Exhibit 10.4


 


LOAN AGREEMENT


(Shahan Prairie, Denton County, Texas)


UDF V
Loan #9005


 


This Loan Agreement
(this “Agreement”) is made and entered into effective as of this the 9th day of June, 2015
(the “Effective Date”) by and among UNITED DEVELOPMENT FUNDING INCOME FUND V, a real estate
investment trust organized under the laws of the State of Maryland (together with its successors and assigns, “Lender”),
SHAHAN PRAIRIE, LP, a Texas limited partnership (“Borrower”),
SHAHAN GP, LLC, a Texas limited liability company (“General Partner”), CENTAMTAR TERRAS, L.L.C.,
a Texas limited liability company (“Centamtar Terras”), CTMGT, LLC, a Texas limited
liability company (“CTMGT”), and MEHRDAD MOAYEDI, a natural person residing in Dallas County,
Texas (“Moayedi”).


 


RECITALS:


 


A.           Borrower
has requested that Lender extend credit to Borrower as described in this Agreement. Lender is willing to make such credit available
to Borrower upon and subject to the provisions, terms and conditions hereinafter set forth.


 


B.           Subject
to and upon the terms and conditions of this Agreement, Lender has agreed to lend to Borrower the amounts herein described for
the purposes set forth below.


 


AGREEMENT:


 


NOW, THEREFORE, in
consideration of the premises, the covenants, representations, warranties and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:


 


1.            Certain
Definitions. Certain terms which are defined in the text of this Agreement shall have the respective meanings given to such
terms herein, and the following terms shall have the following meanings:


 


“Accrued
Interest Payments” means monthly interest payments equal to the amount of accrued interest on the outstanding principal
balance of the Loan, calculated at the applicable rate of interest provided herein, and payable on the last day of each calendar
month for interest accrued during that calendar month, as provided herein.


 


“Advance”
shall mean an advance of funds by Lender to or for the benefit of Borrower under this Agreement, including, without limitation,
a Commitment Advance, a Discretionary Advance or Re-Advance.


 


“Advance
Conditions” has the meaning set forth in Section 8 of this Agreement.


 


“Advance
Request” shall mean Lender’s standard form of Advance Request in the form attached hereto as Exhibit “D”.


 




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“Affiliate”
shall mean an individual or legal entity that directly or indirectly, through one or more intermediaries, controls or is controlled
by, or is under common control with, another Person. The term “Control” as utilized herein means the
possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether
through management, ownership, by contract, or otherwise; provided, however, in no event shall any Lender be deemed
an Affiliate of Borrower or any Borrower-Related Party.


 


“Approved
Budget” means a budget approved by Lender for the management and development of the Property in accordance with the
Development Plan, which specifies the cost by item of all labor, materials, and services necessary for the development of the Property
in accordance with the Development Plan, and all other expenses anticipated by Borrower incident to the Loan, the Property and
such development of the Property. The Approved Budget is attached hereto as Exhibit “F”.


 


“Approved
Builder” means DR Horton, Megatel, and each other residential homebuilder acquiring Lots from Borrower for the
purpose of constructing single family residences thereon which is approved by Lender as evidenced by Lender’s written consent.


 


“Approved
Purposes” means the use by Borrower of the Loan to fund the development of the Property.


 


“Assignment
of Contract Rights” means, collectively, each Assignment of Reimbursement Rights and Reimbursement Payments executed
by Borrower in favor of Lender assigning Lender all of the rights of Borrower under the Reimbursement Contracts.


 


“Assignment
of Lot Sale Contract” means, collectively, each Assignment of Lot Sale Contract executed by Borrower in favor of
Lender as each may be amended, modified, or supplemented from time to time.


 


“Base
Rate” means the lesser of (i) thirteen percent (13%) per annum, accrued at least monthly (on the last day of each
calendar month) and compounded annually on the anniversary of the Loan origination date, or (ii) the Highest Lawful Rate.


 


“Borrower”
has the meaning set forth in the introductory paragraph of this Agreement.


 


“Borrower-Related
Party” means, collectively, General Partner, Guarantor, and any other Person who becomes a Guarantor.


 


“Business
Day” means any day other than a Saturday, Sunday, or other day on which Lender is closed for business.


 


“Centamtar
Terras” has the meaning set forth in the introductory paragraph of this Agreement.


 


“Closing”
means the execution and delivery of the Loan Documents by Lender, Borrower and the Borrower-Related Parties.


 


“Closing
Deliveries” has the meaning given to such term in Section 7.


 




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“Collateral”
means, collectively, all property, assets and rights and all proceeds in which a Lien, in favor of Lender is or has been granted
or arises or has arisen or may hereafter be granted or arise, under or in connection with any Loan Document or otherwise, to secure
payment or performance of all or any part of the Debt. Without limitation of the foregoing, the term “Collateral”
includes, without limitation, (i) all Mortgaged Property, (ii) all Earnest Money (if any), and the proceeds therefrom, (iii) each
Lot Sale Contract (if any) and the proceeds therefrom, and (iv) each Reimbursement Contract (if any) and the proceeds therefrom.


 


“Commitment”
means the maximum dollar amount that Lender has committed to fund to or for the benefit of Borrower, subject to the Lender Conditions,
in the aggregate dollar amount of U.S. Fourteen Million Six Hundred Seventy-Seven Thousand Nine Hundred Sixty and No/100 Dollars
($14,677,960.00). The Commitment includes (and is not in addition to) the Initial Commitment Advance. The Commitment does not include
the Interest Reserve.


 


“Commitment
Advance” means any full or partial advance of the Commitment to or for the benefit of Borrower, including, without
limitation, the Initial Commitment Advance.


 


“Company
Certificate” means a certificate certifying the existence, good standing, formation and organizational documents,
and authorizing resolutions, of a Person that is an entity.


 


“Construction
Contracts” has the meaning given to such term in Section 11(a).


 


“Contractor”
means each Person contracting with Borrower or an Affiliate thereof to provide labor or materials to or in connection with the
development of the Property.


 


“Contractor’s
Consent” means a written consent in form and substance acceptable to Lender executed by each Contactor that has entered
into a written Construction Contract with Borrower or its Affiliate for the provision or labor and/or materials to or for the Property.


 


“Cost
Sharing Agreement” means that certain Cost Sharing Agreement for Water and Wastewater Facilities and Roads, dated
effective March 2, 2015, by and between CR-TDI and Borrower, entitling Borrower to certain reimbursement rights thereunder, as
it may be amended from time to time in accordance with the terms of this Agreement.


 


“CR-TDI”
means CR-TDI, LLC, a Delaware limited liability company.


 


“CTMGT”
has the meaning set forth in the introductory paragraph of this Agreement.


 


“Debt”
means all Indebtedness (principal, interest or other) evidenced by this Agreement and all Indebtedness (principal, interest or
other) owing to Lender incurred under or evidenced by the other Loan Documents. The Debt includes interest and other obligations
accruing or arising after (i) commencement of any case under any bankruptcy or similar laws by or against Borrower or (ii) the
obligations of Borrower shall cease to exist by operation of law or for any other reason. The Debt also includes all reasonable
attorneys’ fees and any other reasonable expenses incurred by Lender in enforcing any of the Loan Documents.


 


“Deed
of Trust” shall mean that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture
Filing to be recorded in the real property records of Denton County, Texas, naming Lender as the beneficiary thereunder and granting
Lender a security interest in and a second priority Lien on the Mortgaged Property in security for the payment and performance
of Borrower’s obligations under this Agreement and the other Loan Documents, subject only to Permitted Exceptions and being
superior in priority over all Liens, except the Lien securing the Senior Indebtedness, as it may be amended, modified, or supplemented
from time to time.


 




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“Default
Rate” means the lesser of (i) eighteen percent (18%) per annum, accrued at least monthly (on the last day of each
calendar month) and compounded annually on the anniversary of the Loan origination date, or (ii) the Highest Lawful Rate.


 


“Development
Plan” means the site plan and preliminary plat and engineering plans submitted to an appropriate Governmental Authority
involving planned Improvements and specifications for the development of the Property, as prepared by Borrower’s engineer
and approved in writing by Lender, which materials shall later be supplemented with final plans and drawings approved by Lender.


 


“Discretionary
Advance” has the meaning given to such term in Section 3(c).


 


“Disposition”
means any sale, lease, transfer, assignment, exchange or conveyance in whole or in part.


 


“District”
means, collectively, (i) Oak Point MUD, (ii) Mustang SUD, and (iii) any other municipal district of Denton County, Texas having
jurisdiction over the Property, being a political subdivision of the State of Texas, a body politic and corporate, and a governmental
agency of the State of Texas, organized pursuant to the provisions of Article XVI, Section 59 of the Texas Constitution.


 


“District
Notice” means, collectively, any written notice sent to the applicable District (or, in the case of the Cost Sharing
Agreement, to CR-TDI) pursuant to the requirements of any Reimbursement Contract advising the District of Lender’s Lien on
and security interest in the Reimbursement Contracts.


 


“DR
Horton” means DRHI, Inc., a Delaware corporation.


 


“DR
Horton Lot Sale Contract” means that certain Contract of Sale, dated effective May 5, 2014, by and between Borrower,
as seller, and DR Horton, as purchaser, for the purchase of approximately two hundred one (201) Finished Lots, as amended by that
certain First Amendment to Contract of Sale, dated effective July 17, 2014, as further amended by that certain Second Amendment
to Contract of Sale, dated effective August 19, 2014, as it may be further amended from time to time in accordance with the terms
of this Agreement.


 


“Earnest
Money” means any form of earnest money supporting a Lot Sale Contract, including, without limitation, any cash on
deposit or letters of credit that may be deposited with a title company, released to Borrower, or held by any other Person.


 


“Earnest
Money Assignment” means an Assignment of Earnest Money Proceeds executed by Borrower in favor of Lender, providing
for a Lien and security interest on the Earnest Money supporting each Lot Sale Contract, in the form approved by Lender in its
sole discretion.


 




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“Effective
Date” has the meaning set forth in the introductory paragraph of this Agreement.


 


“Environmental
Indemnity Agreement” shall mean that certain Environmental Indemnity Agreement to be executed by Borrower and Guarantor
in favor of Lender, pursuant to which Borrower and Guarantor agree to indemnify Lender from environmental liabilities associated
with the Property, as it may be amended, modified, or supplemented from time to time.


 


“Errors
Agreement” means that certain Errors and Omissions Agreement executed by Borrower and the Borrower-Related Parties
in favor of Lender dated as of the Effective Date.


 


“Event
of Default” has the meaning given to such term in Section 12(a).


 


“Financial
Statement Certifications” means those certain certifications of Borrower and Guarantor attesting to the accuracy
and completeness of the financial statements in the form attached hereto as Exhibit “E” and incorporated by
reference.


 


“Finished
Lot” means a fully developed finished single-family residential lot owned by Borrower which is deemed by Lender to
be a “finished” single-family residential lot and has been accepted by each of the city in which such Lot is located,
and each municipal district, municipality, water district, municipal utility district, public improvement district or other Governmental
Authority for Denton County, Texas.


 


“Good
Accounting Practice” shall mean such accounting practice as, in the opinion of independent certified public accountants
satisfactory to Lender, conforms at the time to generally accepted accounting principles or, with the prior written consent of
Lender, which may be given or withheld in Lender’s sole discretion, in any applicable case, cash basis of accounting or the
federal income tax basis of accounting, consistently applied. Each accounting term not defined in this Agreement shall have the
meaning given to it under Good Accounting Practice.


 


“Governmental
Authority” shall mean the United States, the State of Texas, the County where the Property, in whole or in part,
is located, the City, if any, where the Property, in whole or in part, is located, the District, any other district where the Property,
in whole or in part, is located, the Texas Commission for Environmental Quality, the Texas Water Development Board, the Texas Water
Quality Board, the Department of Housing and Urban Development, the Environmental Protection Agency, any political subdivision
of any of the foregoing and any agency, department, commission, board, bureau, court or instrumentality of any of them which now
or hereafter has jurisdiction over Lender, Borrower, any Borrower-Related Party, or any part of the Property.


 


“Guarantor”
means, collectively, Mehrdad Moayedi, a natural person residing in Dallas County, Texas, Centamtar Terras, CTMGT, and each other
Person who executes a Guaranty Agreement as a Guarantor thereunder.


 


“Guaranty
Agreement” means each Guaranty executed by a Guarantor in favor of Lender, as each may be amended, modified, or supplemented
from time to time.


 




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“Highest
Lawful Rate” means the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved
by Lender in accordance with the applicable laws of the State of Texas (or applicable United States federal law, to the extent
that it permits Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law), taking
into account all fees and expenses contracted for, charged, received, taken or reserved by Lender in connection with the transaction
relating to this Agreement and the Debt evidenced hereby or by the other Loan Documents which are treated as interest under applicable
law.


 


“Improvements”
means all of the improvements, structures, equipment and amenities to be constructed and/or installed upon the Property in accordance
with the Development Plan and/or the Plans and Specifications.


 


“Indebtedness”
shall mean and include (i) all items which in accordance with Good Accounting Practice would be included on the liability
side of a balance sheet on the date as of which indebtedness is to be determined (excluding capital stock, surplus, surplus reserves
and deferred credits), (ii) guaranties, endorsements and other contingent obligations in respect of indebtedness of others,
or any obligations to purchase or otherwise acquire any such indebtedness of others, and (iii) indebtedness secured by any
mortgage, pledge, security interest or lien existing on property owned subject to or burdened by such mortgage, pledge, security
interest or lien whether or not the indebtedness secured thereby shall have been assumed.


 


“Initial
Commitment Advance” means the aggregate dollar amount reflected in the closing settlement statement to be advanced
to or for the benefit of Borrower at the Closing, not to exceed the Commitment; provided, however, that Lender’s records
of the amount of the Initial Commitment Advance shall be conclusive evidence of the actual amount funded.


 


“Interest
Reserve” means a reserve of accrued interest in the aggregate amount of U.S. Three Million Four Hundred Fourteen
Thousand Forty and No/100 Dollars ($3,414,040.00) that (subject to the provisions of Sections 5(b) and 5(c) of this
Agreement) may be used by Lender to accrue monthly interest and to defer the Accrued Interest Payment that would otherwise then
be due and payable by Borrower pursuant to Sections 5(b) and 5(c)(i) of this Agreement.


 


“Interest
Reserve Accrual” means an accrual of Interest Reserve by Lender on its books and records.


 


“Lease”
has the meaning given to such term in Section 10(v).


 


“Lender”
has the meaning set forth in the introductory paragraph of this Agreement.


 


“Lender
Conditions” means, collectively, Borrower’s and the Borrower-Related Parties’ strict compliance with
each of the requirements of the Closing Deliveries in Section 7 and each of the Advance Conditions in Section 8,
as determined by Lender in its sole discretion.


 


“Lender
Representatives” has the meaning given to such term in Section 10(m).


 


“Liabilities
and Costs” has the meaning given to such term in Section 14.


 




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“Lien”
means any lien, security interest, charge, tax lien, pledge, encumbrance, collateral assignment, conditional sales or other title
retention arrangement or any other interest in property designed to secure the repayment of Indebtedness or the satisfaction of
any other obligation, whether arising by agreement or under any statute or law, or otherwise.


 


“Loan”
means the full amount of loan made to Borrower pursuant to this Agreement including all principal advanced and accrued interest
thereon and all other amounts owing to Lender under the Loan Documents.


 


“Loan
Documents” means, collectively, together with all exhibits and schedules thereto: this Agreement, the Note, the Deed
of Trust, the Environmental Indemnity Agreement, the Advance Requests, the Guaranty Agreements, the Financial Statement Certifications,
the Errors Agreement, the IRS tax disclosure forms, the Company Certificates, the Earnest Money Assignments (if any), the Assignment
of Lot Sale Contract, each Assignment of Contract Rights, the Post-Closing Agreement (if any), the District Notice, and all other
documents, instruments, agreements, assignments and certificates relating thereto, including, without limitation, any and all loan
or credit agreements, promissory notes, deeds of trust, mortgages, pledge agreements, financing statements, security agreements,
assignments of rents, assignments of leases, assignments of contracts, environmental indemnities, guaranties, contractor’s
consent agreements, lender’s title insurance policies, opinions of counsel, evidences of authorization or incumbency, escrow
instructions, and architect’s and/or engineer’s consent agreements, letters of credit, each of which is to be executed
(and acknowledged where applicable) by Borrower, the Borrower-Related Parties and/or Lender (as and where applicable) in connection
with Lender making the Loan to Borrower, as the same may be amended, modified, or supplemented from time to time.


 


“Loan
Expenses” has the meaning given to such term in Section 2(a).


 


“Lot”
shall mean any platted lot, including any Finished Lot, which is or may become a part of the Property.


 


“Lot
Purchaser” has the meaning given to such term in Section 10(t).


