Document:

ex10-1.htm

    
      Exhibit
        10.1

    

     

    

      SECURED
        LINE OF CREDIT PROMISSORY NOTE

      

      U.S.
        $70,000,000.00                                                                                                                          November
        12, 2007

      

      FOR
        VALUE
        RECEIVED, the undersigned, United Development Funding X, L.P., a Delaware
        limited partnership (the “Borrower”), hereby makes this Secured Line of
        Credit Promissory Note (as it may be amended, modified, renewed, extended,
        increased, superseded, or replaced from time to time, this “Note”) and
        promises to pay to the order of United Development Funding III, L.P., a Delaware
        limited partnership or its assigns (the “Lender”), the sum of Seventy
        Million and NO/100 Dollars ($70,000,000.00), or, if greater or less, the
        aggregate outstanding principal amount of this Note, together with accrued,
        unpaid interest thereon, pursuant to the terms and conditions set forth in
        this
        Note.  All amounts are payable to Lender in lawful money of the United
        States of America at the address for Lender provided in Section 1
        of  this Note, or at such other address as from time to time may be
        designated by Lender.

      

      1.           Definitions.  In
        addition to the terms defined elsewhere in this Note, the following terms
        have
        the meanings set forth below for purposes of this Note:

      

      “Advance
        Request” shall mean
        Lender’s standard form of Advance Request for this Note, as in effect from time
        to time, duly executed by an officer of Borrower and including or accompanied
        by
        an Officer’s Certificate dated as of the date of the Advance Request and as of
        the funding date.

      

      “Base
        Rate” shall mean the
        lesser of (i) fifteen percent (15.0%), accrued monthly and compounded annually,
        or (ii) the Highest Lawful Rate.

      

      “Collateral”
shall
        have the
        meaning given to such term in the Security Agreement.

      

      “Commitment”
        shall mean the aggregate amount of up to U.S. Seventy Million and NO/100
        Dollars
        ($70,000,000.00).

      

      “Default
        Rate” shall mean the
        lesser of (i) eighteen percent (18%), accrued monthly and compounded annually,
        or (ii) the Highest Lawful Rate.

      

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

      

      “Effective
        Date” shall mean November 12, 2007.

      

      “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 or 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 indebtedness evidenced
        hereby
        or by the other Loan Documents which are treated as interest under applicable
        law.

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      “Investments”
        shall mean loans to and/or investments in entities that acquire, entitle,
        develop and/or sell land or lots for the construction of single-family
        residential homes.

      

      “Lien”
        shall mean any lien, security interest, charge, tax lien, pledge, encumbrance,
        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”
        shall mean the amount of principal outstanding under this Note from time
        to
        time, together with unpaid accrued interest thereon.

       

      
        “Maturity
          Date” shall mean November 11, 2012.

      

       

      “Officer’s
        Certificate” means a
        certificate duly executed by an authorized officer on behalf of Borrower
        certifying that (i) no Event of Default has occurred and is continuing under
        this Note, (ii) all representations and warranties made by Borrower and the
        Guarantor (as hereinafter defined), respectively, in this Note and the other
        Loan Documents are true and correct in all respects, and (iii) Borrower and
        the Guarantor have complied with and performed, in all respects, all covenants,
        conditions and agreements which are then required by this Note and the other
        Loan Documents to have been complied with or performed.

      

      “Senior
        Indebtedness” shall mean
        indebtedness owed to a Senior Lender.

      

      “Senior
        Lender” means any bank,
        financial institution or other lender having made a loan to any client of
        Borrower that has a senior position with respect to the payment of any
        indebtedness and/or the priority of any Liens.

      

      2.           Certain
        Loan Terms.  In addition all other terms and conditions set forth
        herein, certain terms and conditions of this Note are set forth
        below:

      

      
        	
                Borrower’s
                  Address

                For
                  Notice:

              	
                1702
                  N. Collins Blvd., Suite 100

                Richardson,
                  Texas  75080

                Attention:  Hollis
                  Greenlaw

                Facsimile
                  No. 972-889-0162

                 

              
	
                Lender's
                  Address

                For
                  Notice and Payment:

              	
                1812
                  Cindy Lane, Suite 200

                Bedford,
                  Texas 76021

                Attention:  Ben
                  Wissink

                Facsimile
                  No. (817) 835-0380

                 

              

      

       

      

        
          
            
            

          

          
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                  Revolver:

                	
                  This
                    Note is a revolver and thus, Borrower may borrow, repay and then
                    reborrow
                    the available amount of the Commitment; provided,  however, that
                    notwithstanding anything else to the contrary contained herein,
                    Lender has
                    no obligation to make any advance of principal to Borrower under
                    this Note
                    unless each of the conditions precedent in Section 10 have been
                    satisfied
                    and/or fulfilled as determined by Lender in its sole
                    discretion.

                   

                
	
                  Use
                    of Proceeds:

                	
                  The
                    purpose of the Loan is to finance Borrower’s origination, purchase,
                    holding and selling of
                    Investments.

                

        

      

       

       

      3.           Origination
        Fee.  Borrower agrees to pay Lender an origination fee equal to
        three percent (3%) of each advance or Commitment made under this Note pursuant
        to that certain letter agreement dated as of the Effective Date (the
“Origination Fee Letter”), but in any event not to exceed $2,100,000 in
        the aggregate; provided, that no further Origination Fee shall be due after
        total advances or Commitment made under this Note exceed $70,000,000 in the
        aggregate and further
        provided, that no origination fee shall be due on the portion of the Commitment
        repaid and re-advanced under this Note.  The origination fee due with
        respect to any advance shall be paid to Lender at or prior to the date of
        Lender’s funding of such advance hereunder.

      

      4.           Security;
        Loan Documents.  This Note is secured by, and entitled to the
        benefits of, (i) a security agreement executed by Borrower in favor of Lender
        dated as of the Effective Date (as it may be amended, modified, renewed,
        extended, superseded, or replaced from time to time, the “Security
        Agreement”) pursuant to which the Borrower has granted to Lender, a security
        interest in the Collateral, (ii) for each Investment, an allonge, collateral
        assignment, and/or such other documents, agreements, assignments and instruments
        as Lender shall require in order to evidence, acknowledge or perfect its
        security interest in the Collateral, as determined by Lender in its sole
        discretion (collectively, as each may be amended, modified, renewed, extended,
        superseded, or replaced from time to time, the “Collateral Documents”),
        and (iii) a guaranty agreement executed by UMT Holdings, L.P., a Delaware
        limited partnership (“Guarantor”) in favor of Lender, dated as of the
        Effective Date (as it may be amended, modified, renewed, extended, superseded,
        or replaced from time to time, this the “Guaranty Agreement”) pursuant to
        which Guarantor has agreed to guaranty the repayment of indebtedness owing
        by
        Borrower to Lender, and the performance of Borrower’s obligations, under this
        Note.  This Note, the Security Agreement, the Collateral Documents,
        the Guaranty Agreement, the Origination Fee Letter, all UCC financing
        statements, amendments thereto and continuation statements (collectively,
        “Financing Statements”) filed by or in favor of Lender, all Advance
        Requests, all Officer’s Certificates, and all other instruments, agreements,
        certificates, assignments and other agreements and documents executed, entered
        into or delivered by any party in connection with this Note, whether prior
        to,
        on or after the Effective Date, are collectively referred to in this Note
        as the
“Loan Documents”.

      

      5.           Loan
        Expenses.

      

      (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”):

       

      
        
          
          

        

        
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      (i)           the
        preparation, negotiation, documentation, closing, renewal, revision,
        modification, increase, 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 any
        other
        collateral granted or pledged as security for the Loan or employing others
        to do
        so or to perform due diligence for Lender with respect thereto; and

       

      (iii)           Lender’s
        creating, perfecting and realizing upon Lender’s security interest in, and the
        Liens on, the Collateral or any other collateral granted or pledged as security
        for the Loan, 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, escrow fees, attorneys’ fees, legal expenses, court costs, other fees
        and expenses incurred in connection with any complete or partial liquidation
        of
        the Collateral or any other collateral granted or pledged as security for
        the
        Loan, 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 other collateral granted or pledged as security for the
        Loan 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 Section 5(a) above and elsewhere in this Note and/or that
        such fees and expenses represent bona fide fees and expenses incurred by
        Lender.  Borrower and Lender further agree 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 Note and the other Loan Documents to the contrary, if any fees or expenses
        charged or chargeable to Borrower hereunder are determined to constitute
        interest and such fees or expenses, when added to the interest charged
        hereunder, would cause the aggregate interest charged hereunder to exceed
        the
        Highest Lawful  Rate, then Section 13 of this Note shall
        automatically apply to reduce the interest charged hereunder so as not to
        exceed
        the Highest Lawful Rate.

