Document:

ex10-3.htm

    Exhibit
      10.3

    CONTINUING
      UNCONDITIONAL GUARANTY

    

    This
      Continuing Unconditional Guaranty
      (this “Guaranty”) dated as of the 12th
      day of November,
      2007 (the “Effective Date”), is made by UMT Holdings,
      L.P., a Delaware limited partnership (the
“Guarantor”), for the benefit of United Development
      Funding III, L.P., a Delaware limited partnership and its affiliates,
      subsidiaries, successors and assigns
      (“Lender”).

    

    

    R
      E C I T A L S:

    

    A.           Lender
      has committed to make a loan (the “Loan”) to United
      Development Funding X, L.P., a Delaware limited partnership
      (“Borrower”), pursuant to the terms and conditions of
      that certain Secured Line of Credit Promissory Note (the
“Note”) issued by Borrower and payable to the order of
      Lender dated the Effective Date in the principal amount of U.S. Seventy Million
      and NO/100 Dollars ($70,000,000.00), the proceeds of which shall be used by
      Borrower for business purposes.

    

    B.           Guarantor
      is an affiliate of Borrower and shall benefit, directly and indirectly, from
      the
      Loan made to Borrower pursuant to the Note.

    

    C.           Guarantor
      is willing to execute this Guaranty in favor of Lender and hereby agrees to
      be
      bound by its terms and conditions.

    

    A
      G R E E M E N T:

    

    NOW,
      THEREFORE, for good and valuable
      consideration, and intending to be legally bound hereby, Guarantor agrees and
      covenants with Lender as follows:

    

    1.           Definitions.  Capitalized
      terms not defined in this Guaranty shall have the respective meanings given
      to
      such terms in the Note.

    

    2.           Guaranty
      and Surety.  Guarantor hereby absolutely and unconditionally
      guarantees, and becomes surety for, the full, timely and complete payment when
      due, whether by lapse of time, by acceleration of payment, or otherwise, of
      all
      indebtedness, liabilities and obligations of every kind and nature of Borrower
      to Lender, whether now existing or hereinafter arising, including, without
      limitation, all indebtedness, liabilities and obligations arising under or
      related to (a) the Note, and the other Loan Documents and all amounts due
      thereunder, pursuant to or in connection therewith, (b) all costs reasonably
      incurred by Lender to obtain, preserve, perfect and enforce the security
      interests granted by the Loan Documents and to maintain, preserve and collect
      any 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 related thereto, and
      (c) all renewals, extensions, modifications and substitutions of all or any
      part of the indebtedness and obligations described in the foregoing clauses
      (a)
      through (b) (collectively, the “Guaranteed
      Obligations”).  Guarantor’s obligation under this
      Guaranty is unconditional, absolute and enforceable, irrespective of (a) the
      validity or enforceability of the Guaranteed Obligations in whole or in part
      or
      of the Note and the other Loan Documents or any provision thereof,
      (b) whether recovery against Borrower with respect to the Guaranteed
      Obligations in whole or in part is prevented by bankruptcy, the operation of
      law, or otherwise, and (c) any other circumstance that might otherwise cause
      a
      legal or equitable discharge or defense of Guarantor.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    3.           Subsequent
      Acts by Lender.  Lender may, in its sole discretion and without
      notice, take or refrain from taking any action that might otherwise be deemed
      a
      legal or equitable release or discharge of Guarantor’s obligations under this
      Guaranty, without either impairing or affecting the liability of Guarantor
      for
      the full, timely and complete payment of the Guaranteed Obligations, which
      actions might include, by way of illustration and not limitation:

    

    (a)           the
      renewal or extension of any of the Guaranteed Obligations or any payments
      thereunder, or the acceleration or change of time for payment of the Guaranteed
      Obligations any increase in the principal amount of any promissory note or
      other
      instrument comprising a part of the Guaranteed Obligations and/or any additional
      funds advanced under the Guaranteed Obligations;

    