 


“Lot
Sale Contract” means, collectively, (i) the DR Horton Lot Sale Contract, (ii) the Megatel Lot Sale Contract, and
(iii) each other contract or agreement entered into by and between Borrower and a Lot Purchaser relating to the acquisition from
Borrower of Lots or any portion of the Mortgaged Property, as each may be amended, modified or supplemented from time to time;
provided, however, that Lender’s consent to any Lot Sale Contract shall not be inferred from this reference.


 


“Management
Contracts” has the meaning given to such term in Section 11(a).


 


“Maturity
Date” means June 9, 2018.


 


“Megatel”
means Megatel Homes III, LLC, a Texas limited liability company.


 


“Megatel
Lot Sale Contract” means that certain Contract of Sale, dated effective February 28, 2014, by and between Borrower,
as seller, and Megatel, as purchaser, for the purchase of one hundred ten (110) Finished Lots, as amended by that certain First
Amendment to Contract of Sale, dated effective June 2, 2014, as it may be further amended from time to time in accordance with
the terms of this Agreement.


 




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“Mortgaged
Property” has the meaning given to such term in the Deed of Trust. The Mortgaged Property includes, without limitation,
all of the Property.


 


“Mustang
SUD” means the Mustang Special Utility District.


 


“Mustang
SUD Reimbursement Contract” means that certain Non-Standard Service Contract, by and between Borrower and the Mustang
SUD, dated effective as of March 2, 2015, entitling Borrower to certain reimbursement rights thereunder, as it may be amended from
time to time in accordance with this Agreement.


 


“Net
Proceeds” means (i) in the event of Lot(s) being sold under a Lot Sale Contract which has been approved by Lender
(including any amendments, modifications or supplements), the purchase price of the Lot stated in the Lot Sale Contract, less (x)
any Earnest Money credit that is required by the Lot Sale Contract to be deduced from the purchase price, and (y) any closing expense
paid by Borrower and shown on the settlement statement, which is required by the Lot Sale Contract to be paid by Borrower, or (ii)
in the event of any Disposition of Lot(s) or any portion of the Mortgaged Property other than pursuant to a Lot Sale Contract approved
by Lender (including any amendments, modifications or supplements), such amount as is determined by Lender, in its sole discretion.


 


“Note”
means the Secured Promissory Note in the original principal amount of U.S. Eighteen Million Ninety-Two Thousand and No/100 Dollars
($18,092,000.00) payable to the order of Lender and its assigns, issued, executed and delivered by Borrower to Lender, as it may
be amended, modified or supplemented from time to time, in the form attached hereto as Exhibit “B” and
incorporated herein by this reference.


 


“Oak
Point MUD” means the Oak Point Water Control and Improvement District No. 3.


 


“Oak
Point MUD Reimbursement Contract” means that certain Development Agreement, dated as of September 20, 2004, by and
between The City of Oak Point, Texas, a Type-A general-law municipal corporation, acting by and through its City Manager, and Borrower,
as amended by that certain Development Agreement Amendment, dated February 20, 2006, entitling Borrower to certain reimbursement
rights thereunder, as it may be further amended from time to time in accordance with this Agreement.


 


“Obligations”
means any and all of the covenants, conditions, warranties, representations and other obligations (other than to repay the Debt)
made or undertaken by Borrower or any Borrower-Related Party to Lender as set forth in the Loan Documents.


 


“Organizational
Agreement” shall mean (i) in respect of a corporation, the Articles of Incorporation certified to a current
date by the Secretary of State in which such corporation is incorporated and the Bylaws of a corporation certified to a current
date as true and correct by the secretary or assistant secretary of a corporation; (ii) in respect of a general partnership,
a partnership agreement; (iii) in respect of a joint venture, a joint venture agreement; (iv) in respect of a limited
partnership, a partnership agreement and the certificate of limited partnership certified to a current date by an appropriate Governmental
Authority of the state in which the limited partnership is organized; (v) in respect of a trust, a trust agreement; and (vi)
in respect of a limited liability company, the certificate of organization certified to a current date by the Secretary of State
in which such limited liability company is organized and the regulations of a limited liability company certified to a current
date as true and correct by the manager of a limited liability company; and any and all future modifications thereof which are
consented to by Lender.


 




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“Origination
Fee” means One Hundred Eighty Thousand Nine Hundred Twenty and No/100 Dollars ($180,920.00) to be paid to Lender
on the date hereof, if not previously paid, in consideration of Lender’s originating the Loan to Borrower and of the commitment
of Lender to make the proceeds of the Loan available to Borrower from time to time during the term of this Agreement in accordance
with the terms hereof. The Origination Fee will be fully earned on execution of this Agreement and shall be absolutely non-refundable.


 


“Other
Contracts” has the meaning assigned to such term in Section 11(b) hereof.


 


“Owner
Loans” means, collectively, loans from owners of Borrower made in accordance with the terms of the Organizational
Agreement of Borrower, which are unsecured or subordinate both in payment and priority of Liens to the Loan and the Loan Documents
pursuant to a subordination agreement executed by such Person in favor of Lender.


 


“Permitted
Exceptions” has the meaning given to such term in the Deed of Trust.


 


“Person”
means a corporation, limited liability company, general partnership, limited partnership, trust, or other entity, or any individual.


 


“Plans
and Specifications” means the plans and specifications for the construction of the Improvements prepared by the Engineer
and approved in writing by Borrower and Lender, as the same may have been or may be amended, modified or supplemented from time
to time.


 


“Post-Closing
Agreement” means that certain Post-Closing Agreement executed by Borrower, the Borrower-Related Parties, and Lender
dated as of the Effective Date.


 


“Principal
Officer” means Mehrdad Moayedi.


 


“Pro
Forma” means Borrower’s schedule for the sale of the Lots and the projected proceeds from the sale of the Lots,
prepared by Borrower in good faith and in accordance with industry standards, attached hereto as Exhibit ”C”.


 


“Property”
means that certain real property located in Denton County, Texas, which is more particularly described on Exhibit “A”
attached hereto and incorporated herein by reference.


 


“Re-Advance”
has the meaning given to such term in Section 4.


 


“Reimbursement
Contract” means, collectively, (i) the Oak Point MUD Reimbursement Contract, (ii) the Cost Sharing Agreement, (iii)
the Mustang SUD Reimbursement Contract, and (iv) any other existing or future contract or agreement with the District or any city,
county, water district, municipal utility district, public improvement district, or other Governmental Authority providing for
the sharing, payment and/or reimbursement of the costs of planning, development and/or construction with respect to the Property
such as, but not limited to, a municipal utility district or public improvement district reimbursement agreement.


 




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“Released
Party” has the meaning given to such term in Section 10(q).


 


“Revenue
Event” means income, revenue, reimbursements, proceeds or other payment of any kind or nature under or pursuant
to, or in connection with, any Reimbursement Contract.


 


“Senior
Indebtedness” means the Indebtedness of Borrower owed to Senior Lender.


 


“Senior
Lender” means Trez Capital Funding II, LLC, a Delaware limited liability company, as Administrative Agent for Trez
Capital (2014) Corporation, a British Columbia corporation.


 


“Senior
Loan Documents” means the loan documents between Borrower and Senior Lender evidencing the Senior Indebtedness, as
further described in the Subordination Agreement.


 


“Subordination
Agreement” means that certain Subordination Agreement dated on or about the Effective Date, by and among Borrower,
Lender and Senior Lender, as amended, restated or supplemented from time to time.


 


“Title
Company” means Silver Star Title, LLC, d/b/a Sendera Title, as agent for Fidelity National Title Insurance Company.


 


“Title
Policy” shall mean one or more policies of mortgagee title insurance and all endorsements thereto requested by Lender,
issued in favor of Lender and naming Lender and its assigns as insured mortgagee by the Title Company and insuring that title to
the Property covered by the Deed of Trust is vested in Borrower, free and clear of any Lien, objection, exception or requirement
other than the Permitted Exceptions, and that Lender has a Lien in the full amount of the Loan against the Property, and containing
such endorsements as Lender may require.


 


2.            Loan
Expenses; Fees.


 


(a)          To
the extent not prohibited by applicable law, Borrower will pay all reasonable costs and expenses and reimburse Lender for any and
all expenditures of every character incurred or expended from time to time, regardless of whether an Event of Default shall have
occurred, in connection with any of the following (collectively, “Loan Expenses”):


 


(i)          the
preparation, negotiation, documentation, closing, renewal, revision, modification, increase, administrating, monitoring, review
or restructuring of any loan or credit facility represented by or secured by the Loan Documents, including legal, accounting, auditing,
architectural, engineering, due diligence, title company, and inspection services and disbursements, or in connection with collecting
or attempting to enforce or collect pursuant to any Loan Document;


 


(ii)         Lender’s
evaluating, monitoring, administering and protecting the Collateral or employing others to do so or to perform due diligence for
Lender with respect thereto; and


 




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(iii)        Lender’s
creating, perfecting and realizing upon Lender’s security interest in, and the Liens on the Collateral, and all costs and
expenses relating to Lender’s exercising any of its rights and remedies under any Loan Document or at law, including all
appraisal fees, consulting fees, filing fees, taxes, brokerage fees and commissions, title review and abstract fees, litigation
report fees, UCC search fees, other fees and expenses incident to title searches, reports and security interests, investigations,
escrow fees, attorneys’ fees, legal expenses, court costs, other fees and expenses incurred in connection with any complete
or partial liquidation of the Collateral, and all fees and expenses for any professional services or any operations conducted in
connection therewith. Notwithstanding the foregoing, no right or option granted by Borrower to Lender or otherwise arising pursuant
to any provision of any Loan Document shall be deemed to impose or admit a duty on Lender to supervise, monitor or control any
aspect of the character or condition of the Collateral or any operations conducted in connection with it for the benefit of Borrower
or any other Person other than Lender.


 


(b)          Usury
Savings Clause Applies. Borrower agrees that Lender has provided, and shall provide, separate and distinct consideration for
the fees and expenses described in the Loan Documents, and that such fees and expenses are necessary, bona fide fees and expenses
incurred in connection with the Loan. Borrower further agrees that such fees and expenses are not, are not intended to be, and
shall not be characterized as, interest or as compensation for the use, forbearance or detention of money. Despite the foregoing
and notwithstanding anything else in this Agreement and the other Loan Documents to the contrary, if any such fees or expenses
are determined to constitute interest and such fees or expenses, and when such fees and expenses are added to the interest charged
hereunder and any other items determined to constitute interest, it would cause the aggregate interest charged hereunder to exceed
the Highest Lawful Rate, then Section 13 of this Agreement shall automatically apply to reduce the interest charged hereunder
(taking into account all items determined to constitute interest) so as not to exceed the Highest Lawful Rate.


 


(c)          Origination
Fee. Borrower agrees to pay the Origination Fee to Lender. Borrower has requested, and Lender has agreed, to fund the Origination
Fee from the proceeds of the Initial Commitment Advance.


 


3.            Closing;
Commitment; Discretionary Advances.


 


(a)          Closing;
Commitment. Subject to the Lender Conditions, Lender agrees to fund the Initial Commitment Advance to Borrower at the Closing
and to fund the balance of the Commitment to Borrower in accordance with the terms and conditions of this Agreement; provided,
however, that all Advances shall be subject to, and made in accordance with, the terms and conditions of Section 3(b). Notwithstanding
anything else to the contrary contained herein, Lender shall have no obligation to make any Advance unless each of the Lender Conditions
has been satisfied.


 


(b)          Procedure
for Borrowing. Each Commitment Advance shall be made pursuant to Borrower’s delivery of an Advance Request to Lender,
accompanied by documentation supporting the Commitment Advance. Borrower agrees to provide all information, documents and agreements
as may be requested by Lender in connection with each such Advance Request. Notwithstanding anything else to the contrary contained
herein, Lender shall have no obligation to make any Advance unless each of the Lender Conditions is satisfied at the time of such
Advance.


 




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(c)          Discretionary
Advances. Lender is hereby authorized from time to time to make Advances without notice to Borrower that Lender, in its sole
discretion, deems necessary or desirable upon the occurrence of any of the following (such Advances made upon the occurrence of
the following events, which are referred to herein as the “Discretionary Advances”): (i) Lender determines,
in its sole discretion, that an Advance is be necessary or desirable for the purpose of paying any Loan Expense, cost, expense,
fee or other amount to or for the benefit of Borrower or chargeable to Borrower under the Loan Documents, (ii) any Event of Default
occurs, or (iii) upon request by Borrower for a Commitment Advance that would cause the aggregate amount of all Commitment Advances
made hereunder to exceed the Commitment. Each Discretionary Advance shall, upon disbursement, automatically constitute principal
outstanding hereunder and cause a corresponding increase in the aggregate amount of the Debt (even if such Discretionary Advance
causes the outstanding principal amount of the Note to exceed the Commitment or the face amount of the Note). Borrower agrees that
each Discretionary Advance may, in Lender’s discretion, reduce the amount of availability, if any, under the Commitment and
may, in Lender’s discretion, reduce the amount of available Interest Reserve, if any. The making by Lender of any Discretionary
Advance shall not cure or waive any Event of Default hereunder (except only for an Event of Default that has been cured to Lender’s
satisfaction as confirmed by Lender’s execution of a written agreement specifically acknowledging and describing the Event
of Default so cured, and for an Event of Default that has been waived by Lender as confirmed by Lender’s execution of a written
agreement specifically acknowledging and describing the Event of Default so waived).


 


4.            Revolving
Advances. In Lender’s sole and absolute discretion, Lender may re-advance the Commitment in whole or in part; provided,
that Lender is under no obligation to re-advance any part of the Commitment, and provided further, that if Lender decides to re-advance
any part of the Commitment, Lender shall have no obligation to fund such re-advance unless each of the Lender Conditions has been
satisfied (each re-advance made for the purposes set forth in Section 3(c) is referred to herein as a “Re-Advance”).
Each Re-Advance made under the Note shall, upon disbursement, automatically constitute principal outstanding under the Note and
shall cause a corresponding increase in the aggregate outstanding principal amount of such Note and such Re-Advance shall not cause
the aggregate amount outstanding under the Note to exceed the face amount of such Note or cause the outstanding principal amount
of the Note to exceed the Commitment. Borrower agrees that each Re-Advance shall automatically reduce the amount of availability,
if any, under the Commitment. The making by Lender of any Re-Advance shall not cure or waive any Event of Default (except only
for an Event of Default that has been cured to Lender’s satisfaction as confirmed by Lender’s execution of a written
agreement specifically acknowledging and describing the Event of Default so cured, or for an Event of Default that has been waived
by Lender as confirmed by Lender’s execution of a written agreement specifically acknowledging and describing the Event of
Default so waived).


 


5.            Interest;
Payments.


 


(a)          Interest
Rate. The outstanding principal amount of the Note shall bear interest on each day outstanding at the Base Rate unless the
Default Rate shall apply. Upon the occurrence and during the continuation of an Event of Default, the outstanding principal amount
of the Note shall, at Lender’s option, automatically and without the necessity of notice, bear interest from the date of
such Event of Default at the Default Rate, until all such delinquent amounts are paid and such breach or Event of Default has been
cured to Lender’s satisfaction as confirmed by Lender’s execution of a written agreement specifically acknowledging
and describing the Event of Default so cured, or waived by Lender as confirmed by Lender’s execution of a written agreement
specifically acknowledging and describing the Event of Default so waived.


 




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(b)          Interest
Payments; Interest Reserve Accruals. Borrower agrees to make Accrued Interest Payments to Lender on the last day of each calendar
month while the Loan is outstanding, in an amount equal to the interest accrued on the outstanding principal balance of the Note
during each such calendar month. Notwithstanding the foregoing sentence, on each date that an Accrued Interest Payment becomes
due and payable, provided that the Lender Conditions are then satisfied and that a sufficient amount of Interest Reserve is available,
Lender shall make an Interest Reserve Accrual in the amount of such Accrued Interest Payment and such Accrued Interest Payment
that would otherwise be then due and payable will be deferred. Lender may, but is not obligated to, make Interest Reserve Accruals
hereunder whether or not the Lender Conditions have been met; provided, however, that if the Lender Conditions are not then met,
any such Interest Reserve Accruals shall be made at Lender’s option and in its sole discretion. Upon each Interest Reserve
Accrual, irrespective of whether the Lender Conditions were met, the amount of remaining Interest Reserve (if any) shall be reduced
by the amount of such Interest Reserve Accrual. Notwithstanding anything else to the contrary contained herein, (i) if at any time
an Event of Default has occurred and is continuing under this Agreement, Lender shall not be obligated to make any further Interest
Reserve Accruals, and thereafter, shall do so only in its sole discretion, unless and until the Event of Default has been cured
to Lender’s satisfaction as confirmed by Lender’s execution of a written agreement specifically acknowledging and describing
the Event of Default so cured, or waived by Lender as confirmed by Lender’s execution of a written agreement specifically
acknowledging and describing the Event of Default so waived, and (ii) in no event shall Lender be obligated to make any Interest
Reserve Accrual that would cause the aggregate amount of Interest Reserve Accruals made hereunder to exceed the remaining Interest
Reserve.