      

      
        
          
          

        

        
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      6.           Advance
        Procedures.

      

      (a)           Advances.  Subject
        to the other terms and conditions of this Note, including, without limitation,
        Section 10, Lender agrees to make advances to Borrower prior to the
        Maturity Date in an aggregate amount not to exceed the available amount of
        the
        Commitment pursuant to the procedures set forth in Section
        6(b).  Notwithstanding anything else to the contrary contained
        herein, Lender shall have no obligation to make any advance of Commitment
        to
        Borrower under this Note unless each of the conditions precedent in Section
        10 have been satisfied and/or fulfilled as determined by Lender in its
        sole
        discretion.  Any obligation of Lender to fund any amount of the
        Commitment shall terminate upon the earlier of (i) Lender’s notification to
        Borrower of such termination, (ii) the acceleration of this Note, or (iii)
        the
        Maturity Date.

      

      (b)           Procedure
        for Borrowing.  Each advance of Commitment (other than an advance
        to be applied to accrued interest due and owing to Lender under this Note)
        shall
        be made pursuant to Borrower’s delivery of an Advance Request and shall specify,
        in addition to any information requested on Lender’s standard form of Advance
        Request, (i) the amount of the advance of Commitment so requested, (ii) the
        requested funding date, and (iii) the use of proceeds.  Each advance
        of Commitment made for the purpose of funding an Investment shall be accompanied
        by the Borrower’s due diligence materials with respect to the Investment
        proposed to be funded and other documentation supporting the advance of
        Commitment.  Borrower agrees to provide, or cause to be provided, all
        information, documents and agreements as may be requested by Lender in
        connection with each such Investment and each such request for an advance
        of
        Commitment.  Notwithstanding the foregoing sentences of this
Section 6(b) and provided that an Event of Default has not occurred and
        is continuing under this Note, on each date that an payment of accrued interest
        becomes due and owing to Lender hereunder, Borrower agrees that Lender shall
        make, and is hereby authorized by Borrower to make, advance(s) from the
        Commitment equal to the amount of the accrued interest then due and owing
        to
        Lender, which amount shall be applied to the accrued interest then due and
        owing
        to Lender, without delivery of an Advance Request to Lender in connection
        with
        such advance.

      

      (c)           Making
        of Advances upon Approval of Advance Request.  Subject to
        the other terms and conditions of this Note, after receipt of an Advance
        Request
        and upon approval by Lender of such Advance Request, which approval may be
        withheld by Lender for any reason or for no reason, Lender shall make available
        to Borrower, the amount of the requested advance of Commitment (or such lesser
        amount than the requested amount that Lender has approved to be funded);
        provided, however, that Lender shall have no obligation to make any advance
        of
        Commitment unless each of the conditions precedent in Section 10 have
        been satisfied and/or fulfilled as determined by Lender in its sole
        discretion.

      

      
        
          
          

        

        
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      (d)           Discretionary
        Advances.  Lender is authorized to make advances hereunder that
        Lender, in its sole discretion, deems necessary or desirable to pay any Loan
        Expense or other amount chargeable to Borrower pursuant to the terms of this
        Note or any other Loan Document (such advances made for the foregoing purposes
        are referred to herein as the “Discretionary Advances”).  Each
        Discretionary Advance shall, upon disbursement, automatically constitute
        principal outstanding hereunder and cause a corresponding increase in the
        aggregate amount of Borrower’s obligations hereunder (even if such Discretionary
        Advance causes the aggregate amount outstanding hereunder to exceed the face
        amount of this Note).  Borrower agrees that each Discretionary Advance
        shall automatically reduce the available amount of Commitment available
        hereunder.  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).

      

      (e)           Advance
        Schedule.  Attached to this Note as Schedule 1 is a list of
        the Advances made under this Note, any payments applied to reduce principal
        outstanding under this Note, and the aggregate amount of principal outstanding
        under this Note prepaid by Lender (the “Advance
        Schedule”).  The Advance Schedule shall be revised by Lender from
        time to time and, as so revised, shall be conclusive and binding upon Borrower,
        absent manifest error.

      

      7.           Interest;
        Payment.

      

      (a)           Interest
        Rate.  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.  Subject to the other provisions of this
        Note, 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 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, and or waived
        by
        Lender as confirmed by Lender’s execution of a written agreement specifically
        acknowledging and describing the Event of Default so waived.

      

      (b)           Payments.  Except
        earlier upon any acceleration of this Note:

      

      (i)           Borrower
        promises to pay to Lender, monthly interest payments equal to the amount
        of
        unpaid accrued interest on the outstanding principal balance of this Note
        on the
        first (1st) day
        of each month, commencing on December 1, 2007; provided, however, that such
        monthly interest payments may be advanced by Lender from the available amount
        of
        the Commitment pursuant to the procedures set forth in Section 6(b) of
        this Note.

      

      
        
          
          

        

        
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      (ii)           In
        addition to the payments required by the provisions of clause (i) above,
        if the
        outstanding principal amount of this Note ever exceeds $70,000,000, Borrower
        promises to pay immediately to Lender, the amount of principal in excess
        of
        $70,000,000, on the date that such excess exists.

      

      (iii)           In
        addition to the payments required by the provisions of clauses (i) and (ii)
        above, 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 hereunder, on or prior to the Maturity
        Date.

      

      (c)           Application
        of Payments.  Payments made on this Note will be applied first to
        any unpaid collection costs, fees and other charges permitted under this
        Note,
        next to unpaid, accrued interest, and last, to reduce the principal outstanding
        under this Note, subject, however, to any
        adjustments required or permitted by this Note or applicable law.

      

      (d)           General.  Borrower
        will make each payment that it owes under this Note to Lender (interest,
        any
        applicable fees and charges, and outstanding principal) in full and in lawful
        money of the United States, without set-off, deduction or
        counterclaim.  All payments shall be made by 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 payment
        of
        principal or past-due interest, 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., Dallas, 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.

      

      8.           Prepayment;
        Lender's Rights.  Borrower may prepay this Note, or any portion of
        this Note, at any time and from time to time, without the payment of any
        fee or
        penalty.

      

      9.           Representations
        and Warranties.  Borrower represents and warrants to Lender as
        follows:

      

      (a)           Organization
        and Good Standing.  Borrower is a limited partnership, duly
        organized, validly existing and in good standing under the laws of its
        jurisdiction of organization, having all limited partnership powers required
        to
        carry on its business and to enter into and carry out the transactions
        contemplated by this Note and the other Loan Documents.  Borrower has
        taken all appropriate actions and complied in all material respects with
        all
        laws applicable to it in each jurisdiction within and without outside the
        United
        States where Borrower owns or leases any properties or conducts any
        business.

      

      
        
          
          

        

        
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      (b)           Authorization;
        Validity.  Borrower has the limited partnership power, authority
        and legal right to execute, deliver and perform its obligations under, this
        Note
        and the other Loan Documents.  The execution and delivery by Borrower
        of the Loan Documents and the performance of its obligations under each such
        Loan Document have been duly authorized by proper limited partnership
        proceedings.  The Loan Documents to which Borrower is a party
        constitute the legal, valid and binding obligations of Borrower enforceable
        against Borrower in accordance with their terms, except as enforceability
        may be
        limited by bankruptcy, insolvency or similar laws affecting the enforcement
        of
        creditors' rights generally.

