Exhibit
10.1












LOAN AND
SECURITY AGREEMENT





Between





UNITED
DEVELOPMENT FUNDING III, LP,





As
Borrower,





and





WESLEY J.
BROCKHOEFT,





As
Lender











Dated as
of September 21, 2009


TABLE OF
CONTENTS





ARTICLE
      I
            -LOANS,
      RENEWAL AND TERMINATION
            161.1
            Credit
      Facility
            161.2
            Borrowing
      Procedures
            171.3
            Interest
            181.4
            Charges
      to Loan Account
            181.5
            Termination
            181.6
            Payments
      by Borrower
            191.7
            Taxes
            20ARTICLE
      II
            -
      FEES
            212.1
            Closing
      Date Fees
            212.2
            Audit
      Fees
            212.3
            Costs
      and Expenses
            21ARTICLE
      III
            -
      GRANT OF SECURITY INTEREST
            213.1
            Grant
      of Security Interest
            213.2
            Continued
      Priority of Security Interest
            213.3
            Delivery
      of Client Notes, Client Loan Documents and Other
    Documentation
            233.4
            Client
      Loan Documents
            243.5
            Appraisals
            24ARTICLE
      IV
            -
      PROCEEDS AND COLLECTIONS
            244.1
            Collection
      of Proceeds
            24ARTICLE
      V
            -
      REPRESENTATIONS AND WARRANTIES
            245.1
            Existence,
      Power and Authority; Borrower Interests
            245.2
            Compliance
      with Other Agreements and Applicable Law
            275.3
            Absence
      of Litigation
            275.4
            Taxes
      and Returns
            275.5
            Lien
      Priority and Nature of Certain Collateral
            275.6
            Principal
      Place of Business
            285.7
            Environmental
      Compliance
            285.8
            Proprietary
      Rights
            285.9
            Trade
      Names
            285.10
            Employee
      Relations
            295.11
            Employee
      Pension Benefit Plans
            295.12
            Bank
      Accounts
            295.13
            Accuracy
      and Completeness of Information
            295.14
            Software
      License Compliance
            295.15
            Client
      Notes
            295.16
            Licenses
      and Permits
            295.17
            Survival
      of Warranties; Cumulative
            30ARTICLE
      VI
            -
      AFFIRMATIVE COVENANTS
            306.1
            Financial
      Statements
            306.2
            Books
      and Records
            316.3
            Additional
      Documentation
            316.4
            Existence,
      Name, Organization and Chief Executive Office
            316.5
            Compliance
      with Laws and Taxes
            326.6
            Performance
      of Obligations
            326.7
            Reporting
      as to Revenues, Receivables and Client Loans
            326.8
            Over-Advance
            336.9
            Breach
      or Default
            336.10
            Maintenance
      of Assets
            346.11
            Insurance
            346.12
            Use
      of Proceeds
            346.13
            Disclosure
            346.14
            Further
      Assurances
            346.15
            Brokerage
      Commissions
            356.16
            Defense
      of Title
            356.17
            Client
      Notes
            356.18
            Client
      Loans
            366.19
            Formation
      of Subsidiaries; Investments in Client Joint Ventures
            366.20
            Revisions
      or Updates to Schedules
            376.21
            Bank
      Accounts; Cash Concentration Account
            37ARTICLE
      VII
            -
      NEGATIVE COVENANTS
            387.1
            Business,
      Management and Organization
            387.2
            Disposition
      of Assets
            387.3
            Loans
      and Guarantees
            387.4
            Subsidiaries
            397.5
            Distributions
            397.6
            Financial
      Covenants
            397.7
            Change
      of Control
            397.8
            Limitation
      on Indebtedness for Money Borrowed
            397.9
            Mergers;
      Consolidations; Acquisitions
            407.10
            Client
      Joint Ventures
            407.11
            Fiscal
      Year
            407.12
            Affiliate
      Transactions
            407.13
            Credit
      Guidelines
            407.14
            Approved
      States
            407.15
            Utilization
      of the Credit Facility
            407.16
            Liens
            417.17
            Investments
            41ARTICLE
      VIII
            -
      CONDITIONS PRECEDENT
            418.1
            Credit
            418.2
            Initial
      and Subsequent Credit
            43ARTICLE
      IX
            -
      EVENTS OF DEFAULT; REMEDIES
            439.1
            Events
      of Default
            439.2
            Remedies
            45ARTICLE
      X
            -
      JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; AND GOVERNING
      LAW
            4710.1
            Governing
      Law; Choice of Forum; Service of Process; Jury Trial
Waiver
            4710.2
            Waiver
      of Certain Claims and Counterclaims
            4810.3
            Indemnification
            48ARTICLE
      XI
            -
      MISCELLANEOUS
            4911.1
            Power
      of Attorney
            4911.2
            Outstanding
      Loan Balance
            4911.3
            Entire
      Agreement, Successors and Assigns and Course of Dealing
            4911.4
            Assignments
      and Participations
            4911.5
            Amendments,
      Etc.
            5011.6
            Notices
            5011.7
            Expenses
            5011.8
            Assignment
      of Receivables
            5111.9
            Binding
      Effect; Severability
            5111.10
            Final
      Agreement
            5111.11
            Counterparts
            5111.12
            Captions
            5111.13
            Information
            5111.14
            Nonliability
      of Lender
            5211.15
            Maximum
      Rate
            5211.16
            Right
      of Setoff
            5211.17
            Business
      Loans
            52