 


(c)          Interest
and Principal Payments. Except earlier upon any acceleration of the Note:


 


(i)          Borrower
promises to pay to Lender monthly Accrued Interest Payments on the last day of each calendar month for interest accrued during
such calendar month, unless Lender makes an Interest Reserve Accrual to defer such Accrued Interest Payment as provided in Section
5(b) of this Agreement;


 


(ii)         in
addition to the payments required by the provisions of clause (i) above, concurrently with each Disposition of the Mortgaged
Property in whole or in part or any Lot thereof, Borrower promises to pay Lender the full amount of proceeds from such Disposition
remaining after payment of the portion of such proceeds as are required to be paid to Senior Lender under the Senior Loan Documents
or the Subordination Agreement for the portion of the Mortgaged Property or Lot so released from Lender’s Lien, which is
due and payable prior to Lender providing to Borrower (or releasing from escrow with the Title Company) its partial release of
Lien on such portion of the Mortgaged Property or Lot so released;


 


(iii)        in
addition to the payments required by the provision of clauses (i) and (ii) above, concurrently with each Revenue
Event, Borrower promises to pay to Lender the full amount of such proceeds from such Revenue Event; and


 




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(iv)        in
addition to the payments required by the provisions of clauses (i) through (iii) above, inclusive, Borrower promises
to pay to Lender the outstanding principal balance of the Note, together with all accrued, unpaid interest thereon, unpaid Loan
Expenses and other unpaid amounts due under the Loan Documents, on or prior to the Maturity Date.


 


(d)          Collateral.
Notwithstanding anything to the contrary contained in the Loan Documents, upon the occurrence and during the continuation of an
Event of Default, Lender has no obligation to release any part of the Collateral.


 


6.            Terms
and Conditions of Payment.


 


(a)          Application
of Payments. All payments and prepayments on the Loan shall be applied first, to unpaid accrued interest calculated through
the date of such payment (irrespective of whether such unpaid accrued interest has been accrued on Lender’s books and records),
next, to principal outstanding under the Note. Notwithstanding the foregoing sentence, if any Event of Default occurs and is continuing,
Lender shall have the right to apply payments toward amounts due under this Agreement as Lender determines in its sole discretion.


 


(b)          General.
All amounts are payable to Lender in lawful money of the United States of America at the address for Lender provided in this Agreement,
or at such other address as from time to time may be designated by Lender. Borrower shall make each payment which it owes under
this Agreement and the other Loan Documents to Lender in full and in lawful money of the United States, without set-off, deduction
or counterclaim. Under no circumstance may Borrower offset any amount owed by Borrower to Lender under this Agreement with an amount
owed by Lender to Borrower under any other arrangement. All payments shall be made by cashier’s check or wire transfer of
immediately available funds. Should any such payment become due and payable on a day other than a Business Day, the date for such
payment shall be extended to the next succeeding Business Day, and, in the case of a required payment of principal, interest or
Loan Expenses or other amounts then due, interest shall accrue and be payable on such amount for the period of such extension.
Each such payment must be received by Lender not later than 3:00 p.m., Grapevine, Texas time on the date such payment becomes due
and payable. Any payment received by Lender after such time will be deemed to have been made on the next succeeding Business Day.


 


(c)          Prepayment.
Borrower may prepay the Loan in whole or in part at any time and from time to time without incurring any prepayment fee or penalty,
by giving Lender no less than ten (10) days prior written notice of such termination; provided, that interest shall accrue on the
portion of the Note so prepaid through the date of such prepayment.


 


7.            Loan
Deliveries. At or prior to the Closing, Borrower shall deliver or cause to be delivered to Lender, the following items, each
of which shall be satisfactory in form and substance to Lender (the “Closing Deliveries”):


 


(a)          originals
duly executed and notarized, as appropriate, by Borrower and the Borrower-Related Parties of the Loan Documents, including, without
limitation, this Agreement, the Deed of Trust, the Note, the Environmental Indemnity Agreement, the Advance Request, the Guaranty
Agreement, the Financial Statement Certifications, the Errors Agreement, the IRS tax disclosure forms, each Assignment of Contract
Rights, the Post-Closing Agreement (if any), each Assignment and Subordination of Lot Sale Contract, and the Company Certificates;


 




    	14



     


    

 


(b)          the
Organizational Agreements of Borrower and each Borrower-Related Party that is an entity;


 


(c)          certificates
of existence and good standing for Borrower and each Borrower-Related Party that is an entity issued by the appropriate state authorities;


 


(d)          resolutions
of the general partner, manager or other governing body (as evidenced by the Organizational Agreements) of Borrower and each Borrower-Related
Party, authorizing the execution, delivery, and performance of this Agreement and the other Loan Documents, and the transactions
contemplated hereby and thereby;


 


(e)          copies
of the liability insurance and casualty insurance policies covering Borrower and the Property, evidence of payment of the premiums
therefor through at least one year and endorsements of such policies to Lender (in accordance with and meeting the requirements
of Sections 10(o) and (p) hereof);


 


(f)          all
written consents that are required with respect to or necessitated by this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby;


 


(g)          the
following due diligence and Closing documents and materials: (i) a current appraisal assessing the fair market value of the Property,
subject to Lender’s review and acceptance, completed by an appraiser acceptable to Lender, (ii) all environmental site assessments
and reports with respect to the Property, including, but not limited to, a wetlands assessment, (iii) all engineering reports and
studies, soil analysis, construction, structural and mechanical feasibility reports; all surveys, survey maps, plats and proposed
plats; all development plans, construction plans, and other plans and specifications; all topographic, drainage and contour maps
and all other reports, maps, studies and surveys of engineers, architects and others; (iv) certified copies of the deeds of conveyance
conveying the Property to Borrower, (v) the fully executed settlement statement prepared by the Title Company, which must be approved
by Lender prior to execution thereof, (vi) all sales and marketing plans for the Property, (vii) all contracts and agreements with
developers, engineers, contractors, subcontractors, consultants and others relating to supervision and maintenance of, and other
professional services relating to the Property, (viii) copies of all easements and encumbrances affecting the Property, including
land use, water use, mineral rights, surface rights, zoning, subdivision, grading, environmental restrictions, and neighborhood
association rights and restrictions and (ix) tax certificates for the Property covering taxes due for tax year(s) 2014 and earlier;


 


(h)          all
Lot Sale Contracts in existence on the Effective Date, copies of Senior Loan Documents and all amendments thereto (or drafts thereof
if unexecuted as of the Effective Date);


 


(i)          all
Reimbursement Contracts in existence on the Effective Date (or drafts thereof if unexecuted as of the Effective Date); and


 


(j)          such
other and further information, documents, agreements and certificates as are reasonably requested by Lender.


 




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No waiver by Lender of the timely
delivery of any Closing Delivery will constitute a waiver of any condition precedent to any obligation of Lender to make any Advance
or to require delivery of any Closing Delivery prior to the funding of any Advance.


 


8.            Conditions
Precedent to Advances. Borrower agrees that, notwithstanding anything to the contrary contained herein or in the other Loan
Documents, Lender’s obligation to fund any Advance or to make any Interest Reserve Accrual shall be conditioned upon the
satisfaction by Borrower of each of the following conditions, on and as of the funding date for the Advance or the date of the
Interest Reserve Accrual, as applicable (the “Advance Conditions”):


 


(a)          no
event constituting an Event of Default shall have occurred and be continuing;


 


(b)          the
Principal Officer shall have executed and delivered to Lender an Advance Request dated as of the funding date, all matters certified
in the Advance Request shall be true and correct in all respects, and Lender shall have approved the Advance Request, as determined
by Lender in its sole discretion;


 


(c)          all
statements contained in all Loan Documents and all other certificates, statements and data furnished to Lender by or on behalf
of Borrower or in connection with the transactions contemplated by this Agreement or any of the other Loan Documents (including
all of the documents and information required to be delivered to Lender under Section 7) shall be true and complete in all
material respects, and there are no facts or events actually known to Borrower that, if disclosed to Lender, would make such statements,
certificates or date untrue in any material respect (and Borrower agrees to inform Lender, prior to Lender making any such Advance,
of any such facts or events actually known to Borrower);


 


(d)          all
of the Loan Documents shall be valid and subsisting, enforceable and in full force and effect and in the priority Lien position
stated therein;


 


(e)          the
Origination Fee and all Loan Expenses owing shall have been paid in full;


 


(f)          the
Title Company shall have delivered to Lender the Title Company’s unconditional commitment to issue the Title Policy for the
Deed of Trust pursuant to a commitment that is satisfactory to Lender in all respects in the full Note amount, with all endorsements
thereto required by Lender, at Borrower’s expense;


 


(g)          the
Title Company shall have executed Lender’s Closing instruction and title objection letter and have complied with all conditions
therein;


 


(h)          the
amount of the requested Advance, when added to the outstanding principal amount of all Loan then outstanding, would not exceed
the Commitment;


 


(i)          the
amount of the Advance has been approved by Lender and the proceeds from such Advance shall be used for Approved Purposes;


 


(j)          Borrower
shall have complied with each other reasonable request of Lender made in connection with the Advance; and


 




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(k)          for
any Advance following the Initial Commitment Advance, Borrower shall have satisfied all conditions of the Post-Closing Agreement.


 


No waiver given in connection with any
Advance will constitute a waiver of any condition precedent with respect to future Advances.


 


9.            Representations
and Warranties. Each of Borrower and the Borrower-Related Parties represents and warrants to Lender as follows:


 


(a)          Due
Organization, Existence and Authority. Borrower and each Borrower-Related Party that is an entity (i) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization, and (ii) has full power and authority to own
its properties, carry on its business as presently conducted and as proposed to be conducted, and to enter into and perform its
obligations under this Agreement and the other Loan Documents to which it is a party.


 


(b)          Loan
Documents Authorized. The execution and delivery by Borrower and each Borrower-Related Party of this Agreement and the other
Loan Documents and the full and timely performance of all obligations thereunder have been duly authorized by all necessary action
under the Organizational Agreement of Borrower and each Borrower-Related Party and otherwise.


 


(c)          Loan
Documents Valid, Binding and Enforceable. This Agreement and the other Loan Documents have been duly and validly executed,
issued and delivered by Borrower and each Borrower-Related Party, and constitute the valid and legally binding obligations of Borrower
and each Borrower-Related Party enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting enforcement of creditor’s rights.


 


(d)          No
Violation. The execution, delivery and performance by Borrower and each Borrower-Related Party of the Loan Documents do not
and will not (i) contravene any Organizational Agreement of Borrower or any Borrower-Related Party, (ii) contravene any
law, rule or regulation, or any order, writ, judgment, injunction or decree or any contractual restriction binding on or affecting
Borrower or any Borrower-Related Party or the Collateral, (iii) require any approval or consent of any general partner, board,
manager, member, lender or any other Person, other than approvals or consents that have been previously obtained and disclosed
in writing to Lender, (iv) result in a breach of or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower or any Borrower-Related Party is a party or by which Borrower or any Borrower-Related
Party or the Collateral may be bound or affected, or (v) result in, or require the creation or imposition of, any Lien (other than
the Liens contemplated by the Loan Documents) with respect to the Collateral.


 


(e)          No
Other Defaults; No Consents Required. To Borrower’s knowledge, none of Borrower or any Borrower-Related Party are in
default with respect to any order, writ, injunction, decree or demand of any court or of any Governmental Authority which would
have a material adverse effect on Borrower or any Borrower-Related Party, as applicable, or which affects the Property in any materially
adverse manner. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by Borrower of the Loan Documents, other than approvals or consents that
have been previously obtained and disclosed in writing to Lender.


 




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(f)          Government
Regulations. Neither Borrower nor any Borrower-Related Party is subject to regulation under the Investment Company Act of 1940,
the Federal Power Act or the Public Utility Holding Company Act of 1935, the Interstate Commerce Act, as the same may be amended
from time to time, or any federal or state statute or regulation limiting its ability to incur Indebtedness.


 


(g)          Securities
Activities None of Borrower or any Borrower-Related Party is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System in effect from time to time) and not more than twenty-five percent (25%) of
the value of the assets of said entities consists of such margin stock.


 


(h)          Litigation
Matters. There are no actions, suits or proceedings pending, or to the knowledge of Borrower, threatened, against or affecting
Borrower, any Borrower-Related Party or the Collateral, or involving the validity or enforceability of the Loan Documents or the
priority of the Liens created or evidenced thereby, at law or in equity, or before or by any Governmental Authority.


 


(i)          Financial
Statements Complete and Accurate. All information supplied and statements made to Lender by or on behalf of Borrower or any
Borrower-Related Party is in any financial statement furnished or application for credit made prior to, contemporaneously with
or subsequent to the execution of this Agreement are and shall be true, correct, complete, valid and genuine; such financial statements
and applications for credit have been prepared in accordance with Good Accounting Practice and fully and accurately present the
financial condition of the subject thereof as of the date thereof and no material adverse change has occurred in the financial
condition reflected therein since the respective dates thereof; and no additional borrowings have been made by Borrower or any
Borrower-Related Party since the respective dates thereof other than (i) the borrowing contemplated hereby and (ii) other borrowings
approved by Lender’s prior written consent, which may be given or withheld in Lender’s sole discretion.


 


(j)          Environmental
Liability. To the knowledge of Borrower, no hazardous substances or solid wastes have been disposed of or otherwise released
on the Property in violation of Environmental Laws, nor is the Property, including its soil, ground, water, air and other elements,
contaminated by hazardous substances or solid wastes in violation of Environmental Laws. The terms “hazardous substance”
and release” shall have the meanings specified in the Comprehensive Environmental Response Compensation and Liability Act
of 1980, as amended (42 U.S.C. Section 9601 et seq.) (“CERCLA”), and the terms “solid waste”
and “disposal” (or “disposed”) shall have the meanings specified in the Resource Conservation and Recovery
Act of 1976, as amended (42 U.S.C. Section 6901 et seq.) (“RCRA”); provided, to the extent that
the laws of the State of Texas establish a meaning for “hazardous substance”, “release”, “solid waste”,
or “disposal” or “disposed”) that is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply.


 




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(k)          Tax
Liabilities. Borrower has filed all tax returns required to be filed, or has obtained an extension which is currently valid
and in effect, for all federal, state, county, local, and foreign tax returns and reports required to be filed, including, without
limitation, taxes on the Collateral and all applicable income, payroll, personal property, real property, employee withholding,
social security, unemployment, franchise, excise, use and sales taxes. Borrower has paid in full all taxes that have become due
as reflected on all such returns and reports including any interest and penalties, expect for taxes being contested in good faith
and for which such taxpayer has set aside adequate reserves for the payment thereof. Borrower has established adequate reserves
for all taxes payable but not yet due. No governmental claim for additional taxes, interest, or penalties is pending or, to the
knowledge of Borrower, threatened against Borrower or the Collateral.


 


(l)          Compliance
with Legal Requirements. Each of Borrower and the Borrower-Related Parties is in compliance with all legal requirements in
respect of the conduct of its business and the ownership of its assets. No violation of any legal requirement exists with respect
to the Property; the anticipated use of the Property complies with all applicable legal requirements; and all legal requirements
applicable to the Property have been satisfied. Each of Borrower and the Borrower-Related Parties owns or has the continuing right
to use all permits, licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names, trade name rights
and copyrights which are required to conduct its business.


 


(m)          Full
Disclosure. All statements contained in any Loan Document shall constitute representations and warranties. None of the representations,
warranties, covenants, agreements or statements contained in any Loan Document or any schedule, exhibit, report, statement or certificate
furnished to Lender by or on behalf of Borrower or any Borrower-Related Party in connection with the Loan contains or will contain
any untrue statement of a material fact, or omits or will omit any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they are made, not misleading.


 


(n)          No
Known Material Adverse Fact. None of Borrower or any Borrower-Related Party knows of any fact which materially and adversely
affects the Collateral, or the business, operations, prospects or condition, financial or otherwise, of Borrower.


 


(o)          Survival
of Representations and Warranties. All representations and warranties made by or on behalf of Borrower or any Borrower-Related
Party herein or in any other Loan Document shall survive the delivery of this Agreement and the making of the Loan and any investigation
at any time made by or on behalf of Lender shall not diminish its rights to rely thereon.


 


(p)          No
Usury. Without limiting the generality of any other representation or warranty set forth herein or in any other Loan Document,
the Loan is a commercial loan and not usurious under the laws of the State of Texas.


 


(q)          Advisement
by Lender. Prior to entering into this Agreement and the other Loan Documents, Borrower and each Borrower-Related Party have
been advised by Lender to seek the advice of an attorney and an accountant in connection with the Loan. Borrower and each Borrower-Related
Party have had the opportunity to seek the advice of an attorney and accountant of its choice in connection with the Loan.


