SECURED LINE OF CREDIT PROMISSORY NOTE
Exhibit
10.1
U.S.
$70,000,000.00 November
12, 2007
FOR
VALUE
RECEIVED, the undersigned, United Development Funding X, L.P., a Delaware
limited partnership (the “Borrower”), hereby makes this Secured Line of
Credit Promissory Note (as it may be amended, modified, renewed, extended,
increased, superseded, or replaced from time to time, this “Note”) and
promises to pay to the order of United Development Funding III, L.P., a Delaware
limited partnership or its assigns (the “Lender”), the sum of Seventy
Million and NO/100 Dollars ($70,000,000.00), or, if greater or less, the
aggregate outstanding principal amount of this Note, together with accrued,
unpaid interest thereon, pursuant to the terms and conditions set forth in
this
Note. All amounts are payable to Lender in lawful money of the United
States of America at the address for Lender provided in Section 1
of this Note, or at such other address as from time to time may be
designated by Xxxxxx.
1. Definitions. In
addition to the terms defined elsewhere in this Note, the following terms
have
the meanings set forth below for purposes of this Note:
“Advance
Request” shall mean
Xxxxxx’s standard form of Advance Request for this Note, as in effect from time
to time, duly executed by an officer of Xxxxxxxx and including or accompanied
by
an Officer’s Certificate dated as of the date of the Advance Request and as of
the funding date.
“Base
Rate” shall mean the
lesser of (i) fifteen percent (15.0%), accrued monthly and compounded annually,
or (ii) the Highest Lawful Rate.
“Collateral”
shall
have the
meaning given to such term in the Security Agreement.
“Commitment”
shall mean the aggregate amount of up to U.S. Seventy Million and NO/100
Dollars
($70,000,000.00).
“Default
Rate” shall mean the
lesser of (i) eighteen percent (18%), accrued monthly and compounded annually,
or (ii) the Highest Lawful Rate.
“Disposition”
shall
mean any
sale, lease, transfer, assignment, exchange or conveyance in whole or in
part.
“Effective
Date” shall mean November 12, 2007.
“Highest
Lawful Rate” means the
maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lender in accordance with the applicable laws of
the
State of Texas (or applicable United States federal law, to the extent that
it
permits Lender to contract or charge, take, receive or reserve a greater
amount
of interest than under Texas law), taking into account all fees and expenses
contracted for, charged, received, taken or reserved by Lender in connection
with the transaction relating to this Note and the indebtedness evidenced
hereby
or by the other Loan Documents which are treated as interest under applicable
law.
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“Investments”
shall mean loans to and/or investments in entities that acquire, entitle,
develop and/or sell land or lots for the construction of single-family
residential homes.
“Lien”
shall mean any lien, security interest, charge, tax lien, pledge, encumbrance,
conditional sales or other title retention arrangement or any other interest
in
property designed to secure the repayment of indebtedness or the satisfaction
of
any other obligation, whether arising by agreement or under any statute or
law,
or otherwise.
“Loan”
shall mean the amount of principal outstanding under this Note from time
to
time, together with unpaid accrued interest thereon.
“Maturity
Date” shall mean November 11, 2012.
“Officer’s
Certificate” means a
certificate duly executed by an authorized officer on behalf of Borrower
certifying that (i) no Event of Default has occurred and is continuing under
this Note, (ii) all representations and warranties made by Borrower and the
Guarantor (as hereinafter defined), respectively, in this Note and the other
Loan Documents are true and correct in all respects, and (iii) Borrower and
the Guarantor have complied with and performed, in all respects, all covenants,
conditions and agreements which are then required by this Note and the other
Loan Documents to have been complied with or performed.
“Senior
Indebtedness” shall mean
indebtedness owed to a Senior Lender.
“Senior
Lender” means any bank,
financial institution or other lender having made a loan to any client of
Borrower that has a senior position with respect to the payment of any
indebtedness and/or the priority of any Liens.