EXHIBITS AND
SCHEDULES




EXHIBITS




Exhibit
      A
              Form
      of Borrowing Base CertificateExhibit
      B
              Form
      of Revolving NoteExhibit
      C
              Credit
      GuidelinesExhibit
      D
              Form
      of Assignment of NoteExhibit
      E
              Form
      of Allonge


SCHEDULES




Schedule
      C
              Incumbent
      Board MembersSchedule
      5.1(a)
              Organization;
      QualificationSchedule
      5.5(a)
              LitigationSchedule
      5.5(c)
              Initial
      Eligible NotesSchedule
      5.5(f)
              Real
      PropertySchedule
      5.7
              Environmental
      ComplianceSchedule
      5.9
              Trade
      NamesSchedule
      5.12
              Bank
      AccountsSchedule
      6.12
              Use
      of Proceeds





LOAN
AND SECURITY AGREEMENT




Dated as
of September 21, 2009




UNITED DEVELOPMENT FUNDING III,
LP, a Delaware limited partnership (“Borrower”) and WESLEY
J. BROCKHOEFT, an individual (“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).




“Adjusted Tangible Net
Worth” means, with respect to Borrower, the sum of (i) Aggregate
Partner’s Equity determined in accordance with GAAP plus (ii) Subordinated
Indebtedness, minus
(iii) Intangible Assets minus (iv) all loans or
advances to employees and Affiliates of Borrower or any other third party (other
than Clients).




“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
September 21, 2009.




“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.




“Appraised Value”
means, for a Client Loan, the value (determined by an Appraiser) of the real
property securing such Client Loan evidenced by an Eligible Note based on the
market value of the real property.




“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 sum, without
duplication, of: (a) with respect to each Eligible Note, the lesser of (i) up to
fifty percent (50%) of the aggregate principal amount outstanding under such
Eligible Note, or (ii) up to fifty percent (50%) of the face amount of such
Eligible Note, or (iii) 40% of Appraised Value; minus (b) any Reserves;
provided,
however, for purposes of determining the principal amount outstanding
under Eligible Notes to be included in the Borrowing Base calculation, (x) a
Client Note made by a Client Borrower payable to a Client described in clause
(ii) of the definition of “Client Note” shall be included only if the related
Client Note made by such Client payable to Borrower described in clause (i) of
such definition that it secures is also included in the Eligible Notes and (y)
without duplication of amounts in such calculation, the principal amount
outstanding used for purposes of the Borrowing Base calculation shall be limited
to the lesser of the outstanding principal amount of the Client Note payable by
such Client Borrower to such Client or the outstanding principal amount of the
secured Client Note payable by such Client to Borrower.