 




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(r)          Adequate
Consideration. Prior to entering into this Agreement and the other Loan Documents, Borrower and each Borrower-Related Party
has reviewed the benefits to be provided to it as a result of Lender making the Loan and have concluded that (i) the Loan and the
terms and conditions of the Loan Documents are in the best interests of Borrower and the Borrower-Related Parties, (ii) the benefits
of the Loan and the Loan Documents are reasonably equivalent in value to the Collateral to be pledged to secure the Loan and the
obligations assumed and to be assumed by them pursuant to the Loan Documents, and (ii) direct and indirect benefits will flow to
Borrower and the Borrower-Related Parties by virtue of Borrower and the Borrower-Related Parties providing guaranties and Collateral
to secure any present or future Indebtedness of Borrower or the Borrower-Related Parties to Lender.


 


(s)          No
Partnership, Joint Venture or Agency Intended. Nothing in this Agreement or the other Loan Documents is intended
or shall in any way be construed so as to create any form of partnership, joint venture or agency relationship between Borrower
and the Borrower-Related Parties, on the one hand, and Lender, on the other hand, the parties hereto having expressly disclaimed
any intention of any kind to create any partnership or agency relationship between them resulting from or arising out of the
Loan Documents.


 


(t)          Reimbursement
Contracts. On the Effective Date, there are no Reimbursement Contracts in effect between Borrower and any District or other
counterparty other than the Oak Point MUD Reimbursement Contract, the Mustang SUD Reimbursement Contract, and the Cost Sharing
Agreement.


 


(u)          Lot
Sale Contracts. On the Effective Date, other than the DR Horton Lot Sale Contract and the Megatel Lot Sale Contract, no Lot
Sale Contract exists covering any of the Property.


 


(v)         Ownership.
Borrower owns the Property and owns all of the improvements thereon (other than any off-site improvements and any public utilities
and roadways), and all “materials” (as defined in Section 53.001 of the Texas Property Code) are free and clear of
all Liens except those in favor of Lender or Senior Lender.


 


(w)          Zoning.
The use of the Property as residential real property complies with all applicable zoning ordinances, regulations and restrictive
covenants affecting the Property.


 


(x)          No
Work Performed. No labor or services have been performed by on behalf of Borrower or otherwise, and no materials have been
furnished or delivered by on or behalf of Borrower or otherwise to, the Property prior to the recording the Deed of Trust, which
could give rise to a Lien on the Property with priority equal to or greater than the Liens and security interests of the Deed of
Trust or other Loan Documents. No party has any right to claim a mechanics or materialmen’s lien, whether statutory or constitutional,
against the Property.


 


10.          Covenants.
Each of Borrower and the Borrower-Related Parties covenants and agrees as follows:


 


(a)          Payment;
Performance. Borrower shall promptly pay all amounts due and owing to Lender under this Agreement. Borrower and each Borrower-Related
Party shall timely perform and comply with each agreement and covenant made by each of them under this Agreement and the other
Loan Documents.


 


(b)          Use
of Proceeds. Borrower shall use the proceeds of this Agreement solely for the development and management of the Property and
related closing costs and expenses, and other costs and expenses included in the Approved Budget, and for other purposes approved
by Lender. In no event shall the proceeds of this Agreement be used, directly or indirectly, for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any “margin
stock” (as such term is defined in Regulation U promulgated by the Board of Governors of the Federal Reserve System).


 




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(c)          Indebtedness.
Except for Owner Loans and the Senior Indebtedness, Borrower shall not incur any Indebtedness or guaranty or provide security for
any Indebtedness of another Person or enter into any agreement to do so without the prior written consent of Lender, which may
be which may be given or withheld in Lender’s sole discretion. As a condition of Lender granting such consent, Lender may
require Borrower and the other lender to enter into a subordination agreement in favor of Lender, which shall be satisfactory to
Lender in all respects. Notwithstanding the foregoing, Borrower may incur trade debt to vendors, and suppliers and providers of
services in the ordinary course of business without violation of this Section 10(c) and Lender approves other indebtedness
owed to Lender or its subsidiaries.


 


(d)          Restriction
on Fundamental Changes. Without the prior written consent of Lender, which may be given or withheld in Lender’s sole
discretion, Borrower will not: (i) engage in any business activities or operations substantially different from or unrelated
to those in which it was engaged on the Effective Date, (ii) merge into or consolidate with any Person or dissolve, terminate,
liquidate or wind-up (or suffer any liquidation or dissolution) in whole or in part, or transfer or otherwise dispose of all its
assets or change its legal structure, (iii) acquire, by purchase or otherwise, all or substantially all of the business or
property of, or stock or partnership interest in, or other evidence of beneficial ownership of any Person, (iv) maintain its
assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those
of any principal or Affiliate of Borrower or any other Person, (v) make any loans or advances to any third party, including any
principal or Affiliate of Borrower (vi) fail to maintain its records, books of account and bank accounts separate and apart from
those of the Affiliates of Borrower and any other Person or entity, (vii) change the management of Borrower from Mehrdad Moayedi,
or (viii) modify or amend the Organizational Agreements of Borrower or any Borrower-Related Party.


 


(e)          Notice
of Certain Events. Borrower shall promptly notify Lender in writing of: (i) the occurrence of any event or series of events
(including, without limitation, financial or economic conditions or natural disasters) causing, or that could be expected to cause
or has caused, a material adverse effect on the operations or financial condition of Borrower, any Borrower-Related Party or the
Collateral, including a statement of Borrower’s opinion as to what effects such may have on the Mortgaged Property, (ii)
the occurrence of any Event of Default, (iii) any default by Borrower or any acceleration of any Indebtedness owed by Borrower
under any contract to which Borrower is a party, (iv) any known default by Guarantor or any acceleration of any Indebtedness owed
by Guarantor under any contract to which Guarantor is a party, (v) any litigation instituted against Borrower or the Collateral,
or any claim made by any Person against or affecting the Collateral, (vi) notices of violation received from any Governmental Authority
that may adversely affect the Collateral, (vii) any audits of any federal or state tax returns of Borrower or any Borrower-Related
party and the results of any such audit, (viii) any natural disaster in the vicinity of the Property or any condemnation or similar
proceedings with respect to the Property, (ix) any Lien affecting the Property other than the Liens in favor of Lender or Senior
Lender and Permitted Exceptions, (x) any change in the character of Borrower’s business as it existed on the date hereof,
(xi) the serious illness or death of any principal or key employee of Borrower, (xii) any termination of, or any default under,
or any receipt of notice of termination or default, under any Lot Sale Contract or Reimbursement Contract, and (xii) any other
matters which could reasonably be expected to adversely affect Borrower’s ability to perform its obligations under this Agreement.
Borrower shall notify Lender in writing at least thirty (30) days prior to the date that it or any Borrower-Related Party changes
its or his name, address, principal place of business, or the place that it maintains its or his books and records.


 




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(f)          Financial
Statements; Tax Returns. Borrower shall deliver or cause to be delivered to Lender, the following:


 


(i)          within
sixty (60) days after the end of each fiscal quarter, the unaudited financial statements of Borrower, prepared in accordance with
Good Accounting Practice, and combined or consolidated as appropriate, including all notes related thereto;


 


(ii)         within
one hundred twenty (120) days after the end of each fiscal year, the unaudited financial statements of Borrower, prepared in accordance
with Good Accounting Practice, and combined or consolidated as appropriate, including all notes related thereto;


 


(iii)        copies
of all federal and state tax returns prepared with respect to Borrower within ten (10) days of such documents being filed with
the Internal Revenue Service or applicable state authority, along with an audit thereof upon request of Lender; and


 


(iv)        such
other information relating to the financial condition and affairs of Borrower and the Collateral as Lender may from time to time
request.


 


All financial statements shall
be accompanied by duly executed Financial Statement Certifications.


 


(g)          Taxes.
Borrower shall pay or cause to be paid all federal, state and local taxes levied against it and its assets and the Collateral as
they become due and payable and before the same become delinquent. Borrower shall furnish to Lender evidence that all such taxes
are paid within ten (10) days following the date of payment. Notwithstanding the foregoing, Borrower shall have the right to pay
such tax under protest or to otherwise contest any such tax or assessment, but only if (i) such contest has the effect of preventing
the collection of such taxes so contested and also of preventing the sale or forfeiture of any property subject thereto, (ii) Borrower
has notified Lender of Borrower’s intent to contest such taxes, and (iii) adequate reserves for the liability associated
with such tax have been established in accordance with Good Accounting Practice.


 


(h)          Liens.
Borrower and each Borrower-Related Party shall not create, incur, assume, permit or suffer to exist any Lien on or against the
Collateral except liens created in favor of Lender or Senior Lender and Liens expressly permitted by the Loan Documents.


 




    	22



     


    

 


(i)          Operation
of Business; Licenses and Permits. Each of Borrower and the Borrower-Related Parties shall: (i) operate its business, manage
and maintain the Property in compliance with all applicable federal, state and local laws, rules, regulations, and ordinances;
(ii) maintain or engage sufficient qualified personnel for the operations of its business; (iii) maintain its existence and good
standing in each state where it operates or does any business, except in any jurisdictions where the failure to maintain such existence
and good standing would not have a material adverse effect, individually or in the aggregate, on its financial condition or operations;
and (iv) obtain, maintain and keep current, all consents, licenses, permits, authorizations, permissions and certificates which
may be required or imposed by any Governmental Authority or which are required by applicable federal, state or local laws, regulations
and ordinances, including, without limitation, those required to manage and maintain the Property.


 


(j)          No
Defaults. Borrower will not permit any “default” or “event of default” to occur under (i) the Senior
Indebtedness, or (ii) any other documents other than the Loan Documents evidencing any Indebtedness if the same may have a material
adverse effect on Borrower, the Mortgaged Property, or Borrower’s ability to repay the Loan.


 


(k)          Borrower
and Property Documents. In addition to the information otherwise required to be provided to Lender pursuant to the Loan Documents,
Borrower shall, within five (5) days following Lender’s request, furnish to Lender, the following documents:


 


(i)          all
documents, certificates, agreements, contracts and other materials required by or designated in the Advance Conditions, including,
without limitation, all amendments, modifications, and supplements thereto, and all new and additional documents, certificates,
and agreements, contracts and other materials relating thereto;


 


(ii)         all
capital expenditure and expense reports, invoices and documentation of expenses and capital expenditures, bank account information
and records, and other material financial and operational information related to the Collateral, including, without limitation,
an itemized breakdown of all costs and expenses, and all contracts evidencing such costs and expenses;


 


(iii)        minutes
of the meetings and all written consents of the general partner, managers, members, board or other governing authority of Borrower
relating in any respect to the Collateral, including, without limitation, the Mortgaged Property;


 


(iv)        promissory
notes, loan documents, contracts and agreements evidencing Indebtedness of Borrower and the Borrower-Related Parties and all amendments,
modifications and supplements thereto;


 


(v)         any
new documents or information, and any updates, supplements, or replacements for any documents or information, required to be delivered
to Lender pursuant to the Loan Documents;


 


(vi)        all
Reimbursement Contracts and each amendment, modification and supplement thereto (provided, that by this reference, Lender shall
not be deemed to have approved any Reimbursement Contract or such amendment, modification or supplement);


 


(vii)       all
Lot Sale Contracts and each amendment, modification and supplement thereto (provided, that by this reference, Lender shall not
be deemed to have approved any such Lot Sale Contract or amendment, modification or supplement);


 




    	23



     


    

 


(viii)      other
contracts and agreements relating to the Property, its maintenance, development, construction, and management and each amendment,
modification and supplement thereto (provided, that by this reference, Lender shall not be deemed to have approved any such contract
or agreement, or amendment, modification or supplement); and


 


(ix)         all
other information with respect to Borrower, each Borrower-Related Party or the Collateral that Lender may reasonably request from
time to time.


 


(l)          Transactions
with Affiliates. Borrower shall not enter into or be a party to any agreement or transaction with any Affiliate except in the
ordinary course of and pursuant to the reasonable requirements of Borrower’s business and upon fair and reasonable terms
that are no less favorable to Borrower than it would obtain in a comparable arms-length transaction with a Person not an Affiliate
of Borrower, and on terms consistent with the business relationship of Borrower and such Affiliate prior to the Effective Date,
and fully disclosed to Lender.


 


(m)        Audit;
Inspections. Borrower and each Borrower-Related Party shall permit Lender and its employees, representatives, auditors, inspectors,
collateral verification agents, attorneys, accountants and agents (collectively, the “Lender Representatives”),
at any time and from time to time, at Borrower’s expense, to (i) audit all books and records related to Borrower, each
Borrower-Related Party and the Collateral, (ii) visit and inspect the offices of Borrower and each Borrower-Related party and
to inspect and make copies of all books and records, and to copy and record any information the Lender Representatives obtain,
and (iii) visit and inspect the Property. Borrower and each Borrower-Related Party agree to cooperate fully with Lender in connection
with such audits and inspections.


 


(n)          Agreements
related to the Property. Without the prior written consent of Lender, which may be given or withheld in Lender’s sole
discretion, none of Borrower or any Borrower-Related Party shall enter into, amend, modify or terminate any agreement related to
the Collateral that reasonably would be expected to hinder, delay or impair the timely payment of the Debt or the performance by
Borrower or any Borrower-Related party of any obligations under the Loan Documents, or that could have a material adverse effect
on the value of the Collateral or Lender’s Liens against the Collateral.


 


(o)          General
Liability Insurance. Borrower shall at all times maintain or cause to be maintained 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 each such policy naming Lender as an additional insured to each such policy,
and provide Lender annually with the insurance certificate, evidencing such coverage, the endorsement of each such policy to Lender,
and evidence of payment of the premium for each such policy.


 


(p)          Notice
of Casualty. Borrower shall notify Lender promptly if any part of the Mortgaged Property suffers material damage or destruction,
and Lender may, without liability, refuse to make further advances until Borrower makes arrangements satisfactory to Lender for
restoration or replacement of the damaged or destroyed portion of the Mortgaged Property.


 




    	24



     


    

 


(q)          Communications.
Each of Borrower and the Borrower-Related Parties hereby consents to and agrees that Lender and its representatives, employees,
project managers, and consultants may communicate with (verbally and in writing, in person and via electronic communications),
and exchange information among and between, all contractors, subcontractors, engineers, design professionals and all others who
have performed or have contracted to provide work and/or services for the Mortgaged Property or any portion thereof, together with
their respective principals, employees and agents. Each of Borrower and the Borrower-Related Parties hereby releases and holds
harmless, and agrees to indemnify, Lender, its Affiliates and their respective partners, officers, directors, shareholders, representatives,
employees, and agents (each, a “Released Party”), from and against any and all damages, claims, liabilities
and expenses related to, associated with or in respect of any such communications or exchanges of information, whether or not
they shall be caused in whole or in part by the negligence of a Released Party, excluding Lender’s intentional misconduct
or gross negligence.


 


(r)          Reimbursement
Contracts. Borrower shall obtain Lender’s written consent prior to entering into or permitting any Affiliate to enter
into any Reimbursement Contract, or prior to becoming an assignee of, or otherwise becoming entitled to receive proceeds under,
any Reimbursement Contract. As a condition to giving its prior written consent, which may be given or withheld in Lender’s
sole discretion, Borrower agrees that Lender may require, in its sole discretion, that (i) the Reimbursement Contract and the proceeds
therefrom or related thereto be assigned to Lender pursuant to an Assignment of Contract Rights or other assignment form satisfactory
to Lender in form and substance and filed of record, and/or (ii) the proceeds therefrom or related thereto be paid to Lender, which
shall be applied by Lender to reduce Borrower’s obligations owed to Lender under this Agreement and the other Loan Documents,
until all such obligations have been paid in full. Notwithstanding anything else to the contrary contained herein or in any other
Loan Document, in no event shall any Reimbursement Contract require or result in a subordination of Lender’s Lien against
the Collateral. Borrower agrees to, and agrees to cause its Affiliates (if applicable) to, execute, enter into and deliver to Lender
an Assignment of Contract Rights or any additional agreements or assignments that Lender may request in order to facilitate the
obligations of Borrower under this Section. If despite an assignment to Lender, Borrower receives any reimbursement or other proceeds
resulting from a Reimbursement Contract, then Borrower agrees to immediately pay over to Lender the full amount of such proceeds,
which shall be applied by Lender to reduce Borrower’s obligations owed to Lender under this Agreement and the other Loan
Documents, until all such obligations have been paid in full. Borrower shall not amend, modify, or supplement any Reimbursement
Contract or permit or consent to any such amendment, modification or supplement without Lender’s prior written consent, which
may be given or withheld in Lender’s sole discretion.


