Document:

Exhibit 10.21 - Buffington Hidden Lakes Promissory Note

    SECURED
      PROMISSORY NOTE

    

    
      	
              U.S. $4,484,077.00

            	
              Dallas,
                Texas

            	
              December
                19, 2006

            

    

    

    FOR
      VALUE RECEIVED,
      BUFFINGTON
      HIDDEN LAKES, LTD.,
      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 III, L.P.,
      a
      Delaware limited partnership (together with its successors and assigns,
“Lender”)
      the
      principal sum of U.S. Four Million Four Hundred Eighty-Four Thousand
      Seventy-Seven and NO/100 ($4,484,077.00) 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. The
      parties hereto hereby agree to the terms and conditions of this Note, as further
      set forth below. The General Partner is executing this Note on its own behalf
      for certain limited purposes described on the signature page to this
      Note.

     

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

    

    (a) “Accrued
      Interest Payments”
shall
      mean 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.

    

    (b) “Base
      Rate”
shall
      mean the lesser of (i) fifteen percent (15%) per annum, or (ii) the Highest
      Lawful Rate.

     

    (c) “Commitment”
shall
      mean an aggregate amount of U.S. Four Million Four Hundred Eighty-Four Thousand
      Seventy-Seven and NO/100 ($4,484,077.00).

    

    (d) “Commitment
      Advance”
      shall
      mean the advance of the Commitment made to Borrower at the closing of this
      Note
      in accordance with the provisions hereof. 

    

    (e) “Default
      Rate”
shall
      mean the lesser of (i) eighteen percent (18%) per annum, or (ii) the Highest
      Lawful Rate.

    

    (f) “Effective
      Date”
shall
      mean December 19, 2006.

    

    (g) “Event
      of Default”
shall
      have the meaning given to such term in Section 9
      of this
      Note.

    

    (h) “General
      Partner”
shall
      mean Buffington Hidden Lakes GP, Inc., a Texas corporation and the general
      partner of Borrower.

    

    (i) “Guaranty”
shall
      mean that certain Continuing Unconditional Guaranty to be executed by the
      General Partner in favor of Lender dated as of the Effective
      Date,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    guaranteeing
      the prompt payment and performance of Borrower’s obligations under this
      Note.

    

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

    

    (k) “Interest
      Reserve”
shall
      mean an aggregate of up to $400,000.00 to be advanced by Lender hereunder and
      to
      be applied against Accrued Interest Payments, subject to the provisions of
      Section
      4(c)
      of this
      Note.

    

    (l) “Interest
      Reserve Advance”
means
      an advance under this Note in the amount of an Accrued Interest Payment pursuant
      to Section
      4(c)
      of this
      Note.

    

    (m) “LEN-BUF
      LP”
shall
      mean LEN-BUF / HiddenLake 2 - JV, Ltd., a Texas limited partnership, in which
      Borrower owns a 49.50% limited partnership interest and in which the General
      Partner owns a 0.50% general partnership interest.

    

    (n) “Loan
      Documents”
shall
      mean this Note, the Pledge Agreement, the Guaranty and all other documents,
      certificates, instruments, and agreements executed, entered into or delivered
      by
      Borrower, the General Partner or any of their respective affiliates in
      connection with this Note, as each such document may be amended from time to
      time. 

    

    (o) “Maturity
      Date”
means
      June 30, 2010.

    

    (p) “Partnership
      Agreement”
means
      the Agreement of Limited Partnership for LEN-BUF / HiddenLake 2 - JV, Ltd.,
      as
      it may be amended from time to time.

    

    (q) “Pledge
      Agreement”
shall
      mean that certain Pledge Agreement executed by Borrower in favor of Lender
      dated
      as of the Effective Date, pursuant to which Borrower pledges its limited
      partnership interest in LEN-BUF LP to Lender as security for the prompt payment
      and performance of Borrower’s obligations to Lender under this Note, as such
      agreement may be amended from time to time.

    

    (r) “Property”
shall
      mean each real property now owned or hereinafter acquired by LEN-BUF LP, and
      “Properties”
shall
      mean, collectively, all real properties now owned or hereinafter acquired by
      LEN-BUF LP.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. Loan
      Expenses; Fees.

    

    (a) Loan
      Expenses.
      No fees
      shall be due by Borrower in connection with the origination and closing of
      the
      Loan. Lender shall bear the costs incurred in connection with the drafting,
      negotiation and closing of this Note and the other Loan Documents. Thereafter,
      Borrower shall pay Lender, the full amount of all fees and expenses incurred
      by
      Lender (collectively, the “Loan
      Expenses”)
      in
      connection with the loan made pursuant to this Note and the preparation of
      the
      Note and the other Loan Documents, including, without limitation, attorneys
      fees, accountants fees, closing costs, due diligence costs and expenses,
      recording fees, courier and delivery fees, document preparation fees, wire
      transfer and bank fees, title company fees, and all other fees and costs
      incurred by Lender up to but not exceeding the aggregate sum of $5,000.00
      annually (the “Annual
      Cap”);
      provided, however, that the Annual Cap on Loan Expenses shall not apply (i)
      upon
      the occurrence and during the continuance of any Event of Default, including,
      without limitation, to costs and expenses incurred in connection with collection
      efforts or any workout or restructure of this Note and the transactions
      contemplated hereby, and (ii) to costs incurred in connection with any audit
      permitted by Section
      9(l)
      of this
      Note. 

     

    (b) Usury
      Savings Clause Applies.
      Borrower and Lender agree that Lender has provided, and shall provide, separate
      and distinct consideration for the fees described in Section
      2(a)
      above or
      that such expenses represent bona fide expenses incurred by Lender, and that
      such fees are not intended to be characterized as interest or as compensation
      for the use, forbearance or detention of money. Despite the foregoing and
      notwithstanding anything else in the Loan Documents to the contrary, if any
      fees
      charged hereunder are determined to constitutes interest and such fees, when
      added to the interest charged hereunder, would cause the aggregate interest
      charged hereunder to exceed the Highest Lawful Rate, then Sections
      4(b)
      and
11
      of this
      Note shall automatically apply to reduce the interest charged hereunder so
      as
      not to exceed the Highest Lawful Rate.

    

    (c) Assignment.
      All
      Loan Expenses are assignable by the payee to any affiliate or third
      party.

