Exhibit 10.1

 

SECOND AMENDMENT TO LOAN AND SECURITYAGREEMENT

 

THIS SECOND AMENDMENTTO LOAN AND SECURITY AGREEMENT (this "Amendment"), dated as of June 21, 2012, is between UNITED DEVELOPMENT FUNDINGIII, LP, a Delaware limited partnership ("Borrower"), and WESLEY J. BROCKHOEFT, an individual ("Lender").

 

RECITALS:

 

Borrower and Lenderhave entered into that certain Loan and Security Agreement dated as of September 21, 2009 (as the same has been amended bythat certain First Amendment to Loan and Security Agreement dated as of June 21, 2010 and the same may be further amended or otherwisemodified, the "Agreement"). Borrower and Lender now desire to amend the Agreement as herein set forth.

 

NOW, THEREFORE, inconsideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the parties hereto agree as follows effective as of the date hereof unless otherwise indicated:

 

ARTICLE 1.

 

Definitions

 

Section1.1.          Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shallhave the same meanings as in the Agreement, as amended hereby.

 

ARTICLE 2.

 

Amendments

 

Section2.1.          Amendments to Definitions in the Agreement. Effective as of the date hereof, each of the following definitionsset forth in the Agreement is hereby amended and restated to read as follows:

 

"ClientLoan" shall mean any loan, extension of credit, or financial accommodation made by Borrower to or for the benefit of aClient or a Client Borrower, the purpose of which Client Loan is related to the purchase and/or development for sale as finishedbuilding lots for single-family residential real estate and the improvements thereto or to Client Credit Enhancements providedby Borrower in accordance with this Agreement.

 

"InitialTerm" means the period commencing on the Agreement Date, and ending on June 21, 2014.

 

"PermittedLiens" means: (a) Liens securing taxes, assessments and other governmental charges or levies (excluding any Lien imposedpursuant 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 thetime be required to be made or which are being diligently contested in good faith by the Borrower by appropriate proceedings; providedthat 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 restrictionsof record on the use of real property, which do not materially detract from the value of such property or impair the use thereofin 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 made in accordance with this Agreement, (g) Liens shown on Schedule 5.5(a)and (h) Liens arising under the UDF Loan Agreement and the other Loan Documents (as such term is defined in the UDF Loan Agreement).

 

 

Section2.2.          Amendment to Section 1.1 of the Agreement. Effective as of the date hereof, subsections(a) and (c) of Section 1.1 of the Loan Agreement are hereby amended and restated to read as follows:

 

(a)          RevolvingCredit Limit. Lender previously made Loans and other financial accommodations to Borrower in accordance with this Agreement.As of June 21, 2012, the outstanding principal amount of the Revolving Loan Advances is $15,000,000. After June 21, 2012,Borrower shall not request any Revolving Loan Advances, and Lender shall not be obligated to, and shall not, make any RevolvingLoan Advances under this Agreement available to, or for the benefit of, Borrower.

 

(c)          Repayment.Borrower shall repay the principal amount of the Revolving Loan Advances in equal installments of $1,250,000 on the twenty-first(21st) day of each March, June, September and December beginning on September 21, 2012. On the Termination Date, Borrowershall 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. In additon, accrued interest shall be payable inaccordance with Section 1.3 hereof.

 

Section2.3.          Amendment to Section 1.2 of the Agreement. Effective as of the date hereof, Section1.2 of the Loan Agreement is hereby amended and restated to read as follows:

 

1.2          BorrowingProcedures. Borrower shall not request any Revolving Loan Advances. Notwithstanding anything to the contrary in this Agreementor the Revolving Note, any amount repaid or prepaid under this Agreement cannot be re-borrowed.

 

Section2.4.          Amendment to Section 1.5 of the Agreement. Effective as of the date hereof, subsections(a) and (b) of Section 1.5 of the Loan Agreement are hereby amended and restated to read as follows:

 

(a)          TheCommitment made hereunder expires on June 21, 2012.

 

(b)          [Reserved].