    (b)           the
      modification, amendment or change in any of the terms relating to any promissory
      note or other agreement, document or instrument now or hereafter executed by
      Borrower in favor of Lender, including, without limitation, the Note and the
      other Loan Documents;

    

    (c)           the
      absence of any attempt to collect the Guaranteed Obligations from Borrower
      or
      any other person or entity primarily or secondarily liable for the Guaranteed
      Obligations or any other action to enforce Lender’s rights with respect to the
      Guaranteed Obligations;

    

    (d)           the
      waiver, consent, or delay in enforcement by Lender with respect to any provision
      of any instrument evidencing the Guaranteed Obligations, including, without
      limitation, the Note and the other Loan Documents;

    

    (e)           any
      failure by Lender to take any steps to perfect and maintain its security
      interest in, or to preserve its rights to, any security or collateral given
      for
      the Guaranteed Obligations, or the release or compromise of any lien or security
      held by Lender as security for the Guaranteed Obligations;

    

    (f)           the
      compounding, rearrangement or consolidation by Lender of all or any part of
      the
      Guaranteed Obligations;

    

    (g)           the
      release from liability of Borrower or any other guarantor or person or entity
      primarily or secondary liable for the Guaranteed Obligations who may guarantee
      or provide security for the Guaranteed Obligations in whole or in part;
      or

    

    (h)           the
      settlement, release, compromise or cancellation of all or any part of the
      Guaranteed Obligations, or the acceptance of partial payment of all or any
      part
      of the Guaranteed Obligations.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    4.           Expenses.  Guarantor
      agrees to pay all costs and expenses, including, without limitation, all court
      costs and reasonable attorneys’ fees paid or incurred by Lender in endeavoring
      to collect all or any part of the Guaranteed Obligations, or in enforcing or
      pursuing its remedies with respect to the Guaranteed Obligations.

    

    5.           Payment
      by Guarantor.  In the event of any failure to pay with respect to
      the Guaranteed Obligations or any Event of Default under the Note, Guarantor
      agrees to pay on demand, all of the Guaranteed Obligations and all other costs,
      expenses and other amounts payable under this Guaranty.  Lender shall
      not be required to liquidate any lien or any other form of security, instrument,
      or note held by Lender prior to making such demand.  THIS IS A
      GUARANTY OF PAYMENT AND NOT OF COLLECTION, and Guarantor specifically agrees
      that Lender shall not be required to assert any claim, file suit, or proceed
      to
      obtain a judgment against Borrower or any other guarantor, endorser or surety
      for the Guaranteed Obligations, or make any effort at collection of the
      Guaranteed Obligations, or foreclose against or seek to realize upon any
      security or collateral now or hereafter existing for the Guaranteed Obligations,
      or exercise or assert any other right or remedy to which Lender is or may be
      entitled in connection with the Guaranteed Obligations, before or as a condition
      of enforcing the liability of Guarantor under this Guaranty or requiring payment
      of the Guaranteed  Obligations under this
      Guaranty.  Guarantor agrees, to the full extent it may legally do so,
      that suit may be brought against Guarantor with or without making Borrower
      or
      any other person or entity a party to such suit, as Lender may
      elect.  Guarantor agrees that Guarantor shall remain fully liable
      under this Guaranty regardless of whether Borrower is held to be not liable
      on
      the Guaranteed Obligations and regardless of whether all or any portion of
      the
      Guaranteed Obligations are “non-recourse” or “limited recourse” to
      Borrower.

    

    6.           Application
      of Payments.  Lender shall have the exclusive right to determine
      the time and manner of application of any payments or credits to the Guaranteed
      Obligations, whether received from Borrower or any other source, and such
      determination shall be binding on Guarantor.  All such payments and
      credits may be applied, reversed and reapplied, in whole or in part, to any
      of
      the Guaranteed Obligations as Lender shall determine in its sole discretion
      without affecting the validity or enforceability of this Guaranty.

