Document:

exv10w20

Exhibit 10.20

SECURED PROMISSORY NOTE

(Travis Ranch Mixed Use / Commercial Tract, Rockwall and Kaufman Counties, Texas)

			
	 	 	 
	U.S. $11,250,000.00
	 	July 23, 2010

     FOR VALUE RECEIVED, CTMGT LAND HOLDINGS, L.P., a Texas limited partnership (“Borrower”),
hereby makes and issues this Secured Promissory Note (this “Note”) and promises to pay to the order
of UNITED DEVELOPMENT FUNDING IV, a real estate investment trust organized under the laws of the
state of Maryland (together with its successors and assigns, “Lender”), the principal sum of U.S.
ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($11,250,000.00) or, if greater or
less, the aggregate amount of all funds advanced to Borrower under this Note, together with
accrued, unpaid interest thereon, and all other amounts due to Lender hereunder. This Note is
subject to the foregoing and the following terms:

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

     “Accrued Interest Payments” means monthly interest payments equal to the amount of
accrued interest on the outstanding principal balance of this Note, calculated at the
applicable rate of interest provided herein, and payable as provided herein.

     “Advance” shall mean an advance by Lender under this Note including, without
limitation, an Interest Reserve Advance, a Commitment Advance, or a Discretionary Advance.

     “Advance Conditions” has the meaning set forth in Section 7 of this Note.

     “Advance Request” shall mean Lender’s standard form of Advance Request in the form
attached hereto as Exhibit “D”, which includes means a certificate executed by the
Principal Officer certifying that (i) no Event of Default has occurred and is continuing
under this Note, (ii) all representations and warranties made by Borrower in this Note and
the other Loan Documents are true and correct in all respects, and (iii) Borrower has
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.

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

     “Approved Budget” means a budget approved by Lender for the management and development
of the Property in accordance with the Development Plan, which (i) specifies the cost by
item of all labor, materials, and services necessary for the development of the Property in
accordance with the Development Plan, and all other expenses anticipated by Borrower
incident to the Loan ,the Property and such development of the Property, (ii) shall be
delivered to Lender for approval prior to commencement of the construction of the
Improvements, in accordance with Section 9(u)(i), and (iii) upon approval by Lender,
shall be attached hereto by Lender as Exhibit “B” and upon such attachment, shall be
deemed incorporated by reference.

 

 

     “Approved Builder” means each residential homebuilder acquiring Lots from Borrower for
the purpose of constructing single family residences thereon which is approved by Lender,
such approval not to be unreasonably withheld, conditioned or delayed.

     “Assignment and Subordination Agreement” means, collectively, each Assignment and
Subordination of Lot Sale and Purchase Contract executed by Borrower in favor of Lender as
each may be amended, modified, renewed, superseded, or replaced from time to time.

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

     “Assignment of Distributions” means, collectively those certain assignments of the
distributions in respect of the Pledged Securities dated as of the Effective Date, executed
and delivered by Pledgors to Lender, as it may be amended, modified, renewed, extended,
increased, or supplemented from time to time.

     “Base Rate” means the lesser of (i) fourteen percent (14%) per annum, accrued monthly
and compounded annually, or (ii) the Highest Lawful Rate.

     “Borrower” means CTMGT Land Holdings, L.P., a Texas limited partnership.

     “Borrower-Related Party” means, collectively, the Guarantors, the Pledgors, and any
other Person who becomes a Guarantor or a Pledgor, or who serves as the general partner of
Borrower.

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

     “Centamtar Terras” means Centamtar Terras, L.L.C., a Texas limited liability company.

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

     “Closing Deliveries” has the meaning given to such term in Section 6.

     “Closing Expense Advance” means an advance of the Commitment by Lender for the benefit
of Borrower in the maximum amount of $100,000, which shall be applied to pay the Closing
costs and expenses and other Loan Expenses, including, without limitation, mortgagee title
policy insurance, taxes (and reimbursement of taxes), attorneys’ fees and other closing
expenses (all of which are subject to the prior approval of Lender).

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

2

 

     “Commitment” means the maximum dollar amount that Lender has committed to fund under
this Note, excluding Interest Reserve Advances, in the aggregate dollar amount of up to U.S.
Nine Million Eight Hundred Seventy Thousand and No/100 Dollars ($9,870,000.00), which amount
includes (and is not in addition to) the Initial Commitment Advance and the Closing Expense
Advance.

     “Commitment Advance” means any full or partial advance of the Commitment pursuant to
the terms hereof including, without limitation, the Initial Commitment Advance, future
Advances of Commitment, if any, and the Closing Expense Advance.

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

     “Construction Contracts” has the meaning assigned to such term in Section 10(a)
hereof.

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

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

     “CTMGT” means CTMGT, LLC, a Texas limited liability company.

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

     “Deed of Trust” shall mean that certain Deed of Trust, Assignment of Leases and Rents,
Security Agreement, and Fixture Filing to be recorded in the real property records of
Rockwall and Kaufman Counties, Texas, naming Lender as the beneficiary thereunder and
granting Lender a security interest in and a Lien on the Property and the Mortgaged
Property related thereto in security for the payment and performance of Borrower’s
obligations under this Note and the other Loan Documents and Related Indebtedness (as such
term is defined in the Deed of Trust), subject only to Permitted Exceptions and being
superior in priority over all Liens other than the Senior Lien, as it may be amended,
modified, renewed, extended, supplemented, or replaced from time to time.

     “Default Rate” means the lesser of (i) eighteen percent (18.0%), accrued monthly and
compounded annually, or (ii) the Highest Lawful Rate.

     “Development Plan” means the site plan and preliminary plat and engineering plans
submitted to an appropriate Governmental Authority involving planned improvements and
specifications for the development of the Property, as prepared by the Engineer and approved
in

3

 

writing by Lender, which materials shall later be supplemented with final plans and drawings
approved by Lender.

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

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

     “Distribution” means all proceeds, products, cash, securities, dividends, increases,
distributions and profits received or distributable in respect of the Pledged Securities,
including, without limitation, distributions or payments in partial or complete liquidation
or redemption, or as a result of reclassifications, readjustments, reorganizations or
changes in the capital structure of the Pledged Securities.

     “District” means any municipal district of Kaufman County having jurisdiction over the
Property, being a political subdivision of the State of Texas, a body politic and corporate,
and a governmental agency of the State of Texas, organized pursuant to the provisions of
Article XVI, Section 59 of the Texas Constitution and operating pursuant to Chapters 49 and
54 of the Texas Water Code, as amended.

     “District Consent” means a written consent and agreement executed by the District for
the benefit of Lender, which, among other things, provides that the District grants its
consent to Lender’s Lien on and security interest in the Reimbursement Contracts.

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

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

     “Effective Date” means July 23, 2010.

     ’Engineer” means each Person contracting with Borrower to provide architectural or
engineering services related to the development of the Property.

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

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

     “Event of Default” has the meaning given to such term in Section 11(a).

4

 

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

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

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

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

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

     “Guarantor” means each of CTMGT, Centamtar Terras, and Mehrdad Moayedi, an individual,
and each other Person who executes a Guaranty Agreement as a Guarantor thereunder.

     “Guaranty Agreement” means each Guaranty dated as of the Effective Date or thereafter
executed by a Guarantor in favor of Lender, as each may be amended, modified, renewed,
extended, increased, or supplemented from time to time.

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

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

5

 

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

     “Initial Commitment Advance” means the aggregate dollar amount of up to$-0- to be
advanced to or for the benefit of Borrower at the Closing.