    

    3. Face
      Amount of Note; Commitment Advance; Borrowing Procedures; etc.

    

    (a) Funding.
      At the
      closing, it is anticipated that Lender will fund $950,000.00 of the Commitment.
      Accordingly, after the closing, (i) 3,534,077.00 of the Commitment will remain
      available for future Commitment Advances, and (ii) the Interest Reserve
      ($400,000.00) will be available to fund Accrued Interest Payments pursuant
      to
Section
      4(c)
      of this
      Note.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b) Commitment
      Advance.
      Subject
      to the terms and conditions of this Note, Lender agrees to make Commitment
      Advances to Borrower from time to time during the eight month period following
      the Closing until the entire Commitment is funded during such eight month
      period; provided, that the aggregate amount of Commitment Advances made
      hereunder shall not exceed the Commitment. This Note is not a revolver and
      thus,
      the portion of the Commitment borrowed may not be repaid to Lender and
      subsequently reborrowed under this Note.

    

    (c) Procedure
      for Borrowing.
      Each
      Commitment Advance shall be made pursuant to a notice of Commitment Advance
      stating the amount of Commitment being advanced and the use of proceeds for
      the
      Commitment Advance which is executed by both Lender and Borrower. 

    

    (d) Making
      of Commitment Advance.
      Subject
      to the terms and conditions of this Note, provided that the notice of Commitment
      Advance is executed by Lender and Borrower, Lender shall make the amount of
      the
      requested Commitment Advance available to Borrower on the applicable funding
      date; provided,
      however,
      that
      Lender shall have no obligation to make the Commitment Advance unless each
      of
      the conditions precedent in Section
      7
      have
      been satisfied.

    

    (e) Discretionary
      Advances.
      Lender
      hereby is authorized by Borrower to make advances hereunder that Lender, in
      its
      sole discretion, deems necessary or desirable to pay any Loan Expense or other
      amount chargeable to Borrower or the General Partner pursuant to the terms
      of
      this Note or any other Loan Document (such advances made for the foregoing
      purposes are referred to herein as the “Discretionary
      Advances”),
      provided Lender has notified Borrower in writing of such Loan Expense and
      provided Borrower with invoices and other supporting documents and Borrower
      has
      failed to timely pay such Loan Expense or provide Lender with written objections
      thereto. Each Discretionary Advance shall, upon disbursement, automatically
      constitute principal outstanding hereunder and cause a corresponding increase
      in
      the aggregate amount of Borrower’s obligations hereunder (even if such
      Discretionary Advance causes the aggregate amount outstanding hereunder to
      exceed the face amount of this Note). The making by Lender of any Discretionary
      Advance shall not cure any Event of Default hereunder, unless Lender provides
      Borrower with a written waiver of such Event of Default. 

    

    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, accrued and compounded
      monthly, unless the Default Rate shall apply. Upon the occurrence and during
      the
      continuation of an Event of Default, the outstanding principal amount of this
      Note shall, automatically and without the necessity of notice, bear interest
      from the date of such Event of Default at the Default Rate, accrued and
      compounded monthly, until all such delinquent amounts are paid or such breach
      or
      Event of Default is otherwise cured to the satisfaction of Lender or waived
      by
      Lender in writing. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

    (c) Interest
      Payments; Interest Reserve Advances.
      Accrued
      Interest Payments shall be due and payable on the last day of each month (for
      interest accrued during that month) while this Note is outstanding.
      Notwithstanding the foregoing sentence and subject to the other provisions
      hereof, on each date that an Accrued Interest Payment becomes due and payable
      hereunder, Lender shall make an Interest Reserve Advance hereunder in the amount
      of such Accrued Interest Payment, which shall be applied to the Accrued Interest
      Payment then due and payable, until the Interest Reserve has been fully
      exhausted. Subject to the other provisions of this Note, each time Lender funds
      an Interest Reserve Advance hereunder, (i) Borrower’s requirement to make the
      Accrued Interest Payment for such month shall be satisfied, (ii) the amount
      of
      remaining Interest Reserve 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. The Interest Reserve Advances may be funded by Lender even if
      such
      funding causes the outstanding principal balance of this Note to exceed its
      face
      amount. 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 is cured to Lender’s satisfaction as evidenced in writing, 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.

    

    (d) Payments.
      Subject
      to the other provisions of this Note: 

    

    (i) Accrued
      Interest Payments shall be due and payable as provided in Section
      4(c)
      of this
      Note; 

    

    (ii) within
      five (5) business days following Borrower’s and/or the General Partner’s receipt
      of any distribution(s) from LEN-BUF LP, Borrower shall make a payment hereunder
      equal to the amount of such distribution(s), which payments shall be applied
      as
      provided in Section
      5(a)
      hereof;
      and

    

    (iii) except
      as
      set forth in clauses (i) and (ii) above and except upon any acceleration of
      this
      Note pursuant to its terms, the outstanding principal balance

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    of
      this
      Note, together with all accrued, unpaid interest thereon, unpaid Loan Expenses
      and other unpaid amounts due hereunder, shall be due and payable on the Maturity
      Date.

    

    5. Terms
      and Conditions of Payment.

    

    (a) Application
      of Payments.
      Subject
      to the application of Interest Reserve Advances to Accrued Interest Payments
      as
      provided in Section
      4(c)
      of the
      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. 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 will 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., Dallas, Texas
      time
      on the date such payment becomes due and payable. Any payment received by Lender
      after such time will be deemed to have been made on the next succeeding business
      day. 