2. Certain
Loan Terms. In addition all other terms and conditions set forth
herein, certain terms and conditions of this Note are set forth
below:
|
Xxxxxxxx’s
Address
For
Notice:
|
0000
X. Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx,
Xxxxx 00000
Attention: Xxxxxx
Xxxxxxxx
Facsimile
No. 000-000-0000
|
|
Xxxxxx's
Address
For
Notice and Payment:
|
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attention: Xxx
Xxxxxxx
Xxxxxxxxx
No. (000) 000-0000
|
2
|
Revolver:
|
This
Note is a revolver and thus, Borrower may borrow, repay and then
reborrow
the available amount of the Commitment; provided, however, that
notwithstanding anything else to the contrary contained herein,
Xxxxxx has
no obligation to make any advance of principal to Borrower under
this Note
unless each of the conditions precedent in Section 10 have been
satisfied
and/or fulfilled as determined by Lender in its sole
discretion.
|
|
Use
of Proceeds:
|
The
purpose of the Loan is to finance Borrower’s origination, purchase,
holding and selling of
Investments.
|
3. Origination
Fee. Borrower agrees to pay Lender an origination fee equal to
three percent (3%) of each advance or Commitment made under this Note pursuant
to that certain letter agreement dated as of the Effective Date (the
“Origination Fee Letter”), but in any event not to exceed $2,100,000 in
the aggregate; provided, that no further Origination Fee shall be due after
total advances or Commitment made under this Note exceed $70,000,000 in the
aggregate and further
provided, that no origination fee shall be due on the portion of the Commitment
repaid and re-advanced under this Note. The origination fee due with
respect to any advance shall be paid to Lender at or prior to the date of
Xxxxxx’s funding of such advance hereunder.
4. Security;
Loan Documents. This Note is secured by, and entitled to the
benefits of, (i) a security agreement executed by Xxxxxxxx in favor of Xxxxxx
dated as of the Effective Date (as it may be amended, modified, renewed,
extended, superseded, or replaced from time to time, the “Security
Agreement”) pursuant to which the Borrower has granted to Lender, a security
interest in the Collateral, (ii) for each Investment, an allonge, collateral
assignment, and/or such other documents, agreements, assignments and instruments
as Lender shall require in order to evidence, acknowledge or perfect its
security interest in the Collateral, as determined by Lender in its sole
discretion (collectively, as each may be amended, modified, renewed, extended,
superseded, or replaced from time to time, the “Collateral Documents”),
and (iii) a guaranty agreement executed by UMT Holdings, L.P., a Delaware
limited partnership (“Guarantor”) in favor of Xxxxxx, dated as of the
Effective Date (as it may be amended, modified, renewed, extended, superseded,
or replaced from time to time, this the “Guaranty Agreement”) pursuant to
which Guarantor has agreed to guaranty the repayment of indebtedness owing
by
Borrower to Lender, and the performance of Borrower’s obligations, under this
Note. This Note, the Security Agreement, the Collateral Documents,
the Guaranty Agreement, the Origination Fee Letter, all UCC financing
statements, amendments thereto and continuation statements (collectively,
“Financing Statements”) filed by or in favor of Lender, all Advance
Requests, all Officer’s Certificates, and all other instruments, agreements,
certificates, assignments and other agreements and documents executed, entered
into or delivered by any party in connection with this Note, whether prior
to,
on or after the Effective Date, are collectively referred to in this Note
as the
“Loan Documents”.
5. Loan
Expenses.
(a) To
the extent not prohibited by applicable law, Borrower will pay all reasonable
costs and expenses and reimburse Lender for any and all expenditures of every
character incurred or expended from time to time, regardless of whether an
Event
of Default shall have occurred, in connection with any of the following
(collectively, “Loan Expenses”):
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(i) the
preparation, negotiation, documentation, closing, renewal, revision,
modification, increase, review or restructuring of any loan or credit facility
represented by or secured by the Loan Documents, including legal, accounting,
auditing, architectural, engineering, due diligence, title company, and
inspection services and disbursements, or in connection with collecting or
attempting to enforce or collect pursuant to any Loan Document;
(ii) Xxxxxx’s
evaluating, monitoring, administering and protecting the Collateral or any
other
collateral granted or pledged as security for the Loan or employing others
to do
so or to perform due diligence for Lender with respect thereto; and
(iii) Lender’s
creating, perfecting and realizing upon Xxxxxx’s security interest in, and the
Liens on, the Collateral or any other collateral granted or pledged as security
for the Loan, and all costs and expenses relating to Xxxxxx’s exercising any of
its rights and remedies under any Loan Document or at law, including all
appraisal fees, consulting fees, filing fees, taxes, brokerage fees and
commissions, title review and abstract fees, litigation report fees, UCC
search
fees, other fees and expenses incident to title searches, reports and security
interests, escrow fees, attorneys’ fees, legal expenses, court costs, other fees
and expenses incurred in connection with any complete or partial liquidation
of
the Collateral or any other collateral granted or pledged as security for
the
Loan, and all fees and expenses for any professional services or any operations
conducted in connection therewith. Notwithstanding the foregoing, no
right or option granted by Borrower to Lender or otherwise arising pursuant
to
any provision of any Loan Document shall be deemed to impose or admit a duty
on
Lender to supervise, monitor or control any aspect of the character or condition
of the Collateral or any other collateral granted or pledged as security for the
Loan or any operations conducted in connection with it for the benefit of
Borrower or any other person other than Lender.