     “Interest Reserve” means a fixed interest reserve in an amount of up to U.S. One
Million Three Hundred Eighty Thousand and No/100 Dollars ($1,380,000.00) that may be
advanced by Lender hereunder on the last day of each month for interest accrued during that
month on the outstanding principal balance of this Note (subject to the provisions of
Sections 4(b) and 4(c)) and applied against Accrued Interest Payments on
this Note.

     “Interest Reserve Advance” means an advance of Interest Reserve by Lender hereunder
applied against Accrued Interest Payments on this Note, subject to the terms and conditions
of Sections 4(b) and 4(c).

     “Lease” has the meaning given to such term in Section 9(v).

     “Lender” means United Development Funding IV, a real estate investment trust organized
under the laws of the state of Maryland, and its successors and assigns.

     “Lender Representatives” has the meaning given to such term in Section 9(m).

     “Liabilities and Costs” has the meaning given to such term in Section 13.

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

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

     “Loan Documents” means, collectively, together with all exhibits and schedules thereto:
this Note, the Deed of Trust, the Environmental Indemnity Agreement, the Advance Requests,
the Guaranty Agreements, the Financial Statement Certifications, the Errors Agreement, the
IRS tax disclosure forms, the Company Certificates, the Earnest Money Assignments (if any),
the Pledge Agreement, the Pledge Assignments, the Assignments of Distributions, the
Assignment and Subordination Agreements (if any), the Lot Purchaser Consents (if any), the
Assignment of Contract Rights, the Contractor’s Subordination Agreement (if any),the
District Consent, and all other documents, instruments, agreements, assignments and
certificates relating thereto, including, without limitation, any and all loan or credit
agreements, promissory notes, deeds of trust, mortgages, pledge agreements, financing
statements, security agreements, assignments of

6

 

rents, assignments of leases, assignments of contracts, environmental indemnities,
guaranties, contractor’s consent agreements, lender’s title insurance policies, opinions of
counsel, evidences of authorization or incumbency, escrow instructions, and architect’s
and/or engineer’s consent agreements, letters of credit, each of which is to be executed
(and acknowledged where applicable) by the Borrower and/or Lender (as and where applicable)
in connection with Lender making the Loan to Borrower, as the same may be amended, modified,
renewed, supplemented or replaced from time to time.

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

     “Lot” shall mean each of the Finished Lots into which a portion of the Property shall
be developed.

     “Lot Purchaser” means (i) an Approved Builder or (ii) any other Person acquiring Lots
from Borrower, subject to approval by Lender in its sole discretion.

     “Lot Purchaser Consent” means, collectively, each Consent to Assignment, Subordination
and Estoppel Certificate and Agreement executed by a Lot Purchaser in favor of Lender with
respect to any Lot Sale Contract entered into by such Lot Purchaser.

     “Lot Sale Contract” means, collectively, each contract or agreement entered into by and
between Borrower and a Lot Purchaser relating to the acquisition from Borrower of Lots, as
each may be amended, modified, extended, or supplemented from time to time. .

     “Maturity Date” means July 23, 2013.

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

     “Note” means this Secured Promissory Note as defined in the introductory paragraph
hereof, together with all exhibits and schedules hereto, as it may be amended, modified,
renewed, extended, increased, or supplemented from time to time.

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

     “Other Contracts” has the meaning assigned to such term in Section 10(c)
hereof.

     “Partner Loans” means, collectively, loans from partners or affiliates of Borrower made
in accordance with the terms of the Organizational Agreement of Borrower, which are

7

 

subordinate both in payment and priority of Liens to the Loan and the Loan Documents
pursuant to a subordination agreement executed by such Person in favor of Lender.

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

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

     “Plans” means, collectively, the Plans and Specifications and the Development Plan.

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

     “Pledge Agreement” means that certain Pledge Agreement executed by the Pledgors in
favor of Lender dated as of the Effective Date or thereafter, pursuant to which the Pledgors
pledge and grant a security interest in, and a Lien on, the Pledged Collateral to Lender to
secure the Loan, as it may be amended, modified, renewed, superseded, replaced or joined
from time to time.

     “Pledge Assignments” means those certain assignments of limited liability company
interests and partnership interests relating to the pledge of such limited liability company
interests and partnership interests of Borrower being executed and delivered to Lender by
the Pledgors pursuant to the requirements of the Pledge Agreement, as each may be amended,
modified, renewed, extended, superseded, replaced or joined from time to time.

     “Pledged Collateral” has the meaning given to such term in the Pledge Agreement, which
is hereby incorporated by reference.

     “Pledged Securities” has the meaning given to such term in the Pledge Agreement, which
is hereby incorporated by reference.

     “Pledgor” means each of CTMGT and Centamtar Terras, and each other Person who executes
the Pledge Agreement as a Pledgor thereunder.

     “Principal Officer” means Mehrdad Moayedi.

     “Pro Forma” means Borrower’s schedule for the development of the Property into Finished
Lots, the sale of the Lots and the projected proceeds from the sale of the Lots prepared by
Borrower in good faith and in accordance with industry standards, which shall be delivered
to Lender for approval in accordance with Section 9(u)(ii), and (iii) upon approval
by Lender, shall be attached hereto by Lender as Exhibit “C” and upon such
attachment, shall be deemed incorporated by reference.

     “Property” means, collectively, (i) that certain approximate 328.450 acre tract of land
situated in the J.R. Briscoe Survey, Abstract No. 40, the I. Jones Survey, Abstract No. 257,
the S.C. White Survey, Abstract No. 572, and the S. Woods Survey, Abstract No. 574 (Tract I)
and (ii) that certain 489.456 acre tract of land situated in the S.C. White Survey, Abstract
No,. 572, the J.R. Briscoe Survey, Abstract No. 40, the R.H. Love Survey, Abstract No. 638,
the S. Woods Survey, Abstract No. 574 and the J.R. Conner Survey, Abstract No. 100 (Tract
II), located

8

 

Rockwall and Kaufman Counties, Texas, all of which is more particularly described on
Exhibit “A” attached hereto and incorporated herein by reference.

     “Released Party” has the meaning given to such term in Section 8(q).

     “Reimbursement Contract” means, collectively, any contract or agreement with any city,
county, water district, municipal utility district, public improvement district, or other
Governmental Authority providing for the sharing, payment and/or reimbursement of the costs
of planning, development and/or construction with respect to the Property such as, but not
limited to, a municipal utility district or public improvement district reimbursement
agreement.

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

     “Senior Lien” means, collectively, (i) that certain Deed of Trust executed by Borrower
for the benefit of Liberty Bankers Life Insurance Company, recorded March 15, 2010 in Volume
3732, Page 36, Real Property Records, Kaufman County, Texas and in Volume 6060, Page 106,
Real Property Records, Rockwall County, Texas (ii) that certain Assignment of Rents executed
by Borrower for the benefit of Liberty Bankers Life Insurance Company, recorded in Volume
3732, Page 99, Real Property Records, Kaufman County, Texas and in Volume 6060, Page 169,
Real Property Records, Rockwall County, Texas and (iii) that certain Financing Statement for
the benefit of Liberty Bankers Life Insurance Company, recorded in Volume 3732, Page 123,
Real Property Records, Kaufman County, Texas and in Volume 6060, Page 193, Real Property
Records, Rockwall County, Texas.

     “Title Company” means Sendera Title Company, as agent for Fidelity National Title
Insurance Company.

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

     “TMP Reimbursement Contract” has the meaning given to such term in Section
8(t). .

     “UDF Loans” means, collectively, loans from United Development Funding, L.P., a
Delaware limited partnership, United Development Funding III, LP, a Delaware limited
partnership, United Development Funding IV, a Maryland real estate investment trust, United
Development Funding Land Opportunity Fund, L.P., a Delaware limited partnership, or any of
their Affiliates.

