ex10-10.htm


    Exhibit
10.10

     

    REAL
ESTATE LIEN NOTE

    Amount:  $4,500,000.00                                                                                                                      Date:  August
29, 2007

    


    For value
received, the receipt and sufficiency of which is hereby acknowledged, the
undersigned, jointly and severally, (hereinafter “Borrower”, whether one or
more) promise to pay to the order of INTERNATIONAL BANK OF COMMERCE (hereinafter
“Lender”), at 1600 FM Road 802, Brownsville, Cameron County, Texas 78520, the
sum of FOUR MILLION FIVE
HUNDRED THOUSAND AND NO/100 Dollars ($4,500,000.00), in legal and lawful
money of the United States of America, with interest as it accrues on the
outstanding principal balance from date of advance of such principal until
paid.

    


    
      	
              ___

            	 
      	
              The
      interest rate shall be _________________ percent per annum;
    or

            
	 
      	 
      	 
      
	
              XX

            	 
      	
              The
      interest rate shall be floating at Zero (0.00%) percent per annum about
      the JP Morgan Chase & Co., New York (“Prime Rate”) (described below)
      as it fluctuates from time to time; provided, however, that in no event
      shall the rate of interest (plus said amount in excess thereof, if any) to
      be paid on the unpaid principal of this Note be less than Six percent
      (6.0%) per annum, nor more than the maximum legal rate allowed by
      applicable law.  This starting interest rate on the Note shall
      be Eight and One-Quarter (8.25%) percent per annum.  The rate of
      interest due hereunder shall be recomputed as of the date of any change in
      the Prime Rate.

            
	 
      	 
      	 
      
	
              ___

            	 
      	
              The
      INTERNATIONAL BANK OF COMMERCE PRIME RATE shall mean the annual lending
      rate of interest announced from time to time by Lender as its prime
      rate.

            
	 
      	 
      	 
      
	
              XX

            	 
      	
              The
      NEW YORK PRIME RATE shall mean the annual lending rate of interest
      announced from time to time by JP Morgan Chase & Co., New
      York,  New York, as its prime rate.  If the New York
      Prime Rate has been selected as the Prime Rate and if, thereafter, a prime
      rate is not announced by JP Morgan Chase & Co., New York, New York,
      then the International Bank of Commerce Prime Rate, minus one percent (1%)
      shall be the Prime Rate.

            
	 
      	 
      	 
      


    

    Use of
either of said Prime Rate is not to be construed as a warranty or representation
that such rates are more favorable than another rate or index, that rates on
other loans or credit facilities may not be based on other indices or that rates
on loans to others may not be made below either of such Prime
Rates.  At Lender’s sole discretion, any interest rate increase will
take the form of higher periodic payments, a greater balloon payment (if
applicable), and/or an increase in the number of periodic payments.

    


    The
interest is calculated on a 360-day factor applied on a 365-day year, or a
366-day year, in the event that the year is a leap year, on the unpaid principal
to the date of such installment paid.  Provided, however, that in the
event the interest rate reaches the maximum rate allowed by applicable law, said
maximum legal rate shall be computed on a full calendar year 365/365 days basis
or on a 366/366 days basis, in the event that the year is a leap
year.  The interest charged and herein contracted for will not exceed
the maximum allowed by law or 18%, whichever is lower.

    


    To the
extent allowed by law, all matured unpaid amounts will bear interest computed on
a full calendar year 365/365 days basis or on a 366/366 days basis, in the event
that the year is a leap year, at the highest legal rate of interest allowed by
Texas law, unless Federal law allows a higher interest rate, in which case,
Borrower agrees to pay the rate allowed by Federal law or 18%, whichever is
lower.  If applicable law does not set a maximum rate of interest for
matured unpaid amounts, then Borrower agrees that the maximum rate for such
amounts shall be eighteen percent (18%) per annum.

    


    To the
extent allowed by law, as the late payment charge under this Agreement, Bank may
in its sole discretion (i) increase the interest on the principal portion of any
payment amount that is not received by the payment due date to the maximum rate
allowed by law, computed on a full calendar year basis from the payment due date
until paid, or (ii) should any payment not be made within ten (10) days of the
due date, require Borrower to pay a one time “late charge” per late payment
equal to five percent (5%) of the amount of the past due principal and interest
of such payment, with a minimum of $10.00 and a maximum of $1,500.00 per late
payment.  The “late charge” may be assessed without notice, and shall
be immediately due and payable.  This provision is inapplicable if the
outstanding indebtedness under the Note is accelerated.  No late
charge will be assessed on any payment when the only delinquency is due to late
charges assessed on earlier payment and the payment is otherwise a full
payment.