    

    7.           Guarantor’
      Responsibilities.  Guarantor hereby assumes responsibility for
      keeping itself informed of the financial condition of Borrower, and any and
      all
      endorsers and/or other Guarantor of any instrument or document evidencing all
      or
      any part of the Guaranteed Obligations and of all other circumstances bearing
      upon the risk of nonpayment of the Guaranteed Obligations.  Guarantor
      further agrees that Lender shall have no duty to advise Guarantor of any
      information known to Lender regarding such condition or such circumstances
      or to
      undertake any investigation.  If Lender, in its sole discretion,
      undertakes at any time or from time to time to provide any information to
      Guarantor, Lender shall be under no obligation to update any such information
      or
      to provide any such information to Guarantor on any subsequent
      occasion.

    

    8.           Reinstatement.  Guarantor
      agrees that, to the extent any payment or payments are made to Lender or Lender
      receives any proceeds of collateral, which payments or proceeds are subsequently
      invalidated, declared to be fraudulent or preferential, set aside and/or
      required to be repaid to Borrower or any other party, then Guarantor’s
      obligations under this Guaranty to the extent of such repayment, shall
      immediately and automatically be reinstated and continued in full force and
      effect.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    9.           RESERVED.

    

    10.           Waivers
      by Guarantor.  Guarantor hereby waives to the extent permissible
      by law: (a) notice of acceptance of this Guaranty and of creation of the
      Guaranteed Obligations, (b) presentment, notice of non-payment, and demand
      for
      payment of the Guaranteed Obligations, (c) protest, notice of protest, and
      notice of dishonor or default to Guarantor or to any other party with respect
      to
      any of the Guaranteed Obligations, and (d) all other notices to which Guarantor
      might otherwise be entitled.

    

    11.           Continuation.  This
      Guaranty shall continue in full force and effect with respect to Guarantor,
      and
      Lender shall be entitled to make loans and advances and extend financial
      accommodations to Borrower on the faith of this Guaranty, until Lender delivers
      to Guarantor, a written revocation of this Guaranty executed by
      Lender.

    

    12.           Mutual
      Understanding.  Guarantor represents and warrants to Lender that
      Guarantor has read and fully understands the terms and provisions hereof, has
      had an opportunity to review this Guaranty with legal counsel and has executed
      this Guaranty based on Guarantor’s own judgment and advice of
      counsel.  If an ambiguity or question of intent or interpretation
      arises, this Guaranty will be construed as if drafted jointly by the Guarantor
      and Lender and no presumption or burden of proof will arise favoring or
      disfavoring any party because of authorship of any provision of this
      Guaranty.

    

    13.           Further
      Assurances.  Guarantor at Guarantor’s expense will promptly (a)
      execute and deliver to Lender on Lender’s request, all such other and further
      documents, agreements and instruments as may be requested by Lender, and (b)
      deliver all such supplementary information as may be requested by Lender, in
      compliance with or accomplishment of the agreements of Guarantor under this
      Guaranty.

    

    14.           Cumulative
      Remedies.  Guarantor hereby agrees that all rights and remedies
      that Lender is afforded by reason of this Guaranty are separate and cumulative
      with respect to Guarantor 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.

    

    15.           Notice.  All
      notices and other communications under this Guaranty 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 Guarantor at the address or facsimile number
      for
      notice provided for such party on the signature page hereto, or to such other
      address or facsimile number as Guarantor may have delivered to Lender for
      purposes of notice pursuant to this Guaranty.  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 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.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

    

    17.           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 GUARANTY 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.

    

    18.           JURISDICTION;
      VENUE.  GUARANTOR IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING IN
      RESPECT OF THIS GUARANTY 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”).  GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
      JURISDICTION OF THE SPECIFIED COURTS.  GUARANTOR HEREBY IRREVOCABLY
      WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH GUARANTOR
      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  ANY GUARANTOR IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY
      MANNER PERMITTED BY APPLICABLE LAW.

    

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

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    20.           Amendments;
      Waivers.  No amendment or waiver of any provision of this Guaranty
      nor consent to any departure by Guarantor 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.

