Document:

Exhibit 10.3

 

DEVELOPMENT LOAN AGREEMENT

 

This DEVELOPMENT LOAN
AGREEMENT (“Agreement”) is made and entered into effective as of June 19, 2020 (the “Effective Date”),
among BOKF, NA dba Bank of Albuquerque (the “Lender”); and Lavender Fields, LLC, a New Mexico limited liability company
(the “Borrower”), with reference to the following:

 

(a)       Borrower
has requested that Lender lend to Borrower up to Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($3,750,000.00),
to finance Borrower’s development of 82 residential Lots (defined below) within the Lavender Fields subdivision and the costs
to extend a road and of other offsite infrastructure to the Lots in Bernalillo County, New Mexico, as more particularly described
on Exhibit “A” attached hereto and made a part hereof (the “Mortgaged Property”).

 

(b)       Subject
to the terms, provisions, covenants and agreements hereinafter set forth, Lender has agreed to make the requested extension of
credit.

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein and the loan to be made hereunder, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, Lender and Borrower hereby covenant and agree as follows:

 

1.               
LENDING AGREEMENT: Subject to the terms, provisions, covenants and agreements set forth in this Agreement, Lender
agrees to lend to Borrower, and the Borrower agrees to borrow from Lender, up to the principal sum of Three Million Seven Hundred
Fifty Thousand and No/100 Dollars ($3,750,000.00), to be used by Borrower for the purposes of: (a) paying contractors, mechanics,
materialmen, and suppliers pursuant to the terms of contracts for services in fact performed and materials purchased for and either
incorporated into the development of the Mortgaged Property or suitably stored on the Mortgaged Property for later incorporation
(such development work and the Mortgaged Property are hereinafter collectively referred to as the “Development”); (b)
reimbursing Lender for reasonable expenses incurred by Lender pursuant to this Agreement; and (c) paying other reasonable costs
that are incidental or related to the cost of completing or financing the Development to the extent included in the Development
Budget (defined below).

 

2.               
BORROWER’S NOTE: The loan shall be evidenced by a Non-Revolving Line of Credit Promissory Note (the “Note”)
in the principal amount of Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($3,750,000.00), which Note shall bear
interest at the rate specified in the Note.

 

3.               
COLLATERAL SECURITY: The performance of all covenants and agreements contained in this Agreement and in the other
documents executed or delivered as a part of this transaction and the payment of the Note shall be secured as follows:

 

3.1.                Security
Documents Covering Mortgaged Property: Borrower shall grant to Lender a first-lien mortgage covering all of the Mortgaged
Property and a security interest in all personal property relating to such Mortgaged Property and owned by Borrower, which
mortgage lien and security interest shall be evidenced by a Mortgage, Security Agreement and Financing Statement (the
 “Mortgage”).

 

     

     

    

 

3.2.               
Hazardous Substances Indemnification Agreement: Borrower and Guarantor shall sign and deliver to Lender a Hazardous
Substances Indemnification Agreement in the form required by Lender (the “HSIA”).

 

3.3.               
Guaranty: AMREP Southwest, Inc. (the “Guarantor”) shall sign and deliver to Lender a Guaranty Agreement
in the form required by Lender (the “Guaranty”).

 

3.4.               
Collateral Assignment of Contracts: Borrower shall assign to Lender and grant a security interest to Lender in all
contracts with contractors, architects and engineers (the “Assignment”).

 

3.5.               
Subordination Agreement: Mesoam LLC, a New Mexico limited liability company, and Borrower shall sign and deliver
to Lender a Subordination Agreement in the form required by Lender (the “Subordination Agreement”).

 

3.6.               
Additional Documents: Borrower shall also sign and deliver such Closing Certificates, Lien Affidavits, Closing Statements
and other documents that Lender may reasonably request (collectively, the “Additional Documents”). Further, any and
all collateral documents executed by Borrower in favor of Lender as security for any indebtedness of Borrower to Lender shall also
expressly secure Borrower’s obligations hereunder and under the Note and all documents that secure payment of the Note.

 

4.               
CONDITIONS OF LENDING: The obligation of Lender to perform this Agreement and to make an initial or any future advance
or extension of credit hereunder is subject to the performance and existence of the following conditions precedent:

 

4.1.               
No Events of Default: There shall not have occurred and be continuing any Event of Default, and the representations
and warranties set forth in the Loan Documents shall be true and accurate in all material respects.

 

4.2.               
Loan Documents: This Agreement, the Note, the Mortgage, the Assignment, the Guaranty, the HSIA, the Subordination
Agreement and the Additional Documents (collectively, the “Loan Documents”) shall be duly authorized, executed and
delivered to Lender.

 

4.3.               
Recording of Security Documents: The Mortgage, the Subordination Agreement and a Uniform Commercial Code Financing
Statement naming Borrower as debtor and Lender as secured party shall be recorded in the appropriate county or state offices.

 

4.4.                Title
Evidence: Borrower shall provide to Lender a loan policy of title insurance with pending disbursements clause, issued by
a title insurance company acceptable to Lender (the “Title Company”), evidencing that Borrower has good and
indefeasible fee simple title to the Mortgaged Property and that the Mortgage constitutes a valid first mortgage lien on the
Mortgaged Property, subject only to those matters waived by Lender. The title policy shall not include an exception based
upon mechanics’ and materialmen’s liens. The premiums for the title policy shall be paid by Borrower.

 

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4.5.               
Appraisal: Borrower shall pay for an independent appraisal evaluation of the Mortgaged Property by an appraiser selected
and approved by Lender, which appraisal must comply with the standards set forth by the Comptroller of the Currency of National
Banks.

 

4.6.               
Survey: Borrower shall deliver to Lender and the Title Company a survey of the Mortgaged Property in a form which
is acceptable to Lender and the Title Company and will enable the issuer of the required loan policy of title insurance to delete
all survey exceptions.

 

4.7.               
Insurance: Borrower shall obtain and maintain the insurance required to be maintained by the Mortgage.

 

4.8.               
Zoning and Use: If requested by Lender, Borrower shall furnish Lender satisfactory evidence that the Mortgaged Property
is presently zoned for its intended use and that the Mortgaged Property is in full compliance with all municipal ordinances, codes,
rules or regulations.

 

4.9.               
Permits: Borrower shall obtain and deliver to Lender copies of all permits required to commence, and thereafter to
continue, work on the Development or any part thereof, including, without limitation, permits issued by Bernalillo County, New
Mexico.

 

4.10.             
Cost Breakdown and Budget: The Borrower shall submit, for approval by Lender, complete plans for the Development
and a detailed cost breakdown and budget of the work entailed in the Development showing the total costs involved (both direct
and indirect) (collectively, the “Development Budget”), which approval shall not be unreasonably withheld or delayed.
Following approval by Lender, the Development Budget shall not be changed in any material respect without the prior written consent
of Lender.

 

4.11.             
Existence and Authority: If requested by Lender, Borrower shall provide to Lender true and correct copies of the
documents that created and evidence Borrower and all amendments thereto including: (i) filed Articles of Organization and Certificate
of Organization from the New Mexico Secretary of State (“NMSOS”); (ii) a Certificate of Good Standing issued by the
NMSOS; (iii) authorization from Borrower to enter into this agreement, and any other Loan Documents required by Lender in connection
with this Agreement; and (iii) the operating agreement of Borrower and all amendments thereto.

 

4.12.              Cash
Equity. In addition to any other equity or loan to value requirements Borrower shall have provided evidence reasonably
satisfactory to Lender that Borrower has invested cash equity in the Development, as determined by Lender, of not less than
fifteen percent (15%) of the “as completed” appraised value of the Development as of the date of the initial
advance under the Note. Borrower’s equity in the Mortgaged Property, shall be included in any calculation of the cash
equity required by this Section 4.12.

 

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4.13.               
Loan Origination Fee: At closing, Borrower shall remit to Lender a fully earned, non-refundable loan origination
fee in the amount of one-half of one percent (1/2%) of the face amount of the Note.

 

4.14.               
Lot Purchase Agreement: Borrower shall deliver to Lender a signed Lot Purchase Agreement in form and content acceptable
to Lender between Borrower and homebuilder(s) for the purchase of 82 Lots comprising the Mortgaged Property.