2


“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 the Deposit Account covered by the Deposit Account Control
Agreement into which Borrower shall cause to be deposited initially all of its
receipts and revenues as required by Section 6.21.




“Change of Control”
means the occurrence of any of the following events:  (i) the
members of the board of directors of UMT Services 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 Services; provided, however that if the
election, or the nomination for election by the common stockholders of UMT
Services, 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
Services 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.




“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 Borrower”
means a Person who is indebted to a Client for Money Borrowed.




“Client Collateral”
means all real and personal property collateral pledged by a Client to Borrower
pursuant to Client Loan Documents.




“Client Collateral
Assignment” means a collateral assignment or assignment of Note, Deed of
Trust, and Loan Documents duly executed by a Client in favor of Borrower in
recordable form to secure a Client Loan (i) which is duly recorded in the real
property records of the county in which the real property underlying the related
mortgage or deed of trust is recorded, or (ii) the original of which is held by
Borrower and is recordable by Borrower upon the occurrence and continuance of a
default or event of default under the Client Loan Documents.




3


“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 Credit
Enhancement” means a guaranty, letter of credit, or other form of credit
enhancement provided by Borrower to a Person for the benefit of a
Client.




“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 or a Client Borrower, the purpose of which
Client Loan is related to the purchase and/or development for sale as finished
building lots for single-family residential real estate and the improvements
thereto or to Client 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
(i) 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, or (ii) an instrument containing an express and absolute promise of
a Client Borrower to pay to a Client, a definite sum of money at a specified
time, which has been assigned or collaterally assigned from such Client to
Borrower pursuant to a Client Collateral Assignment to secure an instrument
described in clause (i) from such Client to Borrower.




4


“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
Accounts and 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” as that term is defined in the UCC and all
documents of title, policies and certificates of insurance, securities, chattel
paper (including electronic chattel paper and tangible chattel paper) and all
“Instruments” as that term is defined in the UCC; (xi) all other goods and
personal property, whether tangible or intangible, wherever located, including
money, cash and cash equivalents, 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.




5


“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
7.13.




“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 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, which Deposit Account shall be the Cash
Concentration Account.




“Dollar”, “dollar” and “$” means freely
transferable United States dollars.




“Eligible Notes” means
a Client Note 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)           Borrower
shall have delivered to Lender, an appraisal setting forth the Appraised Value
of the real property securing the Client Loan, dated as of a recent date
acceptable to Lender in its sole discretion;




(c)           such
Client Note is secured by a First Lien Mortgage, 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
or a Client Borrower, 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 or Client Borrower 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;


6




(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 Person other than (A) Lender or (B) in
the case of Client Notes that are subject to Client Collateral Assignments,
Borrower;




(j)           the
aggregate amount owing under all Client Notes for a particular Client that would
otherwise constitute Eligible Notes does not exceed thirty-three and 33/100
percent (33.33%) of the aggregate amount owing under all Eligible
Notes;




(k)           the
Client under such Client Note is an individual resident of, or an entity
organized under the laws of, the United States of America or a state thereof;
and




(l)           such
Client Note is payable in U.S. Dollars.




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.




7


“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.




“Event of Default”
means an event described in Section
9.1.




“Excluded Taxes” has
the meaning given to such term in Section
1.7.




“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 180 Day Period”
has the meaning given to such term in Section
7.15.




“First Lien Mortgage”
means a first priority mortgage, deed of trust, security deed or similar
agreement (i) from a Client in favor of Borrower or (ii) from a Client Borrower
to Borrower which is subject to a Client Collateral Assignment in favor of
Borrower, encumbering real property as security for a Client Loan, which
mortgage, deed of trust, security deed or similar agreement is 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 by a title insurer
reasonably acceptable to Lender for the amount of such Client Note.




“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.