(b) Usury
Savings Clause Applies. Xxxxxxxx agrees that Xxxxxx has provided,
and shall provide, separate and distinct consideration for the fees and expenses
described in Section 5(a) above and elsewhere in this Note and/or that
such fees and expenses represent bona fide fees and expenses incurred by
Xxxxxx. Borrower and Xxxxxx further agree that such fees and expenses
are not, are not intended to be, and shall not be characterized as, interest
or
as compensation for the use, forbearance or detention of
money. Despite the foregoing and notwithstanding anything else in
this Note and the other Loan Documents to the contrary, if any fees or expenses
charged or chargeable to Borrower hereunder are determined to constitute
interest and such fees or expenses, when added to the interest charged
hereunder, would cause the aggregate interest charged hereunder to exceed
the
Highest Lawful Rate, then Section 13 of this Note shall
automatically apply to reduce the interest charged hereunder so as not to
exceed
the Highest Lawful Rate.
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6. Advance
Procedures.
(a) Advances. Subject
to the other terms and conditions of this Note, including, without limitation,
Section 10, Xxxxxx agrees to make advances to Borrower prior to the
Maturity Date in an aggregate amount not to exceed the available amount of
the
Commitment pursuant to the procedures set forth in Section
6(b). Notwithstanding anything else to the contrary contained
herein, Lender shall have no obligation to make any advance of Commitment
to
Borrower under this Note unless each of the conditions precedent in Section
10 have been satisfied and/or fulfilled as determined by Xxxxxx in its
sole
discretion. Any obligation of Lender to fund any amount of the
Commitment shall terminate upon the earlier of (i) Lender’s notification to
Borrower of such termination, (ii) the acceleration of this Note, or (iii)
the
Maturity Date.
(b) Procedure
for Borrowing. Each advance of Commitment (other than an advance
to be applied to accrued interest due and owing to Lender under this Note)
shall
be made pursuant to Borrower’s delivery of an Advance Request and shall specify,
in addition to any information requested on Lender’s standard form of Advance
Request, (i) the amount of the advance of Commitment so requested, (ii) the
requested funding date, and (iii) the use of proceeds. Each advance
of Commitment made for the purpose of funding an Investment shall be accompanied
by the Borrower’s due diligence materials with respect to the Investment
proposed to be funded and other documentation supporting the advance of
Commitment. Xxxxxxxx agrees to provide, or cause to be provided, all
information, documents and agreements as may be requested by Lender in
connection with each such Investment and each such request for an advance
of
Commitment. Notwithstanding the foregoing sentences of this
Section 6(b) and provided that an Event of Default has not occurred and
is continuing under this Note, on each date that an payment of accrued interest
becomes due and owing to Lender hereunder, Borrower agrees that Lender shall
make, and is hereby authorized by Xxxxxxxx to make, advance(s) from the
Commitment equal to the amount of the accrued interest then due and owing
to
Lender, which amount shall be applied to the accrued interest then due and
owing
to Lender, without delivery of an Advance Request to Lender in connection
with
such advance.
(c) Making
of Advances upon Approval of Advance Request. Subject to
the other terms and conditions of this Note, after receipt of an Advance
Request
and upon approval by Lender of such Advance Request, which approval may be
withheld by Lender for any reason or for no reason, Lender shall make available
to Borrower, the amount of the requested advance of Commitment (or such lesser
amount than the requested amount that Lender has approved to be funded);
provided, however, that Lender shall have no obligation to make any advance
of
Commitment unless each of the conditions precedent in Section 10 have
been satisfied and/or fulfilled as determined by Xxxxxx in its sole
discretion.