      

      (c)           Usury.  Borrower
        has been involved in the structure and negotiation of the Note and the other
        Loan Documents.  It is the intention of Borrower that all aspects of
        the Note and the other Loan Documents, and any related transaction, comply
        with
        all laws, including, specifically, any applicable usury laws.  If for
        any reason, it is determined by a governing authority that the loan made
        pursuant to the Note and the other Loan Documents is usurious in any manner,
        Borrower hereby represents that, as to Borrower, such result was unintentional
        and the result of a bona fide mistake.

      

      10.           Conditions
        Precedent to Advances of Commitment.  Borrower agrees that,
        notwithstanding anything to the contrary contained herein or in the other
        Loan
        Documents, Lender’s obligation to fund each advance of Commitment shall be
        conditioned upon the satisfaction and/or fulfillment of each of the following
        conditions, on and as of the funding date for the applicable advance of
        Commitment:

      

      (a)           the
        representations and warranties made in this Note and the other Loan Documents
        by
        Borrower and the Guarantor and in all certificates and other documents delivered
        pursuant thereto, shall be true and correct in all material respects on and
        as
        of the date of funding, as determined by Lender in its sole
        discretion;

      

      (b)           all
        of the covenants and agreements contained in this Note and the other Loan
        Documents to be complied with and performed as of the date hereof by Borrower
        and the Guarantor have been duly complied with and performed on and as of
        the
        date of funding, as determined by Lender in its sole discretion;

      

      (c)           no
        event constituting an Event of Default (without giving effect to any grace
        or
        cure periods for such Event of Default provided herein or in the other Loan
        Documents), shall have occurred and be continuing, as determined by Lender
        in
        its sole discretion;

      

      (d)           a
        duly authorized officer on behalf of the Borrower shall have duly executed
        and
        delivered to Lender, an Advance Request (including or accompanied by an
        Officer’s Certificate), and all matters certified in the Advance Request and
        Officer’s Certificate shall be true and correct in all respects;

      

      (e)           on
        and as of the date of funding, 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
        Note or any of the other Loan Documents (including all of the documents and
        information delivered to Lender in connection with an Advance Request) shall
        be
        true and complete in all material respects, and there are no facts or events
        known to Borrower which, if disclosed to Lender, would make such statements,
        certificates or date untrue in any material respect;

      

      
        
          
          

        

        
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      (f)            the
        requested advance of Commitment, if made, would not cause the aggregate
        outstanding principal amount of this Note to exceed the Commitment;

      

      (g)           as
        of the date of any such advance of Commitment, all of the Loan Documents
        shall
        have been executed and delivered (including, without limitation, all Collateral
        Documents with respect to the Investment being funded by Lender with the
        proceeds of the advance), and shall be valid, enforceable and in full force
        and
        effect;

      

      (h)           Lender
        shall have approved the Advance Request, as determined by Lender in its sole
        discretion (which approval may be withheld by Lender for any reason or for
        no
        reason); and

      

      (i)           Borrower
        and the Guarantor shall have complied with each other request of Lender made
        in
        connection with the advance of Commitment.

      

      11.           Covenants.

      

      (a)           Deliveries.  Borrower
        covenants and agrees with Lender that it will deliver each of the following,
        on
        a quarterly basis, commencing with the quarter ending December 31, 2007,
        in form
        and substance reasonably satisfactory to Lender:

      

      (i)           Summary
        of Loans.  A summary of each Investment made by Borrower,
        including the name and material of information with respect to the client
        of
        Borrower to whom the Investment is made and a summary of concentration of
        credit
        by client and geographical region.

      

      (ii)           Schedule
        of Maturities.  A summary of scheduled maturities for each
        Investment and payment status for all Investments.

      

      (iii)           Note
        Proceeds.  A summary of all proceeds of this Note that are
        allocated by Borrower to each Investment.

      

      (b)           Aggregate
        Investment-to-Value.  Borrower agrees that at no time shall the
        sum of (i) all Investments, plus (ii) any Senior Indebtedness exceed ninety
        percent (90%) of the market value of the property securing the
        Investments.

      

      (c)           Maximum
        Investment Amount.  No single Investment may exceed twenty percent
        (20%) of the Commitment (i.e., $14,000,000).  Investments with any
        single client of Borrower or group of related clients may not exceed twenty
        percent (20%) of the Commitment (i.e., $14,000,000).

      

      
        
          
          

        

        
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      (d)           Use
        of Proceeds.  The proceeds of this Note shall be used solely to
        acquire Investments approved by Lender and for business and commercial purposes
        approved by Lender that are related to Investments.  In no event shall
        any funds advanced under this Note be used, directly or indirectly, by any
        person 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).

      

      12.           Default.

      

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

      

      (i)           the
        default by Borrower in any payment required by this Note by the fifth (5th) day
        following the
        date when due, whether on or prior to the Maturity Date; or

      

      (ii)           Borrower
        breaches any representation or warranty contained in this Note or any other
        Loan
        Document, or fails to perform or observe any covenant or agreement that is
        set
        forth in this Note or any other Loan Document, and such breach if capable
        of
        being cured, is not cured within ten (10) days after written notice of such
        breach is received from Lender; or

      

      (iii)           the
        entry of a decree or order for relief by a court having jurisdiction in respect
        of Borrower 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 for any substantial
        part of
        Borrower’s property, or ordering the winding up or liquidation of such person's
        affairs; or

      

      (iv)           the
        commencement by Borrower 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
        for any
        substantial part of its property, or the making by Borrower of any assignment
        for the benefit of creditors, or the admission by Borrower in writing of
        Borrower’s inability to pay its debts generally as they become due;
        or

       

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

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

      

      (vi)           Borrower
        is liquidated or winds up its affairs; or

      

      (vii)          any
        Disposition of any Collateral occurs without the prior written consent of
        Lender, unless the full amount of proceeds from such Disposition of Collateral
        is paid by Borrower to Lender to reduce the indebtedness of Borrower owing
        to
        Lender under this Note; or

      

      (viii)         any
        Loan Document ceases to become valid, binding and enforceable for any reason
        other than its release by Lender; or

      

      (ix)           the
        sale or liquidation of all or substantially all of the assets of Borrower,
        without the prior written consent of Lender or the payment in full of the
        indebtedness of Borrower owing to Lender under this Note.

      

      (b)           Upon
        the occurrence of an Event of Default described in subsection (a)(iii),
        (iv) or (v) above, all obligations under this Note 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 this Note or the other Loan Documents, to be due and
        payable
        immediately, and the same shall become and be due and payable, without notices,
        demands 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 additional funds hereunder,
        and/or
        (iv) 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.

      

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

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      13.           Usury
        Laws.

      

      (a)           Notwithstanding
        anything to the contrary contained in this Note or any other Loan Document,
        (i)
        this Note shall never bear interest in excess of the Highest Lawful Rate,
        and
        (ii) if at any time the rate at which interest is payable on this Note is
        limited by the Highest Lawful Rate by the foregoing clause (i) or by reference
        to the Highest Lawful Rate in the definitions of Base Rate and Default Rate,
        then this Note shall bear interest at the Highest Lawful Rate and shall continue
        to bear interest at the Highest Lawful Rate until such time as the total
        amount
        of interest accrued on this Note equals (but does not exceed) the total amount
        of interest which would have accrued on this Note, had there been no Highest
        Lawful Rate applicable to this Note.