 

Section2.5.          Amendment to Section 7.3 of the Agreement. Effective as of the date hereof, clause(d) of Section 7.3 of the Loan Agreement is hereby amended and restated to read as follows:

 

 

(d) ClientCredit Enhancements; provided, that if any such Client Credit Enhancement is (i) called or otherwise required to be paid by Borrower,then at such time the Client or other beneficiary of such Client Credit Enhancement shall reimburse Borrower for all amounts paidby Borrower to satisfy such Client Credit Enhancement or shall be or become indebted to Borrower in the amount of such obligationpursuant to a Client Note, which Client Note shall be subject to the terms and conditions of this Agreement, and (ii) entered intoor acquired on or after June 21, 2012, then Borrower shall have obtained the Lender's prior written consent to enter into or acquiresuch Client Credit Enhancement which consent may be given or withheld by Lender in its sole and absolute discretion. 

 

Section2.6.          Amendment to Section 7.17 of the Agreement. Effective as of the date hereof, Section7.17 of the Loan Agreement is hereby amended and restated to read as follows:

 

7.17          Investments.Neither Borrower nor any Subsidiary of Borrower will purchase, hold or acquire any Investment other than Client Joint Ventures,Client Loans, Client Credit Enhancements and related Investments. Neither Borrower nor any Subsidiary of Borrower will make oracquire any Client Credit Enhancement on or after June 21, 2012 unless Borrower shall have obtained the Lender's prior writtenconsent to make or acquire such Client Credit Enhancement which consent may be given or withheld by Lender in its sole and absolutediscretion.

 

ARTICLE 3.

 

Conditions Precedent

 

Section3.1.          Conditions. The effectiveness of Article 2 of this Amendment is subject to the satisfaction of the followingconditions precedent:

 

(a)          Lendershall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substancesatisfactory to Lender:

 

(i)          thisAmendment, duly executed by Borrower and Lender;

 

(ii)         Borrower’sgood standing certificates in Borrower’s jurisdiction of organization and each other jurisdiction where Borrower is qualifiedto do business;

 

(iii)        theGeneral Partner’s and UMT Services’ 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;

 

(iv)        UCCsearch results against Borrower from its jurisdiction of organization;

 

(v)         paymentby Borrower to Lender of all fees (including the fee required by Section 3.2 below), costs, and expenses owed to and/orincurred by Lender in connection with the Loan Agreement or this Amendment;

 

(b)          Lendershall have received such additional documentation and information as Lender or his legal counsel, Hunton & Williams LLP, mayrequest;

 

(c)          Therepresentations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct inall material respects as of the date hereof as if made on the date hereof, except for such representations and warranties limitedby their terms to a specific date;

 

 

(d)          NoDefault or Event of Default shall have occurred and be continuing; and

 

(e)          Allproceedings taken in connection with the transactions contemplated by this Amendment and all documentation and other legal mattersincident thereto shall be satisfactory to Lender and his legal counsel, Hunton & Williams LLP.

 

Section3.2.          Amendment Fee. Subject to the terms of the Agreement, in consideration for theagreements by Lender under this Amendment, Borrower agrees to pay to Lender upon the execution of this Amendment an amendment feein the aggregate amount of $150,000 via wire transfer in readily available funds, which fee shall be deemed fully earned by Lenderon the date hereof and non-refundable.

 

ARTICLE 4.

 

Ratifications,Representations and Warranties

 

Section4.1.          Ratifications. Except as expressly modified and superseded by this Amendment, the terms and provisions ofthe Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. Borrower andLender agree that the Agreement as amended hereby and the other Loan Documents shall continue to be legal, valid, binding and enforceablein accordance with their respective terms. For all matters arising prior to the effective date of this Amendment (including, withoutlimitation, the accrual and payment of interest and fees and compliance with financial covenants), the terms of the Agreement (asunmodified by this Amendment) shall control and are hereby ratified and confirmed. This Amendment shall constitute a Loan Document.