    

    21.           Binding
      Effect; Assignment. This Guaranty shall be binding on Guarantor and
      Guarantor’s administrators, legal representatives, successors, heirs and/or
      assigns, including, without limitation, any receiver, trustee or debtor in
      possession of or for Guarantor, and shall inure to the benefit of Lender and
      its
      successors and assigns.  Guarantor shall not be entitled to transfer
      or assign this Guaranty in whole or in part without the prior written consent
      of
      Lender. This Guaranty is freely assignable and transferable by Lender without
      the consent of Guarantor.  Should the status, composition, structure
      or name of Guarantor change, this Guaranty shall continue and also cover the
      Guaranteed Obligations under the new status composition, structure or name
      according to the terms of this Guaranty.

    

    22.           RESERVED.

    

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

    

    24.           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.

    

    25.           WAIVER
      OF JURY TRIAL, PUNITIVE DAMAGES, ETC.  GUARANTOR HEREBY KNOWINGLY,
      VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT
      NOT PROHIBITED BY LAW, ANY RIGHT GUARANTOR 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 GUARANTY OR THE LOAN DOCUMENTS
      OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR ASSOCIATED HEREWITH OR
      THEREWITH, BEFORE OR AFTER MATURITY OF THE NOTE; (B) WAIVES, TO THE MAXIMUM
      EXTENT NOT PROHIBITED BY LAW, ANY RIGHT GUARANTOR MAY HAVE TO CLAIM OR RECOVER
      IN ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED BELOW, (C) CERTIFIES
      THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF LENDER OR COUNSEL FOR ANY PARTY
      HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY
      WOULD
      NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
      (D)
      ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO MAKE THE LOAN AND ACCEPT THE NOTE
      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 ANY PARTY HERETO HAS EXPRESSLY
      PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

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

    

               27.           ENTIRE
      AGREEMENT.  THIS GUARANTY TOGETHER WITH 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
      GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS.  THERE ARE NO
      UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.  THIS GUARANTY, THE NOTE
      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.]

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, Guarantor has duly executed this Guaranty on this the 12th
      day
      of November, 2007, effective for all purposes as of the Effective
      Date.

    

    

    GUARANTOR:

    

    
      	
               

            	
              UMT
                HOLDINGS, L.P.,

            

    

    a
      Delaware limited
      partnership

    

    By:  UMT
      Services,
      Inc.

    Its:  General
      Partner

    

    

    By:           /s/
      Hollis M. Greenlaw

    Name:      Hollis
      M. Greenlaw

    Its:           President
      and Chief ExecutiveOfficer

    

    

    

    

    

    

    

    Signature
      page to
      Guarantyex10-4.htm

    
      Exhibit
        10.4

    

    

    

    

    

    

    

    

    

    

    

    CONSULTATION
      REPORT OF

    

    UDF
      X

    The
      Fairness of the Financing Terms

    Between
      United Development Funding III, L.P.

    and
      United Development Funding X, L.P.,

    Dated
      October 1, 2007

    

    

    

    Prepared
      For:

    

    Mr.
      Hollis Greenlaw

    President

    UMTH
      Land Development, LP

    1702
      N. Collins Boulevard, Suite 100

    Richardson,
      TX  75080

    

    

    

    

    

    

    

    Prepared
      By:

    

    JACKSON
      CLABORN, INC.

    Real
      Estate Consulting and Appraisal Services

    5800
      W. Plano Parkway, Suite 220

    Plano,
      TX 75093

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              Jackson
                Claborn, Inc.