      

      (b)           It
        is the intention of the parties hereto that all aspects of this Note and
        the
        other Loan Documents, and the transactions contemplated hereby and thereby,
        comply with all laws, including, specifically, any applicable usury
        laws.  In furtherance thereof, Borrower and Lender stipulate and agree
        that none of the terms and provisions contained in this Note or the other
        Loan
        Documents shall ever be construed to create a contract to pay for the use,
        forbearance, or detention of money, or interest, in excess of the maximum
        amount
        of interest permitted to be charged by applicable law in effect from time
        to
        time.  Neither Borrower nor any present or future guarantors,
        endorsers, or other persons or entities hereafter becoming liable for payment
        of
        Borrower’s obligations hereunder and under the other Loan Documents shall ever
        be liable for unearned interest thereon or shall ever be required to pay
        interest thereon in excess of the maximum amount that may be lawfully charged
        under applicable law from time to time in effect, and the provisions of this
        Section 13 shall control over all other provisions of the Loan Documents
        that may be in conflict or apparent conflict herewith.  Lender
        expressly disavows any intention to charge or collect excessive unearned
        interest or finance charges in the event the maturity of this Note is
        accelerated. If (i) the maturity of this Note is accelerated for any reason,
        (ii) this Note is prepaid and as a result any amounts held to constitute
        interest are determined to be in excess of the legal maximum, or (iii) Lender
        or
        any other holder of this Note shall otherwise collect moneys which are
        determined to constitute interest which would otherwise increase the interest
        hereon to an amount in excess of that permitted to be charged by applicable
        law,
        then all sums determined to constitute interest in excess of such legal limit
        shall, without penalty, be promptly applied to reduce the then outstanding
        principal of this Note or, at Lender's or such holder's option, promptly
        returned to Borrower or the other payor thereof upon such determination.
        In
        determining whether or not the interest paid or payable, under any specific
        circumstance, exceeds the maximum amount permitted under applicable law,
        Lender
        and Borrower (and any other payors of this Note) shall to the greatest extent
        permitted under applicable law, (i) characterize any non-principal payment
        as an
        expense, fee or premium rather than as interest, (ii) exclude voluntary
        prepayments and the effects thereof, and (iii) amortize, prorate, allocate,
        and
        spread the total amount of interest throughout the entire contemplated term
        of
        this Note in accordance with the amounts outstanding from time to time hereunder
        and the maximum legal rate of interest from time to time in effect under
        applicable law in order to lawfully charge the maximum amount of interest
        permitted under applicable law.  In the event applicable law provides
        for an interest ceiling under Chapter 303 of the Texas Finance Code (the
        “Texas Finance Code”) as amended, for that day, the ceiling shall be the
“weekly ceiling” as defined in the Texas Finance Code.  As used in
        this section, the term “applicable law” means the laws of the State of Texas or
        the laws of the United States of America, whichever laws allow the greater
        interest, as such laws now exist or may be changed or amended or come into
        effect in the future.

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

      14.           Further
        Assurances.  Borrower will, at its expense, to promptly execute
        and deliver to Lender, all such other and further documents, agreements and
        instruments, and shall deliver all such supplementary information, including,
        without limitation, information with respect to Investments, as Lender may
        request from time to time.

      

      15.           Cumulative
        Remedies.  All rights and remedies that Lender is afforded by
        reason of this Note and the other Loan Documents are separate and cumulative
        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.

      

      16.           Notice.  All
        notices and other communications under this Note will be in writing and will
        be
        mailed by registered or certified mail, postage prepaid, sent by facsimile,
        delivered personally by hand, or delivered by nationally recognized overnight
        delivery service addressed to Borrower and Lender, respectively, at the
        addresses set forth in Section 1 of this Note, or, with respect to
        Borrower or Lender, to such other address as may have delivered by one to
        the
        other for purposes of notice.  Each notice or other communication will
        be treated as effective and as having been given and received (a) if sent
        by
        mail, at the earlier of its receipt or three (3) business days after such
        notice
        or other communication has been deposited in a regularly maintained receptacle
        for deposit of United States mail, (b) if sent by facsimile, upon written
        or
        electronic confirmation of facsimile transfer, (c) if delivered personally
        by
        hand, upon written or electronic confirmation of delivery from the Person
        delivering such notice or other communication, or (d) if sent by nationally
        recognized overnight delivery service, upon written or electronic confirmation
        of delivery from such service.

      

      17.           Enforcement
        and Waiver by Lender.  Lender shall have the right at all times to
        enforce the provisions of this Note 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.

      

      18.           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 CONFLICTS
        OF LAWS PROVISIONS.

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      19.           JURISDICTION;
        VENUE.  BORROWER IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING IN
        RESPECT OF THIS NOTE 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 WHICH 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
        AND 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.

      

      20.           Counterparts.  This
        Note 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.

      

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

      

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

      

      23.           Binding
        Effect; Assignment. This Note 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 this Note and the other Loan Documents
        in
        whole or in part without the prior written consent of Lender. This Note and
        the
        other Loan Documents are freely assignable and transferable by Lender without
        the consent of Borrower or Guarantor.  Should the status, composition,
        structure or name of Borrower or Guarantor change, this Note 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.

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      24.           Captions.  The
        captions in this Note are for the convenience of reference only and shall
        not
        limit or otherwise affect any of the terms or provisions hereof.

      

      25.           Number
        of Gender or Words.  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.

      

      26.           WAIVER
        OF JURY TRIAL, PUNITIVE DAMAGES, ETC.  BORROWER HEREBY KNOWINGLY,
        VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM
        EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER 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 NOTE OR THE LOAN DOCUMENTS
        OR
        ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR ASSOCIATED HEREWITH OR
        THEREWITH, BEFORE OR AFTER MATURITY OF THIS NOTE; (B) WAIVES, TO THE MAXIMUM
        EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER MAY HAVE TO CLAIM OR RECOVER
        IN
        ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED BELOW, (C) CERTIFIES THAT
        NEITHER LENDER NOR ANY REPRESENTATIVE OF LENDER OR COUNSEL FOR ANY PARTY
        HERETO
        HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT LENDER WOULD NOT,
        IN
        THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
        (D) ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO ENTER INTO THIS NOTE AND
        THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
        BASED UPON, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED
        IN THIS
        SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL SPECIAL,
        CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED),
        BUT
        DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH BORROWER HAS EXPRESSLY PROMISED
        TO
        PAY OR DELIVER TO LENDER HERETO.

      

      27.           ACKNOWLEDGEMENT
        AND CONSENT TO PLEDGE.  THIS NOTE IS SUBJECT TO A SECURITY
        INTEREST IN FAVOR OF, AND PLEDGED AS COLLATERAL TO, PREMIER BANK AND ITS
        ASSIGNS
        (“PREMIER”).  BY EXECUTION HEREOF, BORROWER CONSENTS TO SUCH SECURITY
        INTEREST AND PLEDGE OF THIS NOTE TO PREMIER, AND CONSENTS TO THE ASSIGNMENT
        OF
        THIS NOTE TO PREMIER IN ACCORDANCE THEREWITH.

      

      28.           ENTIRE
        AGREEMENT.  THIS NOTE 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 NOTE AND THE OTHER LOAN
        DOCUMENTS.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
        AND THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE 

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      CONTRADICTED
        BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
        PARTIES.

      

      

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

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      This
        Note has been executed by Borrower
        on this the 12th day of November, 2007, effective for all purposes as of
        the
        Effective Date.

      

      BORROWER:

      

      UNITED
        DEVELOPMENT FUNDING X,
        L.P.

      a
        Delaware limited
        partnership

      

      By:           United
        Development Funding X, Inc.

      Its:           General
        Partner

      

      

      By:           /s/
        Hollis M. Greenlaw

      Name:     
        Hollis M. Greenlaw

      Its:           President
        and Chief Executive Officer

      

      

      

      The
        terms
        of this Note are hereby accepted by Lender.

      

      

      LENDER:                                                                           

       

      UNITED
        DEVELOPMENT FUNDING III, L.P.,

      a
        Delaware limited
        partnership

      

      By:  UMTH
        Land Development,
        L.P.

      Its:  General
        Partner

      

      By:  UMT
        Services,
        Inc.

      Its:  General
        Partner

      

      

      By:           /s/
        Ben Wissink

      Name:     
        Ben Wissink

      Its:           Chief
        Operating Officer

      

      
 

      

      

      

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    Schedule
      1

    

    ADVANCE
      SCHEDULE

    

    

    
      	
                  Date
                of
                Advance

            	
              Amount
                Advanced

            	
              Date
                of Principal Repayment

            	
              Amount
                of Principal
                Repayment

            	
              Aggregate
                Principal Amount Outstandingex10-2.htm

    
      Exhibit
        10.2

    

    SECURITY
      AGREEMENT

    

    This
      Security Agreement (this
“Agreement”) dated as of the 12th
      day of November,
      2007 (the “Effective Date”), is made by United
      Development Funding X, L.P., a Delaware limited partnership
      (“Borrower” or the
“Debtor”), in favor of United
      Development Funding III,
      L.P., a Delaware limited partnership
      (“Lender”).