    


     

    
      
         


      

      
        1

         


      

      
         


      

    


    Notwithstanding
anything contained herein to the contrary, if the Loan is subject to the
provisions of 24 Code of Federal Regulations Part 201 (Title 1 Property
Improvement and Manufactured Home Loans), then the following late charge
provisions shall be applicable to the exclusion of any other late charge and/or
default interest provisions in any instrument relating to any past due
installment of principal and/or interest due under the Note.  Borrower
agrees to pay to Lender a late charge for installments of principal and interest
which are in arrears for fifteen (15) calendar days or more.  The late
charge shall be in an amount equal to the lesser of (a) five percent (5%) of
each late installment of principal and interest, up to a maximum of $10.00 per
installment for any property improvement loan and $15.00 per installment for any
manufactured home loan, or (b) the maximum amount permitted by applicable
Federal or State Law.  The sum of such late charges plus the interest
charged under the Note and other charges deemed interest by law, shall be
limited to the maximum non-usurious amount permitted  by
applicable Federal or State Law.  This provision is inapplicable if
the outstanding indebtedness under the Note is accelerated or otherwise demanded
in full.

     

    The
outstanding and unpaid principal of this Note and all accrued interest are
payable as follows:

    


    
      	
              Number
      of Payments

            	 
      	
              Frequency

            	 
      	
              Amount
      of Payments

            	 
      	
              When
      Payments are Due

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              SEE
      ATTACHED ADDENDUM TO REAL ESTATE LIEN NOTE

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      


    

    


    Final
Maturity Date:  August 29, 2009

    


    Any
outstanding and unpaid principal, all accrued and unpaid interest, and all fees,
accrued and unpaid late charges and/or other charges incurred by, or on behalf
of, Borrower, which remain due and owing on the Final Maturity Date are due and
payable on such date.

    


    All
payments shall be made to Lender at 1600 FM Road 802, Brownsville, Cameron
County, Texas 78520.

    


    Each
payment shall be applied as of its scheduled due date and in the order of
application as the Lender in its sole discretion may from time to time
elect.

    


    The
failure of Borrower to pay any of the amounts due hereunder when the same is due
and payable shall permit Lender at its option, after the expiration of any
applicable grace period, to accelerate the maturity, without notice to Borrower,
of all, or any portion, of the remaining unpaid principal balance outstanding
and all accrued and unpaid interest and all accrued and unpaid late charges of
this Note, whereupon the same shall be due and payable immediately.

    


    Lender,
at its discretion, may declare all sums owing by Borrower (including endorsers
and/or guarantors) immediately due and payable upon deeming itself to be
adversely affected and/or insecure by reason of any material change in any of
Borrower’s (including any endorsers and/or guarantors) net worth, or by reason
of any other adverse material change in the financial condition whether or not
described herein.

    


    BORROWER
AND LENDER INTEND THAT THE LOAN EVIDENCED BY THIS NOTE (THE “LOAN”) SHALL BE IN
STRICT COMPLIANCE WITH APPLICABLE USURY LAWS.  IF AT ANY TIME ANY
INTEREST CONTRACTED FOR, CHARGED OR RECEIVED UNDER THIS NOTE OR OTHERWISE IN
CONNECTION WITH THE LOAN WOULD BE USURIOUS UNDER APPLICABLE LAW, THEN REGARDLESS
OF THE PROVISION OF THIS NOTE OR THE DOCUMENTS AND INSTRUMENTS EVIDENCING,
SECURING OR OTHERWISE EXECUTED IN CONNECTION WITH THE LOAN OR ANY ACTION OR
EVENT (INCLUDING, WITHOUT LIMITATION, PREPAYMENT OF PRINCIPAL HEREUNDER OR
ACCELERATION OF MATURITY BY THE LENDER) WHICH MAY OCCUR WITH RESPECT TO THIS
NOTE OR THE LOAN, IT IS AGREED THAT ALL SUMS DETERMINED TO BE USURIOUS SHALL BE
IMMEDIATELY CREDITED BY THE LENDER AS A PAYMENT OF PRINCIPAL HEREUNDER, OR IF
THIS NOTE HAS ALREADY BEEN PAID, IMMEDIATELY REFUNDED TO THE
BORROWER.  ALL COMPENSATION WHICH CONSTITUTES INTEREST UNDER
APPLICABLE LAW IN CONNECTION WITH THE LOAN SHALL BE AMORTIZED, PRORATED,
ALLOCATED AND SPREAD OVER THE FULL PERIOD OF TIME ANY INDEBTEDNESS IS OWING BY
BORROWER, TO THE GREATEST EXTENT PERMISSIBLE WITHOUT EXCEEDING THE APPLICABLE
MAXIMUM RATE ALLOWED BY APPLICABLE LAW IN EFFECT FROM TIME TO TIME DURING SUCH
PERIOD.

    


    In no
event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving loan accounts and revolving tri-party accounts)
apply to the Loan.