    

    (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; 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 of the loan made pursuant to this Note, 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: 

    

    (a) this
      Note
      and each other Loan Document, duly executed by Borrower and the General Partner,
      as applicable;

    

    (b) The
      most
      recent consolidated financial statements of Borrower and the General Partner,
      in
      the form specified in Section
      9(f)
      of this
      Note, and accompanied by the certification required by Section
      9(f)
      of this
      Note; 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) a
      certified copy of the formation documents and all amendments thereto, of
      Borrower and the General Partner and all other documents filed with the
      secretary of state of the state of organization of Borrower and the General
      Partner; 

    

    (d) a
      certificate of existence and good standing (as applicable) for Borrower and
      the
      General Partner, issued by the appropriate governmental authority;

    

    (e) resolutions
      of Borrower and the General Partner authorizing Borrower’s and the General
      Partner’s execution, delivery, and performance of this Note and the other Loan
      Documents, and the transactions contemplated hereby and thereby; 

     

    (f) a
      copy of
      all partnership agreements, shareholders’ agreements, voting agreements, and
      voting trusts among the shareholders, partners, or owners of each partnership,
      limited liability company, or other entity, the equity interests of which are
      pledged to Lender under the Pledge Agreement;

    

    (g) a
      certificate of Borrower’s and the General Partner’s general liability policies,
      and evidence of payment of the premium through at least one year; 

    

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

    

    (i) the
      Partnership Agreement and all amendments thereto as of the Effective Date,
      and
      written consents of the partners thereto, authorizing the transactions
      contemplated hereby and by the other Loan Documents including, without
      limitation, the Pledge Agreement;

     

    (j) endorsements
      of the insurance policies covering the Properties naming Lender as an additional
      insured; and

    

    (k) such
      other and further documents, agreements and certificates as are reasonably
      required by Lender.

    

    7. Conditions
      Precedent to Commitment Advance.
      Notwithstanding anything to the contrary contained herein or in the other Loan
      Documents, Lender’s obligation to fund the Commitment Advance shall be
      conditioned upon the satisfaction of each of the following conditions, on and
      as
      of the funding date for the Commitment Advance:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) Borrower
      and the General Partner shall have executed and delivered to Lender, an
      Officer’s Certificate dated as of the funding date, and all matters certified in
      the Officer’s Certificate shall be true and correct in all
      respects;

    

    (b) the
      requested Commitment Advance, if made, would not cause the aggregate amount
      of
      all outstanding Commitment Advances to exceed the Commitment; and

    

    (c) there
      shall be no default by any partner under the Partnership Agreement, nor shall
      there be any claim, cause of action, demand or similar dispute among the
      partners to the Partnership Agreement.

     

    8. Representations
      and Warranties.
      Each of
      Borrower and the General Partner jointly and severally represents and warrants
      to Lender that: 

    

    (a) Organization
      and Good Standing; Authorization.
      Each of
      Borrower and the General Partner (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 and to
      perform the transactions contemplated by this Note and the other Loan Documents.
      All necessary partnership, limited liability company, partnership, member,
      partner and other actions required to be taken on behalf of Borrower and the
      General Partner to approve this Note and the other Loan Documents and the
      transactions contemplated hereby and thereby, have been duly taken. Each of
      Borrower and the General Partner is in compliance in all material respects
      with
      all laws applicable to it in each jurisdiction within and without outside the
      United States where it owns or leases any properties or conducts any business,
      except for any such non-compliance that would not have a material adverse
      effect, individually or in the aggregate, on Borrower’s or the General partner’s
      financial condition or operations. 

    

    (b) Authority;
      Validity.
      Each of
      Borrower and the General Partner has the power, authority and legal right to
      execute, deliver and perform its obligations under this Note and the other
      Loan
      Documents. The execution and delivery by Borrower and the General Partner of
      the
      Note and the other Loan Documents, and the performance of their respective
      obligations thereunder, will not (i) violate the certificate of formation or
      partnership agreement or bylaws of Borrower and the General Partner,
      (ii)
      violate any law or result in a default under any contract, agreement, or
      instrument to which Borrower and the General Partner is a party or by which
      Borrower and the General Partner or any of their respective assets and
      properties are bound, or (iii) result in the creation or imposition of any
      security interest in, or lien or encumbrance upon any of their respective
      assets. The Loan Documents constitute the legal, valid and binding obligations
      of Borrower and the General Partner and are enforceable against them in
      accordance with their terms, except as enforceability may be limited by
      bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally. 

    

    (c) Litigation.
      There
      is no pending order, notice, claim, litigation, proceeding or investigation
      against or affecting Borrower and the General Partner or any of
      their

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    respective
      assets or properties, whether or not covered by insurance, that could materially
      and adversely affect either the financial condition or business prospects or
      Borrower and the General Partner, if adversely determined.

    

    (d) Indebtedness.
      Neither
      Borrower nor the General Partner has any material indebtedness of any nature,
      to
      the extent disclosed in the latest financial statements delivered to Lender
      or
      otherwise disclosed in writing to Lender and approved by Lender.

    

    (e) Environmental
      Liability.
      To the
      best of Borrower’s and the General Partner’s knowledge, no hazardous substances
      or solid wastes have been disposed of or otherwise released on or to any
      Properties, except as may have been otherwise disclosed to Lender in a Phase
      I
      environmental report delivered to Lender. The terms “hazardous substance” and
      release” shall have the meanings specified in the Comprehensive Environmental
      Response Compensation and Liability Act of 1980, as amended, (“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,
      (“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. 

    

    (f) Tax
      Liabilities.
      Each of
      Borrower and the General Partner has filed all federal, state, county, local,
      and foreign tax returns and reports required to have been filed by them (or
      has
      obtained valid extensions with respect to such returns and reports), including
      but not limited to such returns and reports with respect to income, payroll,
      property, employee withholding, social security, unemployment, franchise,
      excise, use and sales taxes. Each of Borrower and the General Partner has paid
      in full all taxes that have become due as reflected on all such returns and
      reports (including any interest and penalties) and 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 Borrower’s and the
      General Partner’s knowledge, threatened against Borrower or the General Partner
      or any of their respective properties or assets.

     

    9. Covenants.
      Each of
      Borrower and the General Partner jointly and severally covenants and agrees
      with
      Lender that they will comply with each of the following covenants
      below:

    

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

    

    (b) Use
      of
      Proceeds.
      The
      proceeds of this Note shall be used solely for Borrower’s business purposes and
      in accordance with the applicable provisions of the Partnership Agreement.
      In no
      event shall the proceeds of this Note be used, directly or indirectly, by any
      person for personal, family, household or agricultural purposes or
      for

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    the
      purpose, whether immediate, incidental or ultimate, of purchasing, acquiring
      or
      carrying any “margin stock” (as such term is defined in Regulation U promulgated
      by the Board of Governors of the Federal Reserve System).