    

    R
      E C I T A L S:

    

    A.           Lender
      has committed to loan up to U.S. SEVENTY MILLION and NO/100 Dollars
      ($70,000,000.00) (the “Loan”) to Borrower pursuant to
      the terms and conditions of that certain Secured Line of Credit Promissory
      Note
      (the “Note”) executed by Borrower and payable to the
      order of Lender dated the Effective Date, the proceeds of which shall be used
      by
      Borrower for business purposes.

    

    B.           It
      is a condition precedent to Lender’s willingness to accept the Note and advance
      funds to Borrower thereunder that Debtor enter into this Agreement with Lender,
      pursuant to which Debtor grants Lender a security interest in and lien on all
      of
      its assets, and Debtor is willing to enter into this Agreement and agree to
      be
      bound by its terms and conditions.

    

    AGREEMENT:

    

    NOW,
      THEREFORE, in consideration of the
      foregoing premises and in order to induce Lender to accept the Note and advance
      funds to Borrower thereunder, and for other good and valuable consideration,
      the
      receipt and sufficiency of which are acknowledged, Debtor covenants and agrees
      with Lender as follows:

    

    1.           Definitions.  All
      capitalized terms used but not defined in this Agreement shall have the
      respective meanings given to such terms in the Note.  Notwithstanding
      the foregoing sentence, terms used in Article 9 of the Uniform Commercial Code
      (the “Code”) in the State of Texas, when used in this
      Agreement, have the definitions given to such terms as therein
      defined.

    

    2.           Grant
      of Security Interest.  Debtor hereby assigns, pledges and grants
      to Lender for its benefit, a continuing security interest in all of Debtor’s
      right, title and interest in and to all of its assets, whether now owned or
      hereafter acquired, and including, without limitation, all full and partial
      interests in the following (collectively, the
“Collateral”):

    

    (a)           all
      promissory notes payable to the order of Borrower issued by clients of Borrower
      (“Client Notes”) and all mortgages, deeds of trust to
      secure debt and deeds of trust on real or personal property, and contracts
      for
      deed and/or installment contracts, and all full or partial interests therein,
      and all related loan documents, guarantees, security agreements, leases, pledge
      agreements, assignments of interests, assignments of proceeds, assignments
      of
      securities, and all title policies, insurance policies, and security interests
      related to any of the foregoing and the rights to receive payment thereon and
      other agreements and property which secure or relate to any receivable or other
      asset (all such interests and documents evidencing such interests are referred
      to herein collectively as the “Client Loan
      Documents”);

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (b)           all
      accounts receivable, receivables, rights to payment, promissory notes, and
      all
      guarantees, security agreements, insurance policies, and security interests
      and
      the rights to receive payment thereon, including, without limitation, all rights
      to payment under the Client Notes and the Client
      Loan  Documents;

    

    (c)           all
      cash on hand, including, without limitation, cash held in bank accounts,
      brokerage accounts, certificates of deposit, and other depositories, all
      accounts receivable owing by any person or entity, including all such amounts
      due thereunder, and all security for payment thereof, and in and to all the
      proceeds, monies, income, instruments, securities, accounts, benefit,
      collections, tax refunds, insurance proceeds, and products thereof and thereon
      and attributable or accruing thereto;

    

    (d)           all
      equipment, inventory, materials, computer software and records, goods, and
      other
      personal property, and all documents and receipts covering such property, and
      all licenses and permits used or held for use in connection with such
      property;

    

    (e)           all
      patents, trademarks, service marks, copyrights, licenses, and all other
      intellectual property (collectively, the “Intellectual
      Property”), and all agreements and contracts regarding the use and
      exploitation of any of the Intellectual Property and applications
      therefor;

    

    (f)           all
      contract rights and other general intangibles, including, without limitation,
      all contract and other rights to receive proceeds and reimbursements, and all
      license agreements;

    

    (g)           all
      interests in all subsidiaries, and all capital stock, equity interests,
      partnership interests, and membership interests and all warrants, options and
      other rights to purchase any such capital stock, equity interests, partnership
      interests, and membership interests, in any corporation, partnership, limited
      liability company or other entity;

    

    (h)           all
      books and records (including electronic records, computer disks, tapes,
      printouts and other storage media) relating to any of the foregoing;
      and

    

    (i)           any
      and all products and proceeds of the foregoing (including, but not limited
      to,
      any claim to any item referred to in this definition, and any claim against
      any
      third party for loss of, damage to or destruction of any or all of, the
      Collateral or for proceeds payable under, or unearned premiums with respect
      to,
      policies of insurance) in whatever form, including, but not limited to, cash,
      negotiable instruments and other instruments for the payment of money, chattel
      paper, security agreements and other documents.

    

    Debtor
      shall be deemed to have
      possession of any of the Collateral in transit to it or set apart for it or
      for
      any of its agents, affiliates or correspondents.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    3.           Security
      for Obligations.  This Agreement and the security interest created
      and evidenced hereby secures the following obligations and liabilities (all
      such
      obligations and liabilities are referred to herein as the
“Obligations”):

    

    (a)           the
      prompt and complete payment, observance and performance of all duties,
      liabilities, obligations and indebtedness of Borrower arising under the Note
      and
      the other Loan Documents;

    

    (b)           all
      costs reasonably incurred by Lender to obtain, preserve, perfect and enforce
      the
      security interest evidenced hereby and by the other Loan Documents and to
      maintain, preserve and collect the Collateral, and all taxes, assessments,
      insurance premiums, repairs, reasonable attorneys’ fees and legal expenses,
      rent, storage charges, advertising costs, brokerage fees and expenses of sale;
      and

    

    (c)           and
      all modifications, extensions, renewals, replacements, and increases of each
      of
      the foregoing described in clauses (a) through (b), or any part
      thereof.

    

    4.           Debtor
      Remains Liable.  Notwithstanding anything to the contrary
      contained in this Agreement: (a) Debtor shall remain liable under the contracts
      and agreements included in the Collateral and obligated to perform all duties
      and obligations thereunder to the same extent as if this Agreement had not
      been
      executed, (b) the exercise by Lender of any of its rights hereunder shall not
      release Debtor from any duties or obligations under the contracts and agreements
      included in the Collateral, and (c) Lender shall have no obligation or liability
      under the contracts and agreements included in the Collateral by reason of
      this
      Agreement, nor shall Lender be obligated to perform any of the obligations
      or
      duties of either Debtor thereunder or to take any action to collect or enforce
      any claim for payment assigned hereunder.

    

    5.           Representations
      and Warranties.  Debtor represents and warrants as
      follows:

    

    (a)           Debtor
      owns the Collateral free and clear of any lien, security interest, charge or
      encumbrance of any kind whatsoever (collectively,
“Liens”) except for (i) the security interest created
      hereby in favor of Lender, (ii) Liens in favor of any person or entity that
      Lender has agreed in writing shall have priority over the Collateral (the
“Senior Liens”), (iii) Liens approved by Lender
      pursuant to a written consent or agreement executed by Lender, (iv) Liens
      explicitly permitted by the Loan Documents, and (v) Liens for taxes not yet
      due and payable (collectively, the Liens described in clauses (i) through (v)
      above are referred to herein as the “Permitted
      Liens”).  A schedule of the Senior Liens shall be
      attached hereto as Schedule 1.  No effective financing
      statement, continuation statement or amendment thereto promulgated under the
      Uniform Commercial Code of any state (collectively, “Financing
      Statements”) or other instrument similar in effect covering all or
      any part of the Collateral is on file in any recording office, except such
      as
      may have been filed in favor of Lender or in favor of the holder(s) of the
      Permitted Liens.  The validity of the Collateral in whole or in part,
      and Debtor’s title thereto is not currently being questioned in any litigation
      or regulatory proceeding to which either Debtor is a party, nor is any such
      litigation or proceeding threatened.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (b)           This
      Agreement creates and evidences a valid and perfected security interest in
      the
      Collateral, securing the payment of the Obligations, second in priority only
      to
      any Senior Liens, and all filings and other actions of either Debtor necessary
      or desirable to perfect and protect such security interest have been, or will
      be
      upon request, duly taken by Debtor.