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(d) Discretionary
Advances. Xxxxxx is authorized to make advances hereunder that
Xxxxxx, in its sole discretion, deems necessary or desirable to pay any Loan
Expense or other amount chargeable to Borrower pursuant to the terms of this
Note or any other Loan Document (such advances made for the foregoing purposes
are referred to herein as the “Discretionary Advances”). Each
Discretionary Advance shall, upon disbursement, automatically constitute
principal outstanding hereunder and cause a corresponding increase in the
aggregate amount of Borrower’s obligations hereunder (even if such Discretionary
Advance causes the aggregate amount outstanding hereunder to exceed the face
amount of this Note). Borrower agrees that each Discretionary Advance
shall automatically reduce the available amount of Commitment available
hereunder. The making by Lender of any Discretionary Advance shall
not cure or waive any Event of Default hereunder (except only for an Event
of
Default that has been cured to Xxxxxx’s satisfaction as confirmed by Xxxxxx’s
execution of a written agreement specifically acknowledging and describing
the
Event of Default so cured, and for an Event of Default that has been waived
by
Xxxxxx as confirmed by Xxxxxx’s execution of a written agreement specifically
acknowledging and describing the Event of Default so waived).
(e) Advance
Schedule. Attached to this Note as Schedule 1 is a list of
the Advances made under this Note, any payments applied to reduce principal
outstanding under this Note, and the aggregate amount of principal outstanding
under this Note prepaid by Lender (the “Advance
Schedule”). The Advance Schedule shall be revised by Xxxxxx from
time to time and, as so revised, shall be conclusive and binding upon Borrower,
absent manifest error.
7. Interest;
Payment.
(a) Interest
Rate. The outstanding principal amount of this Note shall bear
interest on each day outstanding at the Base Rate in effect on such day,
unless
the Default Rate shall apply. Subject to the other provisions of this
Note, upon the occurrence and during the continuation of an Event of Default,
the outstanding principal amount of this Note shall, at Lender’s option,
automatically and without the necessity of notice, bear interest from the
date
of such Event of Default at the Default Rate, until all such delinquent amounts
are paid and such Event of Default has been cured to Xxxxxx’s satisfaction as
confirmed by Xxxxxx’s execution of a written agreement specifically
acknowledging and describing the Event of Default so cured, and or waived
by
Xxxxxx as confirmed by Xxxxxx’s execution of a written agreement specifically
acknowledging and describing the Event of Default so waived.
(b) Payments. Except
earlier upon any acceleration of this Note:
(i) Borrower
promises to pay to Lender, monthly interest payments equal to the amount
of
unpaid accrued interest on the outstanding principal balance of this Note
on the
first (1st) day
of each month, commencing on December 1, 2007; provided, however, that such
monthly interest payments may be advanced by Lender from the available amount
of
the Commitment pursuant to the procedures set forth in Section 6(b) of
this Note.
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(ii) In
addition to the payments required by the provisions of clause (i) above,
if the
outstanding principal amount of this Note ever exceeds $70,000,000, Borrower
promises to pay immediately to Lender, the amount of principal in excess
of
$70,000,000, on the date that such excess exists.
(iii) In
addition to the payments required by the provisions of clauses (i) and (ii)
above, Borrower promises to pay to Lender, the outstanding principal balance
of
this Note, together with all accrued, unpaid interest thereon, unpaid Loan
Expenses and other unpaid amounts due hereunder, on or prior to the Maturity
Date.
(c) Application
of Payments. Payments made on this Note will be applied first to
any unpaid collection costs, fees and other charges permitted under this
Note,
next to unpaid, accrued interest, and last, to reduce the principal outstanding
under this Note, subject, however, to any
adjustments required or permitted by this Note or applicable law.
(d) General. Borrower
will make each payment that it owes under this Note to Lender (interest,
any
applicable fees and charges, and outstanding principal) in full and in lawful
money of the United States, without set-off, deduction or
counterclaim. All payments shall be made by check or wire transfer of
immediately available funds. Should any such payment become due and
payable on a day other than a business day, the date for such payment shall
be
extended to the next succeeding business day, and, in the case of a payment
of
principal or past-due interest, interest shall accrue and be payable on such
amount for the period of such extension. Each such payment must be
received by Lender not later than 3:00 p.m., Dallas, Texas time on the date
such
payment becomes due and payable. Any payment received by Xxxxxx after
such time will be deemed to have been made on the next succeeding business
day.