 

4.15.               
Borrower’s Equity: Borrower shall have provided evidence reasonably acceptable to Lender that Borrower has
invested (or will have invested by the date of the final advance under the Note) cash equity in the Development of not less than
$2,900,000.00. Borrower’s equity in the Mortgaged Property shall be included in any calculation of cash equity required by
this Section 4.15.

 

4.16.               
Preliminary and Final Plat: Prior to the initial advance of credit hereunder, Borrower shall have obtained approval
by Bernalillo County, New Mexico of the Lender Approved Preliminary Plat (as defined below). Prior to the final advance of credit
hereunder, but no later than the Completion Date (defined below) the Final Plat (as defined below) shall have been recorded in
the real property records of Bernalillo County, New Mexico.

 

5.               
REPRESENTATIONS AND WARRANTIES: In addition to all other representations and warranties of Borrower to Lender, Borrower
represents and warrants that:

 

5.1.               
Existence; Compliance with Law: Borrower (i) is duly organized or formed, as applicable, validly existing and (if
relevant) in good standing under the laws of the jurisdiction of its organization or formation, as the case may be, (ii) has the
limited liability company power and authority and the legal right, to own and operate its property and assets, to lease the property
and assets it leases and causes to be operated as lessee, and to conduct the business in which it is currently engaged under the
governmental requirements of each jurisdiction in which it owns, leases and/or operates its property or assets, (iii) is duly qualified
as a foreign limited liability company, and (if relevant) in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or assets or the conduct of its business requires such qualification, (iv) is in material compliance
with its applicable organizational documents, and (v) is in compliance with all governmental requirements, except to the extent
that the failure to comply therewith could not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on Borrower.

 

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5.2.                Entity
Power; Authorization; Enforceable Obligations: Borrower has the power and authority, and the legal right, to make,
deliver and perform the Loan Documents and to borrow hereunder, and has taken all necessary limited liability company or
other action to authorize the execution, delivery and performance of the Loan Documents and to authorize the borrowings on
the terms and conditions of this Agreement and the other Loan Documents. No consent or authorization of, filing with, notice
to or other act by or in respect of, any governmental authority or any other person is required in connection with the
borrowings hereunder or the execution, delivery, performance, validity or enforceability of this Agreement or any of the
other Loan Documents, except consents, authorizations, filings and notices which have been obtained or made and are in full
force and effect. Each Loan Document has been duly executed and delivered on behalf of Borrower. This Agreement constitutes,
and each other Loan Document upon execution shall constitute, a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

5.3.               
No Legal Bar: The execution, delivery and performance of this Agreement, the other Loan Documents, the borrowings
hereunder and the use of the proceeds thereof shall not violate any governmental requirement or any contractual or other obligation
of Borrower and shall not result in, or require, the creation or imposition of any lien on any of Borrower’s assets, properties
or revenues pursuant to any governmental requirement or any such contractual or other obligation (other than the liens created
by the Loan Documents). No governmental requirement or contractual or other obligation applicable to Borrower or Borrower’s
properties or assets could reasonably be expected to have a material adverse effect on Borrower. No performance of a contractual
or other obligation by Borrower, either unconditionally or upon the happening of an event, would result in the creation of a lien
(other than a permitted lien) on the property, assets or revenues of Borrower.

 

5.4.               
No Conflicting Agreements: There is no provision of any existing agreement, mortgage, indenture, instrument, document
or contract binding on Borrower or affecting any property or asset of Borrower, which would conflict with or in any way prevent
the execution, delivery or carrying out of the terms of this Agreement and the other Loan Documents.

 

5.5.               
Ownership of Properties; Liens: Borrower has good and indefeasible title to the Mortgaged Property, and the Mortgaged
Property is not subject to any deed of trust, mortgage, pledge, security interest, encumbrance, lien or charge of any kind, excluding
only: (a) deposits to secure payment of worker’s compensation (if any), unemployment insurance and other similar benefits;
(b) liens for property taxes not yet due; (c) statutory liens, against which there are established reserves in accordance with
generally accepted accounting principles, and which arise in the ordinary course of business and secure obligations of Borrower
which are not yet due and not in default; (d) encumbrances in favor of Lender; and (e) matters reflected in the loan policy of
title insurance.

 

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5.6.               
 Financial Condition: The financial statements, information and materials of Borrower heretofore delivered to Lender
fairly and accurately present in all material respects Borrower’s consolidated financial condition (including its assets
and liabilities) as of the date or dates thereof (subject, in the case of the interim financial statements, to normal year-end
adjustments and the absence of notes), and there have been no material adverse changes in Borrower's financial condition or operations
since the date or dates thereof. Borrower does not currently have material guarantee obligations, contingent liabilities and liabilities
for taxes, or any long-term leases or unusual forward or long-term commitments, which are not reflected in the most recent financial
statements, information and materials referred to in this section.

 

5.7.               
Licenses, Permits, Etc.: Borrower possesses or will possess prior to the commencement of construction and construction
of each subsequent phase of the Development, all licenses, permits, consents, approvals, franchises and intellectual property (or
otherwise possesses the right to use such intellectual property without violation of the rights of any other person) which are
necessary for the completion of the Development, except for those licenses, permits, consents, approvals, franchises and intellectual
property the failure of which to possess could not reasonably be expected to have a material adverse effect on Borrower. Borrower
is not in violation in any material respect of the terms under which it possesses any such licenses, permits, consents, approvals,
franchises and intellectual property or the right to use such licenses, permits, consents, approvals, franchises and intellectual
property.

 

5.8.               
Contractual Default: Borrower is not in default under or with respect to any of their respective contractual obligations
in any respect that could reasonably be expected to have a material adverse effect on Borrower.

 

5.9.               
No Change: Since January 1, 2019, there has been no development or event that has had or could reasonably be expected
to have a material adverse effect on the Mortgaged Property or Borrower.

 

5.10.            
Litigation: There is no litigation, investigation or proceeding of or before any arbitrator, mediator or any governmental
authority or, to Borrower’s knowledge, threatened by or against Borrower or against any of any Borrower’s assets, properties
or revenues: (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby, or (b) that could reasonably
be expected to have a material adverse effect on the Mortgaged Property or Borrower.

 

5.11.             Employee
Retirement Income Security Act of 1994 (ERISA): Borrower has not incurred any “accumulated funding
deficiency” within the meaning of Section 302(a)(2) of ERISA as amended from time to time with respect to any employee
pension or other benefit plan or trust maintained by or related to Borrower, and Borrower has not incurred any material
liability to the Pension Benefit Guaranty Corporation (PBGC) as established pursuant to Section 4002 of ERISA in connection
with any such plan. No reportable event described in Sections 4042(a) or 4043(b) of ERISA with respect to any such plan has
occurred. The representations contained in this paragraph 5.11 are subject to the statements and disclosures contained in
Note 7 of the AMREP Corporation SEC Form 10-Q dated July 31, 2017, and all subsequent updates to said Note 7.

 

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5.12.               
Insurance: All policies of insurance of any kind or nature of any Borrower, including policies of fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity, workers’ compensation and employee health
and welfare insurance, if and as applicable, are in full force and effect as of the date of this Agreement and are of a nature
and provide such coverage as is customarily carried by businesses of the size and character of Borrower. Borrower has not been
refused insurance for any material coverage for which it has applied or has had any policy of insurance terminated (other than
at Borrower’s request).

 

5.13.               
Taxes: Borrower has timely filed or requested appropriate extensions (or caused to be timely filed or extended) all
federal, state and other tax returns, reports and statements (collectively, “Tax Returns”) that are required to be
filed by Borrower with the appropriate governmental authorities in all jurisdictions in which such Tax Returns are required to
be filed; all such Tax Returns are true and correct in all material respects; Borrower has timely paid, prior to the date on which
any fine, penalty, interest, late charge or loss may be added thereto for non-payment thereof, all taxes shown to be due and payable
on said Tax Returns or on any assessments made against Borrower or any of Borrower’s properties or assets, and all other
taxes, fees or other charges imposed on Borrower or any of Borrower’s properties or assets by or otherwise due and payable
to any governmental authority (other than any for which the amount or validity of which are currently being contested in good faith
by appropriate proceedings); and no tax lien has been filed against the property or assets of Borrower and, to Borrower’s
knowledge, no claim is being asserted, with respect to any such tax, fee or other charge. No Tax Return is under audit or examination
by any governmental authority and no notice of such an audit or examination or any assertion of any claim for taxes has been given
or made by any governmental authority. Proper and accurate amounts have been withheld by Borrower (if and to the extent any such
withholdings are so required) for all periods in full and complete compliance with the tax, social security, health care and unemployment
withholding provisions of applicable governmental requirements, and such withholdings (if any) have been timely paid to the respective
governmental authorities. Borrower (i) does not intend to treat the Loan or any other transaction contemplated hereby as being
a “reportable transaction” (within the meaning of Treasury Regulation 1.6011-4), and (ii) is not aware of any facts
or events that would result in such treatment. Due to Borrower’s date of organization, Borrower has not yet filed any Tax
Returns.