8


“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 including any Governmental Authority.




“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 one (1) year period commencing on the Agreement Date, and ending on the day
immediately prior to the first 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.




9


“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
ten percent (10%) per annum.




“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.




10


“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, prospects, 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, security deed or similar agreement (i) from a Client in
favor of Borrower or (ii) from a Client Borrower to Borrower which is subject to
a Client Collateral Assignment in favor of Borrower, encumbering real property
as security for a Client Loan, which mortgage, deed of trust, security deed or
similar agreement is 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 by a title insurer reasonably acceptable to Lender for the
amount of such Client Note.




11


“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 in accordance with the
applicable provisions of this Agreement and which specifies (i) the amount of
the requested Borrowing, (ii) the date of the requested Borrowing, and (iii)
wire transfer instructions for Borrower’s account to which Lender is requested
to wire transfer such 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 guarantee the payment and
performance of the whole or any part of the Obligations.




“Origination Fee”
means the non-refundable fee of $300,000 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
1.7(a).




“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) Liens securing Client
Credit Enhancements, and (g) Liens shown on Schedule
5.5(a).




“Person” means any
individual, limited liability company, corporation, partnership, association,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.


12




“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.




“Prepayment Premium”
means a premium payable by Borrower in connection with any prepayment
of  principal of the Revolving Loan Advances during the First 180 Day
Period which premium shall be in an amount equal to the amount of interest that
such prepaid principal amount would have accrued at the Interest Rate between
the date of prepayment and the expiration date of the First 180 Day Period;
provided, however, that the aggregate amount of all interest and any Prepayment
Premiums actually paid by Borrower to Lender with respect to accrued interest
and any prepayments of principal on the Revolving Loan Advances during the First
180 Day Period shall not exceed $750,000.




“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.




13


“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 reasonable discretion, deems necessary to take
into account any perceived financial problems or substandard credit quality of
the Clients whose Client Notes are part of the Eligible Notes in the Borrowing
Base.




“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 equal to $15,000,000, 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.




14


“Security Documents”
means each of the following: (a) the Financing Statements, (b) the Pledge
Agreements, (c) each Assignment of Note, (d) the Deposit Account Control
Agreement 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.




“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 (b) such
date as the Obligations shall have been accelerated pursuant to the provisions
of Section 9.2.




“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.




15


“UMT Services” means
UMT Services, Inc., a Delaware corporation and the general partner of the
General Partner.




“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
Limit.  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 lesser of (i) the Revolving Credit Limit and (ii) 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 in an amount not less than such excess within five (5) Business Days
after the date such excess occurred.




16


(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.




(c)  Repayment.  On
the Termination Date, Borrower shall pay the aggregate unpaid principal amount
of all Revolving Loan Advances outstanding, all accrued but unpaid interest
thereon, all fees and expenses owing to Lender and all other non-contingent
Obligations.




(d)  Prepayment.  As
provided in Section
7.15, the Borrower agrees to use its best efforts to borrow the full
amount of the Revolving Credit Limit during the First 180 Day
Period.  During the First 180 Day Period, if Borrower prepays any
principal of the Revolving Loan Advances for whatever reason (including upon an
acceleration due to an Event of Default), Borrower shall also pay, along with
any such prepayment, to Lender, as liquidated damages for loss of bargain (and
not as a penalty), an amount equal to the Prepayment Premium with respect to
such prepayment amount.  Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents, the Prepayment Premium
is subject to, and shall be limited in accordance with, the provisions of Section 11.15 of this
Agreement.  Any prepayment of principal after the First 180 Day Period
can be made by Borrower without payment of a Prepayment Premium.




1.2  Borrowing
Procedures.  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 three (3) Business Days prior to the date that Borrower desires
to receive the Revolving Loan Advance 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 reasonable 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, (ii) to the
extent such calculation is not in accordance with this Agreement and
(iii) to adjust Reserves used in calculating the Borrowing Base; provided,
however, the establishment or adjustment by Lender of Reserves during the First
180 Day Period shall require the consent of Borrower, which consent shall not be
unreasonably withheld or delayed.  Subject to Sections 1.1(d) and
7.15, 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 wire transfer such funds to Borrower to the account
specified by Borrower in such Notice of Borrowing.