    

    (c)           No
      authorization, approval or other action by, and no notice to or other filing
      with, any governmental authority or regulatory body is required, either (i)
      for
      the grant by Debtor of the security interest granted hereby or for the
      execution, delivery or performance of this Agreement by Debtor, or (ii) for
      the
      perfection of or the exercise by Lender of its rights and remedies hereunder
      (other than the filing of Financing Statements by Lender).

    

    (d)           Debtor’s
      principal place of business is at the address for Borrower set forth in
Section 1 of the Note (the “Principal Place of
      Business”).  All Collateral and books of account and
      records relating to the Collateral are located at Debtor’ Principal Place of
      Business.

    

    6.           Covenants
      and Further Assurances.

    

    (a)           Debtor
      agrees that from time to time, at its own expense, it will promptly execute
      and
      deliver all further instruments and documents, and take all further action,
      that
      may be reasonably necessary or desirable, or that Lender may reasonably request,
      in order to perfect and protect any security interest granted or purported
      to be
      granted hereby or to enable Lender to exercise and enforce rights and remedies
      hereunder with respect to any Collateral.  Without limiting the
      generality of the foregoing, Debtor will, subject to the priority rights, if
      any, of the holders of the Senior Liens:  (i) mark conspicuously
      each document included in the Collateral and each of its records pertaining
      to
      the Collateral, with a legend, in form and substance satisfactory to Lender,
      indicating that such document or Collateral is subject to the security interest
      granted hereby; (ii) transfer, register or otherwise put any of the Collateral
      in the name of Lender or its nominee; and (iii) execute and file such Financing
      Statements, and such other instruments or notices, as may be necessary or
      desirable, or as Lender may request, in order to perfect and preserve the
      security interest granted or purported to be granted hereby.

    

    (b)           Debtor
      hereby authorizes Lender to file one or more Financing Statements relative
      to
      all or any part of the Collateral without the signature of Debtor where
      permitted by law.  A carbon, photographic or other reproduction of
      this Agreement or any financing statement covering the Collateral or any part
      thereof shall be sufficient as a Financing Statement where permitted by
      law.  Debtor acknowledges and agrees that any Financing Statement
      filed by or on behalf of Lender against Debtor, whether such filing is or was
      made prior to or after the date of this Agreement, is hereby deemed to include
      the security interest granted by this Agreement, regardless of whether such
      Financing Statement is or was filed in connection with the Loan or some other
      indebtedness owed to Lender.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (c)           Debtor
      will take all actions and pay all costs to keep and maintain the validity,
      enforceability, security, priority and collectibility of the Client Notes and
      the Client Loan Documents and will pay all other amounts which may be necessary
      or desirable to preserve, maintain and protect Lender's interest in the Client
      Notes and the Client Loan Documents.

    

    (d)           Debtor
      shall at all times maintain the Collateral and its books of account and records
      relating to the Collateral at its Principal Place of Business, and shall not
      relocate such books of account and records and Collateral unless it delivers
      to
      Lender, prior written notice of such relocation and the new location thereof
      (which must be within the United States).  Debtor will furnish to
      Lender from time to time statements and schedules further identifying and
      describing the Collateral and such other reports in connection with the
      Collateral as Lender may reasonably request, all in reasonable
      detail.

    

    (e)           Promptly,
      but in any event, within three (3) business days following the closing of any
      Client Note, Borrower agrees to execute and deliver to Lender, for each such
      Client Note, (i) an allonge duly endorsing the Client Note to Lender, in the
      form attached to this Agreement as Exhibit “A”, together with the
      original Client Note, which shall be held by Lender for so long as the Note
      is
      outstanding or Lender has any obligation to Borrower thereunder, and (ii) a
      Collateral Assignment of Note and Liens, assigning the Client Notes and the
      related Client Loan Documents to Lender, in the form attached to this Agreement
      as Exhibit “B”.

    

    7.           Insurance.

    

    (a)           Debtor
      shall, at Debtor’s own expense, maintain insurance with respect to the
      Collateral in such amounts, against such risks, in such form and with such
      insurers, as shall be reasonably satisfactory to Lender from time to
      time.  Debtor shall ensure that the Collateral and the real properties
      securing the Client Notes and the Client Loan Documents are, and remain, insured
      against loss by fire and other casualty.  Each policy for property
      damage insurance shall provide for all losses to be paid to Lender as holder
      of
      the security interest created hereby, subject to the priority rights, if any,
      of
      the holders of the Senior Liens.  Each such policy shall in addition
      (i) contain the agreement (if available) by the insurer that any loss thereunder
      shall be payable to Lender notwithstanding any action, inaction or breach of
      representation or warranty by Debtor, subject to the priority rights, if any,
      of
      the holders of the Senior Liens, (ii) provide that there shall be no recourse
      against Lender for payment of premiums or other amounts with respect thereto,
      and (iii) provide that at least ten (10) days prior written notice of
      cancellation or of lapse shall be given to Lender by the
      insurer.  Debtor shall, if so requested by Lender, deliver to Lender
      original or duplicate policies of such insurance and, as often as Lender may
      reasonably request, a report of a reputable insurance broker selected by Debtor
      with respect to such insurance.  Further, Debtor shall, at the request
      of Lender, duly execute and deliver instruments of assignment of such insurance
      policies to comply with the foregoing requirements and cause the respective
      insurers to acknowledge notice of such assignment.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (b)           Reimbursement
      under any liability insurance maintained by Debtor may be paid directly to
      the
      person who shall have incurred liability covered by such
      insurance.  All insurance payments to Lender in respect of Collateral
      shall be applied by Lender to reduce the indebtedness evidenced by the
      Note.

    

    8.           Transfers
      and Other Liens.  Debtor shall not sell, assign (by operation of
      law or otherwise) or otherwise dispose of any of the Collateral, other than
      the
      sale or assignment of Client Notes and Client Loan Documents in the ordinary
      course of business if (i) Lender has provided its prior written consent to
      such
      sale or assignment, or (ii) the proceeds of the sale or assignment are used
      to
      pay down the Note.  Debtor shall not create or suffer to exist any
      Lien upon or with respect to any of the Collateral to secure debt of any person,
      except for Permitted Liens.

    

    9.           Lender
      Appointed Attorney-in-Fact.  Debtor hereby irrevocably appoints
      Lender as its attorney-in-fact, with full authority in the place and stead
      of
      Debtor, as applicable, and in the name of Debtor, as applicable, or otherwise,
      from time to time in Lender's discretion at any time after the occurrence of
      an
      Event of Default (as such term is defined in the Note), to take any action
      and
      to execute any instrument which Lender may deem necessary or advisable to
      accomplish the purposes of this Agreement, including, without
      limitation:

    

    (a)           to
      obtain insurance required to be maintained by Debtor and to settle and adjust
      claims under any insurance policy including, without limitation, any such policy
      related to a Client Note;

    

    (b)           to
      ask, demand, collect, sue for, recover, compound, receive and give acquittance
      and receipts for moneys due and to become due, under or in respect of any of
      the
      Collateral including, without limitation, moneys due and to become due under
      the
      Client Notes and the Client Loan  Documents or otherwise;

    

    (c)           to
      file any claims or take any action or institute any proceedings which Lender
      may
      deem necessary or desirable to enforce the rights of Lender with respect to
      any
      of the Collateral including, without limitation, the Client Notes and the Client
      Loan Documents;

    

    (d)           to
      commence and prosecute any actions in any court for the purposes of collecting
      amounts owed to Debtor under the Client Notes and Client Loan Documents, and
      otherwise, and enforcing any other rights in respect thereof, and to defend,
      settle or compromise any action brought and, in connection therewith, and to
      give such discharge or release as Lender may deem appropriate;

    

    (e)           to
      receive, open and dispose of mail addressed to Debtor and endorse checks, notes,
      drafts, acceptances, money orders, bills of lading, warehouse receipts or other
      instruments or documents evidencing payment made on account of or funds paid
      on
      behalf of and in the name of Debtor including, without limitation, payment
      of
      Client Notes;

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (f)           sell,
      assign, transfer, make any agreement in respect of, or otherwise deal with
      or
      exercise rights in respect of, any Collateral as fully and completely as though
      Lender were the absolute owner thereof for all purposes;

    

    (g)           to
      execute Financing Statements or any other documents or writing deemed necessary
      by Lender to evidence or perfect Lender's  security interest in the
      Collateral including, without limitation, the Client Notes and the Client Loan
      Documents; provided that Lender agrees to furnish copies of any document
      executed hereunder to Debtor;

    

    (h)           to
      enter on the premises of Debtor in order to exercise any of Lender's rights
      and
      remedies;

    

    (i)           to
      receive, endorse, and collect any drafts or other instruments, documents,
      assignments, and chattel paper; and

    

    (j)           to
      file any claims or take any action or institute any proceedings which Lender
      may
      deem necessary or desirable to enforce the rights of Lender with respect to
      any
      of the Collateral.