    



    
      
         


      

      
        2

         


      

      
         


      

    


    IN THE
EVENT ANY ITEM, ITEMS, TERMS OR PROVISIONS CONTAINED IN THIS INSTRUMENT ARE IN
CONFLICT WITH THE LAWS OF THE STATE OF TEXAS OR FEDERAL LAW, THIS INSTRUMENT
SHALL BE AFFECTED ONLY AS TO ITS APPLICATION TO SUCH ITEM, ITEMS, TERMS OR
PROVISIONS, AND SHALL IN ALL OTHER RESPECTS REMAIN IN FULL FORCE AND
EFFECT.  IT IS UNDERSTOOD AND AGREED THAT IN NO EVENT AND UPON NO
CONTINGENCY SHALL THE BORROWER OR ANY PARTY LIABLE THEREON, OR HEREFORE, BE
REQUIRED TO PAY INTEREST IN EXCESS OF THE RATE ALLOWED BY THE LAWS OF THE STATE
OF TEXAS OR FEDERAL LAW, IF SUCH LAW PERMITS A GREATER RATE OF INTEREST, THE
INTENTION OF THE PARTIES BEING TO CONFORM STRICTLY TO THE USURY LAWS AS NOW OR
HEREINAFTER CONSTRUED BY THE COURTS HAVING JURISDICTION.

    


    THE
BORROWER, ENDORSERS, SURETIES, GUARANTORS AND ALL PERSONS TO BECOME LIABLE ON
THIS NOTE (THE “OBLIGORS”) HEREBY, JOINTLY AND SEVERALLY, WAIVE EXPRESSLY ALL
NOTICES OF OVERDUE INSTALLMENT PAYMENTS, AND DEMANDS FOR PAYMENT THEREOF,
NOTICES OF INTENTION TO ACCELERATE MATURITY, NOTICES OF ACTUAL ACCELERATION OF
MATURITY, PRESENTMENT, DEMAND FOR PAYMENT, NOTICES OF DISHONOR, PROTEST, NOTICES
OF PROTEST, AND DILIGENCE IN COLLECTION HEREOF.  EACH OBLIGOR CONSENTS
THAT THE LENDER OR OTHER HOLDER OF THIS NOTE MAY AT ANY TIME, AND FROM TIME TO
TIME, UPON REQUEST OF OR BY AGREEMENT WITH ANY OF THEM, RENEW THIS NOTE AND/OR
EXTEND THE DATE OF MATURITY HEREOF OR CHANGE THE TIME OR METHOD OF PAYMENTS
WITHOUT NOTICE TO ANY OF THE OTHER OBLIGORS, MAKERS, SURETIES OR ENDORSERS, WHO
SHALL REMAIN BOUND FOR THE PAYMENT HEREOF.  OBLIGORS WAIVE EXPRESSLY
THE LATE FILING OR ANY SUIT OR CAUSE OF ACTION HEREON, OR ANY DELAY IN THE
HANDLING OF ANY COLLATERAL.  OBLIGORS AGREE THAT HOLDER’S ACCEPTANCE
OF PARTIAL OR DELINQUENT PAYMENTS OR FAILURE OF HOLDER TO EXERCISE ANY RIGHT OR
REMEDY CONTAINED HEREIN OR IN ANY INSTRUMENT GIVEN AS SECURITY FOR THE PAYMENT
OF THIS NOTE SHALL NOT BE A WAIVER OF ANY OBLIGATION OF THE OBLIGORS OR
CONSTITUTE WAIVER OF ANY PRIOR OR SUBSEQUENT DEFAULT.  THE HOLDER MAY
REMEDY ANY DEFAULT WITHOUT WAIVING THE DEFAULT REMEDIED AND MAY WAIVE ANY
DEFAULT WITHOUT WAIVING ANY OTHER PRIOR OR SUBSEQUENT DEFAULT.

    


    To the
extent allowed by law, as security for this Note, and all other indebtedness
which may at any time be owing by Borrower (and any endorsers and/or guarantors
hereof) to Lender or other Lender hereof, Borrower (and any endorsers and/or
guarantors hereof) gives to Lender or other Holder hereof, a security interest,
a lien and contractual right of set-off in and to all of the Borrower’s (and any
endorsers and/or guarantors hereof) money, credits, deposit accounts, accounts
and/or other property now in, or at any time hereafter coming within, the
custody or control of Lender or other Holder hereof, or any member bank or
branch bank of International Bancshares Corporation, whether held in general or
special account or deposit, or for safekeeping or otherwise.  Every
such security interest and right of set-off may be exercised without demand or
notice to Borrower (and any endorsers and/or guarantors hereof).  No
security interest or right of set-off to enforce such security interest shall be
deemed to have been waived by any act or conduct on the part of the Lender, or
by any failure to exercise such right of set-off or to enforce such security
interest, or by any delay in so doing.  Every right of set-off and
security interest shall continue in full force and effect until such right of
set-off or security interest is specifically waived or released by an instrument
in writing executed by Lender.  The foregoing is in addition to and
not in lieu of any rights of set-off allowed by law.

    


    To the
extent allowed by law, in connection with any transaction between Borrower and
Lender at ay time in the past, present or future, in the event Borrower,
individually or jointly with others, has granted or grants Lender a lien on any
real and/or personal property, Borrower agrees that the lien on such real and/or
personal property to the extent of Borrower’s interest shall also secure the
indebtedness of Borrower to Lender evidenced by this Note and all renewals,
extensions and modifications hereof.

