LOAN AND SECURITY AGREEMENT

Between

UNITED DEVELOPMENT FUNDING III, L.P.,

As Borrower,

and

PREMIER BANK,

As Lender

Dated as of December 29, 2006

 
 

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DEFINITIONS
 
 
1
 
ARTICLE I
 
LOANS, RENEWAL AND TERMINATION
 
15
 
1.1
 
Credit Facility
 
15
 
1.2
 
Borrowing Procedures
 
16
 
1.3
 
Interest.
 
16
 
1.4
 
Charges to Loan Account
 
16
 
1.5
 
Renewal and Termination
 
17
 
1.6
 
Payments by Borrower
 
17
 
1.7
 
Taxes
 
17
 
ARTICLE II
 
FEES
 
18
 
2.1
 
Closing Date Fees
 
18
 
2.2
 
Audit Fees
 
18
 
2.3
 
Costs and Expenses
 
19
 
ARTICLE III
 
GRANT OF SECURITY INTEREST
 
19
 
3.1
 
Grant of Security Interest
 
19
 
3.2
 
Continued Priority of Security Interest
 
19
 
3.3
 
Delivery of Client Notes, Client Loan Documents, and Other Documentation
 
20
 
3.4
 
Client Loan Documents
 
21
 
3.5
 
Appraisals
 
21
 
ARTICLE IV
 
ACCOUNTS; PROCEEDS AND COLLECTIONS
 
22
 
4.1
 
Escrow Account; Clearing Account; Proceeds
 
22
 
4.2
 
Collection of Proceeds from Clearing Account
 
22
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES
 
23
 
5.1
 
Existence, Power and Authority; Borrower Interests
 
23
 
5.2
 
Compliance with Other Agreements and Applicable Law
 
25
 
5.3
 
Absence of Litigation
 
25
 
5.4
 
Taxes and Returns
 
25
 
5.5
 
Lien Priority and Nature of Certain Collateral
 
26
 
5.6
 
Principal Place of Business
 
26
 
5.7
 
Environmental Compliance
 
26
 
5.8
 
Proprietary Rights
 
27
 
5.9
 
Trade Names
 
27
 
5.10
 
Employee Relations
 
27
 
5.11
 
Employee Pension Benefit Plans
 
27
 
5.12
 
Bank Accounts
 
27
 
5.13
 
Accuracy and Completeness of Information
 
27
 
5.14
 
Software License Compliance
 
27
 
5.15
 
Client Note
 
27
 
5.16
 
Licenses and Permits
 
28
 
5.17
 
Survival of Warranties; Cumulative
 
28
 
ARTICLE VI
 
AFFIRMATIVE COVENANTS
 
28
 
6.1
 
Financial Statements
 
28
 
6.2
 
Books and Records
 
29
 
6.3
 
Additional Documentation
 
29
 
6.4
 
Existence, Name, Organization and Chief Executive Office
 
29
 
6.5
 
Compliance with Laws and Taxes
 
30
 
6.6
 
Performance of Obligations
 
30
 
6.7
 
Reporting as to Revenues, Receivables and Client Loans
 
30
 
6.8
 
Over-Advance
 
31
 
6.9
 
Breach or Default
 
31
 
6.10
 
Maintenance of Assets
 
32
 
6.11
 
Insurance
 
32
 
6.12
 
Use of Proceeds
 
32
 
6.13
 
Disclosure
 
32
 
6.14
 
Further Assurances
 
32
 
6.15
 
Brokerage Commissions
 
33
 
6.16
 
Defense of Title
 
33
 
6.17
 
Client Notes
 
33
 
6.18
 
Client Loans
 
34
 
6.19
 
Formation of Subsidiaries and Investments in Client Joint Ventures
 
34
 
6.20
 
Revisions or Updates to Schedules
 
35
 
6.21
 
Bank Accounts
 
35
 
ARTICLE VII
 
NEGATIVE COVENANTS
 
35
 
7.1
 
Business, Management and Organization
 
35
 
7.2
 
Disposition of Assets
 
35
 
7.3
 
Loans and Guarantees
 
36
 
7.4
 
Subsidiaries
 
36
 
7.5
 
Distributions and Salaries
 
36
 
7.6
 
Financial Covenants
 
36
 
7.7
 
Change of Control
 
37
 
7.8
 
Limitation on Indebtedness for Money Borrowed
 
37
 
7.9
 
Mergers; Consolidations; Acquisitions
 
37
 
7.10
 
Client Joint Ventures
 
37
 
7.11
 
Fiscal Year
 
37
 
7.12
 
Affiliate Transactions
 
37
 
7.13
 
Credit Guidelines
 
37
 
7.14
 
Approved States
 
38
 
ARTICLE VIII
 
CONDITIONS PRECEDENT
 
38
 
8.1
 
Credit
 
38
 
8.2
 
Initial and Subsequent Credit
 
39
 
ARTICLE IX
 
EVENTS OF DEFAULT; REMEDIES
 
40
 
9.1
 
Events of Default
 
40
 
9.2
 
Remedies
 
42
 
ARTICLE X
 
JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; AND GOVERNING LAW
 
43
 
10.1
 
Governing Law; Choice of Forum; Service of Process; Jury Trial
 
   
Waiver
 
43
 
10.2
 
Waiver of Certain Claims and Counterclaims
 
44
 
10.3
 
Indemnification
 
45
 
ARTICLE XI
 
MISCELLANEOUS
 
45
 
11.1
 
Power of Attorney
 
45
 
11.2
 
Outstanding Loan Balance
 
45
 
11.3
 
Entire Agreement, Successors and Assigns and Course of Dealing
 
45
 
11.4
 
Assignments and Participations
 
45
 
11.5
 
Amendments, Etc
 
46
 
11.6
 
Notices
 
46
 
11.7
 
Expenses
 
47
 
11.8
 
Assignment of Receivables
 
47
 
11.9
 
Binding Effect; Severability
 
47
 
11.10
 
Final Agreement
 
47
 
11.11
 
Counterparts
 
47
 
11.12
 
Captions
 
48
 
11.13
 
Information
 
48
 
11.14
 
Nonliability of Lender
 
48
 
11.15
 
Maximum Rate
 
48
 
11.16
 
Right of Setoff
 
49
 

 

 

36382.02/263482v6 
 
 
 

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EXHIBITS AND SCHEDULES
 
EXHIBITS
 
Exhibit A
Form of Borrowing Base Certificate
Exhibit B
Form of Revolving Note
Exhibit C
Credit Guidelines
Exhibit D
Form of Assignment of Note
Exhibit E
Form of Allonge

 
SCHEDULES
 
Schedule C
Incumbent Board Members
Schedule 5.1(a)
Organization; Qualification
Schedule 5.5(f)
Real Property
Schedule 5.7
Environmental Compliance
Schedule 5.9
Trade Names
Schedule 5.12
Bank Accounts
Schedule 6.12
Use of Proceeds

36382.02/263482v6 
 
 
 

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LOAN AND SECURITY AGREEMENT
 
Dated as of December 29, 2006
 
UNITED DEVELOPMENT FUNDING III, L.P., a Delaware limited partnership
(“Borrower”) and PREMIER BANK, a Missouri banking association d/b/a Premier Bank
Texas (“Lender”), agree as follows:
 
DEFINITIONS
 
As used in this Agreement:
 
“Account” or “Accounts” means all now owned or hereafter acquired right, title
and interest in all accounts, as such term is defined in the UCC, and any and
all supporting obligations with respect to any of the foregoing.
 
“Additional Documents” has the meaning given to such term in Section 3.2(d).
 
“Affiliate” means, with respect to a Person, (a) any partner, shareholder or
member (in each case, if holding more than five percent (5%) of the outstanding
interest in such Person) of such Person, (b) any director, officer or managing
agent of such Person, and (b) any other Person (other than a Subsidiary) that,
(i) directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such given Person, (ii) directly
or indirectly beneficially owns or holds ten percent (10%) or more of any class
of voting stock or voting partnership or other voting interest of such Person or
any Subsidiary of such Person, or (iii) five percent (5%) or more of the voting
stock or voting partnership or other voting interest of which is directly or
indirectly beneficially owned or held by such Person or a Subsidiary of such
Person. The term “control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities or partnership or other
voting interest, by contract or otherwise.
 
“Allonge” means a duly executed allonge in substantially the form attached
hereto as Exhibit “E”.
 
“Aggregate Partners’ Equity” means, at the time of measurement, the aggregate
dollar amount of Borrower’s partners’ equity reported on Borrower’s balance
sheet, determined in accordance with GAAP.
 
“Agreement” means this Loan and Security Agreement, including all Schedules,
Exhibits and other attachments hereto, as the same may be amended, restated,
supplemented, extended or otherwise modified from time to time.
 
“Agreement Date” means the date as of which this Agreement is dated.
 
“Anti-Terrorism Law” means, collectively, the USA Patriot Act, Executive Order
No. 13224 or any other statute, regulation, executive order, or other law
pertaining to the prevention of future acts of terrorism or money laundering, in
each case as such law may be amended from time to time.
 
“Applicable Law” means all applicable provisions of constitutions, statutes,
rules, regulations and orders of governmental bodies and orders and decrees of
courts and arbitrators.
 
“Appraiser” means an independent third party appraiser acceptable to Lender in
its sole discretion, which appraiser shall have a MAI or other approved
designation.
 
“Asset Disposition” means the disposition of any asset of the Borrower or any of
its Subsidiaries.
 
“Assignment of Note” means the Assignment of Promissory Note, Deed of Trust,
Assignment of Rents and Security Agreement and Fixture Filing and Loan
Documents, executed by Borrower in favor of Lender with respect to each Client
Loan substantially in the form attached hereto as Exhibit “D”.
 
“Bankruptcy Code” means the United States Bankruptcy Code, as in effect from
time to time.
 
“Board” means the duly elected and serving members of the Board of Directors of
UMT Services, Inc., a Delaware corporation and the general partner of the
General Partner.
 
“Borrower” has the meaning given to such term in the preamble of this Agreement.
 
“Borrowing” means a borrowing of Revolving Loan Advances made on the same day by
Lender.
 
“Borrowing Base” means, with respect to Borrower, an amount in dollars equal to
the lesser of (a) the Revolving Credit Limit or (b) the sum, without
duplication, of: (i) with respect to each Eligible Note, the lesser of (A) up to
eighty percent (80%) of the aggregate principal amount outstanding under such
Eligible Note, or (B) up to eighty percent (80%) of the face amount of such
Eligible Note; minus (ii) any Reserves.
 
“Borrowing Base Certificate” means the Borrowing Base Certificate referred to in
Section 1.2 in the form attached hereto as Exhibit “A”.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
banks in Dallas, Texas are authorized or required to close.
 
“Capital Expenditures” means the aggregate of all expenditures made and
liabilities incurred that, in accordance with GAAP, are required to be included
in or reflected by the property, plant, equipment or similar fixed assets
accounts.
 
“Capitalized Lease” means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
 
“Cash Concentration Account” means a deposit account established and maintained
by Borrower over which Lender has “control” (as that term is used in Article 9
of the UCC), pursuant to the terms of this Agreement or any Deposit Account
Control Agreement that may be entered into in connection with this Agreement.
 
“Change of Control” means the occurrence of any of the following events: (i) the
members of the board of directors of UMT set forth on Schedule C (the “Incumbent
Board”), cease for any reason to constitute at least two-thirds (2/3) of the
members of the board of directors of UMT; provided, however that if the
election, or the nomination for election by the common stockholders of UMT, of
any new director was approved by a vote of at least two-thirds (2/3) of the
Incumbent Board, such new director shall, for purposes of this definition be
considered a member of the Incumbent Board; (ii) the General Partner shall cease
to be the sole general partner of Borrower; (iii) UMT shall cease to be the sole
general partner of the General Partner; or (iv) Borrower is liquidated,
dissolved, or adopts a plan of liquidation pursuant to the Bankruptcy Code or
any other bankruptcy law.
 
“Clearing Account” has the meaning given to such term in Section 4.1.
 
“Client” means a Person to whom Borrower extends credit loans, or other
financial accommodations, which Client is obligated to Borrower under one or
more Client Loan Documents.
 
“Client Collateral” means all real and personal property collateral pledged by a
Client to Borrower pursuant to Client Loan Documents.
 
“Client Credit Documentation” means the background documentation for each Client
Loan prepared by Borrower for its own internal purposes, including appraisals,
environmental excerpts, term sheets, reports and credit committee write-ups,
with all exhibits and schedules thereto, all as prepared and maintained in
accordance with Borrower’s Credit Guidelines.
 
“Client Joint Venture” means an Investment by Borrower or any Subsidiary of
Borrower in any Person, the purpose of which is related to the purchase and/or
development for sale as finished building lots for single-family residential
purposes of residential real estate and the improvements thereto.
 
“Client Loan” shall mean any loan, extension of credit, or financial
accommodation made by Borrower to or for the benefit of a Client, the purpose of
which Client Loan is related to the purchase and/or development for sale as
finished building lots for single-family residential purposes of residential
real estate and the improvements thereto or to credit enhancements provided by
Borrower.
 
“Client Loan Documents” means any and all Client Notes, Mortgages and other
agreements, contracts, documents, and instruments, including, without
limitation, any and all debt instruments, promissory notes, loan agreements,
chattel paper, agreements of guaranty, assignment agreements, mortgages, deeds
of trust, deeds to secure debt, general or specific security agreements,
certificates, pledge agreements, financing statements and amendments thereto,
policies of title insurance, and all other like or similar agreements,
contracts, documents and instruments evidencing, pertaining or otherwise
securing at any time any Client Loan or Borrower’s interest therein. Generally,
based on Borrower’s current Client Loan documentation, such Client Loan
Documents include promissory notes, pledge agreements, stock powers, assignments
of partnership interests and membership interests, security agreements, guaranty
agreements, deeds of trust, profits interest and distribution of proceeds
agreements, UCC financing statements, and environmental indemnity agreements.
 
“Client Loan Closing Date” means the date of Borrower’s initial funding of a
Client Loan.
 
“Client Note” means an instrument containing an express and absolute promise of
a Client to pay to Borrower, a definite sum of money at a specified time, in
order to evidence a Client Loan.
 
“Client Pledge” means a pledge, assignment or security interest in the equity
interests of any Person, executed by or on behalf of a Client in favor of
Borrower in connection with a Client Loan.
 
“Closing Date” means the date of the funding of an initial Loan under this
Agreement.
 
“Collateral” means all of Borrower’s assets, including, without limitation, all
of the following property and interests in property of Borrower, wherever
located and whether now or hereafter existing or now owned or hereafter acquired
or arising: (i) all Receivables; (ii) all Inventory; (iii) all Equipment; (iv)
all Contract Rights; (v) all General Intangibles and Proprietary Rights; (vi)
all Investment Property; (vii) each Deposit Account and all certificates of
deposit maintained with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a certificate of deposit
that is an instrument under the UCC; (viii) all goods and other property,
whether or not delivered, (a) the sale or lease of which gives or purports to
give rise to any Receivable, including, but not limited to, all merchandise
returned or rejected by or repossessed from customers, or (b) securing any
Receivable, including, without limitation, all rights as an unpaid vendor or
lienor (including, without limitation, stoppage in transit, replevin and
reclamation) with respect to such goods and other property; (ix) all mortgages,
deeds to secure debt and deeds of trust on real or personal property,
guaranties, leases, security agreements, and other agreements and property which
secure or relate to any Receivable or other Collateral (including the Client
Loans), or are acquired for the purpose of securing and enforcing any item
thereof; (x) all documents of title, policies and certificates of insurance,
securities, chattel paper (including electronic chattel paper and tangible
chattel paper) and other documents and instruments; (xi) all other goods and
personal property, whether tangible or intangible, wherever located, including
money, supporting obligations, letters of credit and each letter-of-credit
right; (xii) all files, correspondence, computer programs, tapes, discs and
related data processing software which contain information identifying or
pertaining to any of the Receivables, or any Client, or showing the amounts
thereof or payments thereon or otherwise necessary or helpful in the realization
thereon or the collection thereof; (xiii) any “commercial tort claims” as that
term is defined in the UCC; (xiv) all Client Loans and Client Loan Documents
(and the rights of Borrower to payments thereunder); (xv) all real property; and
(xvi) any and all products and proceeds of the foregoing (including, but not
limited to, any claim to any item referred to in this definition, and any claim
against any third party for loss of, damage to or destruction of any or all of,
the Collateral or for proceeds payable under, or unearned premiums with respect
to, policies of insurance) in whatever form, including, but not limited to,
cash, negotiable instruments and other instruments for the payment of money,
chattel paper, security agreements and other documents.
 