     2. Loan Expenses; Fees.

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

9

 

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

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

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

     (b) Usury Savings Clause Applies. Borrower agrees that Lender has provided,
and shall provide, separate and distinct consideration for the fees and expenses described
in Section 2(a) above and elsewhere in the Loan Documents, and that such fees and
expenses are necessary, bona fide fees and expenses incurred in connection with the Loan.
Borrower further agrees that such fees and expenses are not, are not intended to be, and
shall not be characterized as, interest or as compensation for the use, forbearance or
detention of money. Despite the foregoing and notwithstanding anything else in this Note
and the other Loan Documents to the contrary, if any such fees or expenses 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 12 of this Note shall automatically apply to reduce the interest
charged hereunder so as not to exceed the Highest Lawful Rate.

     3. Closing; Commitment; Discretionary Advances.

     (a) Closing; Commitment. Subject to the Funding Conditions, Lender agrees to
fund the Initial Commitment Advance to Borrower at the Closing, to fund the Closing Expense
Advance at Closing and to fund up to the balance of the Commitment during the Loan term;
provided, however, that all Commitment Advances shall be made subject to, and in accordance
with, the terms and conditions of Section 3(b). Notwithstanding anything else to
the contrary contained herein, Lender shall have no obligation to make any Advance unless
each of the Funding Conditions has been satisfied. This Note is not a revolver and thus,
the portion of the Commitment borrowed may not be repaid to Lender and subsequently borrowed
again under this Note. The Interest Reserve is not included in the Commitment.

10

 

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

     (c) Discretionary Advances. Lender is hereby authorized from time to time to
make Advances to or for the benefit of Borrower hereunder that Lender, in its sole
discretion, deems necessary or desirable upon the occurrence of any of the following (such
Advances made upon the occurrence of the following events are referred to herein as the
“Discretionary Advances”): (i) Lender determines, in its sole discretion, that an Advance is
be necessary or desirable for the purpose of paying any Loan Expense, cost, expense, fee or
other amount to or for the benefit of Borrower or chargeable to Borrower under the Loan
Documents, (ii) any Event of Default occurs, or (iii) upon request by Borrower for an
Advance that (A) if a Commitment Advance, would cause the aggregate amount of all Commitment
Advances made hereunder to exceed the Commitment amount, or (B) if an Interest Reserve
Advance, would cause the aggregate amount of all Interest Reserve Advances made hereunder to
exceed the amount of the Interest Reserve. Each Discretionary Advance shall, upon
disbursement, automatically constitute principal outstanding hereunder and cause a
corresponding increase in the aggregate amount of the Debt (even if such Discretionary
Advance causes the aggregate amount outstanding hereunder to exceed the face amount of this
Note). Borrower agrees that each Discretionary Advance shall automatically reduce the
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).

     4. Interest; Payments.

     (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 breach or Event of Default has been cured to Lender’s
satisfaction as confirmed by Lender’s execution of a written agreement specifically
acknowledging and describing the Event of Default so cured, 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) Interest Payments; Interest Reserve Advances. Borrower agrees to make
Accrued Interest Payments to Lender on the last day of each month while the Loan is
outstanding, in an amount equal to the interest accrued on the outstanding principal balance
of this Note during each such month. Notwithstanding the foregoing sentence, on each date
that an Accrued Interest Payment becomes due and payable hereunder, provided that the
Advance Conditions are then satisfied and that a sufficient amount of Interest Reserve is
available for the funding of an Interest Reserve Advance, Lender shall make an Interest
Reserve Advance hereunder in the amount of

11

 

such Accrued Interest Payment which shall be applied to the Accrued Interest Payment then
due and payable. Lender may, but is not obligated to, make Interest Reserve Advances
hereunder whether or not the Advance Conditions have been met, provided, however, that if
the Advance Conditions are not then met, any such Interest Reserve Advances shall be made at
Lender’s option and in its sole discretion. Provided that Borrower met all of the Advance
Conditions for an Interest Reserve Advance, upon Lender funding such Interest Reserve
Advance hereunder, the corresponding Accrued Interest Payment for such month shall be deemed
to be satisfied. Upon each Interest Reserve Advance, irrespective of whether the Advance
Conditions were met, (i) the amount of remaining Interest Reserve (if any) shall be reduced
by the amount of such Interest Reserve Advance and (ii) such Interest Reserve Advance funded
by Lender hereunder shall automatically become principal outstanding under this Note upon
such funding. Borrower agrees that the Interest Reserve Advances may be funded by Lender in
Lender’s sole discretion even if such funding causes the outstanding principal balance of
this Note to exceed its face amount, and that any such Interest Reserve Advances funded in
excess of the face amount of this Note shall be repaid to Lender in accordance with the
provisions of this Note. Notwithstanding anything else to the contrary contained herein,
(i) if at any time an Event of Default has occurred and is continuing under this Note,
Lender shall not be obligated to make any further Interest Reserve Advances, and thereafter,
shall do so only in its sole discretion, unless and until the Event of Default has been
cured to Lender’s satisfaction as confirmed by Lender’s execution of a written agreement
specifically acknowledging and describing the Event of Default so cured, or waived by Lender
as confirmed by Lender’s execution of a written agreement specifically acknowledging and
describing the Event of Default so waived, and (ii) in no event shall Lender be obligated to
make any Interest Reserve Advance that would cause the aggregate amount of Interest Reserve
Advances made hereunder to exceed the remaining Interest Reserve.

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

     (i) Borrower promises to pay to Lender monthly Accrued Interest Payments on the
last day of each month for interest accrued during that month, unless Lender applies
the Interest Reserve to such Accrued Interest Payment as provided in Section
4(b) of this Note;

     (ii) in addition to the payments required by the provisions of clauses above,
concurrently with any Disposition of the Property or any part or parcel thereof,
Borrower promises to pay to Lender the full amount of the proceeds received by or
due to Borrower from such Disposition (such Disposition being subject to Lender’s
prior written consent which may be given or withheld in its sole discretion, unless
the Disposition results in the Debt being paid in full);

     (iii) in addition to the payments required by the provisions of the clauses
above, upon any Revenue Event, concurrently with any Revenue Event, Borrower
promises to pay to Lender the full amount of the proceeds from or relating to such
Revenue Event up to, but not exceeding the amount of, the unpaid Debt, and

     (iv) in addition to the payments required by the provisions of the clauses
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 under the Loan Documents, on or prior to the Maturity Date.

     5. Terms and Conditions of Payment.

12

 

     (a) Application of Payments. Subject to the application of Interest Reserve
Advances to Accrued Interest Payments as provided in Section 4(b) of this Note, all
payments on this Note shall be applied first, to unpaid Loan Expenses due hereunder, next,
to unpaid accrued interest, and last, to principal outstanding under this Note (being
applied first to any portion of principal attributable to Interest Reserve Advances).
Notwithstanding the foregoing sentence, if any Event of Default occurs and is existing under
this Note or any other Loan Document, Lender shall have the right to apply payments toward
amounts due under this Note as Lender determines in its sole discretion.