 

5.14.               
Margin Regulations: No part of the proceeds of the Loan shall be used for buying or “carrying” any “margin
stock” within the respective meanings of each of the quoted terms under Regulation U (as defined within the applicable governmental
requirements promulgated by the applicable governmental authorities from time to time) as now and from time to time hereafter in
effect or for any purpose that violates the provisions of any governmental authority. If requested by Lender, Borrower shall furnish
to Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable,
referred to in Regulation U.

 

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5.15.               
 Investment Company Act: Borrower is not an “investment company”, or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. Borrower is not subject
to regulation under any governmental requirement which limits its ability to incur Indebtedness, other than Regulation X (as defined
within the applicable governmental requirements promulgated by the applicable governmental authorities from time to time).

 

5.16.               
Patriot Act: Borrower and its affiliates are in compliance, in all material respects, with the Patriot Act. No part
of the proceeds of the Loan shall be used, directly or indirectly, for any payments to any (i) governmental authority’s officials
or employees, (ii) political party, (ii) official of any political party, (iv) candidate for political office, or (v) anyone other
person acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

5.17.               
OFAC: None of Borrower or any affiliate of any Borrower: (a) is a sanctioned person; (b) owns assets in
sanctioned entities; or (c) derives any of its operating income from investments in, or transactions with sanctioned persons
or sanctioned entities. None of the proceeds of any Loan shall be used or have been used to fund any operations in, finance any
investments or activities in, or make any payments to, a sanctioned person or a sanctioned entity.

 

5.18.               
No Default: No Event of Default has occurred and is continuing.

 

5.19.               
Adverse Circumstances: To Borrower’s knowledge, neither the business nor any property or asset of any Borrower
is presently affected by any fire, explosion, accident, strike, lockout, or other dispute, embargo, act of God, act of public enemy
or terrorism, or similar event or circumstance, nor has any other event or circumstance relating to any Borrower's business, affairs,
properties or assets occurred, any of which could have a material adverse effect on Borrower.

 

5.20.               
Accuracy of Information: To Borrower's knowledge, all factual information is and shall be true, accurate and complete
in all material respects on the date as of which such information was delivered to Lender and was not and shall not be incomplete
by the omission of any material fact necessary to make such information not misleading, provided that, with respect to projected
financial information, prospect information, geological and geophysical data and engineering projections, Borrower only represents
that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

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5.21.                Environmental:
To Borrower’s knowledge, the conduct of Borrower's business operations and the condition of Borrower's properties or
assets owned, operated or managed by Borrower does not violate any Environmental Law (as defined in the HSIA between Borrower
and Lender of even date herewith). Borrower has not received notice of, nor, to Borrower’s knowledge are there
presently existing, any judicial, administrative, arbitral or other proceeding (including any notice of violation or alleged
violation) under or relating to any Environmental Law or any environmental permit to which any Borrower is, or to
Borrower’s knowledge, shall be, named as a party that is pending or, to any Borrower’s knowledge, threatened.
Borrower has not received any written request for information, or been notified that any Borrower is a potentially
responsible party under or relating to any Environmental Law. Borrower has not entered into or agreed to any consent decree,
order, or settlement or other agreement or undertaking, and Borrower is not subject to any judgment, decree, or order or
other agreement, in any judicial, administrative, arbitral or other forum for dispute resolution, relating to compliance with
or liability under any Environmental Law. Borrower has not assumed or retained, by contract, operation of law or otherwise,
any liabilities of any kind, fixed or contingent, known or unknown, under any Environmental Law. Borrower has made available
to Lender copies of all significant reports, correspondence and other documents, if any, in its possession, custody or
control regarding compliance by Borrower with, or potential liability of Borrower under, Environmental Laws or environmental
permits.

 

5.22.               
Compliance with Laws: To Borrower’s knowledge, Borrower is presently in compliance in all material respects
with all applicable governmental requirements to which Borrower, or any of Borrower's assets or properties, is subject, except
where the failure to so comply could not reasonably be expected to have a material adverse effect on Borrower.

 

5.23.               
Solvency; Compliance with Financial Covenants: Borrower is, and after giving effect to the incurrence of all Indebtedness
and obligations being incurred in connection herewith shall be and shall continue to be, solvent.

 

5.24.               
Availability of Utility Service: All utility services necessary for the maintenance and use of the Mortgaged Property
are or will be available to the Mortgaged Property, including water supply, storm and sanitary sewer facilities, electric and gas
utilities and cable television lines.

 

5.25.               
No Commencement of Work: Prior to recordation of the Mortgage, no work of any kind incident to the Development (other
than design and engineering work) shall have commenced, no equipment or material shall have been delivered to or stored upon the
Mortgaged Property for any purpose whatsoever, and no contracts (or memorandum or affidavit thereof) for the supplying of labor
or materials for the Development nor affidavit of commencement of construction shall have been recorded in the real property records
of the county in which the Mortgaged Property is located.

 

5.26.               
Continuation of Representations and Warranties; Borrower’s Knowledge: All representations and warranties made
under this Agreement shall be deemed to be made at and as of the closing date and each funding date. Whenever used in this Agreement,
the phrase “to Borrower’s knowledge” means to the actual knowledge of Borrower’s President as of the Effective
Date, without independent inquiry and without review of any files.

 

6.                BORROWER’S
AFFIRMATIVE COVENANTS: Until payment in full of the Note and performance of all obligations owing to Lender under this
Agreement and the instruments executed pursuant hereto, unless the Lender shall otherwise consent in writing, Borrower agrees
to perform or cause to be performed the following:

 

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6.1.               
Performance of Obligations: Borrower will promptly and punctually perform all of the obligations hereunder, and under
all other instruments executed or delivered pursuant thereto and under the terms of any other contract or agreement entered into
by the Borrower in connection with the Development.

 

6.2.               
Financial Information: Borrower will maintain adequate and accurate books and records of account. Lender shall have
the right to examine and copy such books and records, including all books and records relating to the Development, to discuss the
affairs, finances and accounts of Borrower and to be informed as to the same from time to time as Lender might reasonably request.
Borrower will provide Lender with quarterly unaudited and without footnotes financial statements within sixty (60) days of each
quarter end. All financial information provided to Lender will be in form and content acceptable to Lender in its sole discretion.

 

6.3.               
Notification of Liens: Other than items identified in the title policy required hereunder, Borrower will notify Lender
of the existence or asserted existence of any mortgages, pledge, lien, charge or encumbrance on the Mortgaged Property, personal
or real, tangible or intangible, forthwith upon Borrower’s obtaining knowledge thereof, excluding only: (a) encumbrances
in favor of Lender; (b) deposits to secure payment of worker’s compensation, unemployment insurance and similar benefits;
(c) statutory liens arising in the ordinary course of Borrower’s business which secure current obligations of Borrower which
are not in default.

 

6.4.               
Payment of Taxes: All taxes, assessments and governmental charges or levies imposed on the Borrower or on Borrower’s
assets, income or profits, will be paid prior to delinquency. Notwithstanding the foregoing, the Borrower shall not be required
to pay any tax, assessment, charge or levy which is being contested in good faith by proper proceedings; provided, however, at
any time after a tax lien, of any type, is filed or notice thereof is received, upon request of Lender, Borrower shall deposit
with Lender the amount so contested and unpaid together with all interest that may or might be assessed or be a charge on the Mortgaged
Property or any part thereof.

 

6.5.               
Lender’s Access: Upon one (1) business day’s written notice, Borrower will, during normal business hours
and as often as Lender may reasonably request but not exceeding once per month during the term of this Agreement so long as Borrower
is not in default hereunder, permit any of Lender’s officers or any authorized representatives of Lender to visit and inspect
the Development, to enter upon the Mortgaged Property, to inspect the Development progress thereof and all materials to be used
in the Development, and to examine the current plans and specifications.