“Commitment” means the commitment of Lender to make the Revolving Loan Advances,
subject to the terms and conditions of this Agreement.
 
“Contract Rights” means any rights under contracts not yet earned by performance
and not evidenced by an instrument or chattel paper.
 
“Covenant Compliance Certificate” means a certificate setting forth a
calculation of the financial covenants described in Section 7.6, and the status
of all other monetary covenants set forth in this Agreement.
 
“Credit Facility” means the revolving credit facility established under this
Agreement in an aggregate amount outstanding at any one time not to exceed the
Revolving Credit Limit.
 
“Credit Guidelines” means Borrower’s customary credit and underwriting
guidelines as of the date hereof as set forth in Borrower’s credit and
underwriting guidelines manual, a copy of which is attached hereto as Exhibit
“C”, as such guidelines are amended from time to time, provided that such
amendments shall be approved by Lender in writing in accordance with Section
7.14.
 
“Default” means an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
 
“Deposit Account” has the meaning given to such term in the UCC.
 
“Deposit Account Control Agreement” means the Deposit Account Control Agreement
among one or more Borrower, Lender and the bank named therein, pursuant to which
Lender shall have been granted a first priority lien and security interest in
the deposit account more particularly described therein.
 
“Dollar”, “dollar” and “$” means freely transferable United States dollars.
 
“Eligible First Lien Notes” means an Eligible Note payable to Borrower which is
secured by a first priority mortgage, deed of trust, security deed or similar
agreement filed of record (or in transit to be filed of record) in the
appropriate real property records, and insured by a title insurance policy
(including “gap coverage” for the period from the Client Loan Closing Date to
the date of recording of such mortgage, deed of trust, security deed or similar
agreement and containing only such title exceptions as are reasonably acceptable
to Lender) issued to Borrower by a title insurer reasonably acceptable to Lender
for the amount of such Client Note.
 
“Eligible Notes” means a Client Note payable to Borrower which meets all of the
following requirements, as determined by Lender, and continues to do so until
collected in full (unless otherwise consented to by Lender in writing):
 
(a) such Client Note evidences a Client Loan made in accordance with Borrower’s
Credit Guidelines;
 
(b) with respect to real property which is encumbered by a Mortgage securing a
Client Note that has a principal amount in excess of $5,250,000.00 or, in the
case of a Client Pledge, with respect to real property which is owned by the
entity that is the subject of the Client Pledge and secures a Client Note in
excess of $5,250,000.00, Borrower shall have delivered to Lender, an appraisal
setting forth the Retail Appraised Value of such real property, dated as of a
recent date acceptable to Lender in its sole discretion, and if the lesser of
(i) the outstanding principal amount or (ii) the face amount of such Client Note
exceeds the Retail Appraised Value, then the outstanding principal amount or
face amount, as applicable, up to the Retail Appraised Value shall be eligible;
 
(c) such Client Note is secured by a Mortgage, a Client Pledge, or with Lender’s
prior written consent, other security acceptable to Lender in its sole
discretion;
 
(d) such Client Note represents a valid, binding and full recourse obligation of
a Client, enforceable in accordance with its terms for the amount outstanding
thereunder without offset, counterclaim or defense (whether actual or alleged),
and the Client Loan evidenced thereby complies with all applicable state and
federal laws, rules and regulations, including without limitation applicable
usury laws;
 
(e) the Client executing such Client Note (i) is not and has not been
adjudicated as bankrupt or insolvent, (ii) has not filed a voluntary petition
seeking reorganization or an arrangement with creditors or taking advantage of
or seeking any relief under the Bankruptcy Code, or (iii) has not filed an
answer admitting the material allegations of or consenting to, or permitting
default in, a petition filed against such Client in any Insolvency Proceeding;
 
(f)  (i) no payment or obligation under such Client Note is more than fifteen
(15) days past due or delinquent, (ii) such Client Note is otherwise free from
default, after giving effect to any cure periods provided for in such Client
Note, except as provided in clause (i) of this subsection (f), and (iii) to the
knowledge of Borrower, no condition exists that adversely affects the value of
such Client Note or the Collateral securing such Client Note or the Client’s
obligations thereunder;
 
(g) Borrower shall be in compliance with all delivery requirements with respect
to such Client Note set forth in Section 3.3;
 
(h)  the Client Note and the Client Loan evidencing such Client Note shall not
violate any provision of the Borrower’s partnership agreement or any other
agreement with Borrower’s public partners;
 
(i) such Client Note has not been assigned to any other Person; and
 
(j)  any Indebtedness of the Client to the First Lien Lender (if any) shall not
be in default (after giving effect to any cure period provided in the loan
documents evidencing the Indebtedness of the First Lien Lender).
 
For purposed of this definition, any Client Note that at any time is or becomes
an Eligible Note but which subsequently fails to meet any of the requirements of
this definition, shall cease to be an Eligible Note (but shall continue to be
part of the Collateral) for so long as the same fails to meet such requirements.
 
“Environmental Laws” means all federal, state, local and foreign laws now or
hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
 
“Equipment” has the meaning given to such term in the UCC.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as in effect
from time to time.
 
“Escrow Account” has the meaning given to such term in Section 4.1.
 
“Event of Default” means an event described in Section 9.1.
 
“Excluded Taxes” has the meaning given to such term in Section 1.9.
 
“Executive Order No. 13224” means Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.
 
“Fee Letter” means the letter agreement dated as of the Closing Date, by and
between Borrower and Lender regarding the Origination Fee to be paid by Borrower
to Lender.
 
“Financing Statements” has the meaning given to such term in the UCC.
 
“First Lien Lender” means a bank or other financial institution or Person (i)
that provides a First Lien Mortgage to a Client or (ii) who holds a superior
position ahead of Borrower by Lien, agreement or otherwise, with respect to the
repayment of the subject Client Note or any Mortgage or Lien securing such
Client Note.
 
“First Lien Lender Loan Documents” means the loan documents evidencing Client
Indebtedness to a First Lien Lender and includes, without limitation, any
subordination, tri-party or other agreement entered into by Borrower in
connection therewith.
 
“First Lien Mortgage” means a first priority mortgage, deed of trust, security
deed or similar agreement provided by a First Lien Lender to a Client to
purchase and/or develop for sale as finished building lots for single-family
residential purposes of residential real estate and the improvements thereto and
with respect to such property, Borrower has provided a second priority mortgage,
deed of trust, security deed or similar agreement to permit such Client to
purchase and develop such property.
 
“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.
 
“Fiscal Year” means the fiscal year of Borrower that ends on the last day of
December of each year.
 
“GAAP” means generally accepted accounting principles consistently applied and
maintained throughout the period indicated and, when used with reference to
Borrower or any Subsidiary of Borrower, consistent with the prior financial
practices of Borrower.
 
“General Intangibles” has the meaning given to such term in the UCC.
 
“General Partner” means UMTH Land Development, L.P., a Delaware limited
partnership.
 
“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local or foreign national or
provincial and all agencies thereof.
 
“Governmental Authority” means any federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.
 
“Highest Lawful Rate” means, at any given time during which any Obligations
shall be outstanding hereunder, the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness under this Agreement, under the laws of
the State of Texas (or the law of any other jurisdiction whose laws may be
mandatorily applicable notwithstanding other provisions of this Agreement and
the other Loan Documents), or under applicable federal laws that may presently
or hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under the State of Texas or such other jurisdiction’s law, in any case
after taking into account, to the extent permitted by applicable law, any and
all relevant payments or charges under this Agreement and any other Loan
Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions.
 
“Indebtedness” of any Person means, without duplication, all Liabilities of such
Person, and to the extent not otherwise included in Liabilities, the following:
(a) all obligations for Money Borrowed or for the deferred purchase price of
property or services, (b) all obligations (including, during the noncancellable
term of any lease in the nature of a title retention agreement, all future
payment obligations under such lease discounted to their present value in
accordance with GAAP) secured by any Lien to which any property or asset owned
or held by such Person is subject, whether or not the obligation secured thereby
shall have been assumed by such Person, (c) all obligations of other Persons
which such Person has guaranteed, including, but not limited to, all obligations
of such Person consisting of recourse liability with respect to accounts
receivable sold or otherwise disposed of by such Person, and (d) in the case of
Borrower (without duplication) all Obligations under the Loan Documents.
 
“Initial Term” means the two (2) year period commencing on the Agreement Date,
and ending on the day immediately prior to the second anniversary thereof.
 
“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
 
“Installment” means, with respect to any obligation, each installment of rent
under, or payment of (or in the nature of) principal of, such obligation that is
stated or scheduled (in accordance with the terms of such obligation) to be due
and payable.
 
“Intangible Assets” means, with respect to any Person, that portion of the book
value of all of such Person’s assets that would be treated as intangibles under
GAAP.
 
“Interest Expense” means for any period as determined in conformity with GAAP,
total interest expense, whether paid or accrued or due (including without
limitation, in respect of the Loans and subordinated debt, if any) and payable,
including without limitation, the interest component of Capital Lease
obligations for such period, all bank fees, and net costs under interest rate
contracts.
 
“Interest Rate” means the Prime Rate.
 
“Interested Party” means any employee, agent, owner, partner, member, or
shareholder of Borrower.
 
“Internal Revenue Code” means the Internal Revenue Code of 1986, as in effect
from time to time.
 
“Inventory” has the meaning given to such term in the UCC.
 
“Investment” means, with respect to any Person; (a) the acquisition or ownership
by such Person of any share of capital stock, evidence of Indebtedness (which
shall not include funds on deposit in demand deposit accounts) or other security
issued by any other Person, (b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person, excluding advances to
employees in the ordinary course of business for business expenses, (c) the
obligations of any other Person that are guaranteed by such Person, (d) any
other investment in any other Person, and (e) any commitment or option to make
any of the investments listed in clauses (a) through (d) above.
 
“Investment Property” has the meaning given to such term in the UCC.
 
“Lender” has the meaning given to such term in the preamble of this Agreement.
 
“Lender UCC Assignment” means a properly completed UCC-3 assignment form,
assigning to Lender, Borrower’s interest in any UCC financing statement filed by
or on behalf of Borrower in connection with a Client Loan.
 
“Liabilities” of any Person means all items (except for items of capital stock,
additional paid-in capital or retained earnings, or of general contingency or
deferred tax reserves) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person as at the date as of which Liabilities are to be determined.
 
“Lien” as applied to the property of Borrower or any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person, or upon the income or profits
therefrom, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, and (c) the filing of, or any agreement to give, any financing
statement under the UCC or its equivalent in any jurisdiction, excluding
informational financing statements relating to property leased by such Person.
 
“Loan Documents” means collectively this Agreement, the Revolving Note, the
Security Documents, and each other instrument, agreement or document executed by
Borrower or any other Person in connection with this Agreement, whether prior
to, on or after the Agreement Date.
 
“Loans” means collectively, all Revolving Loan Advances and “Loan” means any
individual Revolving Loan Advance.
 
“Materially Adverse Effect” means a material adverse effect on (a) the business,
assets, properties, financial condition, contingent liabilities or material
agreements of Borrower and its Subsidiaries, if any, taken as a whole, (b) the
value of the Collateral taken as a whole, (c) the Security Interest or the
priority of the Security Interest (except to the extent directly caused by the
actions of Lender), (d) the ability of Borrower or any other Obligor to perform
any material payment obligations under this Agreement or any other Loan
Document, or (e) the rights of or benefits available to Lender under, or the
validity or enforceability of, any Loan Document.
 
“Money Borrowed” means, as applied to Indebtedness, (a) Indebtedness for money
borrowed, (b) Indebtedness, whether or not in any such case the same was for
money borrowed, (i) represented by notes payable, and drafts accepted, that
represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid or that was issued or assumed as full or partial
payment for property (other than trade credit that is incurred in the ordinary
course of business), (c) Indebtedness that constitutes a Capitalized Lease, and
(d) Indebtedness that is such by virtue of clause (c) of the definition thereof,
but only to the extent that the obligations guaranteed are obligations that
would constitute Indebtedness for Money Borrowed.
 
“Mortgage” means a mortgage, deed of trust or security agreement from a Client
in favor of Borrower and encumbering real property as security for a Client
Loan.
 
“Net Proceeds” means proceeds received by Borrower or any of its Subsidiaries in
cash from any Asset Disposition (including, without limitation, payments under
notes or other debt securities received in connection with any Asset
Disposition), net of: (a) the reasonable and necessary transaction costs of such
sale, lease, transfer or other disposition; (b) any tax liability arising from
such transaction; and (c) amounts applied to repayment of Indebtedness (other
than the Obligations) secured by a Lien on the asset or property disposed.
 
“Notice of Borrowing” means a telephonic or electronic notice followed by a
confirming same-day written notice requesting a Borrowing, which is given by
telex or facsimile transmission in accordance with the applicable provisions of
this Agreement and which specifies (i) the amount of the requested Borrowing,
and (ii) the date of the requested Borrowing.
 
“Obligations” means, in each case whether now in existence or hereafter arising,
(a) the principal of, and interest and premium, if any, on, the Loans, and (b)
all indebtedness, liabilities, obligations, covenants and duties of Borrower to
Lender of every kind, nature and description arising under this Agreement, or
any of the other Loan Documents, or in connection with the Credit Facility,
whether direct or indirect, absolute or contingent, due or not due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of money, including without limitation,
fees and expenses required to be paid or reimbursed pursuant to this Agreement.
 
“Obligor” means Borrower and any Person who may now or in the future guaranty
the payment and performance of the whole or any part of the Obligations.
 
“Origination Fee” means the non-refundable Origination Fee required to be paid
by Borrower as described in the Fee Letter.
 
“Overadvance” means, as of any date of determination, the amount, if any, by
which the outstanding principal balance of Revolving Loan Advances exceeds the
lesser of (a) the Revolving Credit Limit, or (b) the Borrowing Base.
 
“Payment Taxes” has the meaning given to such term in Section 1.9(a).
 
“Permitted Disbursements” has the meaning given to such term in Section 4.1. 
 
“Permitted Liens” means: (a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but (i) in all cases only if payment shall not
at the time be required to be made or which are being diligently contested in
good faith by the Borrower by appropriate proceedings; provided that in any such
case an adequate reserve is being maintained by Borrower for the payment of the
same in accordance with GAAP, and (ii) in the case of warehousemen or landlords,
only if such liens are junior to the Security Interest in any of the Collateral,
(b) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers’
compensation, unemployment insurance or similar legislation or under payment or
performance bonds, (c) other Liens on real property owned by Borrower in the
nature of zoning restrictions, easements, and rights or restrictions of record
on the use of real property, which do not materially detract from the value of
such property or impair the use thereof in the business of Borrower, (d)
purchase money Liens, (e) Liens of Lender arising under this Agreement and the
other Loan Documents, (f) in the case of Mortgages, Liens in favor of any
related First Lien Lender, and (g) Subordinate Liens in favor of Borrower.
 
“Person” means any individual, limited liability company, corporation,
partnership, association, trust or unincorporated organization, or a government
or any agency or political subdivision thereof.
 
“Plan” means any employee benefit plan as defined in Section 3(3) of ERISA in
respect of which Borrower or any Subsidiary of Borrower is, or within the
immediately preceding six years was, an “employer” as defined in Section 3(5) of
ERISA.
 