            

    

    ·
      Real Estate
      Consulting and Appraisal Services ·

    ·
      Plano, Texas · Southlake,
      Texas
·

    www.jacksonclaborn.com

    Jimmy
      H.
      Jackson, MAI David Claborn, MAI

    Allen
      W.
      Gardiner, SRA Dod W. Clapp, SRA

    

    October
      1, 2007

    

    Mr.
      Hollis Greenlaw

    President

    UMTH
      Land
      Development, LP

    1702
      N.
      Collins Boulevard, Suite 100

    Richardson,
      TX  75080

    

    
      	
              RE:

            	
              A
                consultation report of, UDF X, the fairness of the financing terms
                between
                United Development Funding III, L.P., and United Development Funding
                X,
                L.P., dated October 1, 2007; our file number
                710008

            

    

    

    Ladies
      and Gentlemen:

    

    At
      your
      request, we have performed a consulting assignment regarding the
      above-referenced agreement as of October 1, 2007, subject to certain assumptions
      and limiting conditions that are attached. Our employment was not based upon
      an
      appraisal producing a specific value or a value range and it should also be
      noted that this assignment should not be considered to be an appraisal report
      as
      we are not providing our opinion as to the sales price of the subject property,
      but only providing our opinion as to the fairness of the financing terms.
      Furthermore, we have not inspected the subject property of the above-referenced
      agreement.

    

    You
      have
      requested our opinion as an independent advisor (as that term is defined in
      the
      Prospectus of United Development Funding III, L.P. dated May 15, 2006) as to
      the
      fairness of the terms of that certain note to be dated effective as of October
      1, 2007 amongst and between United Development Funding III, L.P., a Delaware
      limited partnership (“UDF III”) as Lender and United Development Funding X,
      L.P., a Delaware limited partnership (“UDF X”) as Borrower. Pursuant to the
      terms of this note (the “UDF X Note”), UDF III will advance to UDF X the amount
      of up to $70,000,000 at an annual interest rate of 15.0%, which amount shall
      be
      due and payable along with accrued and unpaid interest on September 30, 2012.
      The Borrower will be charged a fee equal to 3% of the note amount that will
      be
      payable concurrently with each initial advance, but not for any
      re-advance.  The credit facility shall revolve allowing for interest
      to accrue on a monthly basis which shall be compounded on an annual basis if
      not
      paid in full on each anniversary date.  The security for the loan
      shall be all the assets and receivables held in UDF X, including without
      limitation, the assignment of any liens and entity equity interests pledged
      to
      UDF X in the course of its business.

     

    
      
        
          	
                  Headquarters:
                    5800 W. Plano Parkway ·
                    Suite 220
                    ·
                    Plano,
                    Texas 75093 ·
                    (972)
                    732-0051 ·
                    FAX (972)
                    733-1403

                
	
                  Branch
                    Office: 1560 E. Southlake Blvd. ·
                    Suite 220
                    ·
                    Southlake, Texas 76092 ·
                    (817)
                    421-3833 ·
                    FAX (817)
                    421-3844

                

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    UMTH
      Land
      Development, LP

    Page
      Two

    October
      1, 2007

    

    

    The
      transaction will be further secured by a UCC-1 filing evidencing the security
      interest retained by for UDF III and an unconditional and unlimited guarantee
      from UMTH Holdings, L.P., a Delaware limited partnership (“Guarantor”) and
      parent company of UDF X.  With respect to the Guarantor, UMTH is a
      financially sound, well diversified entity of substance that is capitalizing
      on
      a business model of underwriting real estate finance transactions in markets
      with strong underlying demographics, appropriate supply/demand ratios and
      growing economics. In just a short period of operations, UMTH has demonstrated
      an impressive record of success. As of YE 2006, UMTH had net earning of $2.4M
      with $2.3M in net earning through YTD July 31, 2007 which is on target for
      achieving their projected YE 2007 net earnings of $9M.