    


    Financing
Statements:  At Lender’s request Debtor will promptly sign all other
documents, including financing statements and certificates of title, to perfect,
protect, and continue Lender’s security interest in the Collateral at the sole
cost of Borrower.  Debtor hereby authorizes Lender to file a Financing
Statement, an Amended Financing Statement and a Continuation Financing Statement
(collectively referred to as the “Financing Statement”) describing the
Collateral.  Where Collateral is in the possession of a third party,
Debtor will join with Lender in notifying the third party of Lender’s security
interest and obtaining a Control Agreement from the third party that it is
holding the collateral for the benefit of Lender.

    


    In the
event any legal action or proceeding, by arbitration or otherwise, is commenced
in connection with the enforcement of, or declaration of rights under this Note
and/or any instrument or written agreement required or delivered under or
pursuant to the terms of this Note, and/or any controversy or claim, whether
sounding in contract, tort or statute, legal or equitable, involving in any way
the financing or the transaction(s), the subject of this Note, or any other
proposed or actual loss or extension of credit, the prevailing party shall be
entitled to recover reasonable and necessary attorney’s fees, paralegal costs
(including allocated costs for in-house legal services), costs, expenses, expert
witness fees and costs, and other accessory disbursements made in connection
with any such action or proceeding, in the amount determined by the
fact-finder.

    



    
      
         


      

      
        3

         


      

      
         


      

    


    Lender,
in its sole discretion and without obligation on Lender to do so, may advance
and pay sums on behalf and for the benefit of Borrower for costs necessary for
the protection and preservation of the collateral securing this Note and other
costs that may be appropriate, in Lender’s sole discretion, including but not
limited to insurance premiums, ad valorem taxes, and attorney’s
fees.  Any sums which may be so paid out by Lender and all sums paid
for insurance premiums, as aforesaid, including the costs, expenses and
attorney’s fees paid in any suit affecting said property when necessary to
protect the lien hereof shall bear interest from the dates of such payments at
the interest rate applied to the matured and past-due principal balance of this
Note and shall be paid by Borrower to Lender upon demand, at the same place at
which this Note is payable, and shall be deemed a part of the debt and
recoverable as such in all aspects.

    


    Borrower
reserves the right to prepay, prior to maturity, all or any part of the
principal of this Note without penalty, and interest shall immediately cease on
any amount so prepaid.

    


    Any
assumption, if permitted by Lender, by any other person, partnership,
corporation, organization or any other entity without the express written
consent of Lender, shall not release the liability of Borrower for the payment
of this Note.

    


    In the
event that the hereinafter described real property is sold, conveyed, or
otherwise disposed of without the prior written consent of the Lender, the
maturity of this Note may, at the option of the Lender, be accelerated and
Lender may immediately demand payment of the then outstanding principal sum
together with all accrued and unpaid interest due thereon.

    


    Borrower
and Lender hereby expressly acknowledge and agree that in the event of a default
under this Note or under any document executed by Borrower in connection with,
or to secure the payment of, this Note (1) Lender shall not be required to
comply with Subsection 3.05(d) of the Texas Revised Partnership Act and (2)
Lender shall not be required to proceed against or exhaust the assets of
Borrower before pursuing any remedy directly against one or more of the partners
of Borrower or the property of such partners.

    


    ARBITRATION.

    


    BORROWER
AND LENDER FURTHER AGREE AS FOLLOWS:

    


    
      	
              (a)  

            	
              ANY
      AND ALL CONTROVERSIES BETWEEN THE PARTIES, EXCEPT SUCH CLAIMS AND
      CONTROVERSIES WHICH ARE CONSUMER RELATED AND INVOLVE AN AGGREGATE AMOUNT
      IN CONTROVERSY OF LESS THAN TEN THOUSAND DOLLARS ($10,000.00), SHALL BE
      RESOLVED BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
      RULES OF THE AMERICAN ARBITRATION ASSOCIATION IN EFFECT AT THE TIME OF
      FILING, UNLESS THE COMMERCIAL ARBITRATION RULES CONFLICT WITH THIS
      PROVISION, AND IN SUCH EVENT THE TERMS OF THIS PROVISION SHALL CONTROL TO
      THE EXTENT OF THE CONFLICT.  NOTWITHSTANDING ANYTHING CONTAINED
      HEREIN TO THE CONTRARY, SAVE AND EXCEPT SUBPARAGRAPHS (k), (m), (o), (p),
      AND (s) HEREIN, THOSE CONSUMER RELATED CLAIMS AND CONTROVERSIES INVOLVING
      AN AGGREGATE AMOUNT OF LESS THAN TEN THOUSAND DOLLARS ($10,000.00) SHALL
      BE CONDUCTED IN ACCORDANCE WITH THE AMERICAN ARBITRATION ASSOCIATION RULES
      FOR THE RESOLUTION OF CONSUMER-RELATED DISPUTES OF LESS THAN TEN THOUSAND
      DOLLARS.  ANY ARBITRATION HEREUNDER SHALL BE BEFORE AT LEAST
      THREE NEUTRAL ARBITRATORS ASSOCIATED WITH THE AMERICAN ARBITRATION
      ASSOCIATION AND SELECTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
      RULES OF THE AMERICAN ARBITRATION ASSOCIATION.  FAILURE OF ANY
      ARBITRATOR TO DISCLOSE ALL FACTS WHICH MIGHT TO AN OBJECTIVE OBSERVER
      CREATE A REASONABLE IMPRESSION OF THE ARBITRATOR’S PARTIALITY, AND/OR
      MATERIAL ERRORS OR LAW SHALL BE GROUNDS [IN ADDITION TO ALL OTHERS] FOR
      VACATUR OF AN AWARD RENDERED PURSUANT TO THIS
  AGREEMENT.