 

6.6.                Compliance
with Laws: Borrower will comply with all statutes, laws, rules and regulations in all material respects to which the
Borrower is subject or by which its properties are bound or affected, including, without limitation, (a) ERISA; (b) those
pertaining or relating to environmental standards and controls; (c) those pertaining to occupational health and safety
standards (d) those pertaining to equal employment and credit practices and civil rights, and (e) those pertaining to the
ownership, operation and use of the Development.

 

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6.7.               
Maintenance: Borrower will maintain its existence, remain in good standing in each jurisdiction in which it is required
to be qualified or licensed, maintain all franchises, permits, intellectual properties and licenses necessary or useful in the
operation of its business heretofore operated and as to be operated as contemplated hereby, and Borrower will maintain or cause
to be maintained its properties in good and workable condition, repair, and appearance, and protect the same from deterioration,
other than normal wear and tear, at all times.

 

6.8.               
Further Assurances: Borrower will, from time to time, promptly cure any defects or omissions in the execution and
delivery of, or the compliance with the Loan Documents, or the conditions described herein, including the execution and delivery
of additional documents reasonably requested by Lender.

 

6.9.               
Events with Respect to ERISA: As soon as possible and in any event within thirty (30) days after Borrower knows or
has reason to know that any reportable event described in Sections 4042(a) or 4043(b) of ERISA with respect to any employee pension
or other benefit plan or trust maintained by or related to Borrower has occurred, or that PBGC has instituted or will institute
proceedings under ERISA to terminate any such plan, Borrower will deliver to Lender (a) a certificate of an officer of Borrower
setting forth details as to such event and the action which Borrower proposes to take with respect thereto, and (b) a copy of any
notice delivered by PBGC evidencing its intent to institute such proceedings. For all purposes of this covenant, Borrower shall
be deemed to have all knowledge or knowledge of all facts attributable to the plan administrator of such plan under ERISA. Borrower
will furnish to Lender (or cause such plan administrator to furnish to Lender) the annual report for each plan covered by ERISA
maintained by or related to Borrower as filed with the Secretary of Labor not later than ten (10) days after the receipt of a request
from Lender in writing for such report.

 

6.10.            
Other Notifications: Borrower will notify Lender as soon as practicable, but in any event within five (5) business
days after Borrower knows or has reason to know that any of the following has occurred: (a) an Event of Default; (b) any material
adverse change in the nature of or property comprising the Mortgaged Property; and (c) any change in the accounting practices and
procedures of Borrower, including a change in the financial conditions, business or operations of Borrower.

 

6.11.            
Compliance with Organizational Documents: Borrower shall timely perform all of its responsibilities and obligations
under the Borrower’s Articles of Organization, Operating Agreement and any other documents now or hereafter evidencing Borrower.

 

6.12.            
Completion of Development: Borrower shall complete the work of the Development on or before July 30, 2021 (the “Completion
Date”).

 

    11

     

    

 

6.13.               
 Regulatory Compliance: Borrower shall at all times cause the Development to remain in full compliance with all required
equity thresholds and capital retention obligations set forth in Part 217 of Chapter II of title 12 of the Code of Federal Regulations
(HVCRE regulations) such that the Development would not, in the determination of Lender need to be classified as High Volatility
Commercial Real Estate.

 

6.14.               
Continuity of Construction: Borrower shall prosecute with diligence and continuity the construction of the work and
improvements and will not suspend or cease construction for a period longer than thirty (30) days. Borrower’s obligation
under this provision shall be subject to exception due to events of Force Majeure Delay. "Force Majeure Delay" shall
mean a delay in progress of construction due to weather, act of God, unavailability or shortage of labor or materials, national
emergency, fire or other casualty, natural disaster, war, delays or actions of governmental authorities or utilities, riots, acts
of violence, labor strike, injunctions in connection with litigation, or other cause which is not within the reasonable control
of Borrower. Force Majeure Delay does not include the failure to order and obtain materials in a timely fashion for the continuous
development of the Development and does not include financial difficulties of the Borrower.

 

7.               
BORROWER’S NEGATIVE COVENANTS: Until payment in full of the Loan and unless Lender shall otherwise consent
in writing, Borrower will not perform or permit to be performed any of the following acts:

 

7.1.               
Creation or Existence of Liens: Borrower shall not create, assume or suffer to exist any mortgage, pledge, lien,
charge or encumbrance on the Mortgaged Property without the prior approval of Lender, excluding only: (a) encumbrances in favor
of the Lender; (b) deposits to secure payment of workmen’s compensation, unemployment insurance and similar benefits; (c)
statutory liens, against which there are established reserves in accordance with generally accepted accounting principles, and
which arise in the ordinary course of Borrower’s business and secure current obligations of Borrower which are not in default;
(d) liens for property taxes not yet due; and (e) such matters reflected in the mortgagee policy of title insurance and in the
Mortgage. Lender understands and approves Borrower recording on the Mortgaged Property: (i) one Final Plat (as defined below) of
the Mortgaged Property which may contain grants of easements, dedications of right-of-way and other encumbrances necessary to create
the subdivided Lots; (ii) a declaration of covenants, conditions and restrictions applicable to the Mortgaged Property which includes
the creation of a homeowner’s association and architectural review provisions; and (iii) private improvement covenants creating
monthly levies on the Lots for the reimbursement of certain infrastructure costs and expenses.

 

7.2.               
Transfer of Mortgaged Property: Borrower shall not sell, transfer or convey all or any portion of the Mortgaged
Property except as permitted by this Agreement; and the Borrower shall not transfer, whether voluntarily or involuntarily, sell
or assign more than 50% of the ownership interest of Borrower without the prior consent of Lender. If Borrower transfers, whether
voluntarily or involuntarily, sells or assigns any of the ownership interest of Borrower, Borrower will give written notice to
Lender of the percentage of ownership interest transferred, sold or assigned and the parties to whom the ownership interest was
transferred, sold or assigned within ten (10) days of the effective date of the transfer, sale or assignment.

 

    12

     

    

 

7.3.               
Use of Loan Proceeds: Borrower shall not use or permit any related person, association or entity to use any funds
advanced to Borrower under this Agreement to (a) defray living expenses, (b) anticipate profit, or (c) defray any other items not
directly connected with the costs of the Development and payable to unrelated third parties.

 

7.4.               
Modification of Organizational Documents: Borrower shall not participate in, suffer or permit the material amendment,
modification, restatement, cancellation or termination of any document now or hereafter evidencing Borrower, including, without
limitation, the Borrower’s Articles of Organization or Operating Agreement, without the prior consent of Lender, which consent
will not be unreasonably withheld.

 

7.5.               
Limitation on Distributions: Except as otherwise provided herein, and if no Default or Event of Default has occurred
and is continuing, Borrower may make distributions of cash or property to its partners or otherwise make distributions on the account
of equity interests in the Borrower, provided, however, that no such distribution would (a) cause Borrower to be in default of
any covenant contained herein or in the Loan Documents, or (b) cause Borrower’s net equity investment in the Development,
as determined by Lender, to be less than fifteen percent (15%).

 

8.               
ADMINISTRATION OF LOAN: NOTWITHSTANDING ANY LANGUAGE IN THIS AGREEMENT SEEMINGLY TO THE CONTRARY, BORROWER SHALL
NOT BE ENTITLED TO ANY DISBURSEMENT OF LOAN PROCEEDS HEREUNDER UNLESS AND UNTIL BORROWER HAS SATISFIED ALL OF THE CONDITIONS OF
LENDING SET FORTH THIS AGREEMENT. LENDER SHALL MAKE DISBURSEMENTS UNDER THE LOAN IN THE FOLLOWING MANNER:

 

8.1.               
Purpose: The principal sum to be disbursed under the Note shall be used only to pay development costs as shown in
the Development Budget (the “Development Costs”).

 

8.2.               
Compliance with Development Budget: Notwithstanding any language in this Agreement seemingly to the contrary, all
disbursements under this Agreement and the Note shall be made in accordance with the Development Budget. Deviations from the Development
Budget must be approved in advance in writing by Lender, which approval shall not be unreasonably withheld. The Development Budget
will be monitored monthly on a category-by-category basis. If Development Costs in an individual category exceed the amount budgeted
therefore (plus ten percent (10%) thereof as contained in the contingency line item) in the Development Budget, then Borrower shall
pay from sources other than the Loan the entire excess, unless a budgetary savings in the same or greater amount is realized in
a different category as reasonably determined by Lender.