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

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

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

     (a) originals duly executed and notarized, as appropriate, by Borrower other party
(other than Lender) who is a signatory thereto, of this Note, the Deed of Trust, the
Environmental Indemnity Agreement, the Advance Requests, the Guaranty Agreement, the
Financial Statement Certifications, the Errors Agreement, the IRS tax disclosure forms, the
Company Certificates, the Pledge Agreement, the Pledge Assignments, and the Assignments of
Distributions;

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

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

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

13

 

     (e) copies of the liability insurance and casualty insurance policies covering Borrower
and the Property, evidence of payment of the premiums therefor through at least one year and
endorsements of such policies to Lender (in accordance with and meeting the requirements of
Sections 9(o) and (p) hereof);

     (f) all written consents that are required with respect to or necessitated by this Note
and the other Loan Documents and the transactions contemplated hereby and thereby,
including, without limitation, the written consent of Liberty Bankers Life Insurance
Company;

     (g) the following due diligence and Closing documents and materials: (i) a current
appraisal assessing the fair market value of the Property, subject to Lender’s review and
acceptance, completed by an appraiser acceptable to Lender, (ii) all environmental site
assessments and reports with respect to the Property, including, but not limited to, a
wetlands assessment, (iii) all engineering reports and studies, soil analysis, construction,
structural and mechanical feasibility reports; all surveys, survey maps, plats and proposed
plats; all development plans, construction plans, and other plans and specifications; all
topographic, drainage and contour maps and all other reports, maps, studies and surveys of
engineers, architects and others; (iv) all agreements and instruments executed or required
to be executed by Borrower with the Liberty Bankers Life Insurance Company, fully executed
and duly notarized, as appropriate, (v) certified copies of the deeds of conveyance
conveying the Property to Borrower, (vi) the fully executed settlement statement prepared by
the Title Company, which must be approved by Lender prior to execution thereof, (vii) all
sales and marketing plans for the Property, (viii) all contracts and agreements with
developers, engineers, contractors, subcontractors, consultants and others relating to
supervision and maintenance of, and other professional services relating to the Property,
(ix) copies of all easements and encumbrances affecting the Property, including land use,
water use, mineral rights, surface rights, zoning, subdivision, grading, environmental
restrictions, and neighborhood association rights and restrictions and (x) tax certificates
for the Propery covering taxes due for tax year(s) 2009 and earlier; and

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

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

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

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

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

     (c) all statements contained in all Loan Documents and all other certificates,
statements and data furnished to Lender by or on behalf of Borrower or in connection with
the

14

 

transactions contemplated by this Note or any of the other Loan Documents (including all of
the documents and information required to be delivered to Lender by Section 6) shall
be true and complete in all material respects, and there are no facts or events actually
known to Borrower that, if disclosed to Lender, would make such statements, certificates or
date untrue in any material respect (and Borrower agrees to inform Lender, prior to Lender
making any such Advance, of any such facts or events actually known to Borrower);

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

     (e) all Loan Expenses owing shall have been paid in full;

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

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

     (h) Borrower shall have complied with each other reasonable request of Lender made in
connection with the Advance.

No Advance will constitute a waiver of any condition precedent to any obligation of Lender to make
any further Advances.

     8. Representations and Warranties. Borrower and each Borrower-Related Party
represents and warrants to Lender as follows:

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

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

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

     (d) No Violation. The execution, delivery and performance by Borrower and each
Borrower-Related Party of the Loan Documents does not and will not (i) contravene the
Organizational Agreement of Borrower and each Borrower-Related Party, (ii) contravene any

15

 

law, rule or regulation, or any order, writ, judgment, injunction or decree or any
contractual restriction binding on or affecting Borrower or any Borrower-Related Party or
the Collateral, (iii) require any approval or consent of any general partner, board,
manager, member, lender or any other Person, other than approvals or consents that have been
previously obtained and disclosed in writing to the Lender, (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower or any Borrower-Related Party is a party or by which
Borrower or any Borrower-Related Party or the Collateral may be bound or affected, or (v)
result in, or require the creation or imposition of, any Lien (other than the Liens
contemplated by the Loan Documents) with respect to the Collateral.

     (e) Governmental Consents. No authorization or approval or other action by,
and no notice to or filing with, any Governmental Authority is required for the due
execution, delivery and performance by Borrower of the Loan Documents, other than approvals
or consents that have been previously obtained and disclosed in writing to the Lender.

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

     (g) Securities Activities Neither Borrower nor any Borrower-Related Party is
engaged principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock (as defined in Regulation
U of the Board of Governors of the Federal Reserve System in effect from time to time) and
not more than twenty five (25%) of the value of the assets of said entities consists of such
margin stock.

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

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

     (j) Environmental Liability. To the knowledge of Borrower, no hazardous
substances or solid wastes have been disposed of or otherwise released on the Property in
violation of Environmental Laws, nor is the Property including its soil, ground, water, air
and other elements, contaminated by hazardous substances or solid wastes in violation of
Environmental Laws. The terms “hazardous substance” and release” shall have the meanings
specified in the Comprehensive Environmental Response Compensation and Liability Act of

16

 

1980, as amended (42 U.S.C. Section 9601 et. seq.) (“CERCLA”), and the terms “solid waste”
and “disposal” (or “disposed”) shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et. seq.)
(“RCRA”); provided, to the extent that the laws of the State of Texas establish a meaning
for “hazardous substance”, “release”, “solid waste”, or “disposal” or “disposed”) that is
broader than that specified in either CERCLA or RCRA, such broader meaning shall apply.

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

     (l) Compliance With Legal Requirements. Borrower and each Borrower-Related
Party is in compliance with all legal requirements in respect of the conduct of its business
and the ownership of its assets. Borrower and each Borrower-Related Party owns or has the
continuing right to use all permits, licenses, patents, patent rights or licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights which are
required to conduct its business.

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

     (n) No Known Material Adverse Fact. Neither Borrower nor any Borrower-Related
Party knows of any fact which materially and adversely affects the Collateral, or the
business, operations, prospects or condition, financial or otherwise, of Borrower.

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

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

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

17

 

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

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

     (t) No Reimbursement Contract. To Borrower’s knowledge, no Reimbursement
Contract exists with respect to the Property other than a Reimbursement Contract between the
District and the former owner of the Property (the “TMP Reimbursement Contract”).

     (u) Lot Sale Contracts. No Lot Sale Contract exists covering any of the
Property on the date of Closing.

     9. Covenants. Borrower and each Borrower-Related Party covenants and agrees as
follows:

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

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

     (c) Indebtedness for Borrowed Money. Except for Partner Loans, UDF Loans, and
the Senior Lien, Borrower shall not incur any Indebtedness or guaranty or provide security
for any Indebtedness of another Person or enter into any agreement to do so without the
prior written consent of Lender, which may be withheld for any reason or no reason. As a
condition of Lender granting such consent, Lender may require Borrower and the other lender
to enter into a subordination agreement in favor of Lender, which shall be satisfactory to
Lender in all respects. Notwithstanding the foregoing, Borrower may incur trade debt to
vendors, and suppliers and providers of services in the ordinary course of business without
violation of this Section 9(c).

18

 

     (d) Termination of Existence. Borrower and each Borrower-Related Party shall
not cause or permit, or enter into any agreement to cause or permit, the dissolution or
termination of the existence of Borrower or any Borrower-Related Party that is an entity.
Without Lender’s prior written consent, Borrower shall not permit or enter into any
agreement to cause or permit, the merger, consolidation, or reorganization of Borrower or
any Borrower-Related party that is an entity with or into any other entity, whether or not
such party would be the surviving entity.