 

Section4.2.          Representations and Warranties. Borrower hereby represents and warrants to Lender as follows: (a)  noDefault or Event of Default has occurred and is continuing; (b) the representations and warranties set forth in the Loan Documentsare true and correct on and as of the date hereof with the same effect as though made on and as of such date except with respectto any representations and warranties limited by their terms to a specific date; (c) the execution, delivery and performanceof this Amendment has been duly authorized by all necessary action on the part of Borrower and does not and will not: (1) violateany provision of law applicable to Borrower, the certificate of limited partnership, partnership agreement or other applicablegoverning document of Borrower or any order, judgment, or decree of any court or agency of government binding upon Borrower; (2) conflictwith, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligationof Borrower; (3) result in or require the creation or imposition of any material lien upon any of the assets of Borrower;or (4) require any approval or consent of any Person under any material contractual obligation of Borrower; and (d) thepartnership agreement, certificate of limited partnership or other applicable governing document of the Borrower and the resolutionsof UMT Services, Inc. attached as Annex 3 to the Partnership Certificate of Borrower dated September 21, 2009 have notbeen modified or rescinded and remain in full force and effect.

 

IN ADDITION, TO INDUCELENDER TO AGREE TO THE TERMS OF THIS AMENDMENT, EACH OF BORROWER, GENERAL PARTNER, AND UMT SERVICES (COLLECTIVELY, THE "OBLIGORS")REPRESENTS AND WARRANTS THAT AS OF THE DATE OF THEIR EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR RIGHTSOF RECOUPMENT WITH RESPECT TO OR DEFENSES OR COUNTERCLAIMS TO THEIR OBLIGATIONS UNDER THE LOAN DOCUMENTS, AND IN ACCORDANCE THEREWITHEACH OF THEM:

 

(a)          WAIVER.WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, RIGHTS OF RECOUPMENT, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIORTO THE DATE OF ITS EXECUTION OF THIS AMENDMENT; AND

 

 

(b)          RELEASE.RELEASES AND DISCHARGES LENDER AND HIS EMPLOYEES, AGENTS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES")FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWNOR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH SUCH OBLIGOR EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINSTANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATEDTHEREBY.

 

ARTICLE 5.

 

Miscellaneous

 

Section5.1.          Survival of Representations and Warranties. All representations and warranties made in this Amendment orany other Loan Document including any Loan Document furnished in connection with this Amendment shall survive the execution anddelivery of this Amendment and the other Loan Documents, and no investigation by Lender or any closing shall affect the representationsand warranties or the right of Lender to rely upon them.

 

Section5.2.          Reference to Agreement. Each of the Loan Documents, including the Agreement and any and all other agreements,documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of theAgreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a referenceto the Agreement as amended hereby.

 

Section5.3.          Expenses of Lender. As provided in the Agreement, Borrower agrees to pay on demand all costs and expensesincurred by Lender in connection with the preparation, negotiation, and execution of this Amendment and the other Loan Documentsexecuted pursuant hereto, including without limitation, the costs and fees of Lender's legal counsel.

 

Section5.4.          Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid orunenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provisionso held to be invalid or unenforceable.

 

Section5.5.          Applicable Law. This Amendment and all other Loan Documents executed pursuant hereto shall be governed byand construed in accordance with the laws of the State of Texas and the applicable laws of the United States of America.

 

Section5.6.          Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender and Borrowerand their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunderwithout the prior written consent of Lender.

 

Section5.7.          Counterparts. This Amendment may be executed in one or more counterparts and on telecopy counterparts, eachof which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and thesame agreement.

 

Section5.8.          Effect of Waiver. No consent or waiver, express or implied, by Lender to or for any breach of or deviationfrom any covenant, condition or duty by Borrower shall be deemed a consent or waiver to or of any other breach of the same or anyother covenant, condition or duty.

 

Section5.9.          Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shallnot affect the interpretation of this Amendment.

 

 

Section5.10.          ENTIRE AGREEMENT. THE AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL,ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS,WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUSOR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

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Executed as ofthe date first written above.

 

 

 

RATIFICATIONOF LOAN DOCUMENTS

 

Each of UMTH LandDevelopment, L.P. ("General Partner") and UMT Services, Inc. ("UMT Services"): (i) consents andagrees to this Amendment (including, without limitation, Section 4.2 thereto), (ii) ratifies and confirms the terms and provisionsof the Agreement, and (iii) makes the representations, warranties, covenants and agreements in the Agreement which are, by theirterms, applicable to it in its capacity as the General Partner or UMT Services, respectively.