17


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-five
(365) days and the actual number of days elapsed in each
month.  Interest shall accrue monthly and accrued interest shall be
due and payable on the tenth (10th) day
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 on the due date thereof from any
subsequent Revolving Loan Advance, (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  Termination.




(a)  The
Commitment made hereunder shall expire on the Termination
Date.  Borrower may terminate the Commitment 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 amounts specified in Section 1.1(c), upon
such termination, as provided in this Agreement.  Lender may terminate
the Commitment at any time during the existence of an Event of
Default.




18


(b)  Upon the
termination of this Agreement for any reason as herein provided, Borrower
promises 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.




(d)  If after
receipt of any payment which is applied to the payment of all or any part of the
Obligations, the Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Lender and the
Borrower shall be liable to pay to the Lender.  The provisions of this
Section 1.5(d)shall be and remain effective notwithstanding any contrary action which
may have been taken by the Lender in reliance upon such payment or application
of proceeds.  The provisions of this Section 1.5(d) shall
survive the termination of this Agreement.




1.6  Payments by
Borrower.  Borrower shall make each payment hereunder and under
the Revolving Note not later than 12:00 noon Dallas, Texastime on the day when
due.  Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.  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.




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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,
or (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.




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ARTICLE
II  -
FEES




2.1  Closing Date
Fees.  On the Closing Date, Borrower shall pay to Lender the
Origination Fee.




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.  In addition to the costs and expenses noted in
Section 11.7, 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 Closing Date and until the
non-contingent Obligations have been paid in full, 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;




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(ii)  Borrower
shall take all steps necessary or otherwise reasonably requested by Lender 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 Wesley J. Brockhoeft.”




(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 hereby authorizes the filing of additional or
amendments to existing financing statements and shall do such other acts or
things deemed necessary or desirable by Lender to give Lender a security
interest in any such commercial tort claim.




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(f)  Borrower
shall mark its books and records 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, including the page and volume and/or document
recording information for the Mortgage.




(c)  If a
Client Pledge secures a Client Note, then within five (5) Business Days
following the Client Loan Closing Date, Borrower shall deliver to Lender, (i)
the original duly executed stock power(s) and assignment(s) of partnership
interests and/or membership interests, as applicable, and (ii) within five (5)
days 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 withinone (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 ninety (90) days after the Client Loan
Closing Date, Borrower shall deliver to Lender, a copy of the issued mortgagee
title policy.




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(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, WESLEY J. BROCKHOEFT AND HIS
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 an Appraiser 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 -
PROCEEDS AND COLLECTIONS




4.1  Collection of
Proceeds.  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 each time that
Lender makes a Loan to Borrower as follows, and with respect to the
representations and warranties applicable to the General Partner and UMT
Services, the General Partner and UMT Services represent and warrant to Lender,
as of the Agreement Date and each time that Lender makes a Loan to Borrower as
follows:




5.1  Existence, Power and
Authority; Borrower Interests.




(a)  Organization;
Qualification.




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(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
Services 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 Services 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 Services 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 limited partnership agreement, 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.




25


(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 limited partnership agreement, 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
Services 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
Services is a party has been duly executed and delivered by the duly authorized
officers of UMT Services and each is, or each when executed and delivered in
accordance with this Agreement will be, a legal, valid and binding obligation of
UMT Services, enforceable against UMT Services in accordance with its
terms.  All of the transactions contemplated under the Loan Documents
to which UMT Services is a party are within UMT Services’ powers and are not in
contravention of law or the terms of UMT Services’ certificate of incorporation,
articles of incorporation, bylaws, or other organizational documentation, or any
material agreement or undertaking to which UMT Services is a party or by which
UMT Services 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
Services.