“Pledge Agreement” means each Pledge Agreement pursuant to which the General
Partner and Borrower, and/or any Subsidiary of Borrower pledge their respective
equity interests in any Subsidiary or Client Joint Venture to Lender, in each
case in favor of Lender and in each case in form and substance satisfactory to
Lender.
 
“Prime Rate” means for any day the prime rate of interest in effect for such day
as reported by The Wall Street Journal, and, if such rate is no longer published
by The Wall Street Journal, that rate as published by a comparable publication
designated by Lender as a substitute therefor. Any change in any interest rate
provided for in this Agreement based upon the Prime Rate shall take effect as of
the time of the change of the Prime Rate.
 
“Proprietary Rights” means all of Borrower’s now owned and hereafter arising or
acquired patents, patent applications, inventions and improvements, copyrights,
copyright applications, literary rights, trademarks, trademark applications,
trade names, trade secrets, service marks, data bases, computer software and
software systems, including the source and object codes, information systems,
discs, tapes, customer lists, telephone numbers, credit memoranda, goodwill,
licenses, and other intangible property, and all other rights under any of the
foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, all income, royalties, damages,
claims and payments now or hereafter due and/or payable under or with respect
thereto, including without limitation, damages and payments for past and future
infringement thereof, all rights to sue for past, present and future
infringement of any of the foregoing and all rights corresponding to any of the
foregoing throughout the world.
 
“Receivable” means and includes (a) any and all rights to the payment of money
or other forms of consideration of any kind (whether classified under the UCC as
Accounts, contract rights, chattel paper, general intangibles, or otherwise)
including, but not limited to, payments under the Client Notes, Accounts,
Letters-of-credit rights, chattel paper, tax refunds, insurance proceeds,
Contract Rights, notes, drafts, instruments, documents, acceptances, and all
other debts, obligations and liabilities in whatever form from any Person, (b)
all guarantees, security and Liens for payment thereof, (c) all goods, whether
now owned or hereafter acquired, and whether sold, delivered, undelivered, in
transit or returned, which may be represented by, or the sale or lease of which
may have given rise to, any such right to payment or other debt, obligation or
liability, and (d) all proceeds of any of the foregoing.
 
“Reportable Event” has the meaning set forth in Section 4043(b) of ERISA, but
shall not include a Reportable Event as to which the provision for thirty (30)
days notice to the PBGC is waived under applicable regulations.
 
“Reserves” means reserves established against the amount of the Revolving Loan
Advances, which Lender in the exercise of its sole discretion, deems necessary
to ensure payment of the Obligations.
 
“Retail Appraised Value” means the value (determined by an Appraiser) of the
real property securing the Client Loans evidenced by Eligible Notes 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.
 
“Revenues” means (a) all money, funds, cash, proceeds, or payments of any kind
received by Borrower and its Subsidiaries, if any, from all sources, including
without limitation, all proceeds of Collateral, including Net Proceeds,
insurance proceeds, and all proceeds from the sale of Collateral, whether
received in cash, by check, by other instrument, or otherwise and (b) all
proceeds of Collateral received by any General Partner, including Net Proceeds,
insurance proceeds, and all proceeds from the sale of Collateral, whether
received in cash, by check, by other instrument, or otherwise.
 
“Revolving Credit Limit” means the Credit Facility established under this
Agreement in an aggregate principal amount outstanding at any one time not to
exceed $10,000,000, subject to the terms and conditions of this Agreement, or
such lesser or greater amount as shall be agreed upon from time to time in
writing by Lender and Borrower.
 
“Revolving Loan Advance” means a revolving loan made to Borrower pursuant to
this Agreement and “Revolving Loan Advances” means more than one Revolving Loan
Advance and, collectively, all Revolving Loan Advances.
 
“Revolving Note” means the promissory note issued by Borrower to Lender in the
form attached hereto as Exhibit “B”, as the same may be amended, restated,
supplemented, or otherwise modified from time to time.
 
“Security” has the meaning given to such term in Section 2(1) of the Securities
Act of 1933, as amended.
 
“Security Documents” means each of the following: (a) the Financing Statements,
(b) the Pledge Agreements, (c) the Deposit Account Control Agreement, (d) each
Assignment of Note and (e) each other writing executed and delivered by Borrower
or any other Obligor securing the Obligations or any part thereof.
 
“Security Interest” means the Liens of Lender on and in the Collateral created
or affected hereby or by any of the Security Documents or pursuant to the terms
hereof or thereof.
 
“Settlement Period” means each week, or such lesser period or periods as Lender
shall determine.
 
“Subordinated Indebtedness” means any Indebtedness for Money Borrowed of
Borrower that is expressly subordinated to the Obligations on terms and
conditions acceptable to Lender in its sole discretion.
 
“Subsidiary” means, (a) when used to determine the relationship of a Person to
another Person, a Person of which an aggregate of fifty percent (50%) or more of
the stock of any class or classes or fifty percent (50%) or more of other
ownership interests is owned of record or beneficially by such other Person, or
by one or more Subsidiaries of such other Person, or by such other Person and
one or more Subsidiaries of such Person, (i) if the holders of such stock, or
other ownership interests, (A) are ordinarily, in the absence of contingencies,
entitled to vote for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency, or (B) are
entitled, as such holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of such Person, whether
or not the right so to vote exists by reason of the happening of a contingency,
or (ii) in the case of such other ownership interests, if such ownership
interests constitute a majority voting interest, and (b) when used with respect
to a Plan, ERISA or a provision of the Internal Revenue Code pertaining to
employee benefit plans, any other corporation, trade or business (whether or not
incorporated) which is under common control with Borrower and is treated as a
single employer with Borrower under Section 414(b) or (c) of the Internal
Revenue Code and the regulations thereunder.
 
“Taxes” means any federal, state, local or foreign income, sales, use, transfer,
payroll, personal, property, occupancy, franchise or other tax, levy, impost,
fee, imposition, assessment or similar charge, together with any interest or
penalties thereon.
 
“Termination Date” means the earliest to occur of: (a) the end of the Initial
Term, or such later date as to which the same may be extended pursuant to the
provisions of Section 1.6, (b) such date as the Obligations shall have been
accelerated pursuant to the provisions of Section 9.2, or (c) such date as all
Obligations shall have been indefeasibly paid in full and the Credit Facility
shall have been terminated.
 
“Termination Event” means (a) a Reportable Event, (b) the filing of a notice of
intent to terminate a Plan, or the treatment of a Plan amendment as a
termination, under Section 4041(c) of ERISA, (c) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or (d) the
appointment of a trustee to administer any Plan.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
state of Texas.
 
“UMT” means UMT Services, Inc., a Delaware corporation and the general partner
of the General Partner.
 
“Unfinanced Capital Expenditures” means Capital Expenditures that are not funded
or financed (i) with the proceeds of any Borrowing under this Agreement or (ii)
with the proceeds of any purchase money Indebtedness or other third party
Indebtedness.
 
“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act
of 2001, Publ. No. 107-56, Stat. 272 (2001), as in effect from time to time.
 
General. Unless otherwise defined, all terms used in this Agreement that are
defined in the UCC shall have the meaning given them in the UCC. All terms of an
accounting nature not specifically defined in this Agreement shall have the
meaning ascribed them by GAAP. References to any legislation or statute or code,
or to any provision thereof, shall include any modification or reenactment of,
or any legislative, statutory or code provision substituted for, such
legislation, statute or code or provision thereof. The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to the Agreement as a whole and not to any particular provision of this
Agreement, unless otherwise specifically provided. References in this Agreement
to “Articles”, “Sections”, “Schedules” or “Exhibits” shall be to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Any of the terms defined in this Section may, unless the
context otherwise requires, be used in the singular or plural depending on the
reference. “Include”, “includes” and “including” shall be deemed to be followed
by “without limitation” whether or not they are in fact followed by such words
or words of like import. “Writing”, “written” and comparable terms refer to
printing, typing, computer disk, e-mail and other means of reproducing words in
a visible form. References to any agreement or contract are to such agreement or
contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and permitted assigns of such Person. References “from” or “through”
any date mean, unless otherwise specified, “from and including” or “through and
including”, respectively.
 
ARTICLE I -   LOANS, RENEWAL AND TERMINATION
 
1.1  Credit Facility.
 
(a)  Revolving Credit Commitment. Lender agrees, for so long as no Default or
Event of Default exists and subject to the terms of this Agreement (including
the provisions of Article VIII hereof), to make Loans and other financial
accommodations to Borrower in an aggregate amount up to, but not exceeding, the
lesser of: (i) the Revolving Credit Limit; or (ii) the Borrowing Base. The
aggregate balance of Revolving Loan Advances shall not at any time exceed the
Revolving Credit Limit at any time. Lender shall not be obligated to make
available, any Revolving Loan Advances to Borrower to the extent such Revolving
Loan Advance when added to the then outstanding Revolving Loan Advances would
cause the aggregate outstanding Revolving Loan Advances to exceed the Borrowing
Base. If at any time the amount of all Revolving Loan Advances outstanding
exceeds the lesser of (i) the Revolving Credit Limit and (ii) the Borrowing
Base, Borrower immediately shall make a mandatory prepayment to Lender for the
ratable benefit of Lender in an amount not less than such excess within five (5)
Business Days after the date such excess occurred.
 
(b)  Revolving Note. The obligations of Borrower to repay the Revolving Loan
Advances to Lender and to pay interest thereon shall be evidenced by a separate
Revolving Note to Lender. The Revolving Note shall be in a principal amount
equal to the Revolving Credit Limit and shall represent the obligation of
Borrower to pay Lender the Revolving Credit Limit or, if less, the aggregate
unpaid principal amount of all Revolving Loans made by Lender hereunder, plus
interest accrued thereon, as set forth herein. Borrower irrevocably authorizes
Lender to make or cause to be made appropriate notations on the Revolving Note,
or on a record pertaining thereto, reflecting Revolving Loan Advances and
repayments thereof. The outstanding amount of the Revolving Loan Advances set
forth on Lender’s Revolving Note or record shall be conclusive evidence of the
principal amount thereof owing and unpaid to Lender, absent manifest error, but
the failure to make such notation or record, or any error in such notation or
record shall not limit or otherwise affect the obligations of Borrower hereunder
or under the Revolving Note to make payments of principal of or interest on the
Revolving Note when due. Any of the foregoing to the contrary notwithstanding,
any lack of Lender’s request to be issued the Revolving Note shall not, in any
manner, diminish Borrower’s obligation to repay the Revolving Loan Advances made
by Lender, together with all other amounts owing to Lender by Borrower.
 
1.2  Borrowing Procedures.
 
(a)  Each request for a Revolving Loan Advance shall be made by a transmission
to Lender of a Notice of Borrowing from Borrower, given not later than 12:00
noon Dallas, Texas time on a Business Day and shall be accompanied by a
complete, accurate and current Borrowing Base Certificate, and shall be
confirmed by Borrower with Lender by telephone; provided, that Lender shall at
any time have the right to review and adjust, in the exercise of its sole
discretion, any calculation set forth in the Borrowing Base Certificate or the
Notice of Borrowing (i) to reflect Lender’s reasonable estimate of declines in
value of any of the Collateral described in such Borrowing Base Certificate, and
(ii) to the extent such calculation is not in accordance with this Agreement.
Revolving Loan Advances may be repaid and reborrowed in accordance with the
provisions hereof. Upon fulfillment of the conditions set forth in Article VIII
for such Borrowing, Lender will make such funds available to Borrower at the
Lender account specified by Borrower in such Notice of Borrowing.
 
1.3  Interest.
 
(a)  Interest shall accrue on the outstanding principal balance of the Loans at
the Interest Rate. All interest accrued on the outstanding principal balance of
the Loans shall be calculated on the basis of a year of three hundred sixty
(360) days and the actual number of days elapsed in each month. Accrued interest
shall be added to the outstanding principal balance of the Loans on the first
Business Day of each calendar month following the month in which such interest
accrues.
 
(b)  Upon the occurrence and during the continuation of an Event of Default,
which Event of Default is not cured to the satisfaction of Lender within ten
(10) days from the date such Event of Default first occurred, the unpaid
principal balance of the Revolving Loan Advances shall bear interest at a per
annum rate equal to the Interest Rate plus two percent (2%) per annum effective
as of and from the date such Event of Default first occurred, as determined by
Lender.
 
1.4  Charges to Loan Account. At Lender’s option, exercised in Lender’s sole
discretion, Lender may (a) deduct the aggregate amount of principal, interest,
fees, costs, expenses, and other charges and amounts provided for in this
Agreement or in any other Loan Documents from any Revolving Loan Advance on the
due date thereof, (b) treat such amounts as a Revolving Loan Advance or (c)
disburse such amount by way of direct payment, which such disbursement shall be
deemed to be a Revolving Loan Advance.
 
1.5  Renewal and Termination.
 
(a)  This Agreement and the Commitment made hereunder shall expire on the
Termination Date. Borrower may terminate this Agreement on a date other than the
Termination Date, by no less than ten (10) days’ written notice of such
termination to Lender and payment to Lender of all payments due upon such
termination, as provided in this Agreement. Lender may terminate this Agreement
at any time during the existence of an Event of Default.
 
(b)  Upon the termination of this Agreement for any reason as herein provided,
Borrower shall be required to pay, discharge and satisfy, no later than the
effective date of such termination, the Loans, all accrued and unpaid interest
and fees, and all other non-contingent Obligations outstanding.
 
(c)  Notwithstanding the payment in full of the Loans, all accrued and unpaid
interest and fees, and all other non-contingent Obligations outstanding, Lender
shall not be required to terminate its Security Interests unless, with respect
to any loss or damage Lender may incur as a result of dishonored checks or other
items of payment received by Lender from Borrower or any Client and applied to
the Obligations, Lender shall (i) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Lender from any such
loss or damage; or (ii) have retained such monetary reserves and its Security
Interest for such period of time as Lender, in its sole discretion, may deem
necessary to protect it from any such loss or damage.
 
    1.6  Payments by Borrower. Borrower shall make each payment hereunder and
under the Revolving Note not later than 12:00 noon Dallas, Texas time on the day
when due. Payments made by Borrower to Lender shall be in Dollars at its address
referred to in Section 11.6 in immediately available funds without deduction,
withholding, setoff or counterclaim.
 
1.7  Taxes.
 
(a)  All payments made by Borrower hereunder or under the Revolving Note will be
made free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any Governmental Authority or by any
political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding any tax imposed on or measured by the net income or
profits or gross receipts of Lender pursuant to the laws of the United States or
the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of Lender is located or any
subdivision thereof or therein (the “Excluded Taxes”)) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as “Payment Taxes”). If any Payment Taxes are so levied
or imposed, Borrower agrees to pay the full amount of such Payment Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or any other Loan Document, after withholding or
deduction for or on account of any Payment Taxes, will not be less than the
amount provided for herein or therein. Borrower agrees to indemnify and hold
harmless Lender, and reimburse Lender upon its written request, for the amount
of any Payment Taxes so levied or imposed and paid by Lender.
 
(b)  In addition, Borrower agrees to pay any present or future stamp,
documentary, privilege, intangible or similar Taxes or any other excise or
property Taxes, charges or similar levies that arise at any time or from time to
time (other than Excluded Taxes) (i) from any payment made under any and all
Loan Documents, (ii) from the execution or delivery by Borrower of, or from the
filing or recording or maintenance of, or otherwise with respect to, any and all
Loan Documents (hereinafter referred to as “Other Taxes”).
 
(c)  Borrower will indemnify Lender for the full amount of Payment Taxes
(including, without duplication, any Payment Taxes imposed by any jurisdiction
on amounts payable under this Section 1.7), subject to the exclusion set out in
the first sentence of Section 1.7(a), and will indemnify Lender for the full
amount of Other Taxes (including, without duplication, any Payment Taxes imposed
by any jurisdiction on amounts payable under this Section 1.7) paid by Lender in
respect of payments made or to be made hereunder, and any liability (including
penalties, interest and expenses) arising solely therefrom or with respect
thereto, whether or not such Payment Taxes or Other Taxes were correctly or
legally asserted. Payment of this indemnification shall be made within thirty
(30) days from the date Lender makes written demand therefor.
 