    

    (c) Other
      Loans.
      Borrower and the General Partner shall not enter into any promissory note,
      loan
      documents, or other agreement for borrowed money without the prior written
      consent of Lender. Unless otherwise agreed by Lender in writing, any loan
      permitted by Lender shall contemplate that (i) the proceeds (or a portion
      thereof, in an amount agreed by Lender) from such loan shall be used to pay
      off
      the loan made pursuant to this Note, and (ii) if this Note will remain
      outstanding, the bank financial institution or other lender providing the
      financing (the “New
      Lender”)
      shall
      agree to provide Lender with written notice of any default or event of default
      occurring under the loan documents evidencing its loan, and the New Lender
      shall
      agree that upon any default by Borrower, Lender shall have the right, but not
      the obligation, to cure Borrower’s default thereunder and to purchase the loan
      and the loan documents from the New Lender. 

    

    (d) Termination
      of Existence.
      Nether
      Borrower nor the General Partner shall cause, or enter into any agreement to
      cause, the dissolution or termination of the existence of Borrower or the
      General Partner or the merger, consolidation, or reorganization of Borrower
      or
      the General Partner with or into any other entity, whether or not such person
      would be the surviving entity. 

    

    (e) Notice
      of Certain Events.
      Borrower and the General Partner shall promptly notify Lender in writing of
      the
      occurrence of any event or series of events of which any of them has actual
      knowledge causing, or that could be expected to cause or has caused (i) a
      material adverse effect on the operations or financial condition of Borrower
      or
      the General Partner, (ii) the occurrence of any Event of Default (without giving
      effect to any cure period applicable thereto), or (iii) any default by Borrower
      or the General Partner the acceleration of the maturity of any indebtedness
      owed
      by Borrower or the General Partner under any indenture, mortgage, agreement,
      promissory note, contract or other instrument to which Borrower or the General
      Partner is a party or by which any material asset or property of Borrower or
      the
      General Partner is bound. In addition, each of Borrower and the General Partner
      agrees to notify Lender in writing at least twenty (20) business days prior
      to
      the date that it changes its name, address, the location of its chief executive
      office or principal place of business, and the place where it keeps its books
      and records.

    

    (f) Financial
      Statements.
      Borrower and the General Partner shall deliver to Lender, the following
      financial statements: (i) within sixty (60) days after the end of each
      fiscal quarter, the unaudited financial statements of Borrower and the General
      Partner, prepared in accordance with GAAP and combined or consolidated as
      appropriate, including all notes related thereto; and (ii) within one
      hundred twenty (120) days after the end of each fiscal year, the unaudited
      financial statements of Borrower and the General Partner, prepared in accordance
      with GAAP and combined or consolidated as appropriate, including all notes
      related thereto. All financial statements provided to Lender shall be certified
      as to accuracy and completeness by appropriate officers.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (g) Taxes.
      Borrower and the General Partner shall pay all federal, state and local taxes
      levied against them and their respective properties and assets as they become
      due and payable and before the same become delinquent. Borrower and the General
      Partner shall have the right to pay such tax under protest or to otherwise
      contest any such tax or assessment, but only if (i) such contest has the effect
      of preventing the collection of such taxes so contested and also of preventing
      the sale or forfeiture of any property subject thereto, (ii) Borrower and
      the General Partner have notified Lender of their intent to contest such taxes,
      and (iii) adequate reserves for the liability associated with such tax have
      been
      established in accordance with GAAP. Borrower and the General Partner shall
      furnish to Lender evidence that all such taxes are paid at least five (5) days
      prior to the last date for payment of such taxes.

    

    (h) Assets.
      Neither
      Borrower nor the General Partner shall pledge, encumber, sell, assign, transfer,
      convey, or grant a security interest against any of their respective properties
      or assets, except as set forth in the Partnership Agreement or as otherwise
      approved by Lender’s prior written consent. 

    

    (i) Indebtedness.
      Neither
      Borrower nor the General Partner shall incur any indebtedness for borrowed
      money, other than as otherwise approved by Lender’s prior written consent.

    

    (j) Distributions;
      Dividends.
      At any
      time when any amounts are due to Lender hereunder, Borrower shall not declare,
      pay, make, or authorize any distributions, whether in cash or in property,
      to
      its partners, and the General Partner shall not declare or pay any dividends
      to
      its shareholders, without Lender’s prior written consent.
      

    

    (k) LEN-BUF
      LP Documents.
      Borrower and the General Partner shall furnish to Lender promptly upon receipt,
      all documents that they receive in their capacity as partners of LEN-BUF LP,
      including without limitation, all of the following:

    

    (i) all
      financial statements, pro formas, projections, budgets, capital expenditure
      and
      expense reports, and other financial information, and all information related
      to
      the operations of LEN-BUF LP; 

    

    (ii) minutes
      of the meetings of the general partners of LEN-BUF LP, and all written consents
      of the general partners of LEN-BUF LP;

    

    (iii) all
      loan
      documents evidencing indebtedness for borrowed money of LEN-BUF LP, and all
      amendments thereto;

    

    (iv) the
      title
      commitment for each Property, the title exception documents and, upon issuance,
      the title policy for each Property; 

    

    (v) for
      each
      Property, all due diligence documents related to such Property, including,
      without limitation, a Phase I Environmental Report, survey,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    plat,
      appraisal, and engineering due diligence report, land use, zoning, subdivision,
      grading, municipal district, environmental, and other governmental permits,
      approvals, authorizations and maps necessary to develop such Property in
      compliance with applicable Governmental Regulations;

    

    (vi) certificates
      of general liability and hazard insurance for LEN-BUF LP and builder’s liability
      insurance covering each Property;

    

    (vii) for
      each
      Property, all project updates, development reports, sales reports, budgets,
      pro
      formas, and similar information; and

    

    (viii) copies
      of
      all records of disbursements made from LEN-BUF LP to Borrower and/or the General
      Partner including, without limitation, copies of checks or wire transfer
      confirmations.

    

    (l) Audit.
      Borrower and the General Partner 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 and the General Partner’s expense,
      to (i) audit all books and records related to Borrower and the General Partner
      and their respective properties and assets, and (ii) visit and inspect any
      of
      their respective offices and assets and properties and to inspect and make
      copies of all books and records, and to write down and record any information
      the Lender Representatives obtain. Each of Borrower and the General Partner
      agrees to cooperate fully in connection with such audits and
      inspections.