    

    Based
      upon the information provided to us with respect to the Borrower, UDF X is
      a
      newly formed, wholly owned subsidiary of UMTH Land Development, L.P., a Delaware
      limited partnership (“UMTH-LD”) whose parent company is UMT Holdings, L.P., a
      Delaware limited partnership (“UMTH”).  UMTH-LD is the general partner
      of UDF III.  UMTH-LD and UDF X are each an affiliate of UDF
      III.  UMTH-LD has a .1% general partner, UMT Services, Inc., and a
      99.9% limited partner owned by UMTH.  UMTH-LD formed UDF X as a
      strategic business platform for the continuation of the UMTH Business Model
      which, in short, is the generation of income by originating, purchasing and
      holding for investment, for its own account, loans to and/or equity positions
      in
      entities that acquire, entitle, develop and sell land and/or lots for the
      construction of single-family residential homes. We understand the purpose
      of
      this note is to provide a credit facility to UDF X for the implementation of
      their business model as a real estate finance company.

    

    Since
      UDF
      X is an “Affiliated Party”, UDF III is required to obtain this fairness opinion
      with respect to the terms of the transaction.

    

    We
      are a
      full service real estate appraisal and consulting firm. As part of our real
      estate appraisal and consulting services, we are regularly engaged in the
      consultation with regard to real estate value and finance.

    

    We
      are
      acting as an independent advisor to UDF III in connection with the UDF X Note
      and will receive a fee for our services. The opinion fee is not contingent
      upon
      the conclusions of our opinion. In addition, UMTH Land Development, L.P. has
      agreed to indemnify us for certain liabilities arising out of our
      engagement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    UMTH
      Land
      Development, LP

    Page
      Three

    October
      1, 2007

    

    

    In
      the
      course of performing our review and analysis for rendering this opinion, we
      have: (i) reviewed the details of the transaction with UDF X, (ii) reviewed
      the
      terms of the UDF X Note, (iii) reviewed materials provided to us by members
      of
      the senior management of UDF III with respect to the described transaction;
      (iv)
      conducted discussions with members of the senior management of UDF III with
      respect to the described transaction; and (v) conducted such other financial
      studies, analyses and investigations and considered such other information
      as we
      deemed appropriate.

    

    With
      respect to the data and discussions relating to the transaction, we have
      assumed, at the direction of management of UDF III and without independent
      verification, that such data has been reasonably prepared on a basis reflecting
      the best currently available estimates and judgments of UDF III. We have further
      relied on the assurances of senior management of UDF III that they are unaware
      of any facts that would make such information incomplete or
      misleading.

    

    In
      rendering our opinion, we have assumed and relied upon the accuracy and
      completeness of the financial, legal, tax, operating and other information
      provided to us by UDF III, and have not assumed responsibility for independently
      verifying and have not independently verified such information. We have not
      assumed any responsibility to perform, and have not performed, an independent
      evaluation or appraisal of any of the respective assets or liabilities
      (contingent or otherwise) involved in the contemplated transaction. In addition,
      we have not assumed any obligation to conduct, and have not conducted, any
      physical inspection of the property involved in the contemplated transaction.
      Additionally, we have not been asked and did not consider the possible effects
      of any litigation or other legal claims.

    

    Our
      opinion is subject to the assumptions and conditions set forth herein, speaks
      only as of the date hereof, is based on market, economic, financial, legal
      and
      other conditions as they exist and information which we have been supplied
      as of
      the date hereof, and is without regard to any market, economic, financial,
      legal
      or other circumstances or events of any kind or nature which may exist or occur
      after such date. We have not undertaken to reaffirm or revise this opinion
      or
      otherwise comment upon any events occurring after the date hereof and do not
      have any obligation to update, revise or reaffirm our opinion.

    Our
      opinion expressed herein is provided for the information and assistance of
      the
      senior management of UDF III in connection with the UDF X Note.

    

    Our
      opinion does not address the merits of the underlying decision by UDF III to
      undertake the UDF X Note, but solely addresses the fairness of the terms
      associated therewith.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    UMTH
      Land
      Development, LP

    Page
      Four

    October
      1, 2007

    

    

    Based
      on
      and subject to the foregoing, including the various assumptions and limitations
      set forth herein, it is our opinion that, as of the date hereof, that the terms
      of the UDF X Note are fair and at least as favorable to UDF III as such
      transaction with an unaffiliated party in similar circumstances.