(d)  Within thirty (30) days after the date of any payment of Payment Taxes or
Other Taxes, Borrower shall furnish to Lender, at its address referred to in
Section 11.6, the original or certified copy of a receipt evidencing payment
thereof.
 
(e)  Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
1.7 shall survive the payment in full of all Obligations hereunder and under the
Revolving Note.
 
ARTICLE II -   FEES
 
2.1  Closing Date Fees. On the Closing Date, Borrower shall pay to Lender the
Origination Fee in accordance with the terms of the Fee Letter.
 
2.2  Audit Fees. For each field examination and audit of the books, records and
other assets of Borrower, in each case performed by one or more agents of
Lender, Borrower shall pay to Lender all reasonable costs and expenses incurred
by Lender in connection with its agents performing and/or summarizing the
results of such examination (including all necessary travel time). Audits shall
be performed by Lender no less frequently than quarterly and, upon the
occurrence of an Event of Default, as often as Lender shall require in its sole
discretion, and each audit fee shall be payable by Borrower to Lender on
Lender’s demand therefor.
 
2.3  Costs and Expenses. Borrower agrees to reimburse Lender for all reasonable
out-of-pocket expenses incurred by Lender in connection with the Loans,
including, but not limited to, filing fees, tax, lien and judgment search fees,
fees of outside auditors, bank fees, outside attorneys’ fees, servicing fees,
appraisal fees, environmental report fees and any other reasonable fees or
expenses.
 
ARTICLE III -   GRANT OF SECURITY INTEREST
 
3.1  Grant of Security Interest. To secure the payment, performance and
observance of the Obligations, Borrower grants, and hereby assigns, mortgages,
and pledges, to Lender, all of the Collateral, and grants to Lender, a
continuing security interest in, and a Lien upon, and a right of set off
against, all of the Collateral.
 
3.2  Continued Priority of Security Interest.
 
(a)  The Security Interest granted by Borrower shall at all times be valid,
perfected and enforceable against Borrower and all third parties in accordance
with the terms of this Agreement, as security for the Obligations, and the
Collateral shall not be at any time subject to any Liens that are prior to, or
on parity with or junior to the Security Interest, other than Permitted Liens.
 
(b)  Borrower shall, at it sole cost and expense, take all action that may be
necessary or desirable, or that either Lender may reasonably request, so as at
all times to maintain the validity, perfection, enforceability and rank of the
Security Interest in the Collateral in conformity with the requirements of
Article III, or to enable Lender to exercise or enforce its rights hereunder.
 
(c)  Borrower covenants and agrees that from and after the Agreement Date and
until the Termination Date, subject to Sections 3.3 and 3.4:
 
(i)  In the event that any Collateral, including proceeds, is evidenced by or
consists of negotiable collateral (including without limitation letters of
credit, letter-of-credit rights, instruments, promissory notes, draft documents
or chattel paper, including electronic and tangible chattel paper, and if and to
the extent that perfection or priority of Lender’s security interest is
dependent on or enhanced by possession, Borrower, immediately upon the request
of Lender, shall endorse and deliver physical possession of such negotiable
collateral or chattel paper to Lender;
 
(ii)  Borrower shall take all steps reasonably necessary to grant Lender control
of all electronic chattel paper in accordance with the UCC and all “transferable
records” as defined in each of the Uniform Electronic Transaction Act and the
Electronic Signatures in Global and National Commerce Act; and
 
(iii)  if Borrower retains possession of any chattel paper or instruments with
Lender’s consent, such chattel paper and instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured thereby
are subject to the security interest of Premier Bank.”
 
(d)  At any time upon the request of Lender, Borrower shall execute (or cause to
be executed) and deliver to Lender, any and all financing statements, original
financing statements in lieu of continuation statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, and all other documents (the “Additional Documents”) upon which
Borrower’s signature may be required that Lender may request in its sole
discretion, in form and substance satisfactory to Lender, to perfect and
continue the perfection of or better perfect Lender’s Liens in the Collateral
(whether now owned or hereafter arising or acquired), and in order to consummate
fully all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by Applicable Law, Borrower
authorizes Lender to execute any such Additional Documents in Borrower’s name
and authorizes Lender to file such executed Additional Documents in any
appropriate filing office. Borrower authorizes Lender to transmit, communicate
or, as applicable, file any financing statement under the UCC, record, in-lieu
financing statement, amendment, correction statement, continuation statement,
termination statement or other instrument describing the Collateral as defined
herein, as “all personal property of Debtor” or “all assets of Debtor” or words
of similar effect in such jurisdictions and in such filing offices as Lender may
deem necessary or desirable in order to perfect any security interest granted by
Borrower under this Agreement and the other Loan Documents without signature.
Borrower hereby ratifies, to the extent necessary, Lender’s authorization to
file a financing statement, if such financing statement has been pre-filed by
Lender prior to the Agreement Date. Prior to repayment in full and final
discharge of the Obligations, Borrower shall not terminate, amend or file a
correction statement with respect to any financing statement filed pursuant to
this Section 3.2(d) without Lender’s prior written consent.
 
(e)  Borrower shall promptly notify Lender in writing upon incurring or
otherwise obtaining a commercial tort claim, as that term is defined in the UCC,
after the date hereof against any third party and, upon request of Lender,
authorize the filing of additional or amendments to existing financing
statements and do such other acts or things deemed necessary or desirable by
Lender to give Lender a security interest in any such commercial tort claim.
 
(f)  Borrower shall mark its books and records as directed by Lender and as may
be necessary or appropriate to evidence, protect and perfect the Security
Interest and shall cause its financial statements to reflect the Security
Interest by appropriate footnote.
 
3.3  Delivery of Client Notes, Client Loan Documents and Other Documentation.
 
(a)  Within one (1) Business Day after each Client Loan Closing Date, Borrower
shall properly endorse such Client Note to Lender pursuant to an Allonge and
deliver to Lender, the original duly executed Client Note, together with the
original duly executed Allonge, to Lender.
 
(b)  If a Mortgage secures a Client Note, then (i) within one (1) Business Day
following the Client Loan Closing Date, Borrower shall deliver to Lender, the
original duly executed and notarized Assignment of Note (containing a blank line
for the recording information to be completed upon recording of the Mortgage),
and (ii) within one (1) Business Day following Borrower’s receipt of the
recorded Mortgage, Borrower shall have delivered to Lender a complete copy of
the recorded Mortgage and the recording information for the Mortgage to be
completed on the Assignment of Note a duly executed and notarized Assignment of
Note, including the page and volume and/or document recording information for
the Mortgage.
 
(c)  If a Client Pledge secures a Client Note, then within one (1) Business Day
following the Client Loan Closing Date, Borrower shall deliver to Lender, the
original duly executed stock power(s) and assignment(s) of partnership interests
and/or membership interests, as applicable, and (ii) within one (1) day
following Borrower’s receipt of the original stock certificate(s), if any,
pledged to secure such Client Note, Borrower shall deliver to Lender such
original stock certificate(s).
 
(d)  Within five (5) Business Days following the Client Loan Closing Date,
Borrower shall deliver to Lender, copies of the Client Loan Documents relating
to such Client Note (other than the Client Note, the Mortgage, the stock
power(s), assignment(s) of partnership interests and assignment(s) of membership
interests, as applicable, which are required to be delivered to Lender in
accordance with the provisions set forth in subsections (a), (b) and (c) above).
 
(e)  If a Client Note is secured by one or more UCC Lien(s), then within one (1)
Business Day following Borrower’s receipt of the UCC recording
confirmation, Borrower shall deliver to Lender, the duly completed Lender UCC
Assignments with respect to such UCC Lien(s).
 
(f)  In the case of Client Notes secured by Mortgages, Borrower shall deliver to
Lender, (i) within one (1) Business Day following the Client Loan Closing Date,
a copy of the mortgagee title commitment for issuance of a mortgagee title
policy for the benefit of Borrower, and (ii) within sixty (60) days after the
Client Loan Closing Date, Borrower shall deliver to Lender, a copy of the issued
mortgagee title policy
 
(g)  For each Client Note, Borrower shall deliver to Lender, within five (5)
Business Days following the Client Loan Closing Date, a copy of the Client’s
insurance certificate and an endorsement of such insurance certificate to
Borrower, and copies of the Client’s financial statements or other documentation
of credit worthiness acceptable to Lender.
 
3.4  Client Loan Documents. All Client Loan Documents entered into after the
Closing Date shall contain (by way of stamp or other method satisfactory to
Lender) the following language: “THIS DOCUMENT IS SUBJECT TO A SECURITY INTEREST
IN FAVOR OF, AND PLEDGED AS COLLATERAL TO, PREMIER BANK AND ITS SUCCESSORS AND
ASSIGNS.”
 
3.5  Appraisals. Lender shall have the right, in its sole discretion, to have
any and all Collateral, including, without limitation, all real property, Client
Joint Ventures, Mortgages and real property underlying Mortgages and Client
Pledges, appraised by a qualified appraisal company selected by Lender from time
to time after the Closing Date. Borrower shall be responsible for the cost of
any appraisal conducted by Lender.
 
ARTICLE IV -   ACCOUNTS; PROCEEDS AND COLLECTIONS
 
4.1  Escrow Account; Clearing Account; Proceeds. Within thirty (30) days after
the Closing Date, Borrower shall establish the following accounts with Lender:
(i) an escrow account into which the subscription proceeds from Borrower’s
public offering shall be deposited (the “Escrow Account”), which shall replace
Borrower’s escrow account No. 8045087080 currently with Colonial Bank
established for the same purpose; and (ii) a clearing account into which the
proceeds of the Escrow Account shall be deposited, which from which fees and
expenses associated with the offering are paid to certain third parties and
Affiliates of Borrower in the aggregate amount of twelve percent of subscription
proceeds, and from which the remaining eighty-eight percent of subscription
proceeds are disbursed into the operating account of Borrower (the “Clearing
Account”), which shall replace clearing account No. 8045087020 currently with
Colonial Bank established for the same purpose. Notwithstanding the foregoing
provisions of this Section 4.1, if Lender is unable to establish procedures
adequate to service Borrower’s needs for the Escrow Account and the Clearing
Account, then Borrower may maintain its Escrow Account and Clearing Account at
Colonial Bank or another financial institution reasonably acceptable to lender’
provided, however, that Colonial Bank or such other financial institution
maintaining the Escrow Account and the Clearing Account shall have entered into
a Deposit Account Control Agreement with Lender and Borrower with respect to the
Clearing Account. The Clearing Account, whether established with Lender or with
Colonial Bank pursuant to a Deposit Control Account Agreement, is and shall be,
at all times while this Agreement is in effect, a Cash Concentration Account.
Borrower shall deposit all proceeds of the Escrow Account, including all
proceeds from the sale of partnership interests in Borrower in connection with
its public offering, in the Clearing Account immediately upon release of such
proceeds from the Escrow Account. The receipt of any payment item by Lender
(whether from transfers to Lender pursuant to a Deposit Account Control
Agreement or otherwise) shall not be considered a payment on account unless such
payment item is a wire transfer of immediately available federal funds made to
Lender’s account or unless the payment item is a check and is deposited with
Lender at Lender’s office or deposited electronically through Lender’s remote
capture system. Anything to the contrary contained in this Agreement
notwithstanding, any payment item shall be deemed received by Lender only if it
is received into Lender’s account on a Business Day on or before 4:00 p.m.
(Dallas, Texas time).
 
4.2  Collection of Proceeds from Clearing Account.
 
(a)  Borrower shall promptly deposit or cause to be deposited all proceeds of
the Escrow Account into the Clearing Account after release of such proceeds from
escrow. Borrower shall be entitled to make the following disbursements from the
Clearing Account (the “Permitted Disbursements”): (i) non-Affiliate offering
expenses in an aggregate amount not to exceed 9.7% of each deposit of proceeds
from the Escrow Account, and (ii) Affiliate offering expenses in an aggregate
amount not to exceed 2.3% of each deposit of proceeds from the Escrow Account.
If Borrower receives any proceeds of the Escrow Account excluding Permitted
Disbursements, upon receipt by Borrower of any such proceeds of the Escrow
Account, Borrower shall receive such payments as Lender’s trustee, and Borrower
shall within one (1) Business Day deliver such payments to Lender in their
original form duly endorsed in blank. Borrower agrees that all payments made to
the Clearing Account, excluding the Permitted Disbursements but only to the
extent set forth in this Section 4.2, shall be subject to Lender’s sole control
and shall be treated as payments to Lender in respect of the Obligations and
therefore shall constitute the property of Lender to the extent of the amount of
the outstanding Obligations.
 
(b)  Lender, or its designee may, in Lender’s sole discretion, at any time
during which a Default or an Event of Default exists, notify Clients of the
Security Interest in the Collateral and collect Receivables directly from
Clients and charge the collection costs and expenses to Borrower as additional
Loans. Whether or not a Default or an Event of Default has occurred, any of
Lender’s officers, employees or agents shall have the right, at any time or
times hereafter, in the name of Lender, any designee of Lender, or Borrower, to
verify the validity, amount or any other matter relating to any Receivables by
mail, telephone, electronic communication or otherwise. Borrower shall cooperate
fully with Lender in an effort to facilitate and promptly conclude any such
verification process.
 
ARTICLE V -   REPRESENTATIONS AND WARRANTIES
 
Borrower represents and warrants to Lender as of the Agreement Date and at all
times that Lender makes Loans to Borrower as follows, and with respect to the
representations and warranties applicable to the General Partner and UMT, the
General Partner and UMT represent and warrant to Lender, as of the Agreement
Date and at all times that Lender makes Loans to Borrower as follows:
 
5.1  Existence, Power and Authority; Borrower Interests.
 
(a)  Organization; Qualification.
 
(i)  Borrower is a limited partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, as identified
in Schedule 5.1(a), having the partnership power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted, and Borrower is duly qualified and authorized to do business in
the jurisdictions listed on Schedule 5.1(a) and in each jurisdiction in which
the nature of its business or the ownership and characteristics of its property
requires such qualification or authorization, except where the failure to be so
qualified would not have a Materially Adverse Effect. The jurisdictions in which
Borrower is qualified to do business as a foreign entity as of the Closing Date
are listed on Schedule 5.1(a).
 
(ii)  The General Partner is a limited partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, as identified in Schedule 5.1(a), having the partnership power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted, and the General Partner is duly qualified
and authorized to do business in the jurisdictions listed on Schedule 5.1(a) and
in each jurisdiction in which the nature of its business or the ownership and
characteristics of its property requires such qualification or authorization,
except where the failure to be so qualified would not have a Materially Adverse
Effect. The jurisdictions in which the General Partner is qualified to do
business as a foreign entity as of the Closing Date are listed on Schedule
5.1(a).
 
(iii)  UMT is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, as identified in
Schedule 5.1(a), having the corporate power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be
conducted, and UMT is duly qualified and authorized to do business in the
jurisdictions listed on Schedule 5.1(a) and in each jurisdiction in which the
nature of its business or the ownership and characteristics of its property
requires such qualification or authorization, except where the failure to be so
qualified would not have a Materially Adverse Effect. The jurisdictions in which
UMT is qualified to do business as a foreign entity as of the Closing Date are
listed on Schedule 5.1(a).
 
(b)  Power.
 
(i)  Borrower has the right and power, and has taken all necessary action to
authorize it, to execute, deliver and perform the Loan Documents in accordance
with their respective terms. Each of the Loan Documents has been duly executed
and delivered by the duly authorized officers of Borrower and each is, or each
when executed and delivered in accordance with this Agreement will be, a legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms. All of the transactions contemplated under the Loan
Documents are within Borrower’s powers and are not in contravention of law or
the terms of Borrower’s certificate of organization, articles of organization,
operating agreement, or other organizational documentation, or any material
agreement or undertaking to which Borrower is a party or by which Borrower or
its property is bound, and does not result in the creation or imposition of any
lien, charge or encumbrance upon any assets of Borrower, other than the Lien of
Lender.
 