 


(s)          Compliance
with Lot Sale Contracts. Borrower shall comply in all respects with its obligations under each Lot Sale Contract and shall
not take any action or inaction that creates a Borrower default under any such Lot Sale Contract. Borrower shall not terminate
any Lot Sale Contract except in accordance with its terms upon default thereunder by the counterparty thereto, in which case, Borrower
shall obtain the prior written consent of Lender, which may be given or withheld in Lender’ s sole discretion, to terminate
such Lot Sale Contract. Borrower shall obtain the prior written consent of Lender, which may be given or withheld in Lender’s
sole discretion, before entering into any agreement that amends, modifies or supplements any Lot Sale Contract. Lender shall not
unreasonably withhold or delay its consent to an amendment, modification or supplement of any Lot Sale Contract if Borrower shall
have consented to such amendment, modification or supplement; provided, however, that Lender may withhold its consent,
as determined by Lender in its sole discretion, to any amendment, modification or supplement to any Lot Sale Contract which (i)
decreases the purchase price payable for any Lots, (ii) delays the acquisition of any Lot beyond the schedule or date(s) agreed
in such Lot Sale Contract, (iii) could reasonably be expected to delay or impair the ability of Borrower to timely repay the Loan
in accordance with the terms and conditions or the Loan Documents, (iv) violates any of the Loan Documents, or (v) in Lender’s
opinion, materially and adversely affects Lender’s security for the Loan or the rights and benefits of Borrower under such
Lot Sale Contract.


 




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(t)          Additional
Covenants for Lot Sale Contracts. Borrower shall obtain Lender’s prior written consent, which may be given or withheld
in Lender’s sole discretion, before entering into any Lot Sale Contract. Each purchaser of Lot(s) pursuant to a Lot Sale
Contract (a “Lot Purchaser”) must be either (i) an Approved Builder or (ii) another Person approved by
Lender in its sole discretion. For each Lot Sale Contract, the purchase price of the Lots, the timing of the take down schedule,
if any, the other terms and conditions of each Lot Sale Contract relating to the purchase price and timing of payment for the Lots
must be satisfactory to Lender in its sole discretion. Concurrently with entering into any Lot Sale Contract and as a condition
to Lender approving any Lot Sale Contract, Borrower shall execute and deliver to Lender, and shall cause the Lot Purchaser under
the Lot Sale Contract, together with any title company or other escrow agent holding Earnest Money, to execute and deliver to Lender
all of the following: (i) an Assignment of Lot Sale Contract, (ii) if required by Lender, a consent to the Assignment of Lot Sale
Contract executed by the Lot Purchaser, and (iii) and, in the event that Earnest Money is delivered or deposited in support of
the Lot Sale Contract, if required by Lender, an Earnest Money Assignment. Borrower further agrees to enter into such amendments,
modification or supplements to the Loan Documents in the form provided by Lender and to make such representations, warranties,
covenants, that Lender deems necessary or desirable in connection with each such Lot Sale Contract.


 


(u)          Certain
Approvals, Deliveries and Property Covenants.


 


(i)          Approved
Budget. The Approved Budget is attached hereto as Exhibit “F”. All Improvements to the Property shall be
constructed in accordance with the Approved Budget. Borrower shall not construct any Improvements on the Property, enter into any
Construction Contract, or order any supplies or materials until Borrower as received notice that Lender has consented to the Approved
Budget. Borrower and the Borrower-Related Parties shall not make, consent to, approve, adopt or vote in favor of any modification,
amendment, supplement, or other change to the Approved Budget (except for changes in line items that do not increase the overall
budget amount) without Lender’s prior written consent, which may be given or withheld in Lender’s sole discretion.
Borrower and the Borrower-Related Parties shall construct the Improvements and manage the Property in strict accordance with the
Approved Budget.


 


(ii)         Pro
Forma. The Pro Forma is attached as Exhibit “C”. Borrower and the Borrower-Related Parties shall not make,
consent to, approve, adopt or vote in favor of any modification, amendment, supplement, or other change to the Pro Forma without
Lender’s prior written consent, which may be given or withheld in Lender’s sole discretion. Borrower shall cause aggregate
Lot sales to occur no later than the dates set forth for Lot sales in the Pro Forma.


 


(iii)        Lot
Sales Report. Within ten (10) days after the end of each month, Borrower shall deliver to Lender a sales report setting forth
the current sales status of all Lots, including pending and anticipated Lot sales, and naming the Approved Builder or other purchaser
thereof.


 




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(iv)        Development
Plan. All Improvements to the Property shall be constructed in accordance with the Development Plan. Borrower shall not construct
any Improvements on the Property, enter into any Construction Contract, or order any supplies or materials until Borrower has received
notice that Lender has consented to the Development Plan. Borrower shall not make, consent to, approve, adopt or vote in favor
of any modification, amendment, supplement, or other change to the Development Plan without Lender’s prior written consent,
which may be given or withheld in Lender’s sole discretion. Borrower shall construct the Improvements and develop the Property
in strict accordance with the Development Plan and shall not permit any changes to the Property to occur, other than in accordance
with the Development Plan.


 


(v)         Plans
and Specifications. All Improvements to the Property shall be constructed in accordance with the Plans and Specifications.
Borrower shall not construct any Improvements on the Property, enter into any Construction Contract, or order any supplies or materials,
until Borrower as received notice that Lender has consented to the Plans and Specifications. Borrower shall not make, consent to,
approve, adopt or vote in favor of any modification, amendment, supplement, or other change to the Plans and Specifications without
Lender’s prior written consent, which may be given or withheld in Lender’s sole discretion. Borrower shall construct
the Improvements and develop the Property in strict accordance with the Plans and Specifications.


 


(vi)        Limitation
on Transfer of Amenities. Borrower will not sell, lease, transfer or otherwise dispose of the existing or future common amenities,
except to the property owners’ association created for the benefit of the owners of the Lots and upon compliance with the
applicable provisions of the Deed of Trust.


 


(vii)       Lot
Sales. Borrower will not sell or lease, or offer to sell or lease, any portion of the Property unless such sale or lease transaction
is exempt from the requirements of the Interstate Land Sales Full Disclosure Act (15
U.S.C. 1701 et seq.) or Borrower complies with all of the provisions thereof with respect to “Statements of
Record” (as defined therein) and “Property Reports” (as defined therein).


 


(viii)      Utilities.
Borrower shall secure utility services, including, without limitation, water and sewer taps for the Lots and shall not permit any
right to obtain utility services, including, without limitation, water and sewer taps, to expire.


 


(ix)         Alterations.
Without the prior written consent of Lender, Borrower shall not approve or enter into any renewal, extension, modification, amendment,
or restatement of, or supplement to, the Senior Loan Documents.


 


(v)         Lease.
Borrower shall obtain Lender’s prior written consent, which may be given or withheld in Lender’s sole discretion, before
entering into any lease for the Property or any portion thereof (each, a “Lease”). Borrower further agrees
to amend, modify or supplement the Loan Documents to incorporate such representations, warranties, covenants, agreements and Events
of Default and other terms and conditions that Lender deems reasonably necessary in connection with such Lease.


 




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(w)          Compliance
with Reimbursement Contracts. Borrower shall comply in all respects with its obligations under all Reimbursement Contracts
and shall not take any action or inaction that creates a default under the Reimbursement Contracts.


 


(x)          Sales
of Assets. Borrower will not sell, lease, transfer or otherwise dispose of the Collateral, except as permitted by the Loan
Documents.


 


(y)          Certain
Construction Matters.


 


(i)          The
Construction Contract. Borrower shall not become a party to any Construction Contract or other contract for the performance
of any work on the Property or for the supplying of any labor, materials, or services for the development of any part of the Property
except upon such terms and with such parties as shall be approved in advance in writing by Lender. Borrower shall cause each Contractor
to execute a Contractor’s Consent which shall contain a provision subordinating the Contractor’s and all subcontractors’
Liens to the Lien of the Deed of Trust. No approval by Lender of any Construction Contract or change order shall impose upon Lender
any responsibility for the adequacy, form, or content of such Construction Contract or any change orders.


 


(ii)         Affidavit
of Commencement. If requested by Lender, within thirty (30) days after the date of commencement of construction of the Improvements,
Borrower shall execute and record in the appropriate records of Denton County, Texas, an affidavit of commencement in proper form
and in accordance with Texas Property Code Section 53.124, setting forth the date work actually commenced on the Improvements.


 


(iii)        Availability
of Utilities. All utility services necessary for the occupancy and proper operation of the Improvements for their intended
purpose will be obtained by Borrower and accounted for in the Development Plan and the Approved Budget, including water supply,
storm and sanitary sewer facilities, gas, electricity and telephone facilities, and Borrower will supply evidence thereof satisfactory
to Lender.


 


(iv)        Construction
of the Improvements. Once development of the Property has commenced, the construction of the Improvements shall be pursued
with due diligence and continuity, in a good and workmanlike manner, and in accordance with sound building and engineering practices,
all applicable governmental requirements, and the Development Plan. Borrower shall not permit cessation of work for a period in
excess of thirty (30) days during any period of time during which development on the Property is scheduled to be performed without
the prior written consent of Lender, which may be given or withheld in Lender’s sole discretion, except for delays due to
strikes, riots, acts of God, war, unavailability of labor or materials, governmental laws, regulations or restrictions and Borrower
shall promptly notify Lender of any such delays; provided, however, that in no event shall work cease for a period in excess of
sixty (60) days regardless of the cause. Borrower shall cause all materials supplied for, or intended to be utilized in, the development
of any part of the Property, but not affixed to or incorporated into the Property, to be stored on the Property or at such other
location as may be approved by Lender in writing, with adequate safeguards, as required by Lender, to prevent loss, theft, damage,
or commingling with other materials or projects.


 




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(v)         Correction
of Defects. Unless approved in writing by Lender, Borrower shall correct or cause to be corrected (i) any material defect in
any part of the Improvements, (ii) any material departure in the development of any part of the Property from the Development Plan
and governmental requirements, or (iii) any encroachment by any structure located on the Property upon any building line, easement,
property line, or restricted area.


 


(z)          Consultants. Borrower
agrees that Lender may engage one or more consultants and whenever consent or approval by Lender is required under this Agreement,
the consent or approval may be conditioned upon consent or approval by such consultants. All reasonable costs of the consultants
shall be borne by Borrower. Borrower shall cooperate with the consultants and will use commercially reasonable efforts to cause
the design professionals, engineers, developers, contractors, project engineers and the employees of each of them to cooperate
with the consultants and, upon request, will furnish the consultants whatever they may consider reasonably necessary or useful
in connection with the performance of their duties. Borrower acknowledges and agrees that the duties of the consultants run solely
to Lender and that the consultants shall have no obligations or responsibilities whatsoever to Borrower or to any other Person.


 


11.          Assignments.


 


(a)          Assignment
of Contracts. As additional security for the payment of the Debt and the payment and performance of the obligations,
covenants and agreements under the Loan Documents, each of Borrower and the Borrower-Related Parties hereby transfers and assigns
to Lender for the benefit of Lender all of its rights and interests, but not its obligations, in, under and to all contracts, subcontracts
and agreements, written or oral, between Borrower and any other party, and between parties other than Borrower, in any way relating
to (i) the management, maintenance, administration, and marketing of the Property (collectively, the “Management Contracts”),
(ii) the development of the Mortgaged Property and/or the construction of Improvements on the Mortgaged Property, or the supplying
of material (specially fabricated or otherwise), labor, supplies, or other services therefor (collectively, the “Construction
Contracts”), and (iii) the Mortgaged Property in any other regard (the “Other Contracts”,
and collectively with the Management Contracts and the Construction Contracts, the “Contracts”) upon
the following terms and conditions:


 


(i)          Each
of Borrower and the Borrower-Related Parties represents and warrants to Lender that the copy of each Contract that Borrower has
furnished or will furnish to Lender is or will be a true and complete copy thereof, including all amendments thereto, if any, and
that Borrower’s interest therein is not subject to any claim, setoff or encumbrance;


 


(ii)         Neither
this assignment nor any action by Lender shall constitute an assumption by Lender of any obligations under any Contract, and Borrower
shall continue to be liable for all obligations of Borrower thereunder, and Borrower hereby agrees to perform all of its obligations
under each Contract. Each of Borrower and the Borrower-Related Parties hereby agrees to indemnify and hold Lender harmless against
and from any loss, cost, liability or expense (including, but not limited to, consultants’ fees and expenses and attorneys’
fees and expenses) incurred in connection with Borrower’s failure to perform any such Contract or any action taken by Lender,
except for matters arising as a result of the gross negligence or willful misconduct by Lender;


 




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(iii)        Upon
the occurrence of an Event of Default, and during the continuance thereof, Lender shall have the right at any time (but shall have
no obligation) to take in its name or in the name of Borrower such action as Lender may at any time determine to be necessary or
advisable to cure any default under any Contract or to protect the rights of Borrower or Lender thereunder. Lender shall incur
no liability if any action so taken by it or on its behalf shall prove to be inadequate or invalid, and each of Borrower and the
Borrower-Related Parties agrees to indemnify and hold Lender harmless against and from any loss, cost, liability or expense (including,
but not limited to, reasonable attorneys’ fees) incurred in connection with any such action, except for matters arising as
a result of the gross negligence or willful misconduct of Lender;


 


(iv)        Borrower
hereby irrevocably constitutes and appoints Lender as Borrower’s attorney-in-fact, in Borrower’s or Lender’s
name, to enforce all rights of such Borrower under each Contract; provided, however, that Lender agrees not to exercise such appointment
until the occurrence of an Event of Default or during the continuance thereof. Such appointment is coupled with an interest and
is therefore irrevocable;


 


(v)         Prior
to the occurrence of an Event of Default, Borrower shall have the right to exercise its rights as owner under each Contract; provided,
that Borrower shall not cancel or amend any Contract or do or suffer to be done any act which would impair the security constituted
by this assignment without the prior written consent of Lender, which may be given or withheld in Lender’s sole discretion;
and


 


(vi)        This
assignment shall inure to the benefit of Lender and its successors and assigns, any purchaser upon foreclosure of the Liens against
any Property, any receiver in possession of any Property or any portion thereof and any entity affiliated with Lender which assumes
Lender’s rights and obligations under this Agreement.


 


(b)          Without
limitation, the foregoing indemnities contained in this Section 11 shall apply to Lender with respect to matters which in
whole or in part are caused by or arise out of, or are claimed to be caused by or arise out of, the negligence (whether sole, comparative
or contributory) or strict liability of Lender. However, such indemnities shall not apply to Lender to the extent that the subject
of the indemnification is caused by or arises out of the gross negligence or willful misconduct of Lender.


 


12.          Default.


 


(a)          For
purposes of this Agreement, any of the following events shall constitute an “Event of Default”:


 


(i)          except
for Accrued Interest Payments due during any period when Accrued Interest Payments are made by Lender pursuant to Section 5(b),
the failure of Borrower to make any payment required by this Agreement in full on or before the date such payment is due (or declared
due pursuant to the terms of this Agreement), whether on or prior to the Maturity Date; or


 




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(ii)         any
financial statement, representation, warranty, or certificate made or furnished by or with respect to Borrower or any Borrower-Related
Party contained in this Agreement or any other Loan Document or made in connection herewith or therewith shall be materially false,
incorrect, or incomplete when made; or


 


(iii)        Borrower
or any Borrower-Related Party shall fail to perform or observe any covenant or agreement contained in this Agreement or any other
Loan Document that is not separately listed in this Section 12(a) as an Event of Default, and the same remains unremedied
for ten (10) days thereafter; or


 


(iv)        any
“event of default” or “default” occurs under any Loan Document other than this Agreement that is not separately
listed in this Section 12(a), and the same remains unremedied for ten (10) days thereafter; or


 


(v)         the
entry of a decree or order for relief by a court having jurisdiction in respect of Borrower or any Borrower-Related Party in an
involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, which is not vacated or dismissed within thirty (30) days, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of Borrower or any Borrower-Related Party for any substantial
part of its properties or the Property, or ordering the winding up or liquidation of such person’s affairs; or


 


(vi)        the
commencement by Borrower or any Borrower-Related Party of a voluntary case under the federal bankruptcy laws, as now constituted
or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it
to the appointment to or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of Borrower or any Borrower-Related Party for any substantial part of its properties or the Property, or the making by
Borrower or any Borrower-Related Party of any assignment for the benefit of creditors, or the admission by Borrower or any Borrower-Related
Party in writing of its inability to pay its debts generally as they become due; or


 


(vii)    
the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official
of all or a substantial part of the assets of Borrower or any Borrower-Related Party or the Collateral in a proceeding brought
against or initiated by Borrower or any Borrower-Related Party or the Collateral; or


 


(viii)      if
Borrower or any Borrower-Related Party that is an entity is liquidated or dissolved or winds up its affairs, or the sale or liquidation
of all or substantially all of the assets of Borrower or any Borrower-Related Party that is an entity; or


 


(ix)         any
Disposition of any Collateral occurs (except as expressly permitted by the Loan Documents) without the prior written consent of
Lender, which may be given or withheld in Lender’s sole discretion; or


 




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(x)          any
“default” or “event of default” not cured within the grace period, if any, for such default or event of
default (the terms “default” and “event of default” have the meaning given to such terms in the agreements
and documents described below), shall occur under (A) the Senior Loan Documents, (B) any credit agreement, loan agreement, promissory
note or other document evidencing Indebtedness for borrowed money to which Borrower or any Borrower-Related Party is a party as
a borrower, debtor, guarantor or other obligor, or (C) any security agreement, pledge agreement, guaranty, deed of trust, or other
agreement providing guaranty of or security or collateral for Indebtedness, executed by Borrower or any Borrower-Related Party,
or


 


(xi)        the
death or disability of the Principal Officer; or


 


(xii)       any
Loan Document ceases to be valid and binding for any reason or Borrower or any Borrower-Related Party asserts so; or


 


(xiii)      Borrower
or any Borrower-Related Party suffers the entry against it of a final judgment for the payment of money in excess of $50,000 which
is not covered by insurance which is not paid in full within ten (10) days thereafter; or


 


(xiv)      Borrower
or any Borrower-Related Party or any Affiliate of any of them suffers a writ or warrant of attachment or any similar process to
be issued by any tribunal against all or any substantial part of its properties, assets or the Collateral, including, without limitation,
the Earnest Money or the Property, and such writ or warrant of attachment or any similar process is not stayed or released within
thirty (30) days after the entry or levy thereof or after any stay is vacated or set aside; or


 


(xv)       in
Lender’s opinion, the prospect for payment or the prospect for performance with respect to this Agreement or any other agreement
that Borrower or any Borrower-Related Party may have with Lender is impaired, including any impairment caused by a material adverse
change in the financial condition or business of Borrower or any Borrower-Related Party, and Lender so notifies Borrower in writing;
or


 


(xvi)      Borrower
or any Borrower-Related Party fails to comply with any covenant or agreement in any of Sections 10(b), (c), (d),
(h), (j), (m), (n), (r), (s), (t), (w) or (x) in any respect.


