery from such service.
14. JURISDICTION; VENUE. EXCEPT TO THE EXTENT THAT A
LOAN DOCUMENT SPECIFIES THAT THE LAWS OF A STATE OTHER THAN
THE STATE OF TEXAS SHALL APPLY AND EXCEPT TO THE EXTENT THE
VALIDITY OR PERFECTION OF SECURITY INTERESTS OR REMEDIES IN
RESPECT OF ANY PARTICULAR COLLATERAL IS GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF TEXAS, THIS NOTE AND
THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
JURISDICTION FOR ALL MATTERS ARISING OUT OF THIS NOTE AND THE
OTHER LOAN DOCUMENTS SHALL BE EXCLUSIVELY IN THE STATE AND
FEDERAL COURTS SITTING IN DALLAS COUNTY, TEXAS, AND BORROWER
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF SUCH
STATE AND FEDERAL COURTS AND AGREES AND CONSENTS NOT TO
ASSERT IN ANY PROCEEDING, THAT ANY SUCH PROCESS IS BROUGHT IN
AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER,
AND FURTHER AGREES TO A TRANSFER OF SUCH PROCEEDING TO THE
COURTS SITTING IN DALLAS COUNTY, TEXAS.
15. Miscellaneous. This Note and the other Loan Documents (a) together
represent the entire agreement between Borrower and Lender regarding
the subject matter hereof, (b) may not be amended or modified except in
writing signed by both ▇▇▇▇▇▇▇▇ and Lender, (c) may be executed in
multiple counterparts, (d) is binding upon, and shall inure to the benefit of,
Borrower and Lender, and their respective successors and permitted
assigns, and (e) may be freely assigned, transferred or pledged by Lender
without the consent of ▇▇▇▇▇▇▇▇, and (f) may not be assigned, transferred,
pledged or delegated by Borrower without the prior written consent of
▇▇▇▇▇▇.
16. ▇▇▇▇▇▇'s Costs. Borrower will pay the cost of all charges and premiums of
any title insurance obtained by ▇▇▇▇▇▇, recording fees, costs of lien
perfection, appraisal fees, reasonable attorney fees and any other out-of-
pocket expenses incurred by ▇▇▇▇▇▇ in connection with the Loan,
including without limitation, the costs and expense of Lender in
connection with the preparation of the Loan Documents and the
enforcement of Lender's rights and remedies under the Loan Documents
and any other agreement between Borrower and Lender.
17. Consent and Waiver. No consent or waiver granted by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
or in respect of this Note or any other Loan Document shall be effective
unless it is in writing and signed by ▇▇▇▇▇▇.
18. Third Party Beneficiaries. This Agreement shall not be construed to make
Lender liable to any third party, including without limitation any borrower
of Borrower or any entity in which Borrower holds an equity interest or
for debts or claims accruing to such parties against Borrower. It is
expressly agreed that there are no contractual relationships, either express
or implied, between Lender and any borrower or Borrower or any entity in
which Borrower holds an equity interest.
19. Further Assurances. Borrower shall execute, acknowledge and deliver, or
cause to be executed, acknowledged or delivered, any and all such further
assurances and other agreements or instruments, and take or cause to be
taken all such other action, as shall be reasonably necessary from time to
time to give full effect to this Note or any Loan Document and the
transactions contemplated thereby.
20. Conflict. If any provision of this Note expressly conflicts with any
provision of any other Loan Document, such provision of this Note shall
control as to such conflict.
21. Severability. If any term or provision of this Note shall be determined to
be illegal or unenforceable, all other terms and provisions of this Note
shall nevertheless remain effective and shall be enforced to the fullest
extent permitted by applicable law.
22. Subordination. ▇▇▇▇▇▇ agrees that this Note and all liens, pledges and
security instruments securing this Note pursuant to the Security
Agreement or any other Loan Document, are and shall be subordinate in
right, priority and payment to all Senior Debt.
23. Guaranty. It is an express condition of this Note that United Development
Funding III, L.P., a Delaware limited partnership, shall give and shall
maintain a guarantee of payment and performance of a all or a portion of
the obligations set forth in this Note as prescribed by and on such terms as
are required by ▇▇▇▇▇▇ and which shall be evidenced by the execution and
delivery of a guarantee in such form as reasonably determined by Lender.
Lender shall have the right to modify the amount of the guarantee from
time to time.
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This Note has been executed by ▇▇▇▇▇▇▇▇ and is effective, on and as of the
date first set forth above.
BORROWER:
UNITED DEVELOPMENT FUNDING, L.P.
a Nevada limited partnership
By: UNITED DEVELOPMENT FUNDING, INC.
Its: General Partner
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: President