(ii)  The General Partner has the right and power, and has taken all necessary
action to authorize it, to execute, deliver and perform the Loan Documents in
accordance with their respective terms. Each of the Loan Documents to which the
General Partner is a party has been duly executed and delivered by the duly
authorized officers of the General Partner and each is, or each when executed
and delivered in accordance with this Agreement will be, a legal, valid and
binding obligation of General Partner, enforceable against General Partner in
accordance with its terms. All of the transactions contemplated under the Loan
Documents to which the General Partner is a party are within the General
Partner’s powers and are not in contravention of law or the terms of the General
Partner’s certificate of incorporation, articles of incorporation, bylaws, or
other organizational documentation, or any material agreement or undertaking to
which the General Partner is a party or by which the General Partner or its
property is bound, and does not result in the creation or imposition of any
lien, charge or encumbrance upon any assets of the General Partner, other than
any Lien of Lender.
 
(iii)  UMT has the right and power, and has taken all necessary action to
authorize it, to execute, deliver and perform the Loan Documents in accordance
with their respective terms. Each of the Loan Documents to which UMT is a party
has been duly executed and delivered by the duly authorized officers of UMT and
each is, or each when executed and delivered in accordance with this Agreement
will be, a legal, valid and binding obligation of UMT, enforceable against UMT
in accordance with its terms. All of the transactions contemplated under the
Loan Documents to which UMT is a party are within UMT’s powers and are not in
contravention of law or the terms of UMT’s certificate of incorporation,
articles of incorporation, bylaws, or other organizational documentation, or any
material agreement or undertaking to which UMT is a party or by which UMT or its
property is bound, and does not result in the creation or imposition of any
lien, charge or encumbrance upon any assets of UMT.
 
(c)  Subsidiaries and Client Joint Ventures. Borrower has no Subsidiaries or
Client Joint Ventures.
 
(d)  Capitalization. The outstanding partnership interests of Borrower have been
duly and validly issued and are fully paid and nonassessable.
 
(e)  Business. Borrower is engaged principally in the business of making loans
and other financial accommodations to Clients for the purchase and/or
development for sale as finished building lots for single-family residential
purposes of residential real estate and the improvements thereto.
 
5.2  Compliance with Other Agreements and Applicable Law. Borrower is not in
default under, or in violation in any material respect of, any material
agreement, contract, instrument or other commitment to which Borrower is a party
or by which Borrower or its property is bound, and Borrower is in compliance in
all material respects with all Governmental Approvals applicable to or required
in connection with the conduct of Borrower’s business and affairs, and Borrower
is otherwise in compliance in all material respects with all Applicable Laws.
 
5.3  Absence of Litigation. There are no actions, proceedings or investigations
pending or threatened against Borrower, or any of its assets, which, if
adversely determined against Borrower can reasonably be expected to have a
Materially Adverse Effect on the assets, financial condition or business
prospects of Borrower.
 
5.4  Taxes and Returns. Borrower has timely filed all tax returns which Borrower
is required by law to file or has obtained valid extensions, and all taxes and
other sums related to the payment of taxes owing by Borrower to any governmental
authority have been fully paid and Borrower maintains adequate reserves to pay
such tax liabilities as they accrue.
 
5.5  Lien Priority and Nature of Certain Collateral.
 
(a)  Liens. Lender has a perfected first priority security interest in the
Collateral and, except for Permitted Liens, none of the properties and assets of
Borrower is subject to any Lien. Other than the Financing Statements of Lender
pursuant to this Agreement, no financing statement under the UCC of any state or
other instrument evidencing a Lien that names Borrower as debtor has been filed
(and has not been terminated) in any state or other jurisdiction, and Borrower
has not signed any such financing statement or other instrument or any security
agreement authorizing any secured party thereunder to file any such financing
statement or instrument, except to perfect Permitted Liens.
 
(b)  Title. Borrower has valid and legal title to or leasehold interest in all
personal property, real property, and other assets used in its business.
 
(c)  Eligible Notes. Each Eligible Note is genuine, complete and, in all other
respects, what it purports to be, and is not otherwise ineligible under the
standards set forth in this Agreement.
 
(d)  Inventory. Borrower has no Inventory.
 
(e)  Equipment. Borrower has no Equipment other than computers, printers, and
other office equipment kept at its principal place of business. All Equipment is
in good order and repair in all material respects.
 
(f)  Real Estate. Borrower does not own or lease any real property other than
that described on Schedule 5.5(f).
 
(g)  Corporate and Fictitious Names. During the five-year (5) period preceding
the Agreement Date, neither Borrower nor any predecessor of Borrower has been
known as or used any corporate or fictitious name other than the name of
Borrower as first set forth in this Agreement.
 
5.6  Principal Place of Business. Borrower’s principal places of business is
located at the address set forth on the signature page of this Agreement. All
books and records pertaining to the Collateral are kept by Borrower at its
principal place of business.
 
5.7  Environmental Compliance. Except as set forth on Schedule 5.7, to the best
of Borrower’s knowledge, (i) none of Borrower’s properties or assets has ever
been used by Borrower or by any previous owner or operator of such properties or
assets, in violation of any Environmental Laws; (ii) none of Borrower’s
properties or assets has ever been designated or identified in any manner
pursuant to any Environmental Laws as a hazardous substance or materials
disposal site, or a candidate for closure pursuant to any Environmental Laws;
(iii) no liens arising under any Environmental Laws has attached to any Revenues
or to any real or personal property owned or operated by Borrower; (iv) Borrower
has not received a summons, citation, notice or directive from any federal or
state governmental agency concerning any action or omission by Borrower
resulting from the violation of any Environmental Laws; (v) Borrower is now in
compliance with all Environmental Laws; and (vi) all material Governmental
Approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Laws have
been obtained, and all Governmental Approvals and similar authorizations are
valid and in full force and effect in all respects.
 
5.8  Proprietary Rights. No Proprietary Rights of Borrower are subject to any
licensing agreement or similar arrangement, except as entered into in the
ordinary course of Borrower’s business. To the best knowledge of Borrower, none
of the Proprietary Rights infringes on the valid trademark, trade name,
copyright, or patent right of any other Person, and no other Person’s property
infringes on the Proprietary Rights, in any material respect. The Proprietary
Rights currently owned or licensed by Borrower constitute all of the property of
such type necessary to the current and anticipated future conduct of the
business of Borrower.
 
5.9  Trade Names. All trade names or styles under which Borrower sells Equipment
or creates Accounts, or to which instruments in payment of Accounts are made
payable, are listed on Schedule 5.9.
 
5.10  Employee Relations. Borrower is not party to any collective bargaining
agreement nor has any labor union been recognized as the representative of
Borrower’s employees, and Borrower does not know of any pending, threatened, or
contemplated strikes, work stoppage or other labor disputes involving any of
Borrower’s employees.
 
5.11  Employee Pension Benefit Plans. Each Plan meets the minimum funding
standards of Section 302 of ERISA, if applicable, and no Termination Event has
occurred with respect to any Plan of Borrower.
 
5.12  Bank Accounts. The information on Schedule 5.12 is a complete and correct
list of all checking accounts, deposit accounts, and other bank accounts
maintained by Borrower.
 
5.13  Accuracy and Completeness of Information. All representations and
warranties set forth in this Article V, and all statements and other information
furnished by or on behalf of the Borrower in connection with this Agreement or
any of the Loan Documents are true and correct in all material respects and do
not omit any material fact. Each financial statement furnished by or on behalf
of Borrower presents fairly the financial condition of Borrower as of the date
of such statement and for the relevant period(s) then ended.
 
5.14  Software License Compliance. Borrower warrants and represents that all
software used by Borrower on any of Borrower’s computers is either Borrower’s
proprietary software or is duly licensed, maintained and operated in compliance
with the software owner’s license terms and conditions.
 
5.15  Client Note. With respect to each Client Note, (a) such Client Note
represents the valid and legally binding indebtedness and obligation of a bona
fide Client arising under the Client Loan Documents except as such
enforceability may be limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and (ii) general principles of equity, (b) the indebtedness
evidenced by such Client Note is not subject to contra accounts, setoffs,
defenses or counterclaims except as such enforceability may be limited by (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally and (ii) general
principles of equity, (c) the outstanding balance of such Client Note, as
reflected on Borrower’s books is the true and undisputed amount owing and unpaid
thereon, and (d) only one (1) copy of such Client Note has been executed.
 
5.16  Licenses and Permits. Borrower and each of its Subsidiaries have obtained
and hold in full force and effect, all material franchises, licenses, leases,
permits, consents, certificates, authorizations, qualifications, easements,
rights of way and other rights and approvals that are necessary or appropriate
for the operation of their businesses as presently conducted and as proposed to
be conducted. Neither Borrower nor any of its Subsidiaries is in violation of
the terms of any such franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval in any
such case that could reasonably be expected to have a Material Adverse Effect.
 
5.17  Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Loan Documents shall survive the
execution and delivery of this Agreement, any investigation made by or on behalf
of Lender, or any Borrowing hereunder, and shall be deemed to have been made
again to Lender on the date of each additional Borrowing or other credit
accommodation under this Agreement, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date), and shall be conclusively presumed to have been relied on by
Lender regardless of any investigation made or information possessed by Lender.
The representations and warranties set forth in this Agreement and in the other
Loan Documents shall be cumulative and shall be in addition to any other
representations or warranties which Borrower shall now or hereafter give, or
cause to be given, to Lender.
 
ARTICLE VI -   AFFIRMATIVE COVENANTS
 
Until this Agreement and the Commitment hereunder have been terminated and all
Obligations have been paid in full, (i) Borrower covenants and agrees with
Lender as follows and (ii) with respect to covenants and agreements applicable
to the General Partner, the General Partner covenants and agrees with Lender as
follows:
 
6.1  Financial Statements. Borrower shall deliver to Lender:
 
(a)  within one hundred twenty (120) days following the close of each Fiscal
Year, commencing with the year ended December 31, 2006, Borrower’s audited
consolidated and consolidating financial statements, certified by Whitley Penn
LLP or such other recognized firm of certified public accountants acceptable to
Lender as having been prepared in accordance with GAAP and as presenting fairly
the financial condition of Borrower as of the date thereof and for the period
then ended (and including a management letter to Borrower from such accountants,
if prepared by such accountants at Borrower’s request, to be delivered not later
than thirty (30) days thereafter) , which, for the end of each Fiscal Year,
shall also include a Covenant Compliance Certificate setting forth a calculation
of the financial covenants described in Section 7.6, and the status of all other
monetary covenants set forth in this Agreement;
 
(b)  within forty-five (45) days after the close of each Fiscal Quarter,
commencing with the Fiscal Quarter ending March 31, 2007, consolidated and
consolidating quarterly and fiscal year-to-date financial statements, including
income statement, and balance sheet, prepared in accordance with GAAP, certified
by the chief executive officer or chief financial officer or other authorized
individual of Borrower as presenting fairly the financial condition of Borrower,
which, for the end of such Fiscal Quarter, shall also include a Covenant
Compliance Certificate, setting forth a calculation of the financial covenants
described in Section 7.6, and the status of all other monetary covenants set
forth in this Agreement;
 
(c)  within thirty (30) days after the close of each month (or within 45 days
after the end of each final month of each Fiscal Quarter) commencing with the
month ending January 31, 2007, reasonably detailed monthly and fiscal
year-to-date financial statements, including income statement and balance sheet,
prepared in accordance with GAAP, certified by the chief executive officer or
chief financial officer or other authorized individual of Borrower as presenting
fairly the financial condition of Borrower, which, for the end of such month,
shall also include a Covenant Compliance Certificate, setting forth a
calculation of the financial covenants described in Section 7.6, and the status
of all other monetary covenants set forth in this Agreement;
 
(d)   at least forty-five (45) days after the end of Borrower’s Fiscal Year, an
annual operating budget showing a projected income statement, balance sheet and
cash flows as of each calendar month end for the forthcoming Fiscal Year; and
 
(e)  such other financial information as Lender shall reasonably request.
 
6.2  Books and Records. Borrower shall keep accurate and complete records of the
Collateral and permit Lender to: (a) visit Borrower’s business locations at
intervals to be determined by Lender; and (b) inspect, audit and make extracts
from or copies of Borrower’s books, records, journals, receipts, computer tapes
and disks. All Governmental Authorities are authorized to furnish Lender with
copies of reports of examinations of Borrower made by such parties. Banks,
Clients and other third parties (without waiving any attorney-client privilege)
with whom Borrower has contractual relationships pertaining to the Collateral or
the Loan Documents, are authorized to furnish Lender with copies of such
contracts and related materials. Lender is authorized, in its own name or any
other name, to communicate with Clients in order to verify the existence, amount
and terms of any Receivable.
 
6.3  Additional Documentation. Borrower shall execute and deliver to Lender all
additional documents that Lender may, from time to time, reasonably determine
are necessary or appropriate to evidence the Loans or to continue or perfect
Lender’s Security Interest in the Collateral.
 
6.4  Existence, Name, Organization and Chief Executive Office. Borrower shall
maintain its existence in good standing and shall deliver to Lender written
notice, at least sixty (60) days in advance, of any proposed change in
Borrower’s state of organization, a change in Borrower’s name or organizational
identification number, a change in the use of any trade name, new trade names,
fictitious name or new fictitious names, Borrower’s business locations, the
location of Borrower’s principal place of business or chief executive office,
the mailing address of Borrower, the location of any Equipment, or the location
of Borrower’s books and records, and shall execute or cause to be executed any
and all documents that Lender reasonably requests in connection therewith,
including, in the case of any new location of Equipment that is not owned by
Borrower, the waiver and consent from the lessor of such premises in form and
substance acceptable to Lender.
 
6.5  Compliance with Laws and Taxes. Borrower shall comply in all material
respects with all Applicable Laws. Borrower shall pay all real and personal
property taxes, assessments and charges, and all franchise, income,
unemployment, social security, withholding, sales and all other taxes assessed
against Borrower or the Collateral, at such times and in such manner so as to
avoid any penalty from accruing against Borrower or any Lien or charge from
attaching to the Collateral; provided, however, that unless such taxes have
become a federal tax or an ERISA Lien on any assets of Borrower, no such tax
shall be required to be paid if the same is being contested in good faith, as
determined by Lender, by appropriate proceedings promptly instituted and
diligently conducted and if an adequate reserve or other appropriate provision
shall have been made therefor as required in order to be in conformity with
GAAP. Borrower shall promptly deliver to Lender, upon request, receipted bills
evidencing payment of such taxes and assessments.
 
6.6  Performance of Obligations. Borrower shall perform, in a timely manner, all
of its obligations pursuant to all leases, mortgages, deeds of trust or other
agreements to which Borrower is a party, and shall pay when due all debt owed by
Borrower and all claims of mechanics, materialmen, carriers, landlords,
warehousemen and other like Persons, except only, and to the extent that, the
amount of any such debt and claims is being contested by Borrower in good faith,
as determined by Lender, by appropriate proceedings and Borrower maintains on
its books reasonable reserves therefor in accordance with GAAP.
 
6.7  Reporting as to Revenues, Receivables and Client Loans.
 
(a)  With such frequency as Lender shall direct, Borrower shall deliver to
Lender such information as Lender shall request with respect to the Revenues,
Receivables and Client Loans, including, but not limited to:
 
(i)  no later than the twenty-fifth (25th) day of each month, (A) a Borrowing
Base Certificate based upon the Eligible Notes as of the end of the preceding
month, together with a detailed summary of the sources of all of the Revenues,
any new Client Loans made and credits and collections associated with
Receivables, for the preceding month and (B) Borrower’s updated portfolio
summary of all Client Loans and Client Joint Ventures reflecting any changes
made during the preceding month;
 
(ii)  no later than the deadlines set forth in or incorporated by reference in
Section 3.3, all documentation and deliverables required by Section 3.3;
 
(iii)  no later than the twenty-fifth (25th) day of each month, a report listing
each of the Clients and identifying Clients who are in default under any Client
Loan Document or whose Client Loan Documents have been terminated, if any; and
 
(iv)  no later than the twenty-fifth (25th) day of each month, a copy of each
Client Loan abstract for any Client Loan made during the preceding month.
 