    

    The
      foregoing appointment of Lender as attorney-in-fact is coupled with an interest
      and is irrevocable.

    

    10.           Rights
      Prior to Event of Default; Termination.

    

    (a)           Rights
      Prior to Event of Default.  So long as no Event of Default shall
      have occurred and be continuing, Debtor shall be entitled to exercise any and
      all rights and powers relating or pertaining to the Collateral for any purpose
      not inconsistent with the terms of this Agreement.

    

    (b)           Termination
      of Rights. Debtor understands and agrees that during any period when an
      Event of Default shall have occurred and be continuing, and after Lender has
      given written notice to Debtor that Lender has exercised its rights hereunder,
      all rights of Debtor to exercise power with respect to the Collateral, which
      Debtor was previously entitled to exercise shall cease and all such rights
      shall
      become vested in Lender, which shall have the sole and exclusive right and
      authority to exercise such power immediately upon such written
      notice.  All amounts, if any, representing principal prepayment or
      payoffs and all amounts, if any, collected by Debtor after the occurrence of
      any
      Event of Default represents trust funds which are assigned and belong to Lender
      and which are to be immediately delivered to Lender, and any retention of such
      funds by Lender before and after the occurrence of an Event of Default shall
      be
      deemed to be a conversion of Lender's property,
ipsofacto.  Further, Lender shall have
      the right, during the continuance of any Event of Default, to notify and direct
      the obligors on the Client Notes to make all payments in respect thereof
      directly to Lender.  The obligor making any payment to Lender under
      this Agreement shall be fully protected in relying on the written statement
      of
      Lender that it then holds a security interest which entitles Lender to receive
      such payments.  Any and all money and other property paid over to or
      received by Lender pursuant to the provisions hereof shall be retained by Lender
      as additional Collateral under this Agreement.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    11.           Lender
      May Perform.  If Debtor fails to perform any covenant or agreement
      contained in this Agreement, Lender may itself perform, or cause performance
      of,
      such covenant or agreement, and the expenses of Lender incurred in connection
      therewith shall be payable by Debtor and/or payable under the Note as a
      Discretionary Advance.

    

    12.           Events
      of Default.  Each of the following events constitutes an Event of
      Default (herein so called) under this Agreement:

    

    (a)           Borrower
      fails to timely pay any amount due and owing it under the Note when due and
      payable, whether at a date for the payment of a fixed installment or as a
      contingent or other payment becomes due and payable or as a result of
      acceleration or otherwise; or

    

    (b)           Any
      “Default”, “default”, “Event of Default” or “event of default” occurs under any
      Loan Document that defines any such term, and the same is not remedied within
      the applicable period of grace (if any) provided in such Loan Document;
      or

    

    (c)           the
      entry of a decree or order for relief by a court having jurisdiction in respect
      of Borrower 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 for any substantial part
      of
      Borrower’s property, or ordering the winding up or liquidation of such person's
      affairs; or

    

    (d)           the
      commencement by Borrower 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 for
      any
      substantial part of its property, or the making by Borrower of any assignment
      for the benefit of creditors, or the admission by Borrower in writing of
      Borrower’s inability to pay its debts generally as they become due;
      or

    

    (e)           the
      appointment of or taking possession by a receiver, liquidator, assignee,
      custodian, trustee, sequestrator or similar official of all or a substantial
      part of its assets or of any part of the Collateral in a proceeding brought
      against or initiated by Borrower.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Upon
      the occurrence of an Event of
      Default described in subsection (c), (d) or (e) of this Section 12, all
      of the Obligations 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.  During the continuance of any
      other Event of Default, Lender at any time and from time to time may, without
      notice to Borrower, declare any or all of the Obligations immediately due and
      payable, and all such Obligations 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.

    

    13.           Remedies.  If
      any Event of Default shall occur and be continuing, subject to the priority
      rights, if any, of the holders of the Senior Liens, Lender may protect and
      enforce its rights under this Agreement and the other Loan Documents by any
      appropriate proceedings, including proceedings for specific performance of
      any
      covenant or agreement contained in any Loan Document, and Lender may enforce
      the
      payment of any Obligations due it or enforce any other legal or equitable right
      which it may have.  All rights, remedies and powers conferred upon
      Lender under the Loan Documents shall be deemed cumulative and not exclusive
      of
      any other rights, remedies or powers available under the Loan Documents or
      at
      law or in equity.  Lender's authority and rights shall include,
      without limitation, the following:

    

    (a)           Lender
      may exercise in respect of the Collateral, in addition to other rights and
      remedies provided for herein or otherwise available to it, all the rights and
      remedies of a secured party on default under the Code (whether or not the Code
      applies to the affected Collateral) and also may (i) require  Debtor
      to, and Debtor hereby agrees that it will at its expense and upon request of
      Lender forthwith, assemble all or part of the Collateral as directed by Lender
      and make it available to Lender at a place to be designated by Lender which
      is
      reasonably convenient to it, and (ii) without notice except as specified below,
      sell the Collateral or any part thereof in one or more parcels at public or
      private sale, at any of Lender's offices or elsewhere, for cash, on credit
      or
      for future delivery, and upon such other terms as Lender may deem commercially
      reasonable.  Debtor agrees that, to the extent notice of sale shall be
      required by law, at least ten (10) business days' notice to Debtor of the time
      and place of any public sale or the time after which any private sale is to
      be
      made shall constitute reasonable notification.  Lender shall not be
      obligated to make any sale of Collateral regardless of notice of sale having
      been given.  Lender may adjourn any public or private sale from time
      to time by announcement at the time and place fixed therefor, and such sale
      may,
      without further notice, be made at the time and place to which it was so
      adjourned.

    

    (b)           All
      cash proceeds received by Lender in respect of any sale of, collection from,
      or
      other realization upon all or any part of the Collateral may, in the discretion
      of Lender, be held by Lender as Collateral for, and/or then or at any time
      thereafter applied in whole or in part by Lender against all or any part of
      the
      Obligations in such order as Lender shall elect, subject to any mandatory
      provisions of this Agreement or applicable law.  Any surplus of such
      cash or cash proceeds held by Lender and remaining after payment in full of
      all
      the Obligations shall be paid over to Debtor or to whomsoever may be lawfully
      entitled to receive such surplus.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    14.           Lender's
      Duties.  The powers conferred on Lender under this Agreement are
      solely to protect its interest in the Collateral and shall not impose any duty
      upon it to exercise any such powers.  Except for the safe custody of
      any Collateral in its possession and the accounting for moneys actually received
      by it hereunder, Lender shall have no duty as to any Collateral or as to the
      taking of any necessary steps to preserve rights against prior parties
      or  any other rights pertaining to any Collateral.