            


    

    


    
      	
              (b)  

            	
              THE
      AWARD OF THE ARBITRATORS, OR A MAJORITY OF THEM, SHALL BE FINAL, AND
      JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR
      FEDERAL, HAVING JURISDICTION, THE ARBITRATION AWARD SHALL BE IN WRITING
      AND SPECIFY THE FACTUAL AND LEGAL BASIS FOR THE AWARD.  UPON THE
      REQUEST OF ANY PARTY, THE AWARD SHALL INCLUDE FINDINGS OF FACT AND
      CONCLUSIONS OF LAW.

            


    

    


    
      	
              (c)  

            	
              ARBITRABLE
      DISPUTES INCLUDE ANY AND ALL CONTROVERSIES OR CLAIMS BETWEEN THE PARTIES
      OF WHATEVER TYPE OR MANNER, INCLUDING WITHOUT LIMITATION, ANY CLAIM
      ARISING OUT OF OR RELATING TO THIS NOTE, ALL PAST, PRESENT AND OR FUTURE
      CREDIT FACILITIES AND/OR AGREEMENTS INVOLVING THE PARTIES.  ANY
      TRANSACTIONS BETWEEN OR INVOLVING THE PARTIES AND/OR ANY ASPECT OF ANY
      PAST OR PRESENT RELATIONSHIP OF THE PARTIES, WHETHER BANKING OR OTHERWISE,
      SPECIFICALLY INCLUDE ANY ALLEGED TORT COMMITTED BY ANY
    PARTY.

            


    


    
      
         


      

      
        4

         


      

      
         


      

    


    


    
      	
              (d)  

            	
              THE
      PARTIES SHALL ALLOW AND PARTICIPATE IN DISCOVERY IN ACCORDANCE WITH THE
      FEDERAL RULES OF CIVIL PROCEDURE FOR A PERIOD OF ONE HUNDRED TWENTY (120)
      DAYS AFTER THE FILING OF THE ORIGINAL RESPONSIVE
      PLEADING.  DISCOVERY MAY CONTINUE THEREAFTER AS AGREED BY THE
      PARTIES OR AS ALLOWED BY THE ARBITRATORS.  UNRESOLVED DISCOVERY
      DISPUTES SHALL BE BROUGHT TO THE ATTENTION OF THE
      ARBITRATORS  BY WRITTEN MOTION FOR PROPER DISPOSITION, INCLUDING
      RULING ON ANY ASSERTED OBJECTIONS, PRIVILEGES, AND PROTECTIVE ORDER
      REQUESTS AND AWARDING REASONABLE ATTORNEY’S FEES TO THE PREVAILING
      PARTY.

            


    

    


    
      	
              (e)  

            	
              IN
      THE EVENT THE AGGREGATE OF ALL AFFIRMATIVE CLAIMS ASSERTED EXCEED
      $500,000.00, EXCLUSIVE OF INTEREST AND ATTORNEY’S FEES, OR UPON THE
      WRITTEN REQUEST OF ANY PARTY, (1) PRIOR TO THE DISSEMINATION OF A LIST OF
      POTENTIAL ARBITRATORS, THE AMERICAN ARBITRATION ASSOCIATION SHALL CONDUCT
      AN IN PERSON ADMINISTRATIVE CONFERENCE WITH THE PARTIES AND THEIR
      ATTORNEYS FOR THE FOLLOWING PURPOSES AND FOR SUCH ADDITIONAL PURPOSES AS
      THE PARTIES OR THE AMERICAN ARBITRATION ASSOCIATION MAY DEEM APPROPRIATE
      (A) TO OBTAIN ADDITIONAL INFORMATION ABOUT THE NATURE AND MAGNITUDE OF THE
      DISPUTE AND THE ANTICIPATED LENGTH OF HEARINGS AND SCHEDULING; (B) TO
      DISCUSS THE VIEW OF THE PARTIES ABOUT ANY TECHNICAL AND/OR OTHER SPECIAL
      QUALIFICATIONS OF THE ARBITRATORS; AND (C) TO CONSIDER, WHETHER MEDIATION
      OR OTHER METHODS OF DISPUTE RESOLUTION MIGHT BE APPROPRIATE, AND (2) AS
      PROMPTLY AS PRACTICABLE AFTER THE SELECTION OF THE ARBITRATORS, A
      PRELIMINARY HEARING SHALL BE HELD AMONG THE PARTIES, THEIR ATTORNEYS AND
      THE ARBITRATORS, WITH THE AGREEMENT OF THE ARBITRATORS AND THE PARTIES,
      THE PRELIMINARY HEARING MAY BE CONDUCTED BY TELEPHONE CONFERENCE CALL
      RATHER THAN IN PERSON.  AT THE PRELIMINARY HEARING THE MATTERS
      THAT MAY BE CONSIDERED SHALL INCLUDE, WITHOUT LIMITATION, A PREHEARING
      SCHEDULING ORDER ADDRESSING (A) EACH PARTY’S DUTY TO SUBMIT A DETAILED
      STATEMENT OF CLAIMS, DAMAGES AND/OR DEFENSES, A STATEMENT OF THE ISSUES
      ASSERTED BY EACH PARTY AND ANY LEGAL AUTHORITIES THE PARTIES MAY WISH TO
      BRING TO THE ATTENTION OF THE ARBITRATORS; (B) RESPONSES AND/OR REPLIES TO
      THE PLEADINGS FILED IN COMPLIANCE WITH SUBPART 2(A); (C) STIPULATIONS
      REGARDING ANY UNCONTESTED FACTS; (D) EXCHANCE AND PREMARKING OF ALL
      DOCUMENTS WHICH EACH PARTY BELIEVES MAY BE OFFERED AT THE FINAL
      ARBITRATION HEARING; (E) THE IDENTIFICATION AND AVAILABILITY OF WITNESSES,
      INCLUDING EXPERTS, AND SUCH ADDITIONAL MATTERS REGARDING WITNESSES
      INCLUDING THEIR BIOGRAPHIES AND A SHORT SUMMARY OF THEIR EXPECTED
      TESTIMONY; (F) WHETHER A STENOGRAPHIC OR OTHER OFFICIAL RECORD OF THE
      PROCEEDINGS SHALL BE MAINTAINED; AND (G) THE POSSIBILITY OF UTILIZING,
      MEDIATION OR OTHER ALTERNATIVE METHODS OF DISPUTE
    RESOLUTION.