     (e) Notice of Certain Events. Borrower shall promptly notify Lender in writing
of (i) the occurrence of any event or series of events causing, or that could be expected to
cause or has caused, a material adverse effect on the operations or financial condition of
Borrower, any Borrower-Related Party or the Collateral, (ii) the occurrence of any Event of
Default, (iii) any default by Borrower or the acceleration of the maturity of any
Indebtedness owed by Borrower or any Borrower-Related Party under any loan agreement,
indenture, mortgage, promissory note, contract or instrument to which Borrower or any
Borrower-Related Party is a party or by which any material asset or property of Borrower or
any Borrower-Related Party is bound, (iv) any litigation instituted against Borrower or the
Collateral, (v) notices of violation relating to and adversely affecting the Collateral
received from any Governmental Authority, (vi) any audits of any federal or state tax
returns of Borrower or any Borrower-Related party and the results of any such audit, (vii)
any condemnation or similar proceedings with respect to the Property, (viii) any other
matters which could reasonably be expected to adversely affect Borrower’s ability to perform
its obligations under this Note, (ix) any termination of, or any default under, or any
receipt of notice of termination or default, under the loan documents secured by the Senior
Lien, or the Reimbursement Contracts, and (x) any claim made by any Person against or
affecting the Collateral. Borrower shall notify Lender in writing at least thirty (30) days
prior to the date that it or any Borrower-Related Party changes its or his name, address,
principal place of business, or the place that it maintains its or his books and records.

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

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

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

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

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

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

19

 

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

     (h) Liens. Borrower and each Borrower-Related Party shall not create, incur,
assume, permit or suffer to exist any Lien on or against the Collateral including, without
limitation, the Property, except for Liens securing UDF Loans and as otherwise expressly
permitted by the Loan Documents.

     (i) Operation of Business. Borrower and each Borrower-Related Party shall
operate its business in compliance with all applicable federal, state and local laws, rules,
regulations, and ordinances. Borrower and each Borrower-Related Party shall maintain or
engage sufficient qualified personnel for the operations of its business. Borrower and each
Borrower-Related Party shall maintain its existence and good standing in each state where it
operates or does any business, except in any jurisdictions where the failure to maintain
such existence and good standing would not have a material adverse effect individually or in
the aggregate, on its financial condition or operations. Borrower and each Borrower-Related
Party shall obtain, maintain and keep current, all consents, licenses, permits,
authorizations, permissions and certificates which may be required or imposed by any
Governmental Authority or which are required by applicable federal, state or local laws,
regulations and ordinances.

     (j) No Work Performed. No labor or services will be performed by on behalf of
Borrower or otherwise, and no materials will be furnished or delivered by on or behalf of
Borrower or otherwise to, the Property prior to the recording the Deed of Trust, which could
give rise to a Lien on the Property with priority equal to or greater than the Liens and
security interests of the Deed of Trust or other Loan Documents.

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

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

     (ii) all capital expenditure and expense reports, invoices and documentation of
expenses and capital expenditures, bank account information and records, and other
material financial and operational information related to the Collateral including,
without limitation, the Property;

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

20

 

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

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

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

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

     (viii) other contracts and agreements relating to the Property, its
maintenance, development, construction, and management; and

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

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

     (m) Audit. Borrower and each Borrower-Related Party shall permit Lender and
its employees, representatives, auditors, collateral verification agents, attorneys and
accountants (collectively, the “Lender Representatives”), at any time and from time to time,
at Borrower’s expense, to (i) audit all books and records related to Borrower, each
Borrower-Related Party and the Collateral including, without limitation, the Property, and
(ii) visit and inspect the offices of Borrower and each Borrower-Related party and to
inspect and make copies of all books and records, and to write down and record any
information the Lender Representatives obtain. Borrower and each Borrower-Related Party
agrees to cooperate fully with Lender in connection with such audits and inspections.

     (n) Agreements related to the Property. Without the prior written consent of
Lender, neither Borrower nor any Borrower-Related Party shall enter into, amend, modify or
terminate any agreement related to the Collateral that reasonably would be expected to
hinder, delay or impair the timely payment of the Debt or the performance by Borrower or any
Borrower-Related party of any obligations under the Loan Documents, or that could have a
material adverse effect on the value of the Collateral or Lender’s Liens against the
Collateral.

     (o) General Liability Insurance. Borrower shall at all times maintain or cause
to be maintained general liability insurance with coverage amounts that are normal and
customary for similarly-situated entities engaged in similar businesses. Each such policy
shall provide that Lender be given at least thirty (30) days written notice as a condition
precedent to any cancellation thereof or material change therein. Borrower shall obtain an
endorsement to each

21

 

such policy naming Lender as an additional insured to each such policy, and provide Lender
annually with the insurance certificate, evidencing such coverage, the endorsement of each
such policy to Lender, and evidence of payment of the premium for each such policy.

     (p) Property Insurance. Borrower shall, at all times maintain hazard insurance
on the Property with coverage amounts that are normal and customary for similar properties.
Each such policy shall provide that Lender be given at least thirty (30) days written notice
as a condition precedent to any cancellation thereof or material change therein. Borrower
shall obtain an endorsement to each such policy naming Lender as an additional insured to
each such policy, and provide Lender annually with the insurance certificate, evidencing
such coverage, and evidence of payment of the premium for each such policy.

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

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

22

 

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

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

     (u) Certain Approvals and Deliveries.

     (i) Approved Budget. Borrower and the Borrower-Related Parties shall
prepare and submit a proposed budget to Lender which meets the standards of the
definition of “Approved Budget” herein. Such Approved Budget must be delivered to
Lender prior to commencement of the Improvements. Upon Lender’s approval thereof,
which is subject to its sole discretion, such budget shall become the Approved
Budget and may be attached by Lender as Exhibit “B” hereto; provided, that
any failure of lender to so attach the Approved Budget to this Note shall not impair
the validity of the Approved Budget or the provisions of the Loan Documents relating
thereto. Borrower and the Borrower-Related Parties shall not make, consent to,
approve, adopt or vote in favor of any modification, amendment, supplement, or other
change to the Approved Budget (except for changes in line items that do not increase
the overall budget amount) without Lender’s prior written consent. Borrower and the
Borrower-Related Parties shall

23

 

construct the Improvements and manage the Property in strict accordance with the
Approved Budget.

     (ii) Pro Forma. Borrower and the Borrower-Related Parties shall
prepare and submit a proposed pro forma to Lender which meets the standards of the
definition of “Pro Forma” herein. Such Pro Forma must be delivered to Lender prior
to commencement of the Improvements. Upon Lender’s approval thereof, which is
subject to its sole discretion, such pro forma shall become the Pro Forma required
hereby and may be attached by Lender as Exhibit “C” hereto; provided, that
any failure of lender to so attach the Pro Forma to this Note shall not impair the
validity of the Pro Forma or the provisions of the Loan Documents relating thereto.
Borrower and the Borrower-Related Parties shall not make, consent to, approve, adopt
or vote in favor of any modification, amendment, supplement, or other change to the
Pro Forma without Lender’s prior written consent. Borrower shall cause aggregate
Lot sales to occur at least by the dates forth for Lot sales in the Pro Forma.

     (iii) Development Plan. Borrower and the Borrower-Related Parties
shall cause the preparation of the Development Plan and submit such Development Plan
to Lender for review and approval. Such Development Plan must be delivered to
Lender prior to commencement of the Improvements. Borrower and the Borrower-Related
Parties shall not make, consent to, approve, adopt or vote in favor of any
modification, amendment, supplement, or other change to the Development Plan without
Lender’s prior written consent. Borrower and the Borrower-Related Parties shall
construct the Improvements and develop the Property in strict accordance with the
Development Plan.

     (iv) Plans and Specifications. Borrower and the Borrower-Related
Parties shall cause the preparation of the Plans and Specifications and submit such
Development Plan to Lender for review and approval. Such Plans and Specifications
must be delivered to Lender prior to any commencement of the Improvements. Borrower
and the Borrower-Related Parties shall not make, consent to, approve, adopt or vote
in favor of any modification, amendment, supplement, or other change to the Plans
and Specifications without Lender’s prior written consent. Borrower and the
Borrower-Related Parties shall construct the Improvements and develop the Property
in strict accordance with the Plans and Specifications.