 

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8.3.               
 Request for Funds: Borrower shall deliver to Lender a request for funds (a “Request for Funds”) stating
the amount of disbursement requested under the Note. The Request for Funds shall be made on the AIA form G702 Application and Certificate
for Payment, and as applicable, an AIA form G703 Continuation Sheet and shall be delivered to Lender at least five (5) business
days before the requested date of disbursement, properly completed and signed by Borrower’s contractor and reviewed by Tierra
West, LLC (the “Engineer/Inspector”). At the option of Lender, all Requests for Funds shall be supported by copies
of bills or statements for all expenses for which a disbursement is requested. Borrower agrees that Lender may disburse automatically
from the Loan an amount sufficient to pay each payment of interest required by the Note, on its due date or any date thereafter
as Lender may choose, provided that such payment of interest has not been theretofore paid by Borrower.

 

8.4.               
Information: The Request for Funds shall be accompanied by:

 

8.4.1.               
a Development Budget spreadsheet detailing the requested disbursement and remaining balance to fund;

 

8.4.2.               
if Lender requires, a list of Hard Costs, broken down by subcontractor, to be paid from the requested disbursement and copies
of all invoices for each Hard Cost item in excess of Five Thousand and No/100 Dollars ($5,000.00). “Hard Costs” are
all of the costs for the visible improvements, including without limitation grading, excavation, concrete, sidewalks, roads, utilities,
and landscaping;

 

8.4.3.               
a list of Soft Costs to be paid from the requested disbursement and copies of the invoices for each Soft Cost item in excess
of Five Thousand and No/100 Dollars ($5,000.00). “Soft Costs” are all costs that are not Hard Costs;

 

8.4.4.               
copies of all current and pending change orders (AIA Form G701 or equivalent);

 

8.4.5.               
copies of executed conditional lien waivers from the general contractor for the current disbursement. In cases where the
general contractor is owned/controlled by the Borrower, conditional lien waivers for the current disbursement are required for
each major subcontractor;

 

8.4.6.               
copies of executed unconditional lien waivers from the general contractor for previous disbursements. In cases where the
general contractor is owned/controlled by the Borrower, unconditional lien waivers for previous disbursements are required for
each major subcontractor;

 

8.4.7.               
if requested by Lender, a report by the Engineer/Inspector which shall specify the estimated percentage of completion of
the Development, together with detailed comments on the specific work performed since the date of the last report rendered to Lender;

 

8.4.8.                an
endorsement to the title insurance policy, extending the effective date of the policy to the date of the endorsement, showing
no liens of record or additional encumbrances not acceptable to the Lender, and increasing the effective amount of the
coverage to the total amount outstanding under the Note;

 

    14

     

    

 

8.4.9.               
unless provided with a previous Request for Funds, a copy of the permit applicable to the work covered by the Request for
Funds issued by Bernalillo County, New Mexico or other governmental authority; and

 

8.4.10.               
Such other information as Lender may reasonably request.

 

8.5.               
Lender’s Inspection: Lender shall engage the Engineer/Inspector, at Borrower’s sole cost and expense,
to review each Request for Funds and make an examination of the Development for the benefit of Lender prior to Lender making any
advance. Regardless of inspections by the Engineer/Inspector or Lender’s representatives, Lender shall have no responsibility,
obligation or liability to Borrower or any other individual or entity based on, arising from or relating to any such inspections,
and Borrower shall at all times have exclusive control over work on the Development and sole responsibility for compliance with
all governmental, quasi-governmental and private laws, ordinances, rules, regulations, codes, covenants, restrictions, easements
and other matters which control, burden, apply to or otherwise affect the Mortgaged Property and/or the Development.

 

8.6.               
Disbursements: The Lender shall, on the date the requested advance is to be made or as soon thereafter as all conditions
precedent to such advance have been satisfactorily met in all material respects, deposit into an account at Lender designated by
Borrower such advance. Advances under the Note may, at the option of the Lender, be recorded on the Note and/or by deposits to
the foregoing account, and such records shall be conclusive evidence of all advances made under the Note. Notwithstanding the foregoing
disbursement procedure, upon the occurrence of an Event of Default (defined below), the Lender may, at its discretion, until such
Event of Default is cured or for so long as required by the title company issuing the loan title insurance required hereunder,
make disbursements to itself for all sums payable by Borrower to Lender, make disbursements to the appropriate taxing authority
to pay all unpaid taxes, make payments directly to insurers for all premiums due on insurance policies required hereunder, and
make all other disbursements to a title company escrow account, and such title company will draw checks on such account for payment
of the items approved by Lender. Any expense incurred because of the disbursement through a controlled title company escrow account
shall be paid by Borrower.

 

8.7.                Development
Budget Overrun: In the event the Lender determines, at any time, that the total cost of completing the Development free
of liens and encumbrances, other than those in favor of the Lender contemplated hereby will, in the reasonable judgment of
the Lender, exceed the available and undisbursed balance of the loan described herein, the Lender may cease making advances
and/or require further security for the payment of the indebtedness evidenced by the Note by requiring the Borrower to post
additional collateral satisfactory to Lender, and/or by requiring Borrower to make cash deposits with Lender to be held in an
account with Lender sufficient in amount to cover such estimated excess cost of completing the Development. For the purpose
of this paragraph, the cost of completion shall be deemed to include, without limitation the following: costs of labor and
materials, site and off-site improvements, amounts paid to contractors, landscaping, professional fees, taxes on the
Mortgaged Property, premiums for bonds, if any, survey costs, appraisal fees, recording costs, interest on the Note, all
amounts reimbursable to the Lender for reasonable expenses incurred hereunder, and the costs of all items necessary to the
proper completion of the Development.

 

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8.8.               
Termination of Advances: At the option of the Lender, monthly advances shall not be made unless: (a) the Loan Documents
are in full force and effect; and (b) an Event of Default does not exist and would not exist but for the giving of notice or the
passage of time under the terms of the Loan Documents.

 

9.               
[RESERVED]

 

10.               
DEFAULT: The Events of Default listed in the Mortgage are incorporated in this Agreement by reference and made a
part of this Agreement and shall constitute “Events of Default” hereunder and under each of the other Loan Documents
executed pursuant to this Agreement. In addition, the failure by Guarantor to provide the financial statements required by the
Guaranty within thirty (30) days from the date of written notice from Lender or the failure by Guarantor to maintain the net worth
required by the Guaranty shall each be an “Event of Default” under this Agreement and under each of the other Loan
Documents.

 

11.               
REMEDIES: Upon the occurrence of an Event of Default and continuation thereof and the failure by Borrower to cure
such Event of Default after such notice of the Event of Default and such opportunity to cure the Event of Default as may be required
by the Mortgage, Lender may, at its option:

 

11.1.               
Acceleration of the Note: Declare the Note to be immediately due and payable whereupon the Note shall become forthwith
due and payable without presentment, demand, protest or further notice of any kind, and the Lender shall be entitled to proceed
simultaneously or selectively and successively to enforce its rights under the Note, this Agreement and any of the Loan Documents
executed pursuant to the terms hereof, or any note or all of them. Nothing contained herein shall limit Lender’s rights and
remedies available under applicable laws.

 

11.2.               
Selective Enforcement: In the event the Lender shall elect to selectively and successively enforce its rights under
any of the Loan Documents, such action shall not be deemed a waiver or discharge of any other lien, encumbrance or security instrument
securing payment of the Note until such time as the Lender shall have been paid in full all sums advanced under the Note. The foreclosure
of any lien provided pursuant to this Agreement without the simultaneous foreclosure of all such liens shall not merge the liens
granted which are not foreclosed with any interest which the Lender might obtain as a result of such elective and successive foreclosure.

 

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12.               
 GENERAL PROVISIONS: Lender and Borrower further agree as follows:

 

12.1.               
Expenses: Borrower agrees to pay all reasonable fees, expenses and charges in respect to the Loan contemplated by
this Agreement, including, without limiting the generality thereof, the following: reasonable fees and expenses of counsel employed
by Lender in connection with drafting and negotiating documents and closing of the Loan up to $4,000.00, plus New Mexico Gross
Receipts Tax, and all reasonable fees and expenses of counsel employed by Lender in regard to any litigation arising out of or
relating to this transaction in which Lender is the prevailing party; title insurance premiums and all expenses incidental to title
insurance and title evidence; recording and filing fees; reasonable fees and expenses of any appraiser who appraises the Mortgaged
Property for Lender limited, in the absence of an Event of Default, to not more than twice during the term of the Loan; reasonable
fees and expenses of the environmental engineering firm which provides the required environmental assessment report to Lender at
the closing of the Loan up to a maximum of two thousand dollars ($2,000.00) and any environmental assessment report required by
federal law; reasonable fees and expenses of the Engineer/Inspector in connection with the construction phase of the Development;
and other reasonable fees and expenses involved in the closing of this loan and the reasonable fees and expenses payable by Lender
which are incidental to the enforcement or defense of this Agreement or any of the other Loan Documents.