            


    

    


    
      	
              (f)  

            	
              FOR
      PURPOSES OF THIS PROVISION, “THE PARTIES” MEANS BORROWER AND LENDER, AND
      EACH AND ALL PERSONS AND ENTITIES SIGNING THIS AGREEMENT OR ANY OTHER
      AGREEMENTS BETWEEN OR AMONG ANY OF THE PARTIES AS PART OF THIS
      TRANSACTION.  “THE PARTIES” SHALL ALSO INCLUDE INDIVIDUAL
      PARTNERS, AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND/OR
      REPRESENTATIVES OF ANY PARTY TO SUCH DOCUMENTS, AND SHALL INCLUDE ANY
      OTHER OWNER AND HOLDER OF THIS
AGREEMENT.

            


    

    


    
      	
              (g)  

            	
              THE
      PARTIES SHALL HAVE THE RIGHT TO INVOLVE SELF-HELP REMEDIES (SUCH AS
      SET-OFF, NOTIFICATION OF ACCOUNT DEBTORS, SEIZURE AND/OR FORECLOSURE OF
      COLLATERAL, AND NON-JUDICIAL SALE OF PERSONAL PROPERTY AND REAL PROPERTY
      COLLATERAL) BEFORE DURING OR AFTER ANY ARBITRATION AND/OR REQUEST
      ANCILLARY OR PROVISIONAL JUDICIAL REMEDIES (SUCH AS GARNISHMENT,
      ATTACHMENT, SPECIFIC PERFORMANCE, RECEIVER, INUNCTION OR RESTRAINING
      ORDER, AND SEQUESTRATION) BEFORE OR AFTER ANY ARBITRATION.  THE
      PARTIES NEED NOT AWAIT THE OUTCOME OF THE ARBITRATION BEFORE USING
      SELF-HELP REMEDIES.  USE OF SELF-HELP ON ANCILLARY AND/OR
      PROVISIONAL JUDICIAL REMEDIES SHALL NOT OPERATE, AS A WAIVER OF EITHER
      PARTY’S RIGHT TO COMPEL ARBITRATION.  ANY ANCILLARY OR
      PROVISIONAL REMEDY WHICH WOULD BE AVAILABLE FROM A COURT OF LAW SHALL BE
      AVAILABLE FROM THE ARBITRATORS.

            


    


    
      
         


      

      
        5

         


      

      
         


      

    


    


    
      	
              (h)  

            	
              THE
      PARTIES AGREE THAT ANY ACTION REGARDING ANY CONTROVERSY BETWEEN THE
      PARTIES SHALL EITHER BE BROUGHT BY ARBITRATION, AS DESCRIBED HEREIN, OR BY
      JUDICIAL PROCEEDINGS, BUT SHALL NOT BE PURSUED SIMULTANEOUSLY IN DIFFERENT
      OR ALTERNATIVE FORMS.  A TIMELY WRITTEN NOTICE OF INTENT TO
      ARBITRATE PURSUANT TO THIS AGREEMENT STAYS AND/OR ABATES ANY AND ALL
      ACTION IN TRIAL COURT, SAVE AND EXCEPT A HEARING ON A MOTION TO COMPEL
      ARBITRATION AND/OR THE ENTRY OF AN ORDER COMPELLING ARBITRATION AND
      STAYING AND/OR ABATING THE LITIGATION PENDING THE FILING OF THE FINAL
      AWARD OF THE ARBITRATORS.  ALL REASONABLE AND NECESSARY
      ATTORNEY’S FEES AND ALL TRAVEL COSTS SHALL BE AWARDED TO THE PREVAILING
      PARTY ON ANY MOTION TO COMPEL ARBITRATION AND MUST BE PAID TO SUCH PARTY
      WITHIN TEN (10) DAYS OF THE SIGNING OF THE ORDER COMPELLING
      ARBITRATION.