    

    (m) Assignments.
      Borrower shall not assign, transfer or convey, any partnership interest, capital
      stock, or other equity interest in any partnership, corporation, limited
      liability company, or other entity, the equity interests of which are pledged
      under the Pledge Agreement. 

    

    (n) Insurance.
      Borrower and the General Partner shall, at all times, maintain or cause to
      be
      maintained, hazard insurance on the Properties with coverage amounts that are
      normal and customary for similarly-situated entities engaged in similar
      businesses. Each such hazard insurance 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 or cause
      to be obtained, an endorsement to each such policy naming Lender as an
      additional insured to each such policy, and provide Lender annually with the
      insurance certificate, evidencing such coverage, the endorsement of each such
      policy to lender, and evidence of payment of the premium for each such policy.
      

    

    (o) Operation
      of Business.
      Borrower and the General Partner shall operate their businesses in compliance
      with all applicable federal, state and local laws, rules, regulations, and
      ordinances. Each of Borrower and the General Partner shall maintain their
      existence and good standing in each state where they operate or do any business.
      Each of Borrower and the General Partner shall obtain all consents, licenses,
      permits,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    authorizations,
      permissions and certificates which may be required or imposed by any
      governmental or quasi-governmental agency, authority or body which are required
      by applicable federal, state or local laws, regulations and
      ordinances.

    

    (p) Additional
      Pledge.
      Borrower and the General Partner agree that they shall use their best efforts
      to
      obtain, no
      later
      than thirty (30) days after the Effective Date, all
      third
      party consents required for the General Partner to pledge its general
      partnership interest in LEN-BUF LP to Lender as security for the prompt payment
      and performance of Borrower’s obligations under this Note. Upon obtaining such
      third party consents, the General Partner shall enter into, execute and deliver
      to Lender, a pledge agreement in the same form as the Pledge Agreement, pursuant
      to which the General Partner shall pledge its general partnership interest
      in
      LEN-BUF LP to Lender, accompanied by resolutions of the General Partner
      authorizing the pledge agreement and the transactions contemplated thereby,
      an
      assignment of the partnership interest executed in blank, and such other
      certificates, documents and agreements as may be reasonably requested by Lender
      in connection therewith. If Borrower and the General Partner are unable to
      obtain the required third party consents for any reason, then the General
      Partner agrees that it shall (i) shall consult with Lender prior to taking
      or
      consenting to any material action, or making any material decision in its
      capacity as a general partner of LEN-BUF LP with respect to LEN-BUF LP, and
      (ii)
      agree to permit a representative of Lender to attend, as an observer, all
      meetings of the general partners of LEN-BUF LP and use its best efforts to
      obtain the consent of Lennar Texas Holding Company, a Texas corporation (or
      any
      substitute general partner) to such attendance. 

    

    10. 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 required to be made by Lender pursuant to Section
      4(c),
      the
      failure of Borrower to make any payment required by this Note in full on or
      before the date such payment is due (or declared due pursuant to the terms
      of
      this Note), whether on or prior to the Maturity Date and such failure continues
      for a period of ten (10) days thereafter; or

    

    (ii) any
      financial statement, representation, warranty, or certificate made or furnished
      by or with respect to Borrower and the General Partner 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
      and the General Partner 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
      10(a)
      as an
      Event of Default, and the

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    same
      remains unremedied for thirty (30) days after written notice of such failure
      is
      given by Lender to Borrower; or

    

    (iv) any
      “event of default” or “default” occurs under any Loan Document other than this
      Note and the same remains unremedied for thirty (30) days after written notice
      is given by Lender to Borrower and the General Partner, as applicable; or

    

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

    

    (vi) the
      commencement by Borrower and the General Partner 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 and the General Partner for any substantial part of its
      property, or the making by Borrower or the General Partner of any assignment
      for
      the benefit of creditors, or the admission by Borrower and the General Partner
      in writing of such entity’s 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 Borrower’s, the General Partner’s assets or of any part of any property
      in a proceeding brought against or initiated by Borrower, the General Partner;
      or

    

    (viii) if
      Borrower and the General Partner is liquidated or dissolved or winds up their
      affairs, or the sale or liquidation of all or substantially all of the assets
      of
      Borrower and the General Partner; or

    

    (ix) except
      as
      otherwise permitted herein, Borrower assigns, transfers, or conveys any
      partnership interest, capital stock, or other equity interest in any
      partnership, corporation, limited liability company, or other entity, the equity
      interests of which are pledged under the Pledge Agreement 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, shall occur under (A) any credit agreement,
      loan agreement, promissory note, or other document evidencing indebtedness
      for
      borrowed money incurred by Borrower and the General Partner,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    or
      (B)
      any subordination agreement, security agreement, pledge agreement, guaranty,
      deed of trust, or other agreement providing security or collateral for
      indebtedness, executed by Borrower and the General Partner, 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 and the General Partner is
      a
      party, if Lender or any of its affiliates is also a party to such agreement
      (the
      terms “default” and “event of default” having the meaning given to such terms in
      any of the agreements described above).

    

    (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 the General Partner. During the continuance of any other Event of Default,
      then and in every such case Lender may do any or all of the following: (i)
      declare the principal of this Note together with all accrued and unpaid interest
      on the unpaid principal balance, and Loan Expenses and other amounts due to
      Lender under this Note or the other Loan Documents, to be due and payable
      immediately, and the same shall become and be due and payable, without notices,
      demands for payment, presentations for payment, notices of payment default,
      notices of intention to accelerate maturity, protest and notice of protest,
      and
      any other notices of any kind, all of which are expressly waived by Borrower
      and
      the General Partner and any and all sureties, guarantors and endorsers of this
      Note, (ii) exercise its rights under any of the Loan Documents, and (iii)
      exercise all other rights and remedies available to Lender under this Note
      and
      the other Loan Documents and at law and at equity, including, without
      limitation, such rights existing under the Uniform Commercial Code. No delay
      on
      the part of Lender in exercising any power under this Note shall operate as
      a
      waiver of such power or right nor shall any single or partial exercise of any
      power or right preclude further exercise of that power or right. 