(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.  UMTH Land Development, L.P. is
the sole general partner of Borrower.  UMT Services, Inc. is the sole
general partner of UMTH Land Development, L.P.




26


(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.  Except as set forth on Schedule 5.3(a), 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.




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.  The Eligible Notes that
are included in the initial Borrowing Base are listed on Schedule
5.5(c).




27


(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.




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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
Notes.  With respect to each Client Note, (a) such Client Note
represents the valid and legally binding indebtedness and obligation of a bona
fide Client or Client Borrower 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) original 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.




29


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, 2009, 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 September 30, 2009, Borrower’s 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;




30


(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
September 30, 2009, 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 endof 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 Collateral that is not owned by
Borrower, the waiver and consent from the lessor of such premises in form and
substance acceptable to Lender.




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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 thirty (30) days after the close 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 thirty (30) days after the close 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




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(iv)  no later
than thirty (30) days after the close 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, and (ii) 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 a Default
or an Event of Default; or (c) which might adversely affect the Client Loans,
taken as a whole.




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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.  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 (a) 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 (b) 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.




34


(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 or Client Borrowers 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 waive any rights or remedies under
any of the Client Notes or the Client Loan Documents, or modify or amend any of
the Eligible Notes or related Client Loan Documents, in either case 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.




35


(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 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, and (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 reasonably requested by Lender.  Any document,
agreement, or instrument executed or issued pursuant to this Section 6.19(a)
shall be a Loan Document.




36


(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; Cash
Concentration Account.




(a)  Other
than the bank accounts set forth on Schedule 5.12, Borrower shall
not open or maintain any bank accounts without Lender’s prior written
consent.




(b)  Borrower
shall establish and maintain a Deposit Account that will serve as the Cash
Concentration Account into which Borrower shall cause to be deposited initially
all of its receipts and revenues and which account shall be covered by the
Deposit  Account Control Agreement.  Borrower hereby grants
to Lender a first priority security interest in the Cash Concentration Account
and all deposits at any time contained therein and the proceeds thereof and will
take all actions necessary to maintain in favor of Lender a perfected first
priority security interest in such Cash Concentration Account.  Such
Cash Concentration Account will be under the control of Lender.  So
long as no Event of Default has occurred and is continuing, Borrower shall have
the right to draw on the funds from such Cash Concentration Account and transfer
such funds to other operating accounts of Borrower.  Upon the
occurrence and during the continuation of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in such Cash Concentration Account to the payment of the
Obligations in any order in its sole discretion.  Borrower shall not
further pledge, assign or grant any security interest in such Cash Concentration
Account or the monies deposited therein or permit any lien or encumbrance to
attach thereto, or any levy to be made thereon.  Borrower shall not
open any other Deposit Account with respect to the direct deposit of receipts or
revenue from any of the Collateral.  Until deposited in such Cash
Concentration Account, any receipts or revenues from the Collateral held by
Borrower shall be deemed to be Collateral and shall be held in trust by it for
the benefit, and as the property, of Lender pursuant to this Agreement and shall
not be commingled with any other funds or property of
Borrower.  Borrower covenants that it will not rescind, withdraw or
change any notices or instructions to any third parties with respect to causing
payments to be made to such Cash Concentration Account without Lender’s prior
written consent.




37


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 Services, the General Partner and UMT Services covenant
and agree with Lender as follows:




7.1  Business, Management and
Organization.  Borrower shall not:  (a) cause the
removal of Hollis M. Greenlaw, as president and chief executive officer of UMT
Services, unless a
replacement president and chief executive officer acceptable to Lender, in its
sole discretion, is named by UMT Services 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 organization or its type of
organization (that is, from a limited partnership); or (e) 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, so long as no Default or Event of Default
exists, Borrower may (i) sell or dispose of obsolete assets that constitute
Collateral which Borrowerhas 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) Client Credit Enhancements; provided,
that if such Client Credit Enhancement is called or otherwise required to be
paid by Borrower, at such time the Client or other beneficiary of the Client
Credit Enhancement shall reimburse Borrower for all amounts paid by Borrower to
satisfy such Client Credit Enhancement or 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.