     (v) Lot Sales Report. After any of the Property has been developed
into Finished Lots, within ten (10) days after the end of each month, Borrower shall
deliver to Lender, a sales report setting forth the current sales status of all
Lots, including pending and anticipated Lots sales, and naming the Approved Builder
or other purchaser thereof.

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

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

24

 

     (x) Agreements Relating to Indebtedness. Without the prior written consent of
Lender, neither Borrower nor any Borrower-Related Party shall enter into, amend, modify or
supplement any agreements with Liberty Bankers Life Insurance Company.

     (y) Certain Construction Matters.

     (i) The Construction Contract. Borrower shall become party to no
contract, including any Construction Contract, for the performance of any work on
the Property or for the supplying of any labor, materials, or services for the
development of any part of the Property except upon such terms and with such parties
as shall be approved in advance in writing by Lender. Each Construction Contract
shall provide that all Liens of such Contractor are subordinate to the Deed of Trust
and shall require all subcontracts entered into by such Contractor to contain a
provision subordinating the subcontractor’s Liens to the Lien of the Deed of Trust.
If required by Lender, each Contractor shall enter into a Contractor’s Subordination
Agreement in favor of Lender. No approval by Lender of any Construction Contract or
change order shall impose upon Lender any responsibility for the adequacy, form, or
content of such Construction Contract or any change orders.

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

     (z) Construction of the Improvements. Borrower or its Affiliate use
commercially reasonable efforts to commence planning and engineering for the construction
and development of the Property within twelve (12) months following the acquisition of the
Property. One commenced, the development of the Property shall be pursued with due
diligence and continuity, in a good and workmanlike manner, and in accordance with sound
building and engineering practices, all applicable governmental requirements, and the
Development Plan. Once commencement of the construction of the Improvements has occurred,
Borrower or its Affiliate shall not permit cessation of work for a period in excess of
thirty (30) days during any period of time during which development on the Property is
scheduled to be performed without the prior written consent of Lender, except for delays due
to strikes, riots, acts of God, war, unavailability of labor or materials, governmental
laws, regulations or restrictions and Borrower shall promptly notify Lender of any such
delays; provided, however, that in no event shall work cease for a period in excess of sixty
(60) days regardless of the cause. Borrower and its Affiliate shall cause all materials
supplied for, or intended to be utilized in, the development of any part of the Property,
but not affixed to or incorporated into the Property, to be stored on the Property or at
such other location as may be approved by Lender in writing, with adequate safeguards, as
required by Lender, to prevent loss, theft, damage, or commingling with other materials or
projects.

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

     10. Assignments

25

 

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

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

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

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

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

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

26

 

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

     (b) Assignment of Plans. As additional security for the payment of the Debt
and the payment and performance of the obligations, covenants and agreements under the Loan
Documents, Borrower and each Borrower-Related Party hereby transfers and assigns to Lender
for the benefit of Lender all rights and interest, but not its obligations, in, under and to
the Plans, and hereby represents and warrants to and agrees with Lender as follows:

     (i) Each schedule of the Plans delivered or to be delivered to Lender is and
shall be a complete and accurate description of the Plans;

     (ii) The Plans are and shall be complete and adequate for the construction of
the Improvements and there have been no modifications thereof except as described in
such schedule. The Plans shall not be modified without the prior written consent of
Lender, which shall not be unreasonably withheld or delayed;

     (iii) Lender may use the Plans for any purpose relating to the Loan, including
but not limited to inspections of construction and the completion of the
Improvements;

     (iv) Lender’s acceptance of this assignment shall not constitute approval of
the Plans by Lender. Lender has no liability or obligation in connection with the
Plans and no responsibility for the adequacy thereof or for the construction of the
Improvements contemplated by the Plans. Lender has no duty to inspect the
Improvements, and if Lender should inspect the Improvements, Lender shall have no
liability or obligation to Borrower or any Borrower-Related Party or any other party
arising out of such inspection. No such inspection nor any failure by Lender to
make objections after any such inspection shall constitute a representation by
Lender that the Improvements are in accordance with the Plans or any other
requirement or constitute a waiver of Lender’s right thereafter to insist that the
Improvements be constructed in accordance with the Plans or any other requirement;
and

     (v) This assignment shall inure to the benefit of Lender and its successors and
assigns, any purchaser upon foreclosure of either Deed of Trust, any receiver in
possession of the Mortgaged Property and any entity affiliated with Lender which
assumes Lender’s rights and obligations under this Note.

     (c) Assignment of Other Contracts. As additional security for the payment of
the Debt and the payment and performance of the obligations, covenants and agreements under
the Loan Documents, Borrower and each Borrower-Related Party hereby transfers and assigns to
Lender for the benefit of Lender all rights and interest, but not its obligations, in, under
and to all other contracts and agreements between Borrower or any Borrower-Related Party and
any Persons pertaining to the Mortgaged Property or the construction of the Improvements
(the “Other Contracts”), whether now existing or hereafter entered into, upon the following
terms and conditions:

     (i) Borrower and each Borrower-Related Party represents and warrants that the
copy of any Other Contracts it has furnished to Lender is a true and complete copy

27

 

thereof and that Borrower’s or such Borrower-Related Party’s interest therein
is not subject to any claim, setoff, or encumbrance;

     (ii) Neither this assignment nor any action by Lender shall constitute an
assumption by Lender of any obligations under any Other Contracts, and Borrower or
such Borrower-Related Party shall continue to be liable for all obligations of
Borrower or such Borrower-Related Party thereunder, Borrower or such
Borrower-Related Party hereby agreeing to perform all of its obligations under any
Other Contracts. Borrower and each Borrower-Related Party indemnifies and holds
Lender harmless against and from any loss, cost, liability, or expense (including,
but not limited to, reasonable attorneys’ fees) resulting from any failure of
Borrower or such Borrower-Related Party to so perform;

     (iii) During the existence and continuance of an Event of Default, Lender shall
have the right at any time (but shall have no obligation) to take in its name or in
the name of Borrower such action as Lender may at any time reasonably determine to
be necessary or advisable to cure any default under any Other Contracts or to
protect the rights of Borrower or Lender thereunder. Lender shall incur no
liability if any action so taken by it shall prove to be inadequate or invalid, and
Borrower agrees to hold Lender free and harmless against and from any loss, cost,
liability or expense (including, but not limited to, reasonable attorneys’ fees)
incurred in connection with any such action;

     (iv) During the existence and continuance of an Event of Default, Borrower and
each Borrower-Related Party hereby irrevocably constitutes and appoints Lender as
Borrower’s or such Borrower-Related Party’s attorney-in-fact, in Borrower’s or such
Borrower-Related Party’s name or in Lender’s name, to enforce all rights of Borrower
or such Borrower-Related Party under any Other Contracts. Such appointment is
coupled with an interest and is therefore irrevocable;

     (v) Except during the existence of an Event of Default, Borrower and each
Borrower-Related Party shall have the right to exercise its rights as owner under
any Other Contracts, provided that Borrower or such Borrower-Related Party shall not
cancel or amend such Other Contracts or do or suffer to be done any act which would
impair the security constituted by this assignment without the prior written consent
of Lender.