            


    

    


    
      	
              (i)  

            	
              ANY
      PARTY SHALL SERVE A WRITTEN NOTICE OF INTENT TO ARBITRATE TO ANY AND ALL
      OPPOSING PARTIES WITHIN 360 DAYS AFTER DISPUTE HAS ARISEN.  A
      DISPUTE IS DEFINED TO HAVE ARISEN ONCE UPON RECEIPT OF SERVICE OR JUDICIAL
      PROCESS, INCLUDING SERVICE ON A COUNTERCLAIM, FAILURE TO SERVE A WRITTEN
      NOTICE OF INTENT TO ARBITRATE WITHIN THE TIME SPECIFIED ABOVE SHALL BE
      DEEMED A WAIVER OF THE AGGRIEVED PARTY’S RIGHT TO COMPEL ARBITRATION OF
      SUCH CLAIM.  THE ISSUE OF WAIVER PURSUANT TO THIS AGREEMENT IS
      AN ARBITRABLE DISPUTE.

            


    

    


    
      	
              (j)  

            	
              ACTIVE
      PARTICPATION ON PENDING LITIGATION DURING THE 360 DAY NOTICE PERIOD,
      WHETHER AS PLAINTIFF OR DEFENDANT, IS NOT A WIAVER OF THE RIGHT TO COMPEL
      ARBITRATION.  ALL DISCOVERY OBTAINED IN THE PENDING LITIGATION
      MAY BE USED IN ANY SUBSEQUENT ARBITRATION
  PROCEEDING.

            


    

    


    
      	
              (k)  

            	
              THE
      PARTIES FURTHER AGREE THAT (i) NO ARBITRATION PROCEEDING HEREUNDER SHALL
      BE CERTIFIED AS A CLASS ACTION OR PROCEED AS A CLASS ACTION, OR ON A BASIS
      INVOLVING CLAIMS BROUGHT IN A PURPORTED REPRESENTATIVE CAPACITY ON BEHALF
      OF THE GENERAL PUBLIC, OTHER CUSTOMERS OR POTENTIAL CUSTOMERS OR PERSONS
      SIMILARY SITUATED AND (ii) NO ARBITRATION PROCEEDING HEREUNDER SHALL BE
      CONSOLIDATED WITH, OR JOINED IN ANY WAY WITH, ANY OTHER ARBITRATION
      PROCEEEDING.

            


    

    


    
      	
              (l)  

            	
              ANY
      ARBITRATOR SELECTED SHALL BE KNOWLEDGEABLE IN THE SUBECT MATTER OF THE
      DISPUTE.  EACH OF THE PARTIES SHALL PAY AN EQUAL SHARE OF THE
      ARBITRATION COSTS, FEES, EXPENSES, AND OF THE ARBITRATORS’ FEES, COSTS AND
      EXPENSES.

            


    

    


    
      	
              (m)  

            	
              ALL
      STATUTES OF LIMITATIONS WHICH WOULD OTHERWISE BE APP;LICABLE SHALL APPLY
      TO ANY AND ALL CLAIMS ASSERTED IN ANY ARBITRATION PROCEEDING HEREUNDER AND
      THE COMMENCEMENT OF ANY ARBITRATION PROCEEDING TOLLS SUCH STATUTES OF
      LIMITAITONS.

            


    

    


    
      	
              (n)  

            	
              IN
      ANY ARBITRATION PROCEEDING SUB JECT TO THIS PROVISION, THE ARBITRATORS, OR
      MAJORITY OF THEM, ARE SPECIFICALLY EMPOWERED TO DECIDE (BY DOCUMENTS ONLY,
      OR WITH A HEARING AT THE ARBITRATORS’ SOLE DISCRETION ) PRE-HEARING
      MOTIONS WHICH ARE SUBSTANTIALLY SIMILAR TO THE PRE-HEARING MOTIONS TO
      DISMISS AND MOTIONS FOR SUMMARY
ADJUDICATIONS.

            


    

    


    
      	
              (o)  

            	
              THIS
      ARBITRATION PROVISION SHALL SURVIVE ANY TERMINATION, AMENDMENT, OR
      EXPIRATION OF THE AGREEMENT IN WHICH THIS PROVISION IS CONTAINED, UNLESS
      ALL OF THE PARTIES OTHERWISE EXPRESSLY AGREE  IN
      WRITING.

            


    

    


    
      	
              (p)  

            	
              THE
      PARTIES ACKNOWLEDGE THAT THIS AGREEMENT EVIDENCES A TRANSACTION INVOLVING
      INTERSTATE COMMERCE.  THE FEDERAL ARBITRATION ACT SHALL GOVERN
      THE INTERPRETATION, ENFORCEMENT, AND PROCEEDINGS PURSUANT TO THE
      ARBITRATION CLAUSE OF THIS
AGREEMENT.