 


(b)          Upon
the occurrence of an Event of Default described in subsections (a)(v), (vi) or (vii) above, all obligations under
the Note, this Agreement and the other Loan Documents shall thereupon be immediately due and payable, without demand, presentment,
notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice
of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and each
Borrower-Related Party and any and all sureties, guarantors and endorsers of the Note. During the continuance of any other Event
of Default, then and in every such case Lender may do any or all of the following: (i) declare the principal of the Note together
with all accrued and unpaid interest on the unpaid principal balance, and Loan Expenses and other amounts due to Lender under this
Agreement or the other Loan Documents, to be due and payable immediately, and the same shall become and be due and payable, without
notice, demand for payment, presentations for payment, notices of payment default, notices of intention to accelerate maturity,
protest and notice of protest, and any other notices of any kind, all of which are expressly waived by Borrower and each Borrower-Related
Party any and all sureties, guarantors and endorsers of the Note, and/or (ii) exercise any or all of its rights under all
or any of the Loan Documents, and/or (iii) refuse to advance any funds hereunder, including, without limitation, any Interest Reserve,
and/or (iv) refuse to release any part of the Collateral for an amount less than the entire amount of the Debt, even if Lender
had previously agreed to do so, and/or (v) exercise any or all other rights and remedies available to Lender at law and at equity,
including, without limitation, such rights existing under the Uniform Commercial Code. No delay on the part of Lender in exercising
any power under this Agreement shall operate as a waiver of such power or right nor shall any single or partial exercise of any
power or right preclude further exercise of that power or right.


 




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(c)          If
the Note is placed in the hands of an attorney for collection after an Event of Default or failure to pay under the Note, or if
all or any part of the Debt represented hereby is proved, established or collected in any court or in any bankruptcy, receivership,
debtor relief, probate or other court proceedings, Borrower and each Borrower-Related Party and all endorsers, sureties and guarantors
of the Note, jointly and severally, agree to pay reasonable attorneys’ fees and collection costs to Lender in addition to
the principal and interest payable under the Note.


 


13.          Usury
Laws. Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document:


 


(a)          It
is expressly stipulated and agreed to be the intent of Borrower and each Borrower-Related Party and Lender at all times to comply
strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the Debt, or applicable United
States federal law to the extent that such law permits Lender to contract for, charge, take, reserve or receive a greater amount
of interest than under Texas law. If the applicable law is ever judicially interpreted so as to render usurious any amount contracted
for, charged, taken, reserved or received in respect of the Debt, including by reason of the acceleration of the maturity or the
prepayment thereof, then it is the express intent of Borrower and each Borrower-Related Party and Lender that all amounts charged
in excess of the Highest Lawful Rate shall be automatically canceled, ab initio, and all amounts in excess of the Highest
Lawful Rate theretofore collected by Lender shall be credited on the principal balance of the Debt (or, if the Debt has been or
would thereby be paid in full, refunded to Borrower), and the provisions of the Note and the other Loan Documents shall immediately
be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution
of any new document, so as to comply with the applicable laws, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder; provided, however, if the Note has been paid in full before the end of the stated term hereof,
then Borrower and each Borrower-Related Party and Lender agree that Lender shall, with reasonable promptness after Lender discovers
or is advised by Borrower that interest was received in an amount in excess of the Highest Lawful Rate, either credit such excess
interest against the Debt then owing by Borrower to Lender and/or refund such excess interest to Borrower. Borrower and each Borrower-Related
Party hereby agrees that as a condition precedent to any claim seeking usury penalties against Lender, Borrower will provide written
notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have sixty (60)
days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to
Borrower or crediting such excess interest against the Debt then owing by Borrower to Lender. All sums contracted for, charged,
taken, reserved or received by Lender for the use, forbearance or detention of the Debt shall, to the extent permitted by applicable
law, be amortized, prorated, allocated or spread, using the actuarial method, throughout the stated term of the Note (including
any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Debt
does not exceed the Highest Lawful Rate from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.
In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts
and revolving triparty accounts) apply to the Note or any other part of the Debt. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. The terms and
provisions of this paragraph shall control and supersede every other term, covenant or provision contained herein, in any of the
other Loan Documents or in any other document or instrument pertaining to the Debt.


 




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(b)          To
the extent that Lender is relying on Chapter 303 of the Texas Finance Code to determine the Highest Lawful Rate payable on the
Note or any other part of the Debt, Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter
303, as amended. To the extent United States federal law permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law, Lender will rely on United States federal law instead of such Chapter 303 for the purpose
of determining the Highest Lawful Rate. Additionally, to the extent permitted by applicable law now or hereafter in effect, Lender
may, at its option and from time to time, utilize any other method of establishing the Highest Lawful Rate under such Chapter 303
or under other applicable law by giving notice, if required, to Borrower as provided by such applicable law now or hereafter in
effect.


 


14.          Indemnity;
Release. Each of Borrower and the Borrower-Related Parties jointly and severally agrees to indemnify Lender, upon demand, from
and against any and all liabilities, obligations, claims, losses, damages, penalties, fines, actions, judgments, suits, settlements,
costs, expenses or disbursements (including reasonable, documented fees of attorneys, accountants, experts and advisors) of any
kind or nature whatsoever, now existing (in this Section, collectively called “Liabilities and Costs”)
to the extent actually imposed on, incurred by, or asserted against Lender in its capacity as lender hereunder growing out of,
resulting from or in any other way associated with (a) this Agreement and the other Loan Documents or any of the transactions and
events (including the enforcement or defense thereof) at any time associated therewith or contemplated therein, (b) any claim that
the Loan evidenced hereby is contractually usurious, and (c) any use, handling, storage, transportation, or disposal of hazardous
or toxic materials on or about the Property.


 


The foregoing indemnifications shall
apply whether or not such Liabilities and Costs are in any way or to any extent owed in whole or in part under any claim or theory
of strict liability, or are caused in whole or in part by any negligent act or omission of any kind by Lender;


 


provided only that Lender shall not be
entitled under this Section to receive indemnification for that portion, if any, of any Liabilities and Costs which is proximately
caused by its own individual gross negligence or willful misconduct, as determined in a final judgment. If any Person (including
Borrower and each Borrower-Related Party) ever alleges such gross negligence or willful misconduct by Lender, the indemnification
provided for in this Section shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time
as a court of competent jurisdiction enters a final judgment as to the extent and effect of the alleged gross negligence or willful
misconduct. As used in this Section, the term “Lender” shall refer not only to the Person designated as such in this
Agreement but also to each partner, director, officer, attorney, employee, representative and Affiliate of such Person.


 




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For good and valuable consideration
set forth herein, including the promises, agreements, covenants, representations and obligations set forth in this Agreement and
the other Loan Documents, each of Borrower and the Borrower-Related Parties hereby releases and forever discharges, and covenants
not to sue or file any charges or claims against Lender for any and all existing or future claims, demands and causes of action,
in contract or in tort, at law or in equity, known or unknown, pending or threatened, for all existing and future damages arising
out of or in any way associated with this Agreement and the other Loan Documents and the Loan made pursuant hereto and thereto.


 


15.          No
Presumption. Each of Borrower and the Borrower-Related Parties represents and warrants to Lender that it has read and fully
understand the terms and provisions hereof, has had an opportunity to review this Agreement and the other Loan Documents with legal
counsel and has executed this Agreement and the other Loan Documents based on its own judgment. If an ambiguity or question of
intent or interpretation arises, the Loan Documents will be construed as if drafted jointly by Borrower, the Borrower-Related Parties
and Lender and no presumption or burden of proof will arise favoring or disfavoring any party because of authorship of any provision
of the Loan Documents.


 


16.          Set-Off.
Borrower hereby gives and confirms to Lender a right of set-off of all moneys, securities and other property of Borrower (whether
special, general or limited) and the proceeds thereof, now or hereafter delivered to remain with or in transit in any manner to
Lender, its correspondents or its agents from or for Borrower, whether for safekeeping, custody, pledge, transmission, collection
or otherwise or coming into possession of Lender in any way, and also, of all other liabilities and obligations now or hereafter
owed by Borrower to Lender, contracted with or acquired by Lender, whether joint, several, absolute, contingent, secured, unsecured,
matured or unmatured, hereby authorizing Lender at any time after an Event of Default has occurred and is continuing, without prior
notice, to apply such balances, credits of claims or any part thereof, to such liabilities in such amounts as it may select, whether
contingent, unmatured or otherwise, and whether any collateral security therefor is deemed adequate or not. The rights described
herein shall be in addition to any collateral security described in any separate agreement executed by Borrower.


 


17.          No
Third Party Beneficiaries. The benefits of this Agreement and the Loan Documents will not inure to any third party. Notwithstanding
anything contained in the Loan Documents or any conduct or course of conduct by Borrower or any Borrower-Related Party or Lender,
before or after the date of this Agreement, this Agreement will not be construed as creating any rights, claims, or causes of action
against Lender, or any of its officers, directors, agents or employees, in favor of any contractor, subcontractor, supplier of
labor or materials, or any of their respective creditors, or any other person or entity other than Borrower. Without limiting the
generality of the foregoing, Advances made to any Person other than Borrower (including, without limitation, any contractor, subcontractor
or supplier of labor or materials) will not be deemed recognition by Lender of any third-party beneficiary status claimed by any
such person or entity.


 


18.          Cumulative
Remedies. All rights and remedies that Lender is afforded by reason of the Loan Documents are separate and cumulative with
respect to Borrower and any other Person that is or becomes obligated to Lender under the Loan Documents and otherwise and may
be pursued separately, successively, or concurrently, as Lender deems advisable. In addition, all such rights and remedies are
non-exclusive and shall in no way limit or prejudice Lender’s ability to pursue any other legal or equitable rights or remedies
that may be available to Lender.


 




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19.         Notice.
Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by any of the
following methods: (a) registered or certified mail, (b) facsimile, (c) delivered personally by courier service, or (d) delivered
by nationally recognized overnight delivery service; in each case, addressed to the respective parties as follows:


 


	If to Borrower:	Shahan Prairie, LP
	 	1800 Valley View Lane, Suite 300
	 	Farmers Branch, Texas 75234
	 	Facsimile No. (469) 892-7210
	 	Attention: Mehrdad Moayedi
	If to a	 
	Borrower-Related Party:	Mehrdad Moayedi
	 	CTMGT, LLC
	 	Centamtar Terras, L.L.C.
	 	Shahan GP, LLC
	 	1800 Valley View Lane, Suite 300
	 	Farmers Branch, Texas 75234
	 	Facsimile No. (469) 892-7210
	 	Attention: Mehrdad Moayedi
	 	 
	If to Lender:	United Development Funding Income Fund V
	 	1301 Municipal Way, Suite 200
	 	Grapevine, Texas 76051
	 	Facsimile No. (817) 835-0383
	 	Attention:	c/o UMTH Land Development
	 	 	Ben Wissink and Melissa Youngblood
	 	 	 
	With a Copy to:	 	 
	(which shall not constitute notice to)
	 	 	 
	 	Michael Franklin
	 	Hallett & Perrin, P.C.
	 	1445 Ross Avenue, Suite 2400
	 	Dallas, Texas 75202
	 	Facsimile No. (214) 922-4142




 


Each notice or other communication will
be treated as effective and as having been given and received (i) if sent by certified mail, or registered mail, three (3)
Business Days after deposit in a regularly maintained receptacle for deposit of United States mail, (ii) if sent by facsimile,
upon written or electronic confirmation of facsimile transfer, (iii) if delivered by courier, upon written or electronic confirmation
of delivery from such service, or (iv) if sent by nationally-recognized overnight delivery service, upon written or electronic
confirmation of delivery from such service. Borrower’s or any Borrower Related party’s address for notice may be changed
at any time and from time to time, but only after thirty (30) days’ advance written notice to Lender and shall be the most
recent such address furnished in writing by them to Lender. Lender’s address for notice may be changed at any time and from
time to time, but only after written notice to Borrower and shall be the most recent such address furnished in writing by Lender
to Borrower. Actual notice, however and from whomever given or received, shall always be effective when received.


 




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20.          Enforcement
and Waiver by Lender. Lender shall have the right at all times to enforce the provisions of this Agreement and the other Loan
Documents in strict accordance with their respective terms, notwithstanding any conduct or custom on the part of Lender in refraining
from so doing at any time or times. The failure of Lender at any time or times to enforce its rights under such provisions, strictly
in accordance with the same, shall not be construed as having created a custom or in any way or manner modified or waived the same.


 


21.          Choice
of Law. Except to the extent that the validity or perfection of security interests or remedies in respect of any particular
collateral is governed by the laws of a jurisdiction other than the state of Texas, this Agreement and the other Loan Documents
shall be construed in accordance with and governed by the substantive laws of the State of Texas, without regard to its conflict
of laws provisions.


 


22.          Jurisdiction;
Venue. Borrower irrevocably agrees that any legal proceeding in respect of this Agreement and the other Loan Documents shall
be brought in the district courts of Tarrant County, Texas or the United States District Court for the Northern District of Texas,
Fort Worth Division (the “Specified Courts”). Borrower hereby irrevocably submits to the nonexclusive jurisdiction
of the Specified Courts. Borrower hereby irrevocably waives, to the fullest extent permitted by law, any objection that it may
now or hereafter have that the laying of venue of any suit, action or proceeding brought in any such Specified Court has been brought
in an inconvenient forum. Borrower hereby irrevocably agrees to a transfer of all such proceedings to the Specified Courts. Nothing
herein shall affect the right of Lender to commence legal proceedings or otherwise proceed against Borrower in any jurisdiction
or to serve process in any manner permitted by applicable law.


 


23.          Counterparts.
This Agreement and each other Loan Document may be executed in any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute but one and the same instrument.


 


24.          Severability.
If any provision of this Agreement or any other Loan Document shall be held invalid under any applicable laws, then all other terms
and provisions of this Agreement and the Loan Documents shall nevertheless remain effective and shall be enforced to the fullest
extent permitted by applicable law.


 


25.          Amendments;
Waivers. No amendment or waiver of any provision of this Agreement nor consent to any departure herefrom, shall in any event
be effective unless the same shall be in writing and signed by Lender and the affected party, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given.


 


26.          Binding
Effect; Assignment. This Agreement and the other Loan Documents shall be binding on Borrower and its successors and assigns,
including, without limitation, any receiver, trustee or debtor in possession of or for Borrower, and shall inure to the benefit
of Lender and its successors and assigns. Borrower shall not be entitled to transfer or assign its obligations under this Agreement
and the other Loan Documents in whole or in part without the prior written consent of Lender, which may be given or withheld in
Lender’s sole discretion. This Agreement and the other Loan Documents are freely assignable and transferable by Lender without
the consent of Borrower. Should the status, composition, structure or name of Borrower change, this Agreement and the other Loan
Documents shall continue to be binding upon such Person and also cover such Person under the new status composition, structure
or name according to the terms hereof and thereof.


 


27.          Time
of the Essence. Time is of the essence in this Agreement and the Loan Documents.


 




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28.          Captions;
Number or Gender of Words. The captions in this Agreement are for the convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions hereof. Except where the context indicates otherwise, words in the singular number
will include the plural and words in the masculine gender will include the feminine and neutral, and vice versa, when they should
so apply.