(b)  Borrower shall notify Lender promptly if:
 
(i)  Borrower enters into a long-term contract with the United States of
America, and, if requested by Lender, Borrower shall execute all instruments and
take all steps necessary to insure that all amounts due and to become due under
such long-term contract are properly assigned to Lender pursuant to the
Assignment of Claims Act of 1940 or otherwise;
 
(ii)  Borrower receives information with regard to any type or item of
Collateral which might have in any way a Materially Adverse Effect on the value
of the Collateral as a whole or the rights and remedies of Lender with respect
thereto; and
 
(iii)  any accounts due and owing in which amounts in excess of $100,000 are in
dispute by any single Client on an Eligible Note, and Borrower shall explain in
detail the reason for the dispute, all claims related to the dispute, and the
amount in controversy;
 
(c)  at each audit of Borrower’s books and records and any time from time to
time upon Lender’s request, Borrower shall make available to Lender and its
auditors, agents and representatives, and permit such Persons to make copies of,
all documentation with respect to each Client Loan, including, without
limitation, (i) for each real property subject to a Mortgage or owned by a
Client, the equity interests of which are pledged to Borrower pursuant to a
Client Pledge, a Phase I environmental study, the survey and recorded plat for
such real property; all contracts and agreements with any public improvement
district, municipal utility district, or other district or Governmental
Authority relating to the development of such real property and/or any
reimbursement of development costs related to such real property, and the
development plan and/or economic feasibility study for such real property, (ii)
copies of the executed First Lien Lender Loan Documents, if any, and (iii) all
other Client Credit Documentation with respect to each Client Note.
 
6.8  Over-Advance. If, at any time, the aggregate unpaid principal amount of any
of the Loans, including without limitation, all amounts deemed to be Revolving
Loan Advances in accordance with Section 1.4 exceeds any applicable limit set
forth in this Agreement, Borrower shall immediately pay to Lender the amount of
any such excess and all accrued interest and other charges owing to Lender with
respect thereto.
 
6.9  Breach or Default. Borrower shall notify Lender immediately upon the
occurrence of any circumstance which: (a) makes any representation or warranty
of Borrower contained in this Agreement or any other Loan Document incorrect or
misleading in any material respect; (b) constitutes an Event of Default or (c)
which might adversely affect the Client Loans, taken as a whole.
 
6.10  Maintenance of Assets. Borrower shall maintain all of its real and
personal property in good repair, working order and condition, shall make all
necessary replacements to such property so that the value and the operating
efficiency of such property will be preserved, shall prevent any personal
property from becoming a fixture to real estate (unless owned by Borrower and
encumbered by a mortgage, deed of trust, security deed or similar agreement in
favor of Lender), and will pay or cause to be paid all rental or mortgage
payments due on its real property.
 
6.11  Insurance. Borrower shall procure and continuously maintain general
liability insurance with coverage amounts that are normal and customary for
similarly-situated entities engaged in similar businesses. Each such policy
shall provide that Lender be given at least thirty (30) days written notice as a
condition precedent to any cancellation thereof or material change therein.
Within thirty (30) days following the Closing Date, Borrower shall obtain an
endorsement to such policy naming Lender as an additional insured to each such
policy, and thereafter provide Lender annually with the insurance certificate,
evidencing such coverage, the endorsement of such policy to Lender, and evidence
of payment of the premium for each such policy. Borrower shall cause each Client
to maintain insurance as required under the Client Loan Documents; provided,
that in any event, each such Client shall be required to maintain casualty and
general liability insurance on the real property securing the Client Loans. All
amounts received by Lender from any such insurance policies may be applied by
Lender to the Obligations. If Borrower fails to procure required insurance or
such insurance is canceled or otherwise lapses, Lender may procure such
insurance and add the cost of such insurance to the principal balance of the
Loans.
 
6.12  Use of Proceeds. Borrower shall use the proceeds of all Revolving Loan
Advances and all other loans or accommodations made by Lender for Borrower for
legal and proper business purposes, and only for those purposes described on
Schedule 6.12, and not for any personal, family or household purposes or for any
purpose prohibited by law or by the terms and conditions of this Agreement or
any of the Loan Documents.
 
6.13  Disclosure. Promptly and in no event later than five (5) Business Days
after obtaining knowledge thereof, Borrower shall (i) notify Lender if any
written information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (ii) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgment,
filing, or recordation thereof.
 
6.14  Further Assurances.
 
(a)  Borrower will promptly cure, or cause to be cured, defects in the execution
and delivery of the Loan Documents (including this Agreement), resulting from
any act or failure to act by Borrower or any of the employees or officers
thereof. Borrower, at Borrower’s expense, will promptly execute and deliver to
Lender, or cause to be executed and delivered to Lender, all such other and
further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of Borrower in the Loan
Documents, including this Agreement, or to correct any technical omissions in
the Loan Documents, or to obtain any consents that are necessary in connection
with or in accomplishment of the covenants and agreements of Borrower, all as
may be necessary or appropriate in connection therewith as may be requested by
Lender.
 
(b)  If any material assets (including any real property or improvements thereto
or any interest therein) are acquired by Borrower after the Closing Date (other
than assets constituting Collateral that become subject to the Lien of this
Agreement or the appropriate Security Documents upon acquisition thereof),
Borrower will notify Lender thereof, and, if requested by Lender, Borrower will
cause such assets to be subjected to a Lien securing the Obligations and will
take, and cause Borrower to take, such actions as shall be necessary or
reasonably requested by Lender to grant and perfect such Liens, including
actions described in paragraph (a) of this Section 6.14, all at the expense of
the Borrower.
 
6.15  Brokerage Commissions. Borrower shall pay any and all brokerage commission
or finders fees incurred in connection with or as a result of Borrower’s
obtaining financing from Lender under this Agreement. Borrower agrees to
indemnify, defend, and hold Lender harmless from and against any claim of any
broker or finder arising out of Borrower’s obtaining financing from Lender under
this Agreement.
 
6.16  Defense of Title. Borrower will take any and all actions necessary to
defend or to cause its Clients to defend title to the real property encumbered
by the Client Loan Documents.
 
6.17  Client Notes.
 
(a)  Collection of Client Notes. Except as otherwise provided in this Agreement,
Borrower will collect and enforce, at Borrower’s sole expense, all amounts due
or hereafter due to Borrower under the Client Notes.
 
(b)  Modification of Client Notes. Borrower shall not modify or amend or waive
any rights or remedies under any of the Client Notes or the Client Loan
Documents without the prior written consent of Lender.
 
(c)  Verification of Client Notes. Lender shall have the right, at any time or
times hereafter, in its name or in the name of a nominee of Lender, to verify
with the maker thereof or any third party the validity, amount or any other
matter relating to any Client Notes, by mail, telephone, telegraph or otherwise.
 
(d)  Appointment of Lender as Attorney-in-Fact. Borrower hereby irrevocably
designates, makes, constitutes and appoints Lender (and all persons designated
by Lender), as its true and lawful attorney-in-fact, and authorizes Lender, upon
the occurrence and during the continuance of a Default or an Event of Default,
in Borrower’s name, to: (i) demand payment of the Client Notes; (ii) enforce
payment of the Client Notes by legal proceedings or otherwise; (iii) exercise
all of Borrower’s rights and remedies with respect to proceedings brought to
collect a Client Note; (iv) sell or assign any Client Note upon such terms, for
such amount and at such time or times as Lender deems advisable; (v) settle,
adjust, compromise, extend or renew any Client Note; (vi) discharge and release
any Client Note; (vii) take control in any manner of any item of payment or
proceeds thereof; (viii) prepare, file and sign Borrower’s name on any proof of
claim in bankruptcy or other similar document against a Client; (ix) endorse
Borrower’s name upon any items of payment or proceeds thereof and deposit the
same in Lender’s account on account of the Obligations; (x) notify the post
office authorities to change the address for delivery of Borrower’s mail to an
address designated by Lender, have access to any lock box or postal box into
which any of Borrower’s mail is deposited, and open and dispose of all mail
addressed to Borrower, and (xi) do all acts and things which are necessary, in
Lender’s sole discretion, to fulfill Borrower’s obligations under this
Agreement. The preceding establishes a power of attorney coupled with an
interest and is therefore irrevocable.
 
(e)  Notice to Clients. Lender may, in its sole discretion, at any time or times
prior to or following the occurrence of a Default or an Event of Default, and
without prior notice to Borrower, notify any or all Clients that the Client
Notes have been assigned to Lender and that Lender has a security interest
therein and (ii) direct any or all Clients to make all payments upon the Client
Notes directly to Lender. Lender will use its best efforts to furnish Borrower
with a copy of such notice, but failure to do so will not expose Lender to any
liability or have an adverse effect on Lender’s rights under this Agreement.
 
6.18  Client Loans. Borrower shall (a) cause each Client Note to have only one
(1) original copy executed, (b) make Client Loans (i) in accordance with the
Credit Guidelines and (ii) which are evidenced by Client Loan Documents that are
solely on forms that are in compliance with applicable state and federal laws.
 
6.19  Formation of Subsidiaries; Investments in Client Joint Ventures.
 
(a)  At the time that Borrower forms any direct or indirect Subsidiary or
acquires any direct or indirect Subsidiary after the Closing Date, Borrower
shall (i) provide to Lender such security documents (including mortgages, deeds
of trust, security deeds or similar agreements with respect to any real property
of such Subsidiary, as well as appropriate financing statements (and with
respect to all real property, fixture filings), all in form and substance
satisfactory to Lender (including being sufficient to grant Lender a first
priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired Subsidiary), (ii) provide to Lender a pledge agreement and
appropriate certificates and powers or financing statements, hypothecating all
of the direct or beneficial ownership interest in such new Subsidiary, in form
and substance satisfactory to Lender, (iii) provide to Lender necessary updates
to any applicable Schedules and (iv) provide to Lender all other documentation,
including one or more opinions of counsel satisfactory to Lender, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all real property). Any
document, agreement, or instrument executed or issued pursuant to this
Section 6.19(a) shall be a Loan Document.
 
(b)  Subject to the requirements of Section 7.4, if Borrower enters into or
makes any Investment in any Client Joint Venture which is not a Subsidiary but
is an Affiliate, after the Closing Date, Borrower shall (i) provide to Lender a
Pledge Agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such Client Joint Venture, in form and substance satisfactory to Lender and (ii)
provide to Lender necessary updates to any applicable Schedules. Any document,
agreement, or instrument executed or issued pursuant to this Section 6.19(b)
shall be a Loan Document.
 
6.20  Revisions or Updates to Schedules. If any of the information or
disclosures provided on the Schedules become outdated or incorrect in any
material respect, then Borrower shall deliver to Lender as part of the next
Borrowing Base Certificate submitted to Lender, such revision or updates to such
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s); provided, that no such revisions or updates to any such Schedule(s)
shall be deemed to have amended, modified or superseded such Schedule(s) as
previously attached hereto on and as of the date such Schedule(s) were
previously provided, or to have cured any breach of warranty or
misrepresentation resulting from the inaccuracy or incompleteness of any such
Schedule(s) on and as of the date such Schedule(s) were previously provided
unless and until Lender, in its sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule(s) on and as of
the date previously provided.
 
6.21  Bank Accounts. Other than accounts with Lender and the bank accounts set
forth on Schedule 5.12, Borrower shall not open or maintain any bank accounts
without Lender’s prior written consent.
 
ARTICLE VII -   NEGATIVE COVENANTS
 
Until this Agreement and the Commitment hereunder have been terminated and all
Obligations have been paid in full, (i) Borrower covenants and agrees with
Lender as follows and (ii) with respect to the covenants applicable to the
General Partner and UMT, the General Partner and UMT covenant and agree with
Lender as follows:
 
7.1  Business, Management and Organization. Borrower shall not: (a) make any
material change in its management, which includes the following: the removal of
Jeffrey W. Shirley, as president and chief executive officer of UMTH Land
Development, L.P. and a replacement president and chief executive officer
acceptable to Lender, in its sole discretion, is not named by UMTH Land
Development, L.P. within ninety (90) days from the date of such removal;
(b) make any material change in the nature of the business that Borrower
presently conducts; (c) change its name except after first complying with
Section 6.4; (d) change its state of incorporation or its type of organization
(that is, from a corporation); or (e) merge or consolidate with any Person, (f)
purchase any stock or assets of any other Person, other than (i) assets used by
Borrower in the ordinary course of its business and (ii) Client Joint Ventures
entered into in compliance with the terms and conditions of this Agreement.
 
7.2  Disposition of Assets. Borrower shall not: (a) encumber the Collateral in
favor of any party other than Lender, whether voluntarily or involuntarily,
other than the Permitted Liens; or (b) sell, consign, lease or remove from
Borrower’s business locations any of Borrower’s assets or dispose of any of the
Collateral except that, until Lender gives the Borrower notice to the contrary
during the existence of any Event of Default, Borrower may (i) sell or dispose
of obsolete assets that constitute Collateral which Borrower has determined, in
good faith, not to be useful in the conduct of its business and which, in any
Fiscal Year, do not have an aggregate fair market value in excess of $50,000;
(ii) sell or dispose of obsolete assets that do not constitute Collateral which
Borrower has determined, in good faith, not to be useful in the conduct of its
business and (iii) sell Client Notes and Client Joint Ventures for cash at a
purchase price of no less than fair market value in the ordinary course of
business and consistent with past practices.
 
7.3  Loans and Guarantees. Borrower shall not make any loan or contribute money,
goods or services to, or guaranty or agree to become liable for any obligation
of, any other Person, including any Affiliates of Borrower or any Interested
Party, other than in connection with or related to : (a) reimbursements for
reasonable and necessary expenses incurred by Borrower’s employees in the normal
course of Borrower’s business; (b) the Client Loans; (c) Client Joint Ventures;
and (d) letters of credit, guarantees and other credit enhancements provided to
Clients and non-Clients; provided, that if such letter of credit, guaranty or
other credit enhancement is called or otherwise required to be paid by Borrower,
at such time the beneficiary of the letter of credit, guaranty or other credit
enhancement shall reimburse Borrower for all amounts paid by Borrower on behalf
of such beneficiary or such beneficiary shall be or become indebted to Borrower
in the amount of such obligation pursuant to a Client Note, which Client Note
shall be subject to the terms and conditions of this Agreement.
 
7.4  Subsidiaries. Borrower will not have or create any Subsidiaries unless it
shall give Lender no less than ten (10) days advance notice in writing that it
intends to create or acquire a Subsidiary and (i) the equity interests of such
Subsidiary that are owned by Borrower (or another Subsidiary of Borrower) are
pledged to Lender pursuant to a Pledge Agreement in accordance with the
provisions of Section 6.19 and (ii) such Subsidiary agrees in writing to be
bound by the terms, conditions, representations, warranties and covenants
contained in this Agreement and the other Loan Documents that are applicable to
Borrower’s Subsidiaries.
 
7.5  Distributions. Borrower shall be permitted to make distribution payments to
its partners and to purchase, redeem or otherwise acquire or retire its
partnership interests pursuant to the terms of its partnership agreement;
provided, however, that Borrower shall not make any distribution payments to its
partners be or purchase, redeem or otherwise acquire or retire any of its
partnership interests if any Event of Default has occurred and is continuing or
would be caused thereby.
 
7.6  Financial Covenants.
 
(a)  Borrower shall not permit the aggregate outstanding principal amount of its
Eligible First Lien Notes to be less than $5,000,000.00 (i) on December 31, 2006
and (ii) as of the last day of each calendar month thereafter, commencing with
the month ending January 31, 2007.
 