    

    This
      consulting assignment conforms to the requirements of the Code of Professional
      Ethics and the Uniform Standards of Professional Appraisal Practice (USPAP)
      established by the Appraisal Institute and instituted by the State of Texas.
      If
      you have any questions regarding the contents of this report, please contact
      either of the undersigned.

    

    Respectfully
      submitted,

    

     

    /s/Jackson
      Claborn, Inc.

    

    JACKSON
      CLABORN, INC.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CERTIFICATION
      - CONSULTATION

    

    

    We
      certify to the best of our knowledge and belief, that:

    

    
      	
               

            	
              The
                statements of fact contained herein and upon which the opinions herein
                are
                based, are true and correct, subject to the assumption and limiting
                conditions explained in the report.

            

    

    

    
      	
               

            	
              Employment
                in and compensation for providing this consultation are in no way
                contingent upon any value reported and we certify that we have no
                interest, either present or contemplated, in the subject property.
                We have
                no personal interest or bias with respect to the subject matter of
                this
                consultation report or the parties
                involved.

            

    

    

    
      	
               

            	
              This
                consultation report identifies all of the limiting conditions (imposed
                by
                the terms of my assignment or by the undersigned) affecting the analysis,
                opinions and conclusions contained in this
                report.

            

    

    

    
      	
               

            	
              The
                analysis, opinions and/or conclusions, if any, contained in this
                report
                have been developed in accordance with the Code of Professional Ethics
                and
                Standards of Professional Practice of the Appraisal
                Institute.

            

    

    

    
      	
               

            	
              The
                use of this consultation report is subject to the requirements of
                the
                Appraisal Institute relating to review by its duly authorized
                representatives.

            

    

    

    
      	
               

            	
              No
                one other than the undersigned prepared the analysis, opinions or
                conclusions concerning real estate that are set forth in this consultation
                report.

            

    

    

    
      	
               

            	
              No
                one at Jackson Claborn, Inc has personally inspected the property
                that is
                the subject of this report.

            

    

    

    
      	
               

            	
              We
                certify that this consultation assignment was not based on a requested
                minimum valuation, a specific valuation, or the approval of a
                loan.

            

    

    

    /s/Jackson
      Claborn,
      Inc.

     

    JACKSON
      CLABORN, INC.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSUMPTIONS
      AND LIMITING CONDITIONS

    

    This
      consultation is expressly subject to the following assumptions and limiting
      conditions:

    

    
      	
               

            	
              1)

            	 	
              No
                responsibility is assumed for matters of legal nature. It is assumed
                that
                title to the property is marketable and the legal description furnished
                us
                is correct.

            

    

    

    
      	
               

            	
              2)

            	 	
              The
                property is treated as though under responsible ownership and competent
                management and free and clear of all liens and
                encumbrances.

            

    

    

    
      	
               

            	
              3)

            	 	
              The
                described physical condition of any improvements is based on visual
                inspection only. It is assumed that there are no hidden or unapparent
                physical conditions affecting value such as the existence of hazardous
                materials such as asbestos or any other potentially hazardous materials.
                No liability is assumed for the soundness of structural members,
                equipment
                or soil conditions, since no engineering tests were
                made.

            

    

    

    
      	
               

            	
              4)

            	 	
              Improvements
                are considered to be within lot lines and in accordance with local
                zoning
                and building ordinances, as well as all applicable Federal, state
                and
                local environmental laws and regulations, except as noted herein.
                Any
                plats, diagrams or drawings provided are intended solely to facilitate
                understanding and aid to the reader in picturing the property and
                are not
                meant to be used as references in matters of survey, as no survey
                was made
                and no liability is assumed regarding questions of
                survey.

            

    

    

    
      	
               

            	
              5)

            	 	
              It
                is assumed that all required private, Federal, state or local licenses,
                certificates of occupancy, consents or other legislative or administrative
                permissions required have been or can be readily obtained or renewed
                for
                any use on which the value estimate in this report is
                based.