 


29.          Further
Assurances; Cooperation. Borrower and each Borrower-Related Party will at any time and from time to time upon Lender’s
request take or cause to be taken any action, will execute, acknowledge, deliver or record any further documents, opinions, mortgages,
security agreements, financing statements, amendments to the Loan Documents or other instruments as Lender in its reasonable discretion
deems necessary or appropriate to carry out the purposes of the Loan Documents and to preserve, protect and perfect the security
interest intended to be created and preserved in the Collateral.


 


30.          Joint
and Several Liability. “Borrower” shall mean each co-borrower hereunder, or any of them, if more than one. The
obligations of said Borrower hereunder if more than one, shall be joint and several. Suit may be brought against said Borrower,
jointly and severally, and against any one or more of them, or less than all, without impairing the rights of Lender against the
others of said Borrower; and Lender may compromise with any one of said Borrower for such sums or sum as it may see fit and release
such of said Borrower from all further liability to Lender for such Indebtedness without impairing the right of Lender to demand
and collect the balance of such Indebtedness from others of said Borrower not so released.


 


31.          Lender
Consent. Where any provision of this Loan Agreement or any other Loan Document requires Lender’s consent, or requires
Borrower to obtain Lender’s consent, in each such case, Lender’s consent shall not be inferred from any action or inaction
of Lender, but instead must be evidenced by a written agreement or consent executed by Lender.


 


32.          Subordination
Agreement. Notwithstanding anything to the contrary contained herein and in the other Loan Documents, this Note and the Debt
evidenced hereby are subordinate to the Senior Indebtedness of Borrower owing to Senior Lender, and the Loan Documents and Liens
of Lender evidenced thereby are subordinate to the Senior Loan Documents and the Liens of Senior Lender evidenced thereby, solely
to the extent and in the manner set forth in the Subordination Agreement.


 


33.          Waiver
of Jury Trial, Punitive Damages, etc. Each of Borrower and the Borrower-Related Parties hereby knowingly, voluntarily, intentionally
and irrevocably (a) waives, to the maximum extent not prohibited by law, any right Borrower or any Borrower-Related Party may have
to a trial by jury in respect of any litigation based hereon, or directly or indirectly at any time arising out of, under or in
connection with this Agreement or the Loan Documents or any transaction contemplated hereby or thereby or associated herewith or
therewith, (b) waives, to the maximum extent not prohibited by law, any right Borrower or any Borrower-Related Party may have to
claim or recover in any such litigation any “Special Damages”, as defined below, (c) certifies that no party hereto
nor any representative of Lender or counsel for any party hereto has represented, expressly or otherwise, or implied that such
party would not, in the event of litigation, seek to enforce the foregoing waivers, and (d) acknowledges that Lender has been induced
to make the Loan to Borrower and to enter into the Loan Documents with Borrower and each Borrower-Related Party by, among other
things, the waivers and certifications contained in this Section. As used in this Section, the term “Special Damages”
means and includes special, consequential, exemplary or punitive damages (regardless of how named).


 




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34.          Entire
Agreement. This Agreement and the other Loan Documents together constitute the entire agreement among the parties concerning
the subject matter hereof, and all prior discussions, agreements and statements, whether oral or written, are merged into this
Agreement and the other Loan Documents. There are no unwritten oral agreements among the parties and this Agreement and the other
Loan Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.


 


[The remainder of this page is left blank
intentionally.]


 




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This Agreement has
been executed on this the 9th day of June, 2015 by the undersigned Borrower, to be effective for all purposes as of the Effective
Date.


 


	BORROWER:	 
	 	 
	SHAHAN PRAIRIE, LP,	 
	a Texas limited partnership	 
	 	 	 
	By:	Shahan GP, LLC,	 
	 	a Texas limited liability company	 
	Its:	General Partner	 
	 	 	 
	 	/s/ Mehrdad Moayedi	 
	 	Mehrdad Moayedi	 
	 	Sole Managing Member	 




 




    	40



     


    

 


This Agreement has
been executed on this the 9th day of June, 2015 by the undersigned Borrower-Related Parties, to be effective for all purposes as
of the Effective Date.


 


	BORROWER-RELATED PARTIES:	 
	 	 
	/s/ Mehrdad Moayedi	 
	MEHRDAD MOAYEDI	 
	 	 
	CTMGT, LLC,	 
	a Texas limited liability company	 
	 	 
	/s/ Mehrdad Moayedi	 
	Mehrdad Moayedi	 
	Sole Member and Manager of CTMGT, LLC	 
	 	 
	CENTAMTAR TERRAS, L.L.C.,	 
	a Texas limited liability company	 
	 	 	 
	By:	CTMGT, LLC,	 
	 	a Texas limited liability company	 
	Its:	Sole Member and Manager of Centamtar Terras, L.L.C.	 
	 	 	 
	 	/s/ Mehrdad Moayedi	 
	 	Mehrdad Moayedi	 
	 	Sole Member and Manager of CTMGT, LLC	 
	 	 	 
	SHAHAN GP, LLC,	 
	a Texas limited liability company	 
	 	 	 
	 	/s/ Mehrdad Moayedi	 
	 	Mehrdad Moayedi	 
	 	Sole Managing Member	 




 




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This Agreement has
been executed on this the 9th day of June, 2015 by the undersigned Lender, to be effective for all purposes as of the Effective
Date.


 


	LENDER:	 
	 	 
	UNITED DEVELOPMENT FUNDING INCOME FUND V,
	a Maryland real estate investment trust	 
	 	 
	/s/ David A. Hanson	 
	David A. Hanson	 
	Chief Accounting Officer	 




 




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EXHIBIT A


 


PROPERTY


 


TRACT 1:


 


BEING A 101.438 ACRE TRACT OF LAND SITUATED
IN THE E.A. SHAHAN SURVEY, ABSTRACT NO. 1204, E.A. SHAHAN SURVEY, ABSTRACT NO. 1205, AND THE LAWSON CLARK SURVEY, ABSTRACT NO.
311, DENTON COUNTY, TEXAS, AND BEING PART OF A CALLED 102.324 ACRE TRACT OF LAND, CONVEYED TO SHAHAN PRAIRIE, L.P. BY DEED RECORDED
IN INSTRUMENT 2004-125495 REAL PROPERTY RECORDS, DENTON COUNTY, TEXAS, AND BEING ALL OF A 49.187 ACRE TRACT OF LAND KNOWN AS SHAHAN
LAKEVIEW ADDITION, PHASE 1, AN ADDITION TO THE CITY OF OAK POINT, AS RECORDED IN CABINET X, PAGE 542, PLAT RECORDS, DENTON COUNTY,
TEXAS. SAID 101.438 ACRE TRACT, WITH BEARING BASIS BEING GRID NORTH, TEXAS STATE PLANE COORDINATE SYSTEM NAD83 (CORS), NORTH CENTRAL
ZONE 4202 BASED ON GPS MEASUREMENTS ON JULIAN DAY 329, 2004 FROM COLLIN COUNTY CORS ARP (PIN DF8982), DENTON CORS ARP (PIN DF8986)
AND ARLINGTON RRP2 CORS ARP (PIN DF5387), BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:


 


BEGINNING AT A 1/2 INCH IRON ROD FOUND
FOR THE SOUTHWEST CORNER OF SAID 102.324 ACRE TRACT, AND BEING THE COMMON SOUTHEAST CORNER OF A CALLED 267.403 ACRE TRACT OF LAND
CONVEYED BY DEED TO PRAIRIE OAKS, LTD., RECORDED IN INSTRUMENT NO. 2004-135309, REAL PROPERTY RECORDS, DENTON COUNTY, TEXAS, SAID
POINT BEING IN THE ASPHALT OF SHAHAN PRAIRIE ROAD, (A VARIABLE WIDTH RIGHT-OF-WAY);


 


THENCE, ALONG THE WEST LINE OF SAID 102.324
ACRE TRACT AND THE COMMON EAST LINE OF SAID 267.403 ACRE TRACT, THE FOLLOWING COURSES AND DISTANCES:


 


NORTH 45 DEGREES 58 MINUTES 11 SECONDS
EAST, A DISTANCE OF 100.64 FEET TO A 5/8 INCH IRON ROD WITH A YELLOW PLASTIC CAP STAMPED “CARTER BURGESS” SET FOR CORNER;


 


NORTH 01 DEGREES 10 MINUTES 45 SECONDS
EAST, A DISTANCE OF 2708.94 FEET TO A 1/2 INCH IRON ROD FOUND FOR AN OUTSIDE ELL CORNER OF SAID 102.324 ACRE TRACT, AND BEING AN
INTERIOR ELL CORNER OF SAID 267.403 ACRE TRACT;


 


THENCE, SOUTH 87 DEGREES 36 MINUTES 02
SECONDS EAST, ALONG THE NORTH LINE OF SAID 102.324 ACRE TRACT, AND A COMMON SOUTH LINE OF SAID 267.403 ACRE TRACT, A DISTANCE OF
644.41 FEET TO A 2 INCH IRON PIPE FOUND FOR A NORTHWESTERLY INTERIOR ELL CORNER OF SAID 102.324 ACRE TRACT, AND BEING AN EXTERIOR
ELL CORNER OF SAID 267.403 ACRE TRACT;


 


THENCE, NORTH 01 DEGREES 27 MINUTES 58
SECONDS EAST, A DISTANCE OF 669.69 FEET TO A CONCRETE MONUMENT FOUND FOR THE NORTHEAST CORNER OF SAID 267.403 ACRE TRACT AND THE
SOUTH CORNER OF THE REMAINDER OF A TRACT OF LAND CONVEYED TO THE UNITED STATES OF AMERICA RECORDED IN VOLUME 388, PAGE 241, REAL
PROPERTY RECORDS, DENTON COUNTY, TEXAS AND BEING DEFINED AS PARCEL NO. 2 BY QUIT CLAIM DEED TO J.R. PATTERSON AND WIFE SARAH A.
PATTERSON, RECORDED IN VOLUME 466, PAGE 136, REAL PROPERTY RECORDS, DENTON COUNTY TEXAS;


 




    	43



     


    

 


THENCE, NORTH 01 DEGREES 02 MINUTES 35
SECONDS EAST, ALONG THE WEST LINE OF SAID 102.324 ACRE TRACT AND THE EAST LINE OF SAID REMAINDER OF UNITED STATES OF AMERICA TRACT,
A DISTANCE OF 386.58 FEET TO A CONCRETE MONUMENT FOUND FOR THE NORTHWEST CORNER OF SAID 102.324 ACRE TRACT, AND BEING A SOUTHWEST
CORNER OF A CALLED 71.5 ACRE TRACT OF LAND CONVEYED AS TRACT NO. K-937 TO THE UNITED STATES OF AMERICA, BY DEED RECORDED IN VOLUME
420, PAGE 577, REAL PROPERTY RECORDS, DENTON COUNTY TEXAS;


 


THENCE, SOUTH 64 DEGREES 40 MINUTES 04
SECONDS EAST, ALONG A NORTHEAST LINE OF SAID 102.324 ACRE TRACT, AND A COMMON SOUTHWEST LINE OF SAID 71.5 ACRE TRACT, A DISTANCE
OF 308.97 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER;


 


THENCE, ALONG THE EAST LINES OF SAID 102.324
ACRE TRACT AND THE COMMON WEST LINES OF SAID 71.5 ACRE TRACT, THE FOLLOWING COURSES AND DISTANCES:


 


SOUTH 07 DEGREES 00 MINUTES 47 SECONDS
EAST, A DISTANCE OF 674.54 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER;


 


SOUTH 36 DEGREES 43 MINUTES 47 SECONDS
WEST, A DISTANCE OF 260.07 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER;


 


SOUTH 26 DEGREES 28 MINUTES 10 SECONDS
EAST, A DISTANCE OF 274.87 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER;


 


NORTH 85 DEGREES 42 MINUTES 21 SECONDS
EAST, ALONG A NORTH LINE OF SAID 102.324 ACRE TRACT, AND A COMMON SOUTH LINE OF SAID 71.5 ACRE TRACT, A DISTANCE OF 643.41 FEET
TO POINT FOR CORNER, SAID POINT BEING THE NORTHWEST CORNER OF A 1.000 ACRE TRACT OF LAND CONVEYED TO CHARLES KAUFMAN, BY DEED RECORDED
IN COUNTY CLERK’S FILE NO. 2005-68113, 2005-68114, 2005-68115, 2005-68116 AND 2005-68117, REAL PROPERTY RECORDS, DENTON COUNTY,
TEXAS;


 


SOUTH 39 DEGREES 51 MINUTES 41 SECONDS
EAST, ALONG THE WEST LINE OF SAID 1.000 ACRE TRACT. A DISTANCE OF 343.36 FEET TO A POINT FOR CORNER AT THE SOUTHWEST CORNER OF
SAID 1.000 ACRE TRACT AND BEING ON THE EAST LINE OF SAID 102.324 ACRE TRACT;


 


SOUTH 54 DEGREES 35 MINUTES 21 SECONDS
WEST, A DISTANCE OF 402.67.00 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER;


 


SOUTH 16 DEGREES 37 MINUTES 54 SECONDS
WEST, A DISTANCE OF 191.89 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER AT THE SOUTHWEST CORNER OF SAID UNITED STATES OF AMERICA
TRACT;


 


THENCE, SOUTH 88 DEGREES 59 MINUTES 50
SECONDS EAST, A DISTANCE OF 438.88 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER AT THE NORTHWEST CORNER OF THE REMAINDER OF A TRACT
OF LAND CONVEYED TO THE UNITED STATES OF AMERICA RECORDED IN VOLUME 392, PAGE 398, REAL PROPERTY RECORDS, DENTON COUNTY, TEXAS
AND BEING DEFINED AS PARCEL NO. 4 BY QUIT CLAIM DEED TO R.E. MARTIN AND WIFE EDNA MARTIN, RECORDED IN VOLUME 466, PAGE 171, REAL
PROPERTY RECORDS, DENTON COUNTY TEXAS,


 




    	44



     


    

 


THENCE, ALONG THE EAST LINES OF SAID 102.324
ACRE TRACT AND THE COMMON WEST LINES OF SAID UNITED STATES OF AMERICA TRACT (PARCEL 4), THE FOLLOWING COURSES AND DISTANCES:


 


SOUTH 00 DEGREES 52 MINUTES 20 SECONDS
EAST, A DISTANCE OF 561.88 FEET TO A CONCRETE MONUMENT FOR CORNER;


 


SOUTH 51 DEGREES 53 MINUTES 15 SECONDS
WEST, A DISTANCE OF 181.76 FEET TO A 1/4 INCH IRON ROD FOUND FOR CORNER;


 


SOUTH 35 DEGREES 13 MINUTES 27 SECONDS
EAST, A DISTANCE OF 508.98 FEET TO A CONCRETE MONUMENT FOUND FOR CORNER AT THE EASTERLY SOUTHEAST CORNER OF SAID 102.324 ACRE TRACT
AND BEING THE NORTHEAST CORNER OF KNOB HILL LAKE ESTATES AN ADDITION TO DENTON COUNTY, TEXAS, ACCORDING TO THE PLAT RECORDED IN
VOLUME 3, PAGE 12, MAP RECORDS, DENTON COUNTY, TEXAS;


 


THENCE, ALONG THE SOUTH LINE OF SAID 102.324
ACRE TRACT AND THE COMMON NORTH LINE OF SAID KNOB HILL LAKE ESTATES, THE FOLLOWING COURSES AND DISTANCES:


 


NORTH 81 DEGREES 39 MINUTES 16 SECONDS
WEST, A DISTANCE OF 1008.14 FEET TO A 3/4 INCH IRON ROD FOUND FOR CORNER;


 


NORTH 83 DEGREES 43 MINUTES 58 SECONDS
WEST, A DISTANCE OF 433.65 FEET TO A 3/8 INCH IRON ROD FOUND FOR A SOUTHEAST INTERIOR ELL CORNER OF SAID 102.324 ACRE TRACT, AND
FOR THE NORTHWEST CORNER OF SAID KNOB HILL LAKE ESTATES;


 


THENCE, SOUTH 01 DEGREES 15 MINUTES 01
SECONDS WEST, ALONG THE EAST LINE OF SAID 102.324 ACRE TRACT, AND THE COMMON WEST LINE OF SAID KNOB HILL LAKE ESTATES, PASSING
AT A DISTANCE OF 1679.99 FEET A 5/8 INCH IRON ROD WITH A YELLOW PLASTIC CAP STAMPED “CARTER BURGESS” SET FOR WITNESS,
CONTINUING A TOTAL DISTANCE OF 1754.99 FEET TO POINT FOR CORNER IN THE ASPHALT OF AFORESAID SHAHAN PRAIRIE ROAD;


 


THENCE, NORTH 88 DEGREES 46 MINUTES 02
SECONDS WEST, A DISTANCE OF 19.04 FEET TO A POINT FOR CORNER ON THE NORTHEAST LINE OF A TRACT OF LAND CONVEYED BY DEED TO CRAIG
OLDEN RECORDED IN COUNTY CLERK’S FILE NO 93-R0026195, REAL PROPERTY RECORDS, DENTON COUNTY , TEXAS;


 


THENCE, NORTH 44 DEGREES 03 MINUTES 14
SECONDS WEST, ALONG THE SOUTH LINE OF SAID 102.324 ACRE TRACT AND THE COMMON NORTH LINE OF SAID CRAIG OLDEN TRACT, A DISTANCE OF
1028.84 FEET TO THE POINT OF BEGINNING AND CONTAINING 101.438 ACRES OF LAND, MORE OR LESS.