38


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 or purchase,
redeem or otherwise acquire or retire any of its partnership interests if any
Default or 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
Notes to be less than two hundred percent (200%) of the aggregate outstanding
principal amount of the Loans.




(b)  Borrower
shall not permit its Adjusted Tangible Net Worth to be less than $250,000,000.00
..




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 $1,000,000; and (iii) Indebtedness for Money Borrowed
secured by Permitted Liens of the type described in clause (d) of the definition
of Permitted Liens.




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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 ofBorrower 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 with the provision of
Section 6.19, (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 if material, 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 than five (5) 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.




7.15  Utilization of the Credit
Facility.  Borrower agrees to use its best efforts to borrow
the full Revolving Credit Limit during the period commencing with the Agreement
Date and continuing through the day that is one hundred eighty (180) days after
the Agreement Date (the “First 180 Day Period”) and to possess Eligible Notes
sufficient to support such borrowing during such First 180
Day  Period.  Should any Client Note that is an Eligible
Note described on Schedule 5.5(c) be paid off, terminated or otherwise cease to
be an Eligible Note during the First 180 Day Period and as a result the
Borrowing Base decreases to less than $30,000,000 so that Borrower is ineligible
to borrow the full Revolving Credit Limit, then Borrower shall promptly submit
Client Notes to Lender for consideration by Lender as Eligible Notes in an
aggregate amount that would, if approved by Lender, sufficiently increase the
Borrowing Base so that Borrower is eligible to borrow the full Revolving Credit
Limit.




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7.16  Liens.  Neither
Borrower nor any Subsidiary ofBorrower will create or
permit to exist any Liens on its assets other than Permitted Liens.




7.17  Investments.  Neither
Borrower nor any Subsidiary ofBorrower will purchase,
hold or acquire any Investment other than Client Joint Ventures, Client Loans,
Client Credit Enhancements and related Investments.




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 Services’ resolutions, certified organizational
documents and good standing certificates in the General Partner’s and UMT
Services’ jurisdiction of organization and each other jurisdiction where the
General Partner and UMT Services are qualified to do business, together with a
secretary’s certificate;




(v)  a Notice
of Borrowing dated the Agreement Date for the lesser of (A) the Borrowing Base
or (B) the Revolving Credit Limit;




(vi)  a
Borrowing Base Certificate dated as of the Agreement Date;




(vii)  a copy of
Borrower’s Credit Guidelines, in form and substance satisfactory to Lender;
and




(viii)  the
Security Documents (other than a Pledge Agreement) and all other Loan Documents
and such other documents as Lender may require under this
Agreement.




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(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)  Lender
shall have received evidence of insurance that complies with the terms of Section
6.11.




(j)  Lender
shall have received a fully executed Deposit Account Control Agreement in form
and substance satisfactory to Lender.




(k)  No
Default or Event of Default shall have occurred and be continuing.




(l)  All
representations and warranties of Borrower set forth in this Agreement shall be
true and correct in all material respects.




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(m)  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.




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 (i) any
covenant set forth in Section 3.2 or 6.2, (ii) in any
material respect any covenant set forth in Article VII or (iii)
any other 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;




43


(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 $500,000, 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 $500,000, 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
$500,000 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 $1,000,000 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;




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(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, with respect to priority only, 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 Services, 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; or




(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 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);




45


(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;




(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; and




(viii)  exercise
all other rights and remedies available to Lender in law or at equity including,
without limitation, the rights of a secured party under the UCC.




(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 directed by Lender; 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.




46


(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, UMT SERVICES 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 SERVICES 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.




47


(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; (iii) any claim, demand, liability, loss,
cost or expense resulting from Lender having possession of any Client Loan
Documents in accordance with the Loan Documents; and (iv) 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.




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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)  Lender
may, in the ordinary course of its lending business and in accordance with
applicable law, at any time, 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.