     (d) Without limitation, the foregoing indemnities contained in this Section 10
shall apply to Lender with respect to matters which in whole or in part are caused by or
arise out of, or are claimed to be caused by or arise out of, the negligence (whether sole,
comparative or contributory) or strict liability of Lender. However, such indemnities shall
not apply to Lender to the extent that the subject of the indemnification is caused by or
arises out of the gross negligence or willful misconduct of Lender.

     11. Default.

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

     (i) except for Accrued Interest Payments due during any period when Accrued
Interest Payments are made by Lender pursuant to Section 4(b), the failure
of Borrower to make any payment required by this Note in full on or before the date
such

28

 

payment is due (or declared due pursuant to the terms of this Note), whether on
or prior to the Maturity Date; or

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

     (iii) Borrower or any Borrower-Related Party shall fail to perform or observe
any covenant or agreement contained in this Note or any other Loan Document that is
not separately listed in this Section 11(a) as an Event of Default, and the
same remains unremedied for ten (10) days thereafter; or

     (iv) any “event of default” or “default” occurs under any Loan Document other
than this Note that is not separately listed in this Section 11(a), and the
same remains unremedied for ten (10) days thereafter; or

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

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

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

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

     (ix) any Disposition of any Collateral occurs (except as expressly permitted by
the Loan Documents) without the prior written consent of Lender; or

     (x) any “default” or “event of default” not cured within the grace period, if
any, for such default or event of default (the terms “default” and “event of
default” have the meaning given to such terms in the agreements and documents
described below),

29

 

shall occur under (A) any credit agreement, loan agreement, promissory note or
other document evidencing Indebtedness for borrowed money to which Borrower or any
Borrower-Related Party is a party as a borrower, debtor, guarantor or other obligor,
or (B) any subordination agreement, security agreement, pledge agreement, guaranty,
deed of trust, or other agreement providing guaranty of or security or collateral
for Indebtedness, executed by Borrower or any Borrower-Related Party, or (C) any
joint venture agreement, revenue or profits sharing or participation agreement,
partnership agreement, shareholders agreement, securities purchase agreement or any
other agreement governing to which Borrower or any Borrower-Related Party is a
party, if Lender or any of its Affiliates are also a party to such agreement, or

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

     (xii) in Lender’s opinion, any material adverse change occurs in the financial
condition or business of Borrower or any Borrower-Related Party; or

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

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

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

     (xvi) in Lender’s opinion, the prospect for payment or the prospect for
performance with respect to this Note or any other agreement that Borrower or any
Borrower-Related Party may have with Lender is impaired and Lender so notifies
Borrower in writing; or

     (xvii) Borrower or any Borrower-Related Party fails to comply with any covenant
or agreement in any of Sections 9(b), (c), (d), (h),
(j), (m), (n), (r), (s), (t)
(w) or (x) in any respect.

     (b) Upon the occurrence of an Event of Default described in subsection (a)(v),
(vi) or (vii) 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 each
Borrower-Related Party 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

30

 

maturity, protest and notice of protest, and any other notices of any kind, all of
which are expressly waived by Borrower and each Borrower-Related Party any and all sureties,
guarantors and endorsers of this Note, and/or (ii) exercise any or all of its rights under
all or any of the Loan Documents, and/or (iii) refuse to advance any funds hereunder,
including, without limitation, any Interest Reserve, and/or (iv) 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 Debt represented
hereby is proved, established or collected in any court or in any bankruptcy, receivership,
debtor relief, probate or other court proceedings, Borrower and each Borrower-Related Party
and all endorsers, sureties and guarantors of 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.

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

     (a) It is expressly stipulated and agreed to be the intent of Borrower and each
Borrower-Related Party and Lender at all times to comply strictly with the applicable Texas
law governing the maximum rate or amount of interest payable on the Debt, or applicable
United States federal law to the extent that such law permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under Texas law. If the
applicable law is ever judicially interpreted so as to render usurious any amount contracted
for, charged, taken, reserved or received in respect of the Debt, including by reason of the
acceleration of the maturity or the prepayment thereof, then it is the express intent of
Borrower and each Borrower-Related Party and Lender that all amounts charged in excess of
the Highest Lawful Rate shall be automatically canceled, ab initio, and all amounts in
excess of the Highest Lawful Rate theretofore collected by Lender shall be credited on the
principal balance of the Debt (or, if the Debt has been or would thereby be paid in full,
refunded to Borrower), and the provisions of the Note and the other Loan Documents shall
immediately be deemed reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any new document, so as to
comply with the applicable laws, but so as to permit the recovery of the fullest amount
otherwise called for hereunder and thereunder; provided, however, if the Note has been paid
in full before the end of the stated term hereof, then Borrower and each Borrower-Related
Party and Lender agree that Lender shall, with reasonable promptness after Lender discovers
or is advised by Borrower that interest was received in an amount in excess of the Highest
Lawful Rate, either credit such excess interest against the Debt then owing by Borrower to
Lender and/or refund such excess interest to Borrower. Borrower and each Borrower-Related
Party hereby agrees that as a condition precedent to any claim seeking usury penalties
against Lender, Borrower will provide written notice to Lender, advising Lender in
reasonable detail of the nature and amount of the violation, and Lender shall have sixty
(60) days after receipt of such notice in which to correct such usury violation, if any, by
either refunding such excess interest to Borrower or crediting such excess interest against
the Debt then owing by Borrower to Lender. All sums contracted for, charged, taken, reserved
or received by Lender for the use, forbearance or detention of the Debt shall, to the extent
permitted by applicable law, be amortized, prorated, allocated or spread, using the
actuarial method, throughout the stated term of the Note (including any and all renewal and
extension periods) until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the Highest Lawful Rate from time to time in effect and
applicable to the

31

 

Debt for so long as the Debt is outstanding. In no event shall the provisions of Chapter 346
of the Texas Finance Code (which regulates certain revolving credit loan accounts and
revolving triparty accounts) apply to this Note or any other part of the Debt.
Notwithstanding anything to the contrary contained herein or in any of the other Loan
Documents, it is not the intention of Lender to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest at the time
of such acceleration. The terms and provisions of this paragraph shall control and
supersede every other term, covenant or provision contained herein, in any of the other Loan
Documents or in any other document or instrument pertaining to the Debt.

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

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

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

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

For good and valuable consideration set forth herein, including the promises, agreements,
covenants, representations and obligations set forth in this Note and the other Loan Documents,
Borrower and each Borrower-Related Party hereby releases and forever discharges, and covenants not
to sue or file any charges or claims against Lender for any and all existing or future claims,

32

 

demands and causes of action, in contract or in tort, at law or in equity, known or unknown,
pending or threatened, for all existing and future damages arising out of or in any way associated
with this Note and the other Loan Documents and the Loan made pursuant hereto and thereto.

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

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

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

     17. Cumulative Remedies. All rights and remedies that Lender is afforded by reason of
the Loan Documents are separate and cumulative with respect to Borrower or any of them 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.

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

	 	 	 

	If to Borrower:

	 	CTMGT Land Holdings, L.P.

1221 North I-35 East, Suite 200

Carrollton, Texas 75006

Facsimile No. (469) 892-7201

33

 

	 	 	 

	 

	 	Attention: Mehrdad Moayedi
	If to a

Borrower-Related Party:

	 	
CTMGT, LLC

Centamtar Terras, L.L.C.

Mehrdad Moayedi

1221 E. I-35

Carrollton, Texas 75006

Facsimile No.(469) 892-7201

Attention: Mehrdad Moayedi
	 
	 	 
	If to Lender:

	 	United Development Funding IV

1301 Municipal Way, Suite 100

Grapevine, Texas 76051

Facsimile No. (817) 835-0383

Attention: Ben Wissink

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

     19. 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.