 

12.2.               
Notices: Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered
personally via a national overnight delivery service or sent by registered or certified mail, postage prepaid, return receipt requested
and addressed as listed below or to such other address as the party concerned may substitute by written notice to the other. All
notices shall be deemed received: (i) on the date of delivery if personally delivered; (ii) on the day following timely deposit
with an overnight delivery service; or (iii) within three (3) days (excluding Saturdays, Sundays and holidays recognized by national
banking associations) after being mailed:

 

		To Borrower:	Lavender Fields, LLC

333 Rio Rancho Drive,
Suite 202

Rio Rancho, New Mexico
87124

Attention: Vice President

 

		To Lender:	BOKF, NA dba Bank of Albuquerque

100 Sun Avenue NE,
Suite 500

Albuquerque, New Mexico
87109

Attention: Jordan Herrington,
Vice President

 

12.3.                Amendment
and Waiver: This Agreement may not be amended or modified in any way, except by an instrument in writing executed by both
parties hereto; provided, however, Lender may, in writing: (a) extend the time for performance of any of the obligations of
Borrower; (b) waive any Event of Default by Borrower; and (c) waive the satisfaction of any condition that is precedent to
the performance of Lender’s obligations under this Agreement. In the event of Lender’s waiver of an Event of
Default, such specific Event of Default shall be deemed to have been cured and not continuing, but no such waiver shall
extend to any subsequent or other Event of Default or impair any consequence of such subsequent or other Event of
Default.

 

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12.4.               
Non-Waiver; Cumulative Remedies: No failure on the part of Lender to exercise and no delay in exercising any right
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right hereunder preclude
any other or further right of exercise thereof. The remedies herein provided are cumulative and not alternative.

 

12.5.               
Assignment: Neither this Agreement, nor the loan proceeds hereunder, shall be assignable by Borrower without the
prior written consent of Lender.

 

12.6.               
Applicable Law: THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT, AND ALL MATTERS RELATING HERETO OR THERETO OR
ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW MEXICO, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. BORROWER AND LENDER HEREBY
CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF BERNALILLO, STATE OF NEW MEXICO, AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED
IN SUCH COURTS. BORROWER AND LENDER EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
OF FORUM NON CONVENIENS. 

 

12.7.               
Descriptive Headings: The descriptive headings of the paragraphs of this Agreement are for convenience only and shall
not be used in the construction of the terms hereof.

 

12.8.               
Terms: As used in this Agreement the singular shall be deemed to include the plural and the plural shall be deemed
to include the singular.

 

12.9.               
Integrated Agreement: THIS AGREEMENT AND OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING
TO 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 ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

12.10.               
Time of Essence: Time is of the essence of this Agreement.

 

12.11.               
Binding Effect: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns. The obligations of Borrower under this Agreement are joint and several.

 

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12.12.               
 Third Party Beneficiary: Nothing in this Agreement, express or implied, is intended to confer upon any person other
than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.

 

12.13.               
Right to Defend: Lender shall have the right, but not the obligation, at Borrower’s expense, to commence, to
appear in or to defend any action or proceeding (initiated by a third party against Borrower) purporting to affect the rights or
duties of the parties hereunder and in connection therewith pay out of the funds of the Loan all necessary expenses, including
reasonable fees of counsel, if Borrower fails to so commence, appear in or defend any such action or proceeding with counsel satisfactory
to Lender.

 

12.14.               
Indemnification: Borrower agrees to indemnify, defend and hold Lender harmless from and against any loss, cost or
expense (including interest, penalties, reasonable attorneys’ fees and amounts paid in settlement) caused by Borrower’s
negligence, breach or wrongful actions arising out of or based upon the Loan Documents or the Loan, except and to the extent caused
by Lender’s negligence, breach, wrongful actions, gross negligence or willful misconduct.

 

12.15.               
Waiver of Jury Trial. EACH OF BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND
AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH OF BORROWER AND LENDER ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THAT EACH SHALL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH OF BORROWER AND LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

12.16.               
Joint and Several Obligations. If Borrower consists of more than one party, all representations, warranties, covenants,
agreements and undertakings of such parties under this Agreement shall be deemed joint and several. Whenever the context requires,
the representations, warranties, liabilities, covenants, agreements and undertakings contained in this Agreement shall be deemed
to have been individually given by each of the parties constituting Borrower.

 

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13.        PARTIAL
RELEASES. From time to time, after the recording of the Final Plat (defined below) in the real property records of
Bernalillo County, New Mexico until the Maturity Date (defined in the Note), Lender shall release one or more Lots (defined
below) from the lien of the Mortgage and from the UCC Financing Statement as provided in this Agreement. A request for
release (a “Request”) must identify the Lot or Lots to be released and be made to Lender not less than five (5)
Business Days prior to the requested release date. A “Business Day” is any day in which the Lender is open for
business. The release price (the “Release Price”) for each Lot shall be Sixty-Five Thousand Seven Hundred Fifty
and No/100 Dollars ($65,750.00). The Release Price must be delivered to the Lender in immediately available funds no later
than 1:00 p.m. New Mexico time on the requested release date. In addition, Borrower has received approval for a preliminary
plat for the Mortgaged Property from Bernalillo County, New Mexico, which plat the Lender has previously reviewed and
approved (the “Lender Approved Preliminary Plat”) and which will become final plat (the “Final
Plat”). Borrower will not materially change the Lender Approved Preliminary Plat without the prior written approval of
Lender. Upon substantial completion of the Lots, Borrower shall record one or more Final Plats for the Mortgaged Property.
Each Final Plat may contain land dedicated to Bernalillo County, New Mexico or other governmental entity. To the extent any
Final Plat contains land dedicated, granted or conveyed to a governmental entity, the Lender shall execute a partial release
with regard to such land without charge. Lender further agrees to execute a partial release without charge with regard to
Tract B-1, as such is shown and described on the Lender Approved Preliminary Plat. As used in this Agreement, the term
 “Lot” means a lot shown on the Lender Approved Preliminary Plat. Notwithstanding anything to the contrary
contained in this Agreement or in any of the Loan Documents, Lender shall not be required or obligated to release any Lot if
an Event of Default Exists or would exist but for the giving of notice or the lapse of time. Unless an Event of Default
exists or would exist but for the giving of notice of the passage of time, the Release Price shall be applied to the
outstanding principal balance of the Note.

 

14.       
REAPPRAISAL. If, as determined in Lender’s reasonable discretion, there has been a material deterioration in
the value of the Mortgaged Property, Lender shall be entitled, at the expense of Borrower, not more frequently than once every
twelve (12) months, to obtain a re-appraisal of the Mortgaged Property. If such re-appraisal confirms a material deterioration
in the value of the Mortgaged Property compared with the value shown in the previous appraisal on file with Lender, which deterioration
causes Borrower to be in violation of any covenants contained in the Loan Documents, Lender may, at Lender’s option, require
Borrower to make an additional payment of principal sufficient to bring Borrower into compliance with such covenants.

 

15.       
WAIVER OF SET-OFF. Lender hereby waives all rights of set-off Lender has under New Mexico law or the Loan Documents
against any and all deposits held by Lender in the name of Borrower. Lender does not waive any other rights or remedies of Lender
under New Mexico law or the Loan Documents.

 

[SIGNATURES ON NEXT PAGE]

 

    20

     

    

 

IN WITNESS WHEREOF,
the parties have caused this instrument to be duly executed effective as of (but not necessarily on) the day and year first above
written.