            


    

    


    
      	
              (q)  

            	
              THE
      ARBITRATORS, OR A MAJORITY OF THEM, SHALL AWARD ATTORNEY’S FEES AND COSTS
      TO THE PREVAILING PARTY PURSUANT TO THE TERMS OF THIS
      AGREEMENT.

            


    

    


    
      	
              (r)  

            	
              NEITHER
      THE PARTIES NOR THE ARBITRATORS MAY DISCLOSE THE EXISTENCE, CONTENT, OR
      RESULTS OF ANY ARBITRATION HEREUNDER WITHOUT PRIOR WRITTEN CONSENT OF ALL
      PARTIES AND/OR COURT ORDER.

            


    

    


    
      	
              (s)  

            	
              VENUE
      OF ANY ARBITRATION PROCEEDING HEREUNDER SHALL BE IN CAMERON, COUNTY,
      TEXAS.

            


    

    



    
      
         


      

      
        6

         


      

      
         


      

    


     

    


    
      THE TERM
LENDER INCLUDES ANY OTHER OWNER AND HOLDER OF THIS NOTE AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.  THIS NOTE IS GOVERNED BY APPLICABLE TEXAS
LAW, EXCEPT TO THE EXTENT THE USURY LAWS OF TEXAS ARE PRE-EMPTED BY FEDERAL LAW,
IN WHICH CASE, SUCH FEDERAL LAW SHALL APPLY.  VENUE OF ALL ACTIONS ON
THIS NOTE, SHALL LIE IN CAMERON COUNTY, TEXAS, AND ALL OBLIGATIONS REQUIRED
HEREIN ARE PERFORMABLE IN CAMERON COUNTY, TEXAS.

    

     

    If loan
proceeds are to be used primarily for personal, family or household use, the
following notice shall apply:

    


    NOTICE TO
CONSUMER:  UNDER TEXAS LAW IF YOU CONSENT TO THIS AGREEMENT YOU MAY BE
SUBJECT TO A FUTURE RATE AS HIGH AS TWNETY-FOUR PERCENT (24%) ANNUAL PERCENTAGE
RATE OR THE STATE USURY CEILING, WHCHEVER IS LESS.

    


    If this
Note is to be secured by a lien on a dwelling located on the hereinafter
described property, then the following notice shall apply:

    


    THE
MAXIMUM INTEREST RATE SHALL NOT EXCEED TWENTY-FOUR PERCENT (24%) PER ANNUM, OR
THE USURY CEILING, WHICHEVER IS LESS.

    


    Payment
hereof is secured by a Deed of Trust, Security Agreement and Financing Statement
of even date herewith executed by the Borrower and/or Grantors thereof to FRED
W. RUSTENBERG, Trustee, upon the following described real property:

    


    


    


    NO ORAL
AGREEMENTS

    


    THIS
WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENT OF THE PARTIES

    


    THERE ARE
NO WRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

    


    BORROWER:

    


    SOUTH
PADRE ISLAND DEVELOPMENT, LLC

    


    


    By:           /s/ MARK A.
KERNEY                                                                

    Mark A. Kerney

    Manager and Vice President

    


    Address:                1
Ocelot Trail Road

    Laguna Vista,
TX  78578


    
      
         


      

      
        7

         


      

      
         


      

    


    ADDENDUM
TO REAL ESTATE LIEN NOTE

    DATED
AUGUST 29, 2007

    EXECUTED
BY

    SOUTH
PADRE ISLAND DEVELOPMENT, LLC

    PAYABLE
TO

    INTERNATIONAL
BANK OF COMMERCE

    


    


    REPAYMENT SCHEDULE OF
NOTE:

    


    Twenty-three
(23) monthly payments of ACCRUED INTEREST due n or before the 29th day of
each month, commencing September 29, 2007 and one final payment due and payable
on or before August 29, 2009.

    


    PRINCIPAL
BALANCE PLUS ACCRUED INTEREST shall be due and payable on or before August 29,
2009.

    


    APPLICATION OF
PAYMENTS:

    


    Each
payment shall be applied on the earlier of (i) its scheduled due date, or (ii)
the date that it is received by the Lender; and each payment made after an event
of default may be applied in the order of application as the Lender, in its sole
discretion, may from time to time elect.

    


    PARTIAL
RELEASES:

    


    By paying
Lender the sum of $10,000.00 per acre (the “Release Price”) and by making
regular payments on this Note according to its terms, Borrower may have tracts
or parcels released from the liens securing payment of this
Note.  Payments of the Release Price shall be applied to the reduction
of the principal of this Note.  The line of credit available to
Borrower shall be reduced by $10,000.00 for each acre of the Property that is so
released by Lender.

    


    DESCRIPTION OF REAL PROPERTY
SECURING THIS NOTE:

    


    ALL
OF THOSE CERTAIN TRACTS OF REAL PROPERTY DESCRIBED AS “TRACTS I THROUGH II” ON
EXHIBIT “A” ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE FOR ALL
PURPOSES.