    

    15.           No
      Impairment.  The execution and delivery of this Agreement in no
      manner shall impair or affect any other security (by endorsement or otherwise)
      for the payment of the Obligations and no security taken hereafter as security
      for payment of the Obligations shall impair in any manner or affect this
      Agreement, all such present and further additional security to be considered
      as
      cumulative security.  Any of the Collateral for, or any obligor on,
      any of the Obligations may be released without altering, varying or diminishing
      in any way the force, effect, lien, security interest, or charge of this
      Agreement as to the Collateral not expressly released, and this Agreement shall
      continue as a security interest and charge on all of the Collateral not
      expressly released until all the Obligations secured hereby have been paid
      in
      full.  This Agreement shall not be construed as relieving Debtor from
      full recourse liability on the Obligations and any and all further and other
      indebtedness secured hereby and for any deficiency thereon.

    

    16.           Indemnity
      and Expenses.

    

    (a)           
      Debtor agrees to indemnify Lender from and against any and all claims, losses
      and liabilities growing out of or resulting from this Agreement (including,
      without limitation, enforcement of this Agreement), except claims, losses or
      liabilities resulting from Lender's gross negligence or willful
      misconduct.

    

    (b)           Debtor
      agrees that it will, upon demand, pay to Lender the amount of any and all
      reasonable expenses, including the reasonable fees and disbursements of Lender’s
      counsel and of any experts and agents, which Lender may incur in connection
      with
      (i) the administration of this Agreement, (ii) the custody, preservation, use
      or
      operation of, or the sale of, collection from, or other realization upon, any
      of
      the Collateral, (iii) the exercise or enforcement of any of the rights of Lender
      hereunder, or (iv) the failure by Debtor to perform or observe any of the
      provisions hereof.

    

    17.           Security
      Interest Absolute.  All rights of Lender and security interests
      hereunder, and all obligations of Debtor hereunder, shall be absolute and
      unconditional, irrespective of:

    

    (a)           any
      lack of validity or enforceability of the Note or any other Loan Document or
      instrument relating thereto;

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (b)           any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any of the Obligations or any other amendment or waiver of or any consent
      to
      any departure from the Note or any other Loan Document;

    

    (c)           any
      exchange, release or non-perfection of any other collateral, or any release
      or
      amendment or waiver of or consent to departure from any guaranty, for all or
      any
      of the Obligations; or

    

    (d)           any
      other circumstance which might otherwise constitute a defense available to,
      or a
      discharge of, Debtor, or a third party holder of a security
      interest.

    

    18.           Notice.  Any
      notice, request, demand or other communication required or permitted hereunder,
      will be in writing and will be mailed by registered or certified mail, postage
      prepaid, sent by facsimile, delivered personally by hand, or delivered by
      nationally recognized overnight delivery service addressed at the addresses
      provided in the Note for purposes of notice or with respect to any party, to
      such other address or facsimile number as a party may have delivered to the
      other parties for purposes of notice pursuant to the provisions of the
      Note.  Each notice or other communication will be treated as effective
      and as having been given and received (a) if sent by mail, at the earlier of
      its
      receipt or three (3) business days after such notice or other communication
      has
      been deposited in a regularly maintained receptacle for deposit of United States
      mail, (b) if sent by facsimile, upon electronic or written confirmation of
      facsimile transfer, (c) if delivered personally by hand, upon electronic or
      written confirmation of delivery from the person delivering such notice or
      other
      communication, or (d) if sent by nationally recognized overnight delivery
      service, upon electronic or written confirmation of delivery from such
      service.

    

    19.           Continuing
      Security Interest.  This Agreement shall create a continuing
      security interest in the Collateral.  Upon the payment in full of the
      Obligations and termination of the Note as determined by Lender in its sole
      discretion, the security interest granted hereby shall
      terminate.  Upon any such termination, Lender will, at Debtor’s
      expense, execute and deliver to Debtor such documents as Debtor shall reasonably
      request to evidence such termination.

    

    20.           Further
      Assurances.  Debtor at Debtor’s expense will promptly execute and
      deliver to Lender on Lender’s request, all such other and further documents,
      agreements and instruments, and shall deliver all such supplementary
      information, including, without limitation, with respect to the Client Notes,
      the Client Loan Documents and the loans made pursuant thereto, and the
      Collateral, as Lender may request from time to time.

    

    21.           Cumulative
      Remedies.  Debtor hereby agrees that all rights and remedies that
      Lender is afforded by reason of the Loan Documents are separate and cumulative
      with respect to Debtor and otherwise and may be pursued separately,
      successively, or concurrently, as Lender deems advisable.  In
      addition, all such rights and remedies of Lender 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.

    

    22.           Enforcement
      and Waiver by Lender.  Lender shall have the right at all times to
      enforce the provisions of this Agreement 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. All rights and remedies of
      Lender are cumulative and concurrent and the exercise of one right or remedy
      shall not be deemed a waiver or release of any other right or
      remedy.

    
      
        
        

      

      
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    23.    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 CONFLICTS OF LAWS
      PROVISIONS.  

    

    24.    JURISDICTION;
      VENUE.  DEBTOR 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”).  DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
      JURISDICTION OF THE SPECIFIED COURTS.  EACH DEBTOR HEREBY IRREVOCABLY
      WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH DEBTOR
      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
      AND SUCH DEBTOR 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 EITHER DEBTOR
      IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE
      LAW.  

    

    25.           Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original, but all of them together shall constitute one and
      the
      same agreement.

    

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

    

    27.           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 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.  Debtor will not be released
      from its obligations hereunder, except pursuant to a written instrument executed
      by Lender.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    28.           Binding
      Effect; Assignment. This Agreement shall be binding on Debtor and its
      successors and assigns, including, without limitation, any receiver, trustee
      or
      debtor in possession of or for Debtor, and shall inure to the benefit of Lender
      and its successors and assigns.  Debtor shall not be entitled to
      transfer or assign this Agreement in whole or in part without the prior written
      consent of Lender. This Agreement is freely assignable and transferable by
      Lender without the consent of Debtor.  Should the status, composition,
      structure or name of either Debtor change, this Agreement shall continue and
      also cover Debtor under the new status composition, structure or name according
      to the terms of this Agreement.

    

    29.           Captions.  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.

    

    30.           Number
      or Gender of Words.  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.

    

    31.           WAIVER
      OF JURY TRIAL, PUNITIVE DAMAGES, ETC.  DEBTOR HEREBY KNOWINGLY,
      VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT
      NOT PROHIBITED BY LAW, ANY RIGHT DEBTOR 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 SUCH DEBTOR
      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 ENTER INTO THE NOTE AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
      THE
      WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION,
      “SPECIAL DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE
      DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS
      WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER
      PARTY HERETO.

    

    32.           ACKNOWLEDGEMENT
      AND CONSENT TO PLEDGE.  THIS AGREEMENT IS SUBJECT TO A SECURITY
      INTEREST IN FAVOR OF, AND PLEDGED AS COLLATERAL TO, PREMIER BANK AND ITS ASSIGNS
      (“PREMIER”).  BY EXECUTION HEREOF, DEBTOR HEREBY CONSENTS TO SUCH
      SECURITY INTEREST AND PLEDGE OF THIS AGREEMENT TO PREMIER, AND CONSENTS TO
      THE
      ASSIGNMENT OF THIS AGREEMENT TO PREMIER IN ACCORDANCE
      THEREWITH.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    33.           ENTIRE
      AGREEMENT.  THIS
      AGREEMENT, THE NOTE 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.]

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Debtor has caused
      this Agreement to be duly executed and delivered on the 12th day of November,
      2007, effective for all purposes as of the Effective Date.

    

    DEBTOR:

    

    UNITED
      DEVELOPMENT FUNDING X,
      L.P.

    a
      Delaware limited
      partnership

    

    

    By:         United
      Development Funding X, Inc.

    Its:         General
      Partner

    

    

    By:        /s/
      Hollis M. Greenlaw

    Name:   Hollis
      M. Greenlaw

    Its:        President
      and Chief Executive Officer

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        Signature
          page to Security Agreement

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

    

    SENIOR
      LIENS

    

    

    

    

    

    NONE.

    

    

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    ALLONGE

    

    (see
      attached)

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    COLLATERAL
      ASSIGNMENT OF NOTE AND LIENS

    

    (see
      attached)

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