            

    

    

    
      	
               

            	
              6)

            	 	
              Any
                information received from public or private sources is believed to
                be
                reliable; however, no warranty is given for its
                accuracy.

            

    

    

    
      	
               

            	
              7)

            	 	
              The
                authors shall not be required to give further consultation or testimony
                or
                appear in court, by reason of this consultation report with reference
                to
                the property described unless previous arrangements have been made
                to that
                effect.

            

    

    

    
      	
               

            	
              8)

            	 	
              Disclosure
                of the contents of this consultation report is governed by the Bylaws
                and
                Regulations of the Appraisal Institute. Possession of this consultation
                report or a copy thereof or any part thereof, does not carry with
                it the
                right of publication, nor may it be used by anyone but the party
                for whom
                it has been prepared without the previous written consent of the
                appraisers and, in any event, only with proper written qualifications
                and
                only in its entirety.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              9)

            	 	
              Neither
                all nor any part of the contents of this consultation report (especially
                conclusions as to value, the identity of the appraisers or the firm
                with
                which the appraiser is connected) shall be disseminated to the public
                through advertising, public relations, news, sales or other media
                without
                the prior written consent and approval of Jackson Claborn,
                Inc.

            

    

    

    
      	
               

            	
              10)

            	 	
              Any
                opinions of value stated herein are based on the purchasing power
                of the
                dollar as of the date of this report, except as otherwise specified.
                Therefore, the opinion of value is considered reliable only as of
                the
                stated date of valuation.

            

    

    

    
      	
               

            	
              11)

            	 	
              This
                consultation report is intended to be read and used as a whole and
                not in
                parts. Separation of any section or page from the main body of the
                consultation report is expressly forbidden and will be considered
                as
                invalidating the consultation.

            

    

    

    
      	
               

            	
              12)

            	 	
              Any
                allocation of value of this consultation report between land and
                improvements applies only to this consultation and must not be used
                as
                part of any other appraisal and is invalid if so used. The value
                reported
                for any portion appraised, plus the value of all other portions may
                or may
                not equal the value of the entire parcel or tract considered as an
                entity.

            

    

    

    
      	
               

            	
              13)

            	 	
              No
                responsibility is assumed for the accuracy of any descriptions of
                physical
                materials and conditions pertaining to the property or for any damages
                sustained in connection with actual or potential deficiencies or
                hazards
                such as, but not limited to, inadequacies or defects in the structure,
                design, mechanical equipment or utility services associated with
                the
                improvements; air or water pollution; noise; flooding; storms or
                wind;
                traffic and other neighborhood hazards; radon gas, asbestos, natural
                or
                artificial radiation or toxic substances of any description, whether
                on or
                off the premises.

            

    

    

    
      	
               

            	
              14)

            	 	
              The
                opinions of value and/or lease rates contained within this consultation
                report are estimates. There is no guarantee, written or implied,
                that the
                subject will actually sell or lease for the estimated value/lease
                rate.

            

    

     

    
      
        
          	
                   

                	
                  15)

                	 	
                  
                    The
                      Americans with Disabilities Act ("ADA") became effective January
                      26, 1992.
                      We have not made a specific compliance survey and analysis
                      of this
                      property to determine whether or not it is in conformity with
                      the various
                      detailed requirements of the ADA. Indeed, we have not been
                      supplied with
                      nor have we rendered a qualified opinion as to whether or not
                      there are
                      any "readily achievable" barrier removal items present. It
                      is possible
                      that a survey of the property together with a detailed analysis
                      of the
                      requirements of the ADA could reveal that the property is not
                      in
                      compliance with one or more of the requirements of the Act.  If
                      so, this fact could have a negative affect upon the value of
                      the
                      property.  Since we have no direct evidence relating to this
                      issue, we did not consider possible non-compliance with the
                      requirements
                      of ADA in estimating the value of the property.  Consequently,
                      the subject property has been valued assuming compliance to
                      ADA.  Should a professional survey prove non-compliance, we
                      reserve the right to re-evaluate the
                      property.

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