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

     21. 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 that it may now or hereafter have that the laying of venue of any
suit, action or proceeding brought in any such Specified Court has been brought in an inconvenient
forum. Borrower hereby irrevocably agrees to a transfer of all such proceedings to the Specified
Courts. Nothing herein shall affect the right of Lender to commence legal proceedings or otherwise

34

 

proceed against Borrower in any jurisdiction or to serve process in any manner permitted by
applicable law.

     22. 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.

     23. 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.

     24. 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 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.

     25. 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 their obligations
under 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. Should the status, composition, structure or name of Borrower
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.

     26. Time of the Essence. Time is of the essence in this Note and the Loan Documents.

     27. Captions; Number or Gender of Words. 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. 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.

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

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

35

 

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

     31. Acknowledgement and Consent to Pledge. Borrower and the Borrower-Related Parties
acknowledge that this Note is subject to a security interest and lien in favor of, and is pledged
as collateral to, Raley Holdings, LLC, which is a lender to United Development Funding IV. By
execution hereof, Borrower and the Borrower-Related Parties consent to such security interest, lien
and pledge.

     32. 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 contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.

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

36

 

     This Note has been executed on this the 23rd day of July, 2010 by the undersigned Borrower, to
be effective for all purposes as of the Effective Date.

	 	 	 	 	 
	BORROWER:

CTMGT LAND DEVELOPMENT, L.P.,

a Texas limited partnership

 	 
	By:  	Centamtar Terras, L.L.C., a Texas limited liability company
 	 
	Its: 	      General Partner 	 
	 	 	 
	By:  	CTMGT, LLC, a Texas limited liability company
 	 
	Its: 	 Manager 	 
	 	 	 
	By:  	                 /s/ Mehrdad Moayedi
 	 
	 	Name:  	Mehrdad Moayedi 	 
	 	Title:  	Sole Member and Manager of CTMGT, LLC 	 
	 

37

 

     This Note has been executed on this the 23rd day of July, 2010 by the undersigned
Borrower-Related Parties, to be effective for all purposes as of the Effective Date.

BORROWER-RELATED PARTIES:

CTMGT, LLC:

CTMGT, LLC, a Texas limited liability company, hereby executes this Note for the purpose of
acknowledging and agreeing to the representations, warranties, covenants and agreements as same
relate to it, specifically in its capacity as a Guarantor, a Pledgor and a Borrower-Related Party
under this Note.

	 	 	 	 	 
	CTMGT, LLC, a Texas limited liability company

 	 
	By:  	/s/ Mehrdad Moayedi
 	 
	 	Name:  	Mehrdad Moayedi 	 
	 	Title:  	Sole Member and Manager of CTMGT, LLC 	 

CENTAMTAR TERRAS, L.L.C.:

CENTAMTAR TERRAS, L.L.C., a Texas limited liability company, hereby executes this Note for the
purpose of acknowledging and agreeing to the representations, warranties, covenants and agreements
as same relate to it, specifically in its capacity as a Guarantor, a Pledgor and a Borrower-Related
Party under this Note.

	 	 	 	 	 
	CENTAMTAR TERRAS, L.L.C., a Texas limited liability company

 	 
	By:  	CTMGT, LLC, a Texas limited liability company
 	 
	Its: 	  Manager 	 
	 	 	 
	By:  	/s/ Mehrdad Moayedi
 	 
	 	Name:  	Mehrdad Moayedi 	 
	 	Title:  	Sole Member and Manager of CTMGT, LLC 	 
	 

MEHRDAD MOAYEDI:

Mehrdad Moayedi, an individual, hereby executes this Note for the purpose of acknowledging and
agreeing to the representations, warranties, covenants and agreements as same relate to him,
specifically in his capacity as a Guarantor and a Borrower-Related Party under this Note.

	 	 	 	 	 
	/s/ Mehrdad Moayedi
 	 
	MEHRDAD MOAYEDI 	 
	 	 
	 

38

 

     This Note has been executed on this the 23rd day of July, 2010 by the undersigned Lender, to
be effective for all purposes as of the Effective Date.

The terms of this Note are hereby accepted by Lender.

	 	 	 	 	 
	LENDER:

UNITED DEVELOPMENT FUNDING IV,

a Maryland real estate investment trust

 	 
	By:  	/s/ David Hanson
 	 
	 	Name:  	David Hanson 	 
	 	Its:       Chief Operating Officer 	 
	 

39exv10w1

Exhibit 10.1

AMENDMENT TO

PERFORMANCE-BASED RESTRICTED STOCK AWARD AGREEMENT

(pursuant to Lender Processing Services, Inc. 2008 Omnibus Incentive Plan)

     This Amendment (the “Amendment”), effective as of May 10, 2010, is by and between Lender
Processing Services, Inc. (the “Company”) and                      (the “Grantee”).

     WHEREAS, on May 10, 2010, the Company granted to the Grantee a performance-based restricted
stock award (the “Award”) pursuant to a Performance-Based Restricted Stock Award Agreement (the
“Award Agreement”); and

     WHEREAS, in order to clarify the consequences of a termination of the Grantee’s employment by
the Company without cause under the Award Agreement, the Company and the Grantee wish to amend the
first paragraph of Section 2(a) of the Award Agreement.

     NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and the Grantee hereby
agree as follows:

     1. The first paragraph of Section 2(a) of the Award Agreement is hereby amended in its
entirety to read as follows:

“If the Grantee’s employment or service as a Director or Consultant, as the case
may be, is terminated for any reason other than (i) death, (ii) Disability (as
defined below) or (iii) termination by the Company and its Subsidiaries without
Cause (as defined below), the Grantee shall, for no consideration, forfeit to the
Company the Shares of Restricted Stock to the extent such Shares are subject to a
Period of Restriction at the time of such termination. If the Grantee’s employment
or service as a Director or Consultant, as the case may be, is (x) terminated by
the Company and its Subsidiaries without Cause after the Performance Objective has
been attained, or (y) terminates due to the Grantee’s death or Disability, in each
case, while Shares of Restricted Stock are subject to a Period of Restriction, the
Period of Restriction with respect to such Shares shall lapse, and the Shares shall
vest and become free of the forfeiture and transfer restrictions described in this
Section 2 on the date of the Grantee’s termination of employment or service, except
that the mandatory holding period restrictions described in Section 2(d) shall
remain in effect for the period specified therein. If the Grantee’s employment or
service as a Director or Consultant, as the case may be, is terminated by the
Company and its Subsidiaries without Cause before the Performance Objective has
been attained, the Shares of Restricted Stock shall vest and become free of the
forfeiture and transfer restrictions described in this Section 2 on the

 

 

first Calculation Date as of which the Performance Objective is attained, except
that the mandatory holding period restrictions described in Section 2(d) shall
remain in effect for the period specified therein. For avoidance of doubt, if the
Performance Objective has not been attained as of the final Calculation Date, a
Grantee whose employment or service as a Director or Consultant, as the case may
be, is terminated by the Company and its Subsidiaries without Cause shall, for no
consideration, forfeit to the Company all of the Shares of Restricted Stock.”

     2. Except as specifically amended by the provisions of the Amendment, all terms of the Award
Agreement are unmodified and remain in full force and effect.

     IN WITNESS WHEREOF, the Company and the Grantee have duly executed the Amendment effective as
of the date set forth above.

	 	 	 	 	 	 	 

	 	 	LENDER PROCESSING SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Francis K. Chan
 

	 	 
	 

	 	Name:
	 	Francis K. Chan	 	 
	 

	 	Title:
	 	Executive Vice President and Chief	 	 
	 

	 	 	 	Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	GRANTEE	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]