 

	“BORROWER”:	LAVENDER FIELDS, LLC,
	 	a New Mexico limited liability company
	 	 
	 	 
	 	By	/s/ Carey A. Plant
	 	 	Carey Plant, Vice President
	 	 
	 	 
	“LENDER”:	BOKF, NA dba BANK OF ALBUQUERQUE
	 	 
	 	 
	 	By:	/s/ Jordan Herrington
	 	 	Jordan Herrington, Vice President

 

    21

     

    

 

EXHIBIT “A”

Legal Description

 

Tracts "A", "B", "C" and "D"
of Meso Am, Bernalillo County, New Mexico, as the same are shown and designated on the Plat thereof, filed in the office of the
County Clerk of Bernalillo County, New Mexico on October 22, 2013 in Plat Book 2013C, Page 119 as Document No. 2013116380, re-recorded
November 4, 2013 in Plat Book 2013C, Page 123 as Document No. 2013120726.Exhibit 10.4

 

NON-REVOLVING LINE OF CREDIT

PROMISSORY NOTE

 

	$3,750,000.00	June 19, 2020
	Note #__________	Albuquerque, New Mexico

 

FOR VALUE RECEIVED,
the undersigned Lavender Fields, LLC, a New Mexico limited liability company (“Maker”), hereby promises to pay to the
order of BOKF, NA dba Bank of Albuquerque (“Lender”), at its office located at 100 Sun Avenue NE, Suite 500, Albuquerque,
New Mexico 87109, or at such other place as may be designated in writing by the holder of this Non-Revolving Line of Credit Promissory
Note (“Note”), the principal sum of Three Million Seven Hundred Fifty Thousand and No/100 Dollars ($3,750,000.00),
or so much thereof as shall be disbursed hereunder, together with interest thereon at the rates specified in this Note, payable
as set forth herein.

 

1.           
Definitions. As used in this Note, the following terms shall have the meanings indicated for each:

 

A.          
“Event of Default” shall have the meaning ascribed to such term in the Mortgage, including without limitation
a default in payment or performance under this Note.

 

B.          
“Interest Rate” shall mean from and following the closing date, the loan and the other obligations shall
bear interest at LIBOR (defined below) plus three hundred (300) basis points, as calculated in accordance with paragraph 5 below;
provided, however, in no event will the Interest Rate be lower than three and three quarters of one percent (3.75%). The
Interest Rate is not necessarily the lowest rate charged by Lender on its loans. If the Interest Rate becomes unavailable during
the term of the Loan, Lender may designate a comparable substitute index after notifying Maker. Notwithstanding any language herein
seemingly to the contrary: (a) Maker shall not be obligated to pay in excess of the maximum interest rate permitted by law for
any interest payment period; and (b) upon the occurrence of an Event of Default, at the option of the holder of this Note, interest
will accrue at the Default Rate of interest hereafter specified.

 

C.           “LIBOR”
shall mean a rate (expressed to the fifth decimal place) equal to (i) the rate of interest which is identified and normally
published by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for United
States dollars) for loans in United States dollars for thirty (30) day periods as of 11:00 a.m. (London time), on the first
of each month (or if such day is not a Business Day, the immediately preceding Business Day) plus (ii) the maximum reserve
requirement, if any, then imposed under Regulation D of the Board of Governors of the Federal Reserve System (or any
successor thereto) for “Eurocurrency Liabilities” (as defined therein); provided, however, that if LIBOR
determined as provided above shall be less than zero, LIBOR shall be deemed to be zero for the purposes of this Agreement.
Notwithstanding the foregoing, if at any time Lender determines (which determination shall be conclusive absent manifest
error) that (a) ICE Benchmark Administration no longer reports LIBOR, (b) LIBOR is no longer a widely recognized benchmark
rate for newly originated loans in the U.S. commercial or syndicated loan market, (c) the applicable supervisor or
administrator (if any) of any applicable interest rate specified herein or any governmental authority having or purporting to
have jurisdiction over Lender has made a public statement identifying a specific date after which LIBOR shall no longer be
used for determining interest rates for loans in the U.S. commercial or syndicated loan market, or (d) Lender determines in
good faith that the rate so reported no longer accurately reflects the rate available to Lender in the London Interbank
Market; or (e) if such index no longer exists (or accurately reflects the rate available to Lender in the London Interbank
Market), then Lender may establish a replacement interest rate, including any necessary adjustments to any applicable margin
(the “Replacement Rate”), in which case, the Replacement Rate shall replace LIBOR and such applicable interest
rate for all purposes under this Note and the other Loan Documents unless and until (A) an event described in clauses (i)
through (iv) occurs with respect to the Replacement Rate or (B) the Lender notifies the Maker that the Replacement Rate does
not adequately and fairly reflect the cost to the Lender of funding loans bearing interest at the Replacement Rate. In
connection with the establishment and application of the Replacement Rate, and notwithstanding anything to the contrary as
may be set forth in Section 12.3 of the Loan Agreement, this Note and the other Loan Documents shall be amended as may be
necessary or appropriate, in consultation with Maker (but in the sole opinion of the Lender), to effect the above provisions
and the implementation of the Replacement Rate and, without limitation of Maker’s covenant under Section 6.8 of the
Loan Agreement. Maker consents to any such necessary or appropriate amendments.

 

     

     

    

 

D.          
“Loan” shall mean the loan evidenced by this Note.

 

E.          
“Loan Agreement” shall mean the certain Development Loan Agreement dated the same date as this Note,
between Lender and Maker and pursuant to which this Note is executed.

 

F.           
“Maturity Date” shall mean June 19, 2024, or such earlier date on which the entire unpaid principal balance
of this Note shall be paid or required to be paid in full, whether by prepayment, acceleration or otherwise.

 

G.          
“Mortgage” shall mean the certain Mortgage, Security Agreement and Financing Statement, dated the same
date as this Note, executed by Maker for the benefit of Lender, and securing, among other things, payment of this Note, as supplemented,
modified and amended.

 

2.           
Draw Note. This Note evidences a loan that may be advanced in more than one advance during the term of this Note.
This Note does not evidence a revolving line of credit. Maker acknowledges and agrees that it does not have the right under this
Note to borrow, pay and re-borrow the loan proceeds. The loan evidenced by this Note shall be disbursed in accordance with the
provisions of the Loan Agreement.

 

3.            Payments.
Maker shall make monthly payments of interest only on the Nineteenth (19th) day of each month beginning on July
19, 2020, and continuing on the Nineteenth (19th) day of each month thereafter through and including May 19, 2024.
On the Maturity Date, Maker shall make one final payment of all accrued and unpaid principal and interest and any other
unpaid sums. Upon the occurrence of an Event of Default, at the option of the holder of this Note, interest shall accrue at
the Default Rate. IN NO EVENT SHALL THE SUM TOTAL OF ALL ADVANCES ON THE NOTE EXCEED THE FACE AMOUNT OF THE NOTE.

 

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In addition, Maker
shall make the following required principal payments (the “Curtailment Payments”) to Lender: (i) Six Hundred Fifty-Seven
Thousand Five Hundred and No/100 Dollars ($657,500.00), on or before March 19, 2022; (ii) Three Hundred Ninety-Four Thousand Five
Hundred and No/100 Dollars ($394,500.00) on or before June 19, 2022; (iii) Three Hundred Ninety-Four Thousand Five Hundred and
No/100 Dollars ($394,500.00) on or before September 19, 2022; (iv) Three Hundred Ninety-Four Thousand Five Hundred and No/100 Dollars
($394,500.00) on or before December 19, 2022; (v) Three Hundred Ninety-Four Thousand Five Hundred and No/100 Dollars ($394,500.00)
on or before March 19, 2023; (vi) Three Hundred Ninety-Four Thousand Five Hundred and No/100 Dollars ($394,500.00) on or before
June 19, 2023; (vii) Three Hundred Ninety-Four Thousand Five Hundred and No/100 Dollars ($394,500.00) on or before September 19,
2023; (viii) Three Hundred Ninety-Four Thousand Five Hundred and No/100 Dollars ($394,500.00) on or before December 19, 2023; and
(ix) Three Hundred Thirty-One Thousand and No/100 Dollars ($331,000.00) on or before March 19, 2024. Payments of the Release Price
(defined in the Loan Agreement) to Lender shall be credited towards the Curtailment Payments.

 

4.           
Loan Origination Fee. On the date this Note is signed, Maker will pay to Lender a loan origination fee of one-half
of one percent (1/2%) of the face amount of this Note.