    

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

    

    11. Usury
      Laws.
       It
      is the
      intention of the parties to this Note to comply with all applicable laws,
      including, without limitation, usury laws. In furtherance thereof, Borrower
      and
      the General Partner and Lender stipulate and agree that none of the terms and
      provisions contained in this Note or the other Loan Documents shall ever be
      construed to create a contract to pay for the use, forbearance, or detention
      of
      money, or interest, in excess of the maximum amount of interest permitted to
      be
      charged by applicable law in effect from time to time. Neither

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Borrower
      nor any present or future guarantors, endorsers, or other persons or entities
      hereafter becoming liable for payment of Borrower’s obligations hereunder and
      under the other Loan Documents shall ever be liable for unearned interest
      thereon or shall ever be required to pay interest thereon in excess of the
      maximum amount that may be lawfully charged under applicable law from time
      to
      time in effect, and the provisions of this Section
      11
      shall
      control over all other provisions of the Loan Documents that may be in conflict
      or apparent conflict herewith. Lender expressly disavows any intention to charge
      or collect excessive unearned interest or finance charges in the event the
      maturity of this Note is accelerated. If (a) the maturity of this Note is
      accelerated for any reason, (b) this Note is prepaid and as a result any amounts
      held to constitute interest are determined to be in excess of the legal maximum,
      or (c) Lender or any other holder of the Note shall otherwise collect moneys
      which are determined to constitute interest which would otherwise increase
      the
      interest hereon to an amount in excess of that permitted to be charged by
      applicable law, then all sums determined to constitute interest in excess of
      such legal limit shall, without penalty, be promptly applied to reduce the
      then
      outstanding principal of this Note or, at Lender's or such holder's option,
      promptly returned to Borrower or the other payor thereof upon such
      determination. In determining whether or not the interest paid or payable,
      under
      any specific circumstance, exceeds the maximum amount permitted under applicable
      law, Lender and Borrower (and any other payors of this Note) shall to the
      greatest extent permitted under applicable law, (a) characterize any
      non-principal payment as an expense, fee or premium rather than as interest,
      (b)
      exclude voluntary prepayments and the effects thereof, and (c) amortize,
      prorate, allocate, and spread the total amount of interest throughout the entire
      contemplated term of this Note in accordance with the amounts outstanding from
      time to time hereunder and the maximum legal rate of interest from time to
      time
      in effect under applicable law in order to lawfully charge the maximum amount
      of
      interest permitted under applicable law. In the event applicable law provides
      for an interest ceiling under Chapter 303 of the Texas Finance Code (the
“Texas
      Finance Code”)
      as
      amended, for that day, the ceiling shall be the “weekly ceiling” as defined in
      the Texas Finance Code. As used in this section the term “applicable law” means
      the laws of the State of Texas or the laws of the United States of America,
      whichever laws allow the greater interest, as such laws now exist or may be
      changed or amended or come into effect in the future.

    

    12. Indemnity;
      Release.
      Each of
      Borrower and the General Partner, 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 any
      Property or any part thereof or any real properties owned, managed or operated
      by Borrower and the General Partner. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THE
      FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS
      ARE IN ANY WAY OR TO ANY EXTENT OWED IN WHOLE OR IN PART UNDER ANY CLAIM OR
      THEORY OF STRICT LIABILITY, OR ARE CAUSED IN WHOLE OR IN PART, BY ANY NEGLIGENT
      ACT OR OMISSION OF ANY KIND BY LENDER;

    

    provided
      only that Lender shall not be entitled under this section to receive
      indemnification for that portion, if any, of any Liabilities and Costs which
      is
      proximately caused by its own individual gross negligence or willful misconduct,
      as determined in a final judgment. If any person (including Borrower and the
      General Partner) 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.

    

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

    

    14. Further
      Assurances.
      Each of
      Borrower and the General Partner, at their own expense, will promptly execute
      and deliver to Lender on Lender’s request, all such other and further documents,
      agreements and instruments, and shall deliver all such supplementary
      information, in compliance with or accomplishment of their agreements and
      covenants under this Note and the other Loan Documents. 

    

    15. Cumulative
      Remedies.
      Borrower and the General Partner hereby agrees that all rights and remedies
      that
      Lender is afforded by reason of this Note are separate and cumulative with
      respect to Borrower and the General Partner and otherwise and may be pursued
      separately, successively, or concurrently, as Lender deems advisable. In
      addition, all such rights and remedies are non-exclusive and shall in no way
      limit or prejudice Lender’s ability to pursue any other legal or equitable
      rights or remedies that may be available to Lender.

    

    16. Notice.
      All
      notices and other communications under this Note will be in writing and will
      be
      mailed by registered or certified mail, postage prepaid, sent by facsimile,
      delivered personally by hand, or delivered by nationally recognized overnight
      delivery service addressed to Borrower or the General Partner, at 1710 West
      6th
      Street,
      Austin, Texas 78703, Facsimile No. (512) 732-2826 or, with respect to Lender,
      to
      Lender at 1812 Cindy Lane, Suite 200, Bedford, Texas 76021, Facsimile No. (817)
      835-0383 or with respect to any party, to such other address as a party may
      have
      delivered to the other parties for purposes of notice. Each notice or other
      communication will be treated as effective and as having been given and received
      (a) if sent by

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    mail,
      at
      the earlier of its receipt or three (3) business days after such notice or
      other
      communication has been deposited in a regularly maintained receptacle for
      deposit of United States mail, (b) if sent by facsimile, upon confirmation
      of
      facsimile transfer, (c) if delivered personally by hand, upon written
      confirmation of delivery from the person delivering such notice or other
      communication, or (d) if sent by nationally recognized overnight delivery
      service, upon written confirmation of delivery from such service.

    

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

    

    18. CHOICE
      OF LAW; JURISDICTION;
      VENUE.
      EXCEPT
      TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF SECURITY INTERESTS OR REMEDIES
      IN RESPECT OF ANY PARTICULAR COLLATERAL IS GOVERNED BY THE LAWS OF A
      JURISDICTION OTHER THAN THE STATE OF TEXAS, THIS NOTE AND THE OTHER LOAN
      DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE
      LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
      JURISDICTION FOR ALL MATTERS ARISING OUT OF THIS NOTE AND THE OTHER LOAN
      DOCUMENTS SHALL BE EXCLUSIVELY IN THE STATE AND FEDERAL COURTS SITTING IN DALLAS
      COUNTY, TEXAS, AND EACH OF BORROWER AND THE GENERAL PARTNER HEREBY IRREVOCABLY
      SUBMITS ITSELF TO THE JURISDICTION OF SUCH STATE AND FEDERAL COURTS AND AGREES
      AND CONSENTS NOT TO ASSERT IN ANY PROCEEDING, THAT ANY SUCH PROCESS IS BROUGHT
      IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER, AND FURTHER
      AGREES TO A TRANSFER OF SUCH PROCEEDING TO THE COURTS SITTING IN DALLAS COUNTY,
      TEXAS. 