 




    	45



     


    

 


SAVE AND EXCEPT that portion of subject
property now platted as SHAHAN LAKEVIEW ADDITION, PHASE 1, an addition to the City of Oak Point, Denton County, Texas, according
to the plat thereof recorded in Cabinet X, Page 542, of the Plat Records of Denton County, Texas.


 


TRACT 2:


 


Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14, 15 and 16, Block A; Lots 1, 2, 3, 4, 5, 6, 7, 8 and 9, Block B; Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14,
15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38 and 37, Block C; Lots 1, 2, 3, 4,
5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28 and 29, Block D; Lots 1, 2, 3, 4, 5,
6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16, Block F; Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20,
21, 22 and 23, Block G; Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23 and 24, Block H;
Lots 1, 2, 3, 4, 5, 6, 7 and 8, Block J; Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20, Block K;
Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19, Block L; Lots 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10, Block
M, of SHAHAN LAKEVIEW ADDITION, PHASE 1, an addition to the City of Oak Point, Denton County, Texas, according to the plat thereof
recorded in Cabinet X, Page 542, of the Plat Records of Denton County, Texas.


 




    	46



     


    

 


EXHIBIT B


 


SECURED PROMISSORY NOTE


(Shahan Prairie, Denton County, Texas)


UDF V
Loan #9005


 


	U.S. $18,092,000.00	June 9, 2015 (the “Effective Date”)




 


FOR VALUE RECEIVED, SHAHAN PRAIRIE,
LP, a Texas limited partnership (“Borrower”), as borrower,
hereby unconditionally promises to pay to the order of UNITED DEVELOPMENT FUNDING INCOME FUND V, a Maryland real estate
investment trust (“Lender”), the principal sum of U.S. EIGHTEEN MILLION NINETY-TWO THOUSAND AND NO/100
DOLLARS ($18,092,000.00), or so much thereof as may be advanced by Lender from time to time hereunder to or for the benefit
or account of Borrower, together with interest thereon at the rate of interest hereinafter provided, without right of offset in
favor of Borrower.


 


1.            Loan
Documents; Security. This Secured Promissory Note (this “Note”) evidences the Loan governed by
that certain Loan Agreement dated as of even date herewith among Borrower, Lender, CTMGT, LLC, a Texas limited liability company,
Centamtar Terras, L.L.C., a Texas limited liability company, Shahan GP, LLC, a Texas limited liability company, and Mehrdad Moayedi,
a natural person residing in Dallas County, Texas (as it may be amended, modified or supplemented, the “Loan Agreement”).
This Note is the “Note” as such term is defined in the Loan Agreement, and capitalized terms used in this Note, but
not otherwise defined herein, shall have the respective meanings given to such terms in the Loan Agreement. Payment hereof is secured
by, among other things, a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the “Deed
of Trust”) executed by Borrower, as grantor for the benefit of Lender, covering certain real property located in
Denton County, Texas, and reference is hereby made to the Deed of Trust and the other Loan Documents for a description of
the security and the liens therein granted and the rights of Borrower and Lender thereunder.


 


2.            Interest.
The outstanding principal amount of this Note shall bear interest on each day outstanding at the Base Rate in effect on such day,
unless the Default Rate shall apply. Upon the occurrence and during the continuation of an Event of Default, the outstanding principal
amount of this Note shall, at Lender’s option, automatically and without the necessity of notice, bear interest from the
date of such Event of Default at the Default Rate, until all such delinquent amounts are paid and such breach or Event of Default
has been cured to Lender’s satisfaction as confirmed by Lender’s execution of a written agreement specifically acknowledging
and describing the Event of Default so cured, or waived by Lender as confirmed by Lender’s execution of a written agreement
specifically acknowledging and describing the Event of Default so waived. “Base Rate” means the lesser
of (i) thirteen percent (13%) per annum, accrued at least monthly (on the last day of each calendar month) and compounded annually
on the anniversary of the Effective Date, or (ii) the Highest Lawful Rate. “Default Rate” means the lesser
of (i) eighteen percent (18%) per annum, accrued at least monthly (on the last day of each calendar month) and compounded annually
on the anniversary of the Effective Date, or (ii) the Highest Lawful Rate. “Highest Lawful Rate” means
the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by Lender in accordance with
the applicable laws of the State of Texas (or applicable United States federal law, to the extent that it permits Lender to contract
for, charge, take, receive or reserve a greater amount of interest than under Texas law), taking into account all fees and expenses
contracted for, charged, received, taken or reserved by Lender in connection with the transaction relating to this Note and the
Debt evidenced hereby or by the other Loan Documents which are treated as interest under applicable law.


 




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3.            Interest
and Principal Payments. Except earlier upon any acceleration of this Note:


 


(a)          Borrower
promises to pay to Lender monthly Accrued Interest Payments on the last day of each calendar month for interest accrued during
such calendar month, unless Lender makes an Interest Reserve Accrual to defer such Accrued Interest Payment as provided in Section
5(b) of the Loan Agreement;


 


(b)          in
addition to the payments required by the provisions of clause (a) above, concurrently with each Disposition of the Mortgaged
Property in whole or in part or any Lot thereof, Borrower promises to pay Lender the full amount of proceeds from such Disposition
remaining after payment of such portion of such proceeds as are required to be paid to the Senior Lender under the Senior Loan
Documents or the Subordination Agreement for the portion of the Mortgaged Property or Lot so released from Lender’s Lien,
which is due and payable prior to Lender providing to Borrower (or releasing from escrow with the Title Company) its partial release
of Lien on such portion of the Mortgaged Property or Lot so released;


 


(c)          in
addition to the payments required by the provision of clauses (a) and (b) above, concurrently with each Revenue Event,
Borrower promises to pay to Lender the full amount of such proceeds from such Revenue Event; and


 


(d)          in
addition to the payments required by the provisions of clauses (a) through (c) above, inclusive, Borrower promises
to pay to Lender the outstanding principal balance of this Note, together with all accrued, unpaid interest thereon, unpaid Loan
Expenses and other unpaid amounts due under the Loan Documents, on or prior to the Maturity Date, which is June 8, 2018.


 


4.            Payments.
All amounts are payable to Lender in lawful money of the United States of America at the address for Lender provided in or pursuant
to the notice provisions of the Loan Agreement, or at such other address as from time to time may be designated by Lender. Borrower
shall make each payment which it owes under this Note and the other Loan Documents to Lender in full and in lawful money of the
United States, without set-off, deduction or counterclaim. Under no circumstance may Borrower offset any amount owed by Borrower
to Lender under this Note with an amount owed by Lender to Borrower under any other arrangement. All payments shall be made by
cashier’s check or wire transfer of immediately available funds. Should any such payment become due and payable on a day
other than a business day, the date for such payment shall be extended to the next succeeding business day, and, in the case of
a required payment of principal, interest or Loan Expenses or other amounts then due, interest shall accrue and be payable on such
amount for the period of such extension. Each such payment must be received by Lender not later than 3:00 p.m., Grapevine, Texas
time on the date such payment becomes due and payable. Any payment received by Lender after such time will be deemed to have been
made on the next succeeding business day.


 


5.            Default
and Remedies.


 


(a)          The
happening or occurrence, at any time and from time to time, of any Event of Default as defined in the Loan Agreement shall constitute
an “Event of Default” under this Note:


 




    	48



     


    

 


(b)          Upon
the occurrence of an Event of Default described in subsections 12(a)(v), (vi) or (vii) of the Loan Agreement, all obligations under
this Note, the Loan Agreement and the other Loan Documents shall thereupon be immediately due and payable, without demand, presentment,
notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice
of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and any and
all sureties, guarantors and endorsers of this Note. During the continuance of any other Event of Default, then and in every such
case Lender may do any or all of the following: (i) declare the principal of this Note together with all accrued and unpaid interest
on the unpaid principal balance, and Loan Expenses and other amounts due to Lender under the Loan Agreement or the other Loan Documents,
to be due and payable immediately, and the same shall become and be due and payable, without notice, demand for payment, presentations
for payment, notices of payment default, notices of intention to accelerate maturity, protest and notice of protest, and any other
notices of any kind, all of which are expressly waived by Borrower and any and all sureties, guarantors and endorsers of this Note,
and/or (ii) exercise any or all of its rights under all or any of the Loan Documents, and/or (iii) refuse to advance any funds
hereunder, including, without limitation, any Interest Reserve, and/or (iv) refuse to release any part of the Collateral for an
amount less than the entire amount of the Debt, even if Lender had previously agreed to do so, and/or (v) exercise any or all other
rights and remedies available to Lender at law and at equity, including, without limitation, such rights existing under the Uniform
Commercial Code. No delay on the part of Lender in exercising any power under this Note shall operate as a waiver of such power
or right nor shall any single or partial exercise of any power or right preclude further exercise of that power or right.


 


6.            Attorneys’
Fees and Costs. If Lender retains an attorney-at-law in connection with any Event of Default or at maturity or to collect,
enforce, or defend this Note or any part hereof, or any of the other Loan Documents, in any lawsuit or in any probate, reorganization,
bankruptcy or other proceeding, or otherwise, Borrower agrees to pay all reasonable costs and expenses of collection, including,
but not limited to, Lender’s reasonable attorneys’ fees, whether or not any legal action shall be instituted.


 


7.            Usury
Savings Provisions. Notwithstanding anything to the contrary contained in this Note or any other Loan Document:


 


(a)          It
is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply strictly with the applicable
Texas law governing the maximum rate or amount of interest payable on the Debt, or applicable United States federal law to the
extent that such law permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas
law. If the applicable law is ever judicially interpreted so as to render usurious any amount contracted for, charged, taken, reserved
or received in respect of the Debt, including by reason of the acceleration of the maturity or the prepayment thereof, then it
is the express intent of Borrower and Lender that all amounts charged in excess of the Highest Lawful Rate shall be automatically
canceled, ab initio, and all amounts in excess of the Highest Lawful Rate theretofore collected by Lender shall be credited
on the principal balance of the Debt (or, if the Debt has been or would thereby be paid in full, refunded to Borrower), and the
provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable
laws, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however,
if this Note has been paid in full before the end of the stated term hereof, then Borrower and Lender agree that Lender shall,
with reasonable promptness after Lender discovers or is advised by Borrower that interest was received in an amount in excess of
the Highest Lawful Rate, either credit such excess interest against the Debt then owing by Borrower to Lender and/or refund such
excess interest to Borrower. Borrower hereby agrees that as a condition precedent to any claim seeking usury penalties against
Lender, Borrower will provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation,
and Lender shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either
refunding such excess interest to Borrower or crediting such excess interest against the Debt then owing by Borrower to Lender.
All sums contracted for, charged, taken, reserved or received by Lender for the use, forbearance or detention of the Debt shall,
to the extent permitted by applicable law, be amortized, prorated, allocated or spread, using the actuarial method, throughout
the stated term of this Note (including any and all renewal and extension periods) until payment in full so that the rate or amount
of interest on account of the Debt does not exceed the Highest Lawful Rate from time to time in effect and applicable to the Debt
for so long as the Debt is outstanding. In no event shall the provisions of Chapter 346 of the Texas Finance Code (which regulates
certain revolving credit loan accounts and revolving triparty accounts) apply to this Note or any other part of the Debt. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate
the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time
of such acceleration. The terms and provisions of this paragraph shall control and supersede every other term, covenant or provision
contained herein, in any of the other Loan Documents or in any other document or instrument pertaining to the Debt.


 




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(b)          To
the extent that Lender is relying on Chapter 303 of the Texas Finance Code to determine the Highest Lawful Rate payable on this
Note or any other part of the Debt, Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter
303, as amended. To the extent United States federal law permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law, Lender will rely on United States federal law instead of such Chapter 303 for the purpose
of determining the Highest Lawful Rate. Additionally, to the extent permitted by applicable law now or hereafter in effect, Lender
may, at its option and from time to time, utilize any other method of establishing the Highest Lawful Rate under such Chapter 303
or under other applicable law by giving notice, if required, to Borrower as provided by such applicable law now or hereafter in
effect.


 


8.            Waiver.
BORROWER AND ANY SURETY, ENDORSER OR GUARANTOR OF THIS NOTE SEVERALLY AND EXPRESSLY (A) WAIVE AND RELINQUISH PRESENTMENT FOR PAYMENT,
DEMAND, NOTICE OF NONPAYMENT OR NONPERFORMANCE, PROTEST, NOTICE OF PROTEST, NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION,
GRACE, DILIGENCE IN COLLECTING THIS NOTE OR ENFORCING ANY SECURITY THEREFOR, OR ANY OTHER NOTICES OR ANY OTHER ACTION, AND (B)
CONSENT TO ALL RENEWALS, EXTENSIONS, REARRANGEMENTS AND MODIFICATIONS WHICH FROM TIME TO TIME MAY BE GRANTED BY LENDER WITHOUT
NOTICE AND TO ALL PARTIAL PAYMENTS HEREON, WHETHER BEFORE OR AFTER MATURITY, WITHOUT PREJUDICE TO LENDER. LENDER SHALL SIMILARLY
HAVE THE RIGHT TO DEAL IN ANY WAY, AT ANY TIME, WITH ONE OR MORE OF THE FOREGOING PARTIES WITHOUT NOTICE TO ANY OTHER PARTY, AND
TO GRANT ANY SUCH PARTY ANY EXTENSIONS OF TIME FOR PAYMENT OF ANY OF SAID INDEBTEDNESS, OR TO GRANT ANY OTHER INDULGENCES OR FORBEARANCES
WHATSOEVER, WITHOUT NOTICE TO ANY OTHER PARTY AND WITHOUT IN ANY WAY AFFECTING THE PERSONAL LIABILITY OF ANY PARTY TO THE LOAN
DOCUMENTS.


 


9.            Choice
of Law. Except to the extent that the validity or perfection of security interests or remedies in respect of any particular
Collateral is governed by the laws of a jurisdiction other than the state of Texas, this Note and the other Loan Documents shall
be construed in accordance with and governed by the substantive laws of the state of Texas, without regard to its conflict of laws
provisions.


 




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10.          Notices.
Any notice or demand required or given hereunder shall be delivered in accordance with the notice provisions of the Loan Agreement.


 


11.          Successors
and Assigns. This Note and all the covenants, promises and agreements contained herein shall be binding upon and shall
inure to the benefit of Lender, and its successors and assigns.


 


12.          Time
is of the Essence. Time is of the essence with respect to all obligations of Borrower under this Note.


 


13.          Termination.
This Note may not be terminated orally, but only by a discharge in writing signed by Lender at the time such discharge is sought.


 


14.          Right
of Setoff. Borrower hereby gives and confirms to Lender a right of set-off of all moneys, securities and other property
of Borrower (whether special, general or limited) and the proceeds thereof, now or hereafter delivered to remain with or in transit
in any manner to Lender, its correspondents or its agents from or for Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise or coming into possession of Lender in any way, and also, of all other liabilities and obligations now
or hereafter owed by Borrower to Lender, contracted with or acquired by Lender, whether joint, several, absolute, contingent, secured,
unsecured, matured or unmatured, hereby authorizing Lender at any time after an Event of Default has occurred and is continuing,
without prior notice, to apply such balances, credits of claims or any part thereof, to such liabilities in such amounts as it
may select, whether contingent, unmatured or otherwise, and whether any collateral security therefor is deemed adequate or not.
The rights described herein shall be in addition to any collateral security described in any separate agreement executed by Borrower.


 


15.          Statement
of Unpaid Balance. At any time and from time to time, Borrower will furnish promptly, upon the request of Lender, a written
statement or affidavit, in form satisfactory to Lender, stating the unpaid balance of the Debt and that there are no offsets or
defenses against full payment of the Debt and the terms hereof, or if there are any such offsets or defenses known by Borrower,
specifying them.


 


16.          NO
ORAL AGREEMENTS. THIS SECURED PROMISSORY NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT 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 THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.  The
provisions hereof and the other Loan Documents may be amended or waived only by an instrument in writing signed by Borrower and
Lender.


 


[The remainder
of this page is left blank intentionally.]


 






    	51



     


    

 


EXECUTED on this the
9th day of June, 2015, to be effective as of the Effective Date.


 


	BORROWER:	 
	 	 
	SHAHAN PRAIRIE, LP,	 
	a Texas limited partnership	 
	 	 	 
	By:	Shahan GP, LLC,	 
	 	a Texas limited liability company	 
	 	its General Partner	 
	 	 	 
	 	/s/ Mehrdad Moayedi	 
	 	Mehrdad Moayedi	 
	 	Sole Managing Member	 







 



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