 

5.           
Computation of Interest and Related Fees. Interest due under this Note shall be calculated on the unpaid principal
to the date of each installment paid, and each payment of principal and/or interest made hereunder shall be credited first to the
discharge of interest, and the balance shall be credited to the unpaid principal sum. All payments of interest shall be computed
on the per annum basis of a year consisting of three hundred sixty (360) days and for the actual number of days elapsed (including
the first day, but excluding the last if payment is received by the holder of this Note by 1:00 p.m. New Mexico time). In addition
to any other means of payment, Maker shall have the right to make payments by wire transfer or ACH directly to Lender. Within ten
(10) days after written request by Maker, Lender shall provide wiring and ACH instructions to Maker for all payments due pursuant
to the Loan.

 

6.            Default
Interest. Subject to the notice and cure provisions contained in the Mortgage, while any Event of Default exists in the
making of any of the payments herein provided to be made, or in the performance or observance of any of the terms, covenants
or conditions of the Loan Agreement, this Note, the Mortgage or of any instrument now or hereafter securing payment of the
indebtedness evidenced by this Note, at the option of the holder of this Note, in its sole discretion, the entire unpaid
principal balance hereof shall bear interest at the rate per annum equal to the applicable interest rate, adjusted as of the
date of any change therein, plus five percent (5%) per annum (the “Default Rate”). Notwithstanding the foregoing,
if Lender determines pursuant to paragraph 15.6 of the Mortgage, that the Loan evidenced by this Note is required to be
classified as high volatility commercial real estate, then the Interest Rate will be increased as provided in paragraph 15.6
of the Mortgage. During the existence of any such Event of Default, the holder of this Note may apply payments received on
any amounts due hereunder, or under the terms of any instrument now or hereafter evidencing or amounts due hereunder, or
under the terms of any instrument now or hereafter evidencing or securing such indebtedness, as the holder may determine, and
if the holder of this Note so elects, notice of election being expressly waived, the principal hereof remaining unpaid,
together with accrued interest, shall at once become due and payable. Any and all additional interest that has accrued at the
rate provided in this paragraph shall be due and payable at the time of, and as a condition precedent to, the curing of any
Event of Default.

 

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7.           
Late Fees. Subject to the notice and cure provisions contained in the Mortgage, to the extent any principal and interest
due under this Note is not paid within fifteen (15) calendar days of the due date therefore, and, to the extent that the following
described fee is deemed to constitute interest, subject to paragraph 9 of this Note, in addition to any interest or other fees
and charges due hereunder or under this Note, Maker shall pay a late fee equal to the lesser of: (a) five percent (5%) of the amount
of the payment that was to have been made; or (ii) $400.00. Maker agrees that the charges set forth herein are reasonable compensation
to Lender for the acceptance and handling of such late payments.

 

8.           
Currency. All sums called for, payable, or to be paid hereunder shall be paid in lawful money of the United States
of America, which, at the time of payment, is legal tender for the payment of public and private debts therein.

 

9.           
Pre-Payment. This Note may be prepaid in whole or in part without penalty upon not less than two (2) business days’
advance written notice to the holder of this Note.

 

10.         Interest
Savings Clause. All agreements between Maker and the holder of this Note are expressly limited so that in no event
whatsoever, whether by reason of disbursement of the proceeds hereof or otherwise, shall the amount of interest or loan
finance charge contracted for, charged or received by the holder of this Note exceed the highest lawful contractual rate of
interest or the maximum finance charge permissible under applicable federal or state law which a court of competent
jurisdiction, by final non-appealable order, determines to be applicable hereto. It is the intention of Maker and the holder
of this Note to conform strictly to applicable usury laws from time to time in force, and all agreements between Maker and
the holder of this Note, whether now existing or hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the maturity hereof or otherwise, shall the amount
paid or agreed to be paid to the holder of this Note, or collected by the holder of this Note, for the use, forbearance or
detention of the money to be loaned hereunder or otherwise, or for the payment or performance of any covenant or obligation
contained herein or in the Mortgage or in any other document evidencing, securing or pertaining to the indebtedness evidenced
hereby, exceed the maximum amount permissible under applicable usury laws. If under any circumstances whatsoever fulfillment
of any provisions hereof or of the Mortgage or any other document evidencing, securing or pertaining to the indebtedness
evidenced hereby, at the time performance of such provision shall be due, shall involve transcending the limit of validity
prescribed or permitted by law, including judicial determination, then ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity; and if under any circumstances the holder of this Note hereby shall ever
receive an amount deemed interest by applicable law which would exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied to the reduction of the principal amount owing hereunder or
to other indebtedness secured by the Mortgage and not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal and other indebtedness, the excess shall be deemed to have been a payment made by mistake and
shall be refunded to Maker or to any other person entitled thereto. All sums contracted for, charged or received by the
holder of this Note for the use, forbearance or detention of the indebtedness of Maker evidenced hereby, outstanding from
time to time shall, to the extent permitted by applicable law, be amortized, pro-rated, allocated and spread from the date of
disbursement of the proceeds of this Note until payment in full of such indebtedness so that the actual rate of interest on
account of such indebtedness is uniform through the term hereof. The terms and provisions of this paragraph shall control and
supersede every other provision of all agreements between the holder of this Note and Maker and any endorser or guarantor of
this Note.

 

    4

     

    

 

11.        
Governing Law. Payment of this Note is secured, without limitation, by the Mortgage, which covers real and personal
property located in Bernalillo County, New Mexico. THIS NOTE AND EACH OTHER LOAN DOCUMENT (AS DEFINED IN THE LOAN AGREEMENT),
AND ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW MEXICO, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES. MAKER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY
OF BERNALILLO, STATE OF NEW MEXICO, AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. MAKER EXPRESSLY
SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. 

 

12.         Remedies.
Subject to the notice and cure provisions contained in the Mortgage, upon the occurrence or existence of any Event of
Default, the holder hereof may, without further notice, declare the entire unpaid principal balance of this Note and all
unpaid, accrued interest on this Note and all other obligations of the Maker to the holder of this Note, whether direct or
indirect, absolute or contingent, now existing or hereafter arising, immediately due and payable, without further notice or
demand, and the Maker shall pay all such sums and other obligations. Further, upon the occurrence or existence of any such
Event of Default, the holder of this Note shall be entitled to exercise any or all remedies provided or referenced in this
Note, the Loan Agreement, the Mortgage or any other instrument or agreement evidencing, securing or relating to the
indebtedness evidenced by this Note and any other rights and remedies under state or federal law. Failure to exercise any
such rights and remedies upon any Event of Default shall not constitute a waiver of any rights in the event of any subsequent
Event of Default. If this Note is placed in the hands of an attorney for collection or if collected through the probate
court, bankruptcy court, or by any other legal or judicial proceedings, the Maker agrees and is obligated to pay, in addition
to the sums referred to above, the reasonable attorneys' fees of the holder of this Note, together with all court costs and
other reasonable expenses paid by such holder.

 

13.        
Waiver. The Maker, endorsers, sureties, guarantors and all other parties who may become liable for all or any part
of this Note severally waive demand, presentment, notice of dishonor, protest, notice of protest, notice of nonpayment, notice
of intent to accelerate, notice of acceleration of the maturity of this Note and consent to: (a) any and all extensions of time
for any term or terms regarding any payment due under this Note, including partial payments or renewals before or after maturity;
(b) changes in interest rates as provided in this Note; (c) any substitutions or release of collateral; and (d) the addition, substitution
or release of any party liable for payment of this Note.

 

    5

     

    

 

14.        
Miscellaneous. All notices provided for herein shall be given in accordance with the provisions of the Loan Agreement.

 

A.          
[Intentionally Omitted].

 

B.          
This Note is given to evidence an obligation incurred for business purposes and not for personal, single family residential
or agricultural purposes.

 

C.          
This Note may not be terminated orally, but only by a discharge in writing and signed by the party who is the owner and
holder of this Note at the time enforcement of any discharge is sought.

 

D.          
MAKER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THE RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. MAKER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT LENDER HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS, AND THAT LENDER WILL CONTINUE
TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. MAKER WARRANTS AND REPRESENTS THAT MAKER HAS HAD THE OPPORTUNITY OF REVIEWING
THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT MAKER KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

[SIGNATURE ON NEXT PAGE]

 

    6

     

    

 

Signed and delivered
effective as of (but not necessarily on) the date set forth above.

 

	“MAKER”	LAVENDER FIELDS, LLC,

	 	a New Mexico limited liability company
	 	 
	 	By	/s/ Carey Plant
	 	 	Carey Plant, Vice President

 

    7

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