    

    19. 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.

    

    20. 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.

    

    21. 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 person, and then such waiver or consent
      shall be effective only in the specific instance and for the specific purpose
      for which given. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    22. Binding
      Effect; Assignment.
      This
      Note and the other Loan Documents shall be binding on Borrower and the General
      Partner and their respective administrators, other legal representatives,
      successors, heirs and assigns, including, without limitation, any receiver,
      trustee or debtor in possession of or for Borrower and the General Partner,
      and
      shall inure to the benefit of Lender and its successors and assigns. Neither
      Borrower nor the General Partner shall be entitled to transfer or assign this
      Note and the other Loan Documents in whole or in part without the prior written
      consent of Lender. This Note and the other Loan Documents are freely assignable
      and transferable by Lender to an affiliate of Lender without the consent of
      Borrower or the General Partner. Assignments or transfers by Lender to parties
      other than affiliates of Lender shall require the prior written consent of
      Borrower. Should the status, composition, structure or name of Borrower and
      the
      General Partner change, this Note and the other Loan Documents shall continue
      and also cover such entity under the new status composition, structure or name
      according to the terms of this Note and the other Loan Documents. 

    

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

    

    24. Number
      of Gender of Words.
      Except
      where the context indicates otherwise, words in the singular number will include
      the plural and words in the masculine gender will include the feminine and
      neutral, and vice versa, when they should so apply.

     

    25. WAIVER
      OF JURY TRIAL, PUNITIVE DAMAGES, ETC.
      EACH OF BORROWER AND THE GENERAL PARTNER HEREBY KNOWINGLY, VOLUNTARILY,
      INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
      BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
      BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR
      IN
      CONNECTION WITH THIS NOTE OR THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED
      HEREBY OR THEREBY OR ASSOCIATED HEREWITH OR THEREWITH, BEFORE OR AFTER MATURITY
      OF THIS NOTE; (B) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
      RIGHT
      IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS
      DEFINED BELOW, (C) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF
      LENDER OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
      OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
      ENFORCE THE FOREGOING WAIVERS, AND (D) ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED
      TO ENTER INTO THIS NOTE AND THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
      CONTEMPLATED HEREBY AND THEREBY BY AMONG OTHER THINGS, THE WAIVERS AND
      CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, “SPECIAL
      DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES
      (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH
      ANY
      PARTY HERETO

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    HAS
      EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY
      HERETO.

    

    26. 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 intentionally left blank.]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      Note
      has been executed on the ___ day of ________________, 2006, effective for all
      purposes as of the Effective Date. 

    

    BORROWER:

    
      	 	 	 
	 	
              BUFFINGTON
                HIDDEN LAKES, LTD.,

              a Texas limited partnership

               

              By:  Buffington Hidden Lakes GP, Inc.,

              Its:  General Partner

            
	 
 	 
 	 
 
	 	By:  	/s/ Patrick
              Starley
	 	
              

              Patrick Starley
	 	Vice
              President

    LENDER:    

    
      	 	 	 
	 	
              UNITED
                DEVELOPMENT FUNDING III, L.P.,

              a Delaware limited partnership

               

              By:  UMTH Land Development, L.P.

              Its:  General Partner

               

              By:  UMT Services, Inc.

            
	 
 	 
 	 
 
	 	By:  	/s/ Jeff
              Shirley
	 	
              

              Jeff Shirley
	 	Executive
              Vice President

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    AGREED
      AND ACKNOWLEDGED BY:

    

    THE
      GENERAL PARTNER

    

    Buffington
      Hidden Lakes GP, Inc., acting in its own capacity, hereby (i) agrees with and
      accepts all of the terms and conditions of this Note which are applicable to
      the
      General Partner (as such term is defined in the Note), and (ii) makes the
      representations, warranties, covenants and agreements in the Note which are,
      by
      their terms, applicable to General Partner. 

    

    
      	 	 	 
	 	
              BUFFINGTON
                HIDDEN LAKES GP, INC.,

              a Texas corporation

            
	 
 	 
 	 
 
	Date: 	By:  	/s/ Patrick
              Starley
	 	
              

              Patrick Starley
	 	Vice
              PresidentExhibit 10.22 - Buffington Hidden Lakes Guaranty

    

      CONTINUING
        UNCONDITIONAL GUARANTY

      

      This
        Continuing Unconditional Guaranty (this “Guaranty”)
        dated
        as of the 19th
        day of
        December, 2006 (the “Effective
        Date”),
        is
        made by Buffington Hidden Lakes GP, Inc., a Texas corporation (the “Guarantor”),
        for
        the benefit of United Development Funding III, L.P., a Delaware limited
        partnership and its successors and assigns (“Lender”).
        

      

      R
        E C I T A L S:

      

      A. Lender
        has agreed to advance funds to Buffington Hidden Lakes, Ltd., a Texas limited
        partnership (“Borrower”)
        as
        borrower under that certain Secured
        Promissory Note dated as of the Effective Date in the original principal
        amount
        of U.S. $4,484,077.00 (the “Note”).

      

      B. Guarantor
        is an affiliate of, and the general partner of, Borrower and shall benefit,
        directly or indirectly, from the loan made to Borrower under the Note.

      

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

      

      A
        G R E E M E N T:

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      4. Expenses.
        Guarantor agrees to pay all costs and expenses, including, without limitation,
        all court costs and reasonable attorneys' fees paid or incurred by Lender
        in

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      endeavoring
        to collect all or any part of the Guaranteed Obligations, or in enforcing
        or
        pursuing its remedies with respect to the Guaranteed Obligations.