(b)  Borrower shall not permit its Aggregate Partners’ Equity to be less than
(i) $7,000,000.00 on December 31, 2006, and (ii) $10,000,000.00 as of the last
day of each calendar month thereafter, commencing with the month ending January
31, 2007.
 
All amounts referenced in this Section shall be determined in accordance with
GAAP.
 
7.7  Change of Control. Borrower shall not cause, permit, or suffer, directly or
indirectly, any Change of Control.
 
7.8  Limitation on Indebtedness for Money Borrowed. Borrower shall not create or
suffer to exist any Indebtedness for Money Borrowed except: (i) the Indebtedness
for Money Borrowed by Borrower to Lender under this Agreement and the Loan
Documents; (ii) other unsecured Indebtedness for Money Borrowed, in an aggregate
amount not to exceed $500,000; and (iii) Indebtedness for Money Borrowed secured
by Permitted Liens.
 
7.9  Mergers; Consolidations; Acquisitions. Borrower shall not merge or
consolidate, or permit any Subsidiary of Borrower to merge or consolidate, with
any Person; nor acquire, or permit any of its Subsidiaries to acquire, all or
any substantial part of the properties and assets or Securities of any Person,
except for Client Joint Ventures which meet the requirements of this Agreement.
 
7.10  Client Joint Ventures. Neither Borrower nor any Subsidiary of Borrower
will enter into or create any Client Joint Venture unless (i) Borrower shall
give Lender no less than ten (10) days advance notice in writing that it intends
to create or acquire a Client Joint Venture, (ii) the equity interests of such
Client Joint Venture that are owned by Borrower or a Subsidiary of Borrower are
pledged to Lender pursuant to a Pledge Agreement in accordance wiht the
provision of Section 6.19, and (iii) all agreements, documents and due diligence
materials related to such Client Joint Venture are delivered to Lender, and (iv)
after such Client Joint Venture, Borrower is in compliance with the financial
covenants contained in Section 7.6.
 
7.11  Fiscal Year. Borrower shall not change its Fiscal Year end for accounting
purposes.
 
7.12  Affiliate Transactions. Subject to Section 7.5, neither Borrower nor any
Subsidiary of Borrower shall enter into or be a party to any agreement or
transaction with any Affiliate, including Client Joint Ventures, except in the
ordinary course of and pursuant to the reasonable requirements of the business
of Borrower and its Subsidiaries and upon fair and reasonable terms that are no
less favorable to Borrower or such Subsidiary than it would obtain in a
comparable arms length transaction with a Person not an Affiliate, and on terms
consistent with the business relationship of Borrower or such Subsidiary and
such Affiliate prior to the Agreement Date, if any, and fully disclosed to
Lender.
 
7.13  Credit Guidelines. Borrower shall not amend, modify or otherwise change in
any respect the Credit Guidelines without the prior written consent of Lender.
Borrower shall deliver to Lender promptly (but in any event not less that two
(2) Business Days after such amendment, modification or change) a copy of any
revised Credit Guidelines.
 
7.14  Approved States. Without the prior written consent of Lender, Borrower
will not make Client Loans where the real and personal property securing such
Clients Loans are located in any state other than Arizona, Texas, Florida and
Colorado.
 
ARTICLE VIII -   CONDITIONS PRECEDENT
 
8.1  Credit. The obligation of Lender to extend any credit under this Agreement
is subject to the fulfillment to Lender’s satisfaction in its sole discretion of
all of the following conditions:
 
(a)  All legal matters incidental to the extension of credit by Lender shall be
satisfactory to counsel of Lender.
 
(b)  Lender shall have received, in form and substance satisfactory to Lender in
its sole discretion, each of the following, duly executed:
 
(i)  this Agreement and the schedules hereto;
 
(ii)  the Revolving Note;
 
(iii)  Borrower’s borrowing resolutions, certified organizational documents and
good standing certificates in Borrower’s jurisdiction of organization and each
other jurisdiction where Borrower is qualified to do business, together with a
secretary’s certificate;
 
(iv)  the General Partner’s and UMT’s resolutions, certified organizational
documents and good standing certificates in the General Partner’s and UMT’s
jurisdiction of organization and each other jurisdiction where the General
Partner and UMT are qualified to do business, together with a secretary’s
certificate;
 
(v)  a Notice of Borrowing dated the Agreement Date;
 
(vi)  opinion of Borrower’s counsel;
 
(vii)  a Borrowing Base Certificate dated as of the Agreement Date;
 
(viii)  a copy of Borrower’s Credit Guidelines, in form and substance
satisfactory to Lender; and
 
(ix)  all other Loan Documents and such other documents as Lender may require
under this Agreement.
 
(c)  Lender shall have completed an audit and field review of the records and
other information with respect to the Collateral as Lender may require, the
results of which (including evidence of segregation and identification of
Collateral) shall be satisfactory to Lender in its discretion.
 
(d)  Lender shall have received and reviewed UCC search results for all
jurisdictions in which assets of Borrower are located in the United States, in
form and substance satisfactory to Lender.
 
(e)  Lender shall have received evidence, in form and substance satisfactory to
Lender, that Lender has a valid perfected first security interest in all of the
Collateral except as otherwise permitted under this Agreement.
 
(f)  Lender shall have received, with respect to all Client Notes in existence
prior to the Closing Date, (i) all original Client Notes and photocopies of all
other Client Loan Documents with respect to each Client Note, (ii) an original
Allonge with respect to each Client Note, (iii) an original Assignment of Note
with respect to each Mortgage, and (iv) a Lender UCC Assignment with respect to
each Client Loan Document secured by a security interest evidenced by a UCC
security interest.
 
(g)  Lender shall have completed its business, legal and collateral due
diligence, including a collateral audit and review of Borrower’s books and
records, contracts with Clients conducted by Lender and verification of
Borrower’s representations and warranties to Lender, the results of which shall
be satisfactory to Lender.
 
(h)  Lender shall have completed background checks with respect to certain
principal owners and managers of Borrower, the results of which shall be
satisfactory to Lender in its sole discretion.
 
(i)  No Default or Event of Default shall have occurred and be continuing.
 
(j)  All representations and warranties of Borrower set forth in this Agreement
shall be true and correct in all material respects.
 
(k)  The parties thereto shall have completed or delivered, as applicable, all
items on the checklist of closing items in connection with this Agreement, each
to the satisfaction of Lender in its discretion and Lender shall have received
such other documents, information or items as Lender or its counsel may have
reasonably requested.
 
8.2  Initial and Subsequent Credit. The obligation of Lender to make each
extension of credit requested by Borrower under this Agreement, including
without limitation, the initial Revolving Loan Advance, and any subsequent
Revolving Loan Advance shall be subject to the fulfillment to Lender’s
satisfaction of all of the following conditions:
 
(a)  The representations and warranties contained in this Agreement and in each
of the other Loan Documents shall be true on and as of the date of the signing
of this Agreement and on the date of each extension of credit or the making of
any Loans by Lender pursuant to this Agreement, with the same effect as though
such representations and warranties had been made on and as of each such date,
and on each such date, no Default or Event of Default, and no condition, event
or act which with the giving of notice or the passage of time or both would
constitute a Default or an Event of Default, shall have occurred and be
continuing or shall exist.
 
(b)  Lender shall have received all additional documents, information and items
that it may require in connection with such extension of credit, in form and
substance satisfactory to Lender.
 
(c)  There shall be no Materially Adverse Effect, as determined by Lender in its
sole discretion, since October 31, 2006.
 
ARTICLE IX -   EVENTS OF DEFAULT; REMEDIES
 
9.1  Events of Default. The occurrence or existence of any one or more of the
following events or conditions, whether voluntary or involuntary, shall
constitute an Event of Default:
 
(a)  Borrower fails to pay when due (whether due at stated maturity, on demand,
upon acceleration or otherwise) any installment of principal, over advance,
interest, premium, if any, and fees on any of the Loans, or otherwise owing
under this Agreement;
 
(b)  Borrower fails to pay any of the other Obligations on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or otherwise) and
such failure shall continue for a period of ten (10) days after Lender’s giving
Borrower written notice thereof;
 
(c)  Borrower or any other Obligor fails or neglects to perform, keep or observe
any covenant contained in this Agreement or the other Loan Documents (other than
a covenant which is dealt with specifically elsewhere in this Section 9.1) and
the breach of such other covenant in this Agreement or the other Loan Documents
is not cured within ten (10) days after the sooner to occur of Borrower’s or
such other Obligor’s receipt of notice of such breach from Lender or the date on
which such failure or neglect first becomes known to any officer of Borrower or
such other Obligor;
 
(d)  any representation or warranty made by or on behalf of Borrower or any
other Obligor, or other information provided by or on behalf of Borrower or any
other Obligor to Lender, was incorrect or misleading in any material respect at
the time it was made or provided;
 
(e)  Borrower or any Subsidiary of Borrower defaults: (1) as primary or
secondary obligor, in the payment of any principal or interest on any
Indebtedness for Money Borrowed (other than the Obligations) in excess of
$10,000,000, and such default continues beyond any applicable grace period or,
if such Indebtedness is payable on demand, fails to pay such Indebtedness upon
demand; or (2) in the observance of any covenant, term or condition contained in
any agreement evidencing, securing or relating to any Indebtedness for Money
Borrowed (other than the Obligations) in excess of $10,000.000, if the effect of
such default is to cause, or to permit any other party to such Indebtedness to
cause, all or part of such Indebtedness to become due before its stated
maturity;
 
(f)  a writ of attachment, garnishment execution, distraint or similar process
in excess of $10,000,000 is issued against Borrower, any Subsidiary of Borrower,
or any of their respective properties except for any such writ of attachment,
garnishment execution, distraint or similar process that is subject to a bona
fide dispute by Borrower and is properly contested by appropriate proceedings
promptly instituted and diligently conducted;
 
(g)  Lender determines that a Materially Adverse Effect has occurred;
 
(h)  Borrower becomes insolvent or bankrupt; makes an assignment for the benefit
of creditors or consents to the appointment of a trustee or receiver; a trustee
or a receiver is appointed for Borrower or for a significant portion of
Borrower’s assets; bankruptcy, reorganization or insolvency proceedings are
instituted by or against Borrower; or if any of the foregoing occurs with
respect to any guarantor or other party liable for any of Borrower’s obligations
owing to Lender;
 
(i)  any judgment or order for the payment of money in excess of $500,000, or in
excess of $10,000,000 in the aggregate for all such judgments or orders, is
entered against Borrower, unless the same shall be (i) fully covered by
insurance and the issuer of the applicable policy shall have acknowledged full
coverage in writing within thirty (30) days of judgment, or (ii) vacated,
stayed, bonded, paid or discharged within a period of thirty (30) days from the
date of such judgment or order;
 
(j)  any Loan Document is terminated other than as provided for in this
Agreement or becomes void or unenforceable, or any Security Interest ceases to
be a valid and perfected first priority security interest in any portion of the
Collateral, other than as a result of the Permitted Liens;
 
(k)  Borrower conceals, removes, or permits to be concealed or removed, any of
its assets with the intent to hinder, delay or defraud Lender or any of
Borrower’s other creditors;
 
(l)  any loss, theft, damage or destruction of the Collateral taken as a whole
or other property of Borrower which has a Materially Adverse Effect;
 
(m)  there is filed against Borrower or the General Partner or UMT, any civil or
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding could result in the
confiscation or forfeiture of any material portion of the Collateral;
 
(n)  any Termination Event with respect to any Plan shall have occurred; or a
decision shall have been made by Borrower or any Subsidiary of Borrower, or any
member of the “controlled group of corporations” (as defined in Section
1563(a)(4) of the Internal Revenue Code determined without regard to Sections
1563(a) and (e)(3)(c) of such Code) of which Borrower or any Subsidiary of
Borrower is a party, to terminate, file a notice of termination with respect to,
or withdraw from, any Plan; and
 
(o)  Lender shall at any time deem itself insecure or believe that the prospect
of payment or performance of the Obligations or any portion thereof is impaired.
 
9.2  Remedies. In addition to any other rights and remedies that Lender may
have, upon the occurrence and during the continuance of an Event of Default,
Lender may take any or all of the following actions, without prejudice to the
rights of Lender or the holder of the Revolving Note to enforce its claims
against Borrower or any Pledgor:
 
(a)  Without notice to, or demand upon, Borrower or any Pledgor:
 
(i)  discontinue making any further Loans;
 
(ii)  immediately terminate this Agreement and the Commitment hereunder;
 
(iii)  declare all Obligations to be immediately due and payable (except with
respect to any Event of Default set forth in Section 9.1(h), in which case all
Obligations shall automatically become immediately due and payable);
 
(iv)  take possession of all or any portion of the Collateral, wherever located,
and enter on any of the premises where any of the Collateral may be and remove,
repair and store any of the Collateral until it is sold or otherwise disposed of
(Lender shall have the right to store, without charge, all or any portion of the
Collateral at Borrower’s business locations);
 
(v)  use, without charge, Borrower’s Proprietary Rights, advertising materials,
or any property of a similar nature, in advertising for sale and selling any of
the Collateral;
 
(vi)  renew, modify or extend any Receivable, grant waivers or indulgences with
respect to any Receivable, accept partial payments on any Receivable, release,
surrender or substitute any security for payment of any Receivable, or
compromise with, or release, any party liable on any Receivable in such a manner
as Lender may, in its sole discretion deem advisable, all without affecting or
diminishing Borrower’s Obligations to Lender; and
 
(vii)  record all UCC-3 assignments and Assignment of Notes to evidence of
record the assignment to Lender of the Client Loan Documents and Borrower’s
liens against its respective Clients.
 
(b)  With notice to Borrower or any Pledgor:
 
(i)  require Borrower, at Borrower’s expense, to assemble the Collateral and
make the Collateral available to Lender at locations reasonably convenient to
Borrower; and
 
(ii)  sell or otherwise dispose of all or any portion of the Collateral at
public or private sale for cash or credit, with such notice as may be required
by law (in the absence of any contrary requirement, Borrower agrees that ten
(10) days prior notice of a public or private sale of the Collateral is
reasonable), in lots or in bulk, all as Lender, in its sole discretion, may deem
advisable. Lender shall have the right to conduct any such sales, without
charge, at Borrower’s business locations. Lender may purchase all or any portion
of the Collateral at public sale and, if permitted by law, at private sale and,
in lieu of actual payment of the purchase price, may offset the amount of such
price against the outstanding amount of the Loans and any other amounts owing
from Borrower to such member of Lender. Proceeds realized from the sale of any
Collateral will be applied in the order set forth herein. Borrower agrees that
it will remain fully liable for any deficiency owing to Lender after the
proceeds of the Collateral have been applied to the Loans and all other amounts
owing from Borrower to Lender.
 
(c)  If any of the Collateral shall require repairing, maintenance, preparation,
or the like, or is in process or other unfinished state, Lender shall have the
right, but not the obligation, to repair or perform such maintenance,
preparation, processing or completion of manufacturing to place the same in such
saleable condition as Lender shall deem appropriate, but Lender shall have the
right to sell or dispose of such Collateral with or without such processing.
 
ARTICLE X -   JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; AND GOVERNING LAW
 
10.1  Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
 
(a)  The provisions of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to applicable
conflict of law principles.
 
(b)  The parties hereto irrevocably consent and submit to the non-exclusive
jurisdiction of Texas Courts in connection with the resolution of any disputes
relating to this Agreement or the other Loan Documents. Borrower irrevocably
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other Loan
Documents, or in any way connected with or related or incidental to the dealings
of the parties in respect of this Agreement or the other Loan Documents or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and
agrees that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Lender shall have the right to bring any
action or proceeding against Borrower or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to realize on
the Collateral or otherwise enforce its rights against Borrower or its property,
or any guarantor of the Obligations.
 
(c)  Borrower waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrower at the address set forth below and
service so made shall be deemed to be completed five (5) Business Days after the
same shall have been so deposited in the United States mail. Nothing contained
in this Agreement shall affect the right of Lender to serve legal process by any
other manner permitted by law.
 