49


(c)  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 three (3) 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 the creation, perfection, and protection of the Security
Interest, 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 any appraisal of Borrower’s owned real property and the real
property securing any Client Loan.




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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, or (j) 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.




51


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.




11.17  Business
Loans.  Borrower warrants and represents that the Loans are and
shall be for business, commercial, investment, or other similar purposes and not
primarily for personal, family, household, or agricultural use, as such terms
are used in Chapter One of the Texas Credit Code.




[remainder
of page intentionally left blank]




52


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, LP
              
              By:UMTH
      Land Development, L.P.
              Its:   general
      partner
              
              By:
      UMT Services, Inc., its general partner
              
              By:     
      /s/ Ben
      Wissink
              Name:
      Ben Wissink
              Title:
      Chief Operating OfficerAddress
      for Notices for Borrower:
              
              1301
      Municipal Way, Suite 200
              Grapevine,
      TX 76051
              Attention:                      Hollis
      M. Greenlaw
              Facsimile:                      (817)
      835-0383with
      a copy to:
            Melissa
      H. Youngblood, Esq.
              Hallett
      & Perrin, P.C.
              2001
      Bryan Street, Suite 3900
              Dallas,
      TX 75201
              Facsimile:                      (214)
      922-4170










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 Loan and Security
      Agreement which are applicable to the General Partner (as such term is
      defined in the Loan and Security Agreement), and (ii) makes the
      representations, warranties, covenants and agreements in the Loan and
      Security Agreement which are, by their terms, applicable to the General
      Partner.UMTH
      LAND DEVELOPMENT, L.P.
              
              By:    UMT
      Services, Inc.
              Its:    General
      Partner
              
              By:  /s/Ben Wissink
              Name:
      Ben Wissink
              Title:
      Chief Operating OfficerAddress
      for Notices for General Partner:
              
              1301
      Municipal Way, Suite 200
              Grapevine,
      TX 76051
              Attention:                      Hollis
      M. Greenlaw
              Facsimile:                      (817)
      835-0383with
      a copy to:
            Melissa
      H. Youngblood, Esq.
              Hallett
      & Perrin, P.C.
              2001
      Bryan Street, Suite 3900
              Dallas,
      TX 75201
              Facsimile:                      (214)
      922-4170










UMT
      SERVICES:
              UMT
      Services, Inc., acting in its own capacity, hereby (i) agrees with and
      accepts all of the terms and conditions of this Loan and Security
      Agreement which are applicable to UMT Services (as such term is defined in
      the Loan and Security Agreement), and (ii) makes the representations,
      warranties, covenants and agreements in the Loan and Security Agreement
      which are, by their terms, applicable to UMT Services.UMT
      SERVICES, INC.,
              a
      Delaware corporation
              
              
              
              By:     
      /s/ Ben Wissink
              Name:
      Ben Wissink
              Title:
      Chief Operating OfficerAddress
      for Notices for UMT Services:
              
              1301
      Municipal Way, Suite 200
              Grapevine,
      TX 76051
              Attention:                      Hollis
      M. Greenlaw
              Facsimile:                      (817)
      835-0383with
      a copy to:
            Melissa
      H. Youngblood, Esq.
              Hallett
      & Perrin, P.C.
              2001
      Bryan Street, Suite 3900
              Dallas,
      TX 75201
              Facsimile:                      (214)
      922-4170










LENDER:
            /s/ Wesley J.
      Brockhoeft
              WESLEY
      J. BROCKHOEFT, an individualAddress
      for Notices for Lender:
              
              4611
      Bee Caves Road, Suite 104
              Austin,
      Texas  78746
              Attention:  Wesley
      J. Brockhoeft
              Facsimile:  (512)
      329-5909with
      a copy to:
            Daryl
      Robertson, Esq.
              Hunton
      & Williams LLP
              1445
      Ross Ave., Suite 3700
              Dallas,
      Texas  75202
              Facsimile:                      (214)
      740-7163