      

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

      

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

      

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

      

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      9. Subordination.
        Guarantor agrees that any and all claims of Guarantor against Borrower, any
        endorser or any other guarantor of all or any part of the Guaranteed
        Obligations, or against any of Borrower’s assets and properties, whether arising
        by reason of any payment by Guarantor to Lender pursuant to the provisions
        of
        this Guaranty or otherwise, shall be subordinate and subject in right of
        payment
        to the prior payment, in full, to Lender of all of the Guaranteed Obligations.
        

       

      

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

      

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

      

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

      

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

      

      14. Cumulative
        Remedies.
        Guarantor hereby agrees that all rights and remedies that Lender is afforded
        by
        reason of this Guaranty are separate and cumulative with respect to Guarantor
        and otherwise and may be pursued separately, successively, or concurrently,
        as
        Lender deems advisable. In addition, all such rights and remedies of Lender
        are
        non-exclusive and shall in no way limit or prejudice Lender's ability to
        pursue
        any other legal or equitable rights or remedies that may be available to
        Lender.

      

      15. Notice.
        All
        notices and other communications under this Guaranty will be in writing and
        will
        be mailed by registered or certified mail, postage prepaid, sent by facsimile,
        delivered personally by hand, or delivered by nationally recognized overnight
        delivery service addressed to Lender and Guarantor at the addresses provided
        in
        the Note (Guarantor having executed the Note not as a borrower thereunder,
        but
        as the general partner of Borrower for

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      certain
        limited purposes described therein), or to such other address as a party
        may
        have delivered to the other parties for purposes of notice. Each notice or
        other
        communication will be treated as effective and as having been given and received
        (a) if sent by mail, at the earlier of its receipt or three business days
        after
        such notice or other communication has been deposited in a regularly maintained
        receptacle for deposit of United States mail, (b) if sent by facsimile, upon
        confirmation of facsimile transfer, (c) if delivered personally by hand,
        upon
        written confirmation of delivery from the person delivering such notice or
        other
        communication, or (d) if sent by nationally recognized overnight delivery
        service, upon written confirmation of delivery from such service.

       

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

      

      17. CHOICE
        OF LAW; JURISDICTION; VENUE.
        EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF SECURITY INTERESTS
        OR
        REMEDIES IN RESPECT OF ANY PARTICULAR COLLATERAL IS GOVERNED BY THE LAWS
        OF A
        JURISDICTION OTHER THAN THE STATE OF TEXAS, THIS GUARANTY AND THE OTHER LOAN
        DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE
        LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
        JURISDICTION FOR ALL MATTERS ARISING OUT OF THIS GUARANTY AND THE OTHER LOAN
        DOCUMENTS SHALL BE EXCLUSIVELY IN THE STATE AND FEDERAL COURTS SITTING IN
        DALLAS
        COUNTY, TEXAS, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
        OF
        SUCH STATE AND FEDERAL COURTS AND AGREES AND CONSENTS NOT TO ASSERT IN ANY
        PROCEEDING, THAT ANY SUCH PROCESS IS BROUGHT IN AN INCONVENIENT FORUM OR
        THAT
        THE VENUE THEREOF IS IMPROPER, AND FURTHER AGREES TO A TRANSFER OF SUCH
        PROCEEDING TO THE COURTS SITTING IN DALLAS COUNTY, TEXAS.

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      given.
        Guarantor may not be released from Guarantor’s obligations hereunder, except
        pursuant to a written agreement executed by Lender.

      

      20. Binding
        Effect; Assignment.
        This
        Guaranty shall be binding on Guarantor and Guarantor’s administrators, other
        legal representatives, successors, heirs and assigns, including, without
        limitation, any receiver, trustee or debtor in possession of or for Guarantor,
        and shall inure to the benefit of Lender and its successors and assigns.
        No
        Guarantor shall be entitled to transfer or assign this Guaranty in whole
        or in
        part without the prior written consent of Lender. This Guaranty is freely
        assignable and transferable by Lender without the consent of Guarantor. Should
        the status, composition, structure or name of any Guarantor change, this
        Guaranty shall continue and also cover the Guaranteed Obligations under the
        new
        status composition, structure or name according to the terms of this Guaranty.
        

      

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

      

      22. Number
        of Gender of Words.
        Except
        where the context indicates otherwise, words in the singular number will
        include
        the plural and words in the masculine gender will include the feminine and
        neutral, and vice versa, when they should so apply.

      

      23. WAIVER
        OF JURY TRIAL, PUNITIVE DAMAGES, ETC.
        GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A)
        WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT HE OR IT MAY
        HAVE
        TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY
        OR
        INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY
        OR THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR
        ASSOCIATED HEREWITH OR THEREWITH, BEFORE OR AFTER MATURITY OF THE NOTE; (B)
        WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT HE OR IT MAY
        HAVE
        TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED
        BELOW, (C) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF LENDER
        OR
        COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
        IMPLIED
        THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
        FOREGOING WAIVERS, AND (D) ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO MAKE
        THE
        LOAN AND ACCEPT THE NOTE AND, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
        CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES
        ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF
        HOW
        NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO
        HAS
        EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY
        HERETO.

      

        24. ENTIRE
        AGREEMENT.
        THIS GUARANTY TOGETHER WITH THE NOTE AND THE OTHER LOAN DOCUMENTS TOGETHER
        CONSTITUTE THE

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ENTIRE
        AGREEMENT AMONG THE PARTIES CONCERNING THE SUBJECT MATTER HEREOF, AND ALL
        PRIOR
        DISCUSSIONS, AGREEMENTS AND STATEMENTS, WHETHER ORAL OR WRITTEN, ARE MERGED
        INTO
        THIS GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS. THERE ARE NO UNWRITTEN
        ORAL AGREEMENTS AMONG THE PARTIES. THIS GUARANTY, THE NOTE AND THE OTHER
        LOAN
        DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
        SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 

      

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF, Guarantor has duly executed this Guaranty on the _____ day
        of
        ________________, 2006, effective for all purposes as of the Effective
        Date.

      

      GUARANTOR:

      

      
        	 	 	 
	 	
                BUFFINGTON
                  HIDDEN LAKES GP, INC.,

                a Texas corporation

              
	 
 	 
 	 
 
	 	By:  	/s/ Patrick
                Starley
	 	
                

                Patrick Starley
	 	Vice
                President

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