(d)  BORROWER, THE GENERAL PARTNER AND LENDER EACH HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES TO THIS AGREEMENT IN
RESPECT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE RELATED
TRANSACTIONS, INCLUDING WITHOUT LIMITATION, THE OBLIGATIONS OF BORROWER, THE
COLLATERAL, OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED PURSUANT TO THIS
AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION,
COLLECTION OR ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
WHETHER NOW EXISTING OR HEREAFTER ARISING, WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. BORROWER, GENERAL PARTNER, UMT AND LENDER EACH HEREBY AGREES THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT BORROWER OR LENDER OR ANY OTHER PARTY TO SUCH ACTION MAY
FILE AN ORIGINAL COUNTERPART OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO A TRIAL
BY JURY.
 
(e)  Borrower hereby releases and exculpates Lender and its officers, employees
and designees, and Lender shall not have any liability to Borrower (whether in
contract, tort, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted at all times in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement.
 
10.2  Waiver of Certain Claims and Counterclaims. In no event shall Lender have
any liability to Borrower for lost profits or other special, consequential,
incidental, exemplary or punitive damages in connection with this Agreement or
any of the other Loan Documents or the transactions contemplated hereby or
thereby, and Borrower expressly waives any and all right to assert any such
claims. Borrower further waives all rights to interpose any claims, deductions,
setoffs, recoupment, or counterclaims of any nature (other than compulsory
counterclaims) in any action or proceeding with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating hereto
or thereto. No officer of Lender has any authority to waive, condition, or
modify the provisions of this section.
 
10.3  Indemnification. Borrower agrees to indemnify, save and hold harmless
Lender and its respective directors, officers, agents, attorneys and employees
from and against: (i) the use or contemplated use of the proceeds of any of the
Loans, any transaction contemplated by this Agreement or the other Loan
Documents, or any relationship with Borrower or any other party to this
Agreement or the other Loan Documents; (ii) any administrative or investigative
proceeding by any governmental agency arising out of or related to a claim,
demand, action or cause of action described in clause (i) above; and (iii) any
and all liabilities, losses, costs or expenses (including reasonable attorneys’
fees and disbursements and other professional services) that any party
indemnified hereunder suffers or incurs as a result of any foregoing claim,
demand, action or cause of action; provided, however, that no such indemnitee
shall be entitled to indemnification for any loss caused by its own gross
negligence or willful misconduct. Any obligation or liability of Borrower to any
such indemnitee under this section shall survive the expiration or termination
of this Agreement and the repayment of the Loans and performance of all
Obligations.
 
ARTICLE XI -   MISCELLANEOUS
 
11.1  Power of Attorney. Borrower irrevocably appoints Lender, and any person
designated by Lender, as Borrower’s true and lawful attorney-in-fact to:
(a) endorse for Borrower, in Lender’s or Borrower’s name, any draft or other
order for the payment of money payable to Borrower; and (b) execute and file or
submit for recording, in Lender’s or Borrower’s name, Financing Statements
describing the Collateral. Lender shall not be liable to Borrower for any action
taken by Lender or its designee under this power of attorney, except to the
extent that such action was taken by Lender in bad faith or with gross
negligence or willful misconduct. Borrower agrees that a carbon, photographic or
other reproduction of a Financing Statement or this Agreement may be filed by
Lender as a Financing Statement.
 
11.2  Outstanding Loan Balance. The outstanding principal amount of, and accrued
interest on, the Loans and the Interest Rate applicable to the Loans from time
to time, shall be, at all times, ascertained from the records of Lender and
shall be conclusive absent obvious error.
 
11.3  Entire Agreement, Successors and Assigns and Course of Dealing. This
Agreement along with the other Loan Documents constitutes the entire agreement
among the Obligors and Lender, supersedes any prior agreements among them, and
shall bind and benefit the Obligors and Lender and their respective successors
and permitted assigns. The enumeration in this Agreement of Lender’s rights and
remedies is not intended to be exclusive, and such rights and remedies are in
addition to and not by way of limitation of any other rights or remedies that
Lender may have under the UCC or other Applicable Law. No course of dealing and
no delay or failure of Lender to exercise any right, power or privilege under
any of the Loan Documents will affect any other or future exercise of such
right, power or privilege. The exercise of any one right, power or privilege
shall not preclude the exercise of any others, all of which shall be cumulative.
 
11.4  Assignments and Participations.
 
(a)  Borrower shall not have the right to assign this Agreement or any interest
therein except with the prior written consent of Lender.
 
(b)  Notwithstanding subsection (c) of this Section 11.4, nothing herein shall
restrict, prevent or prohibit Lender from pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by Lender from such Federal
Reserve Bank. Lender may make, carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an Affiliate of Lender except to
the extent such transfer would result in increased costs to Borrower.
 
(c)  Lender may, in the ordinary course of its lending business and in
accordance with applicable law, at any time, assign with concurrent notice to
Borrower, but without the consent of Borrower, assign all or a portion of its
rights and obligations under this Agreement to any Person; provided, however,
that (i) for each such assignment, the parties thereto shall execute and deliver
to Lender, a written assignment in form and substance satisfactory to Lender.
Upon such execution and delivery of the assignment to Lender, (x) the assignee
thereunder shall be a party hereto, and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment, such
assignee shall have the rights and obligations of Lender hereunder and (y) the
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such assignment, relinquish its rights
(other than any rights it may have pursuant to Sections 10.3 and 11.7 which will
survive) and be released from its obligations under this Agreement (and in the
case of an assignment covering all or the remaining portion of Lender’s rights
and obligations under this Agreement, Lender shall cease to be a party hereto).
 
(d)  In connection with the efforts of Lender to assign its rights or
obligations or to participate interests, Lender may disclose any information in
its possession regarding Borrower or any of its Subsidiaries, subject to Section
11.14.
 
11.5  Amendments, Etc. Neither the amendment or waiver of any provision of this
Agreement or any other Loan Document, nor the consent to any departure by any
Obligor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Lender, and each such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
 
11.6  Notices. Except as otherwise provided herein, whenever any notice, demand,
request or other communication shall or may be given to or served upon any party
by any other party, or whenever any party desires to give or serve upon any
other party any communication with respect to this Agreement, each such
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and five (5)
Business Days after deposit in the United States mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided in this Section
11.6), (c) one (1) Business Day after deposit with a reputable overnight courier
with all charges prepaid or (d) when hand-delivered, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in the signature page to this Agreement or to such other
address (or facsimile number) as may be substituted by the giving of notice of
such substitution. Delivery of a copy of any notice under this Section 11.6 to
an individual designated on the signature page as “with a copy to” shall not be
deemed notice to a party.
 
11.7  Expenses. Borrower agrees to pay all out-of-pocket costs and expenses of
(a) Lender in connection with (i) the syndication, negotiation, preparation,
execution, delivery, administration and monitoring of this Agreement and the
other Loan Documents and the documents and instruments referred to therein or
executed in connection therewith, including evaluating the compliance by the
Obligors with law and the provisions of such documents (including the reasonable
fees and expenses of special counsel to Lender and the fees and expenses of
counsel for Lender in connection with collateral issues and all due diligence,
appraisal, field exam, environmental audit and other similar costs), and (ii)
any amendment, waiver or consent relating hereto and thereto including any such
amendments, waivers or consents resulting from or related to any work-out,
re-negotiation or restructure relating to the performance by any of the Obligors
under this Agreement or any other Loan Documents and (b) Lender in connection
with enforcement of the Loan Documents and the documents and instruments
referred to therein or executed in connection therewith, including but not
limited to, any work-out, re-negotiation or restructure relating to the
performance by any of the Obligors under this Agreement or any other Loan
Documents, including in connection with any such enforcement, the reasonable
fees and disbursements of counsel for Lender (including the allocated costs of
internal counsel), and the reasonable fees and expenses of a financial
consultant engaged by Lender or its counsel in connection with the foregoing.
Borrower also agrees to pay or reimburse Lender for the costs of conducting the
appraisal of Borrower’s owned real property and the real property securing any
Client Loan.
 
11.8  Assignment of Receivables. This Agreement may be supplemented by separate
assignments of Receivables and, if such assignments are executed, the rights and
interests given by Borrower pursuant to such assignments shall be in addition
to, and not in limitation of, the rights and security interests given by
Borrower under this Agreement. Lender will not be responsible for the collection
of proceeds of any of the Collateral, or for losses of collected proceeds held
by Borrower in trust for Lender.
 
11.9  Binding Effect; Severability. This Agreement shall not be deemed to create
any right in any party except as provided herein and shall inure to the benefit
of, and be binding upon, the successors and assigns of Borrower and Lender. All
of Borrower’s obligations under this Agreement are absolute and unconditional
and shall not be subject to any offset or deduction whatsoever. The provisions
of this Agreement are intended to be severable. If any provision of this
Agreement is held invalid or unenforceable in whole or in part, such provision
will be ineffective to the extent of such invalidity or unenforceability without
in any manner effecting the validity or enforceability of the remaining
provisions of this Agreement.
 
11.10  Final Agreement. This Agreement and the other Loan Documents are intended
by Borrower and Lender to be the final, complete, and exclusive expression of
the agreement between them. This Agreement supersedes any and all prior oral or
written agreements relating to the subject matter hereof.
 
11.11  Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. Any signatures delivered
by a party by facsimile transmission or by e-mail transmission of an adobe file
format document (also known as a “PDF file”) shall be deemed an original
signature hereto. Any party delivering an executed counterpart of this Agreement
by facsimile or as a PDF file also shall deliver an original executed
counterpart of such agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
 
11.12  Captions. The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
 
11.13  Information. Lender agrees to keep confidential any information furnished
or made available to it by Borrower pursuant to this Agreement; provided that
nothing herein shall prevent Lender from disclosing such information (a) to any
Affiliate, or any officer, director, employee, agent, or advisor of Lender or
Affiliate of Lender, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority;
provided, however, that, to the extent permitted by law, Lender shall provide
prior written notice to Borrower of any such request or demand, (f) that is or
becomes available to the public or that is or becomes available to Lender other
than as a result of a disclosure by Lender prohibited by this Agreement, (g) in
connection with any litigation to which such member of Lender or any of its
Affiliates may be a party, whether to defend itself, reduce its liability,
protect or exercise any of its claims, rights, remedies or interests under or in
connection with the Loan Documents or otherwise, (h) to the extent necessary in
connection with the exercise of any remedy under this Agreement or any other
Loan Document or to any actual or proposed participant or assignee; provided
that such party is informed of the confidential nature of such information and
that by receiving such information it is agreeing to be bound by these
provisions, (i) to Gold Sheets and other similar bank trade publications; such
information to consist of deal terms and other information customarily found in
such publications subject to the prior review of such communication by the
Obligors and (j) to a nationally recognized rating agency that requires access
to information regarding the Obligors, the Loans and Loan Documents in
connection with ratings issued or (k) any assignee of or participant in, or
potential assignee of or participant in, any of its rights or obligations under
this Agreement; provided that such party is informed of the confidential nature
of such information and that by receiving such information it is agreeing to be
bound by these provisions.
 
11.14  Nonliability of Lender. The relationship between Borrower on the one hand
and Lender on the other hand shall be solely that of borrower and lender. Lender
has no fiduciary responsibilities to Borrower. Lender undertakes no
responsibility to Borrower to review or inform Borrower of any matter in
connection with any phase of Borrower’s business or operations.
 
11.15  Maximum Rate. Notwithstanding anything to the contrary contained
elsewhere in this Agreement or in any other Loan Document, Borrower and Lender
hereby agree that all agreements among them under this Agreement and the other
Loan Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to Lender for the use, forbearance, or
detention of the money loaned to Borrower and evidenced hereby or thereby or for
the performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Agreement or any of the other Loan
Documents at the time performance of such provision shall be due shall exceed
the Highest Lawful Rate, then, automatically, the obligation to be fulfilled
shall be modified or reduced to the extent necessary to limit such interest to
the Highest Lawful Rate, and if from any such circumstance Lender should ever
receive anything of value deemed interest by applicable law which would exceed
the Highest Lawful Rate, such excessive interest shall be applied to the
reduction of the principal amount then outstanding hereunder or on account of
any other then outstanding Obligations and not to the payment of interest, or if
such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to Borrower. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Obligations and other indebtedness of Borrower
to Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the actual rate of interest on account of all such
indebtedness does not exceed the Highest Lawful Rate throughout the entire term
of such indebtedness. The terms and provisions of this Section shall control
every other provision of this Agreement and all agreements between Borrower and
Lender.
 
11.16  Right of Setoff. In addition to and not in limitation of all rights of
offset that Lender may have under applicable law, Lender shall, if any Event of
Default has occurred and is continuing and whether or not Lender has made any
demand or the Obligations of Borrower are matured, have the right to appropriate
and apply to the payment of the Obligations of Borrower all deposits (general or
special, time or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by Lender or other
holder, including any and all amounts in the Clearing Account.
 
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36382.02/263482v6
 
 
 

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The undersigned, pursuant to due authority, have caused this Agreement to be
executed as of the date set forth above. 
 
BORROWER:
 
UNITED DEVELOPMENT FUNDING III, L.P.
 
By:  UMTH Land Development, L.P.
Its: general partner
 
By: UMT Services, Inc., its general partner
 
By: /s/ Jeff Shirley
Name: Jeff Shirley
Title: Executive Vice President
     
Address for Notices for Borrower:
 
1812 Cindy Lane, Suite 200
Bedford, Texas 76021
Attention:  Hollis M. Greenlaw
Facsimile: (817) 835-0383
 
 
 
with a copy to:
 
 
Hollis M. Greenlaw, Esq.
1812 Cindy Lane, Suite 200
Bedford, Texas 76021
Facsimile: (817) 835-0383
 
GENERAL PARTNER:
 
UMTH Land Development, L.P., acting in its own capacity, hereby (i) agrees with
and accepts all of the terms and conditions of this Note which are applicable to
the General Partner (as such term is defined in the Note), and (ii) makes the
representations, warranties, covenants and agreements in the Note which are, by
their terms, applicable to the General Partner.
 
 
UMTH LAND DEVELOPMENT, L.P.
 
By: UMT Services, Inc.
Its: General Partner
 
By: /s/ Jeff Shirley
Name: Jeff Shirley
Title: Executive Vice President
   
 
Address for Notices for General Partner:
 
1812 Cindy Lane, Suite 200
Bedford, Texas 76021
Attention:  ________________________
Facsimile: (817) 835-0383
 
 
 
with a copy to:
 
 
Hollis M. Greenlaw, Esq.
1812 Cindy Lane, Suite 200
Bedford, Texas 76021
Facsimile: (817) 835-0383
 
UMT:
 
UMT Services, Inc., acting in its own capacity, hereby (i) agrees with and
accepts all of the terms and conditions of this Note which are applicable to UMT
(as such term is defined in the Note), and (ii) makes the representations,
warranties, covenants and agreements in the Note which are, by their terms,
applicable to UMT.
 
 
UMT SERVICES, INC.,
a Delaware corporation
.
 
 
By: /s/ Jeff Shirley
Name: Jeff Shirley
Title: Executive Vice President
 
 
Address for Notices for UMT:
 
1812 Cindy Lane, Suite 200
Bedford, Texas 76021
Attention:  Jeff Shirley
Facsimile: (817) 835-0383
 
 
 
with a copy to:
 
 
Hollis M. Greenlaw, Esq.
1812 Cindy Lane, Suite 200
Bedford, Texas 76021
Facsimile: (817) 835-0383
 
LENDER:
 
PREMIER BANK
 
 
 
By: /s/ Sean P.Cleveland
Name: Sean P. Cleveland
Title: Vice President
 
 
 
Address for Notices for Lender:
 
1111 South Main Street, Suite 108
Grapevine, Texas 76051
Attention: Sean P. Cleveland
Facsimile: (817) 835-0383
 
 
with a copy to:
 
 
 
Hallett & Perrin, P.C.
2001 Bryan Street, Suite 3900
Dallas, Texas 75201
Attention: Melissa Youngblood
Facsimile: (214) 922-4170