8. Prepayment;
Xxxxxx's Rights. Borrower may prepay this Note, or any portion of
this Note, at any time and from time to time, without the payment of any
fee or
penalty.
9. Representations
and Warranties. Borrower represents and warrants to Lender as
follows:
(a) Organization
and Good Standing. Borrower is a limited partnership, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, having all limited partnership powers required
to
carry on its business and to enter into and carry out the transactions
contemplated by this Note and the other Loan Documents. Borrower has
taken all appropriate actions and complied in all material respects with
all
laws applicable to it in each jurisdiction within and without outside the
United
States where Borrower owns or leases any properties or conducts any
business.
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(b) Authorization;
Validity. Borrower has the limited partnership power, authority
and legal right to execute, deliver and perform its obligations under, this
Note
and the other Loan Documents. The execution and delivery by Borrower
of the Loan Documents and the performance of its obligations under each such
Loan Document have been duly authorized by proper limited partnership
proceedings. The Loan Documents to which Borrower is a party
constitute the legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their terms, except as enforceability
may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement
of
creditors' rights generally.
(c) Usury. Xxxxxxxx
has been involved in the structure and negotiation of the Note and the other
Loan Documents. It is the intention of Borrower that all aspects of
the Note and the other Loan Documents, and any related transaction, comply
with
all laws, including, specifically, any applicable usury laws. If for
any reason, it is determined by a governing authority that the loan made
pursuant to the Note and the other Loan Documents is usurious in any manner,
Borrower hereby represents that, as to Borrower, such result was unintentional
and the result of a bona fide mistake.
10. Conditions
Precedent to Advances of Commitment. Xxxxxxxx agrees that,
notwithstanding anything to the contrary contained herein or in the other
Loan
Documents, Xxxxxx’s obligation to fund each advance of Commitment shall be
conditioned upon the satisfaction and/or fulfillment of each of the following
conditions, on and as of the funding date for the applicable advance of
Commitment:
(a) the
representations and warranties made in this Note and the other Loan Documents
by
Borrower and the Guarantor and in all certificates and other documents delivered
pursuant thereto, shall be true and correct in all material respects on and
as
of the date of funding, as determined by Lender in its sole
discretion;
(b) all
of the covenants and agreements contained in this Note and the other Loan
Documents to be complied with and performed as of the date hereof by Xxxxxxxx
and the Guarantor have been duly complied with and performed on and as of
the
date of funding, as determined by Xxxxxx in its sole discretion;
(c) no
event constituting an Event of Default (without giving effect to any grace
or
cure periods for such Event of Default provided herein or in the other Loan
Documents), shall have occurred and be continuing, as determined by Lender
in
its sole discretion;
(d) a
duly authorized officer on behalf of the Borrower shall have duly executed
and
delivered to Lender, an Advance Request (including or accompanied by an
Officer’s Certificate), and all matters certified in the Advance Request and
Officer’s Certificate shall be true and correct in all respects;
(e) on
and as of the date of funding, all statements contained in all Loan Documents
and all other certificates, statements and data furnished to Lender by or
on
behalf of Borrower or in connection with the transactions contemplated by
this
Note or any of the other Loan Documents (including all of the documents and
information delivered to Lender in connection with an Advance Request) shall
be
true and complete in all material respects, and there are no facts or events
known to Borrower which, if disclosed to Lender, would make such statements,
certificates or date untrue in any material respect;
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(f) the
requested advance of Commitment, if made, would not cause the aggregate
outstanding principal amount of this Note to exceed the Commitment;
(g) as
of the date of any such advance of Commitment, all of the Loan Documents
shall
have been executed and delivered (including, without limitation, all Collateral
Documents with respect to the Investment being funded by Lender with the
proceeds of the advance), and shall be valid, enforceable and in full force
and
effect;
(h) Lender
shall have approved the Advance Request, as determined by Lender in its sole
discretion (which approval may be withheld by Lender for any reason or for
no
reason); and
(i) Borrower
and the Guarantor shall have complied with each other request of Xxxxxx made
in
connection with the advance of Commitment.
11. Covenants.
(a) Deliveries. Borrower
covenants and agrees with Xxxxxx that it will deliver each of the following,
on
a quarterly basis, commencing with the quarter ending December 31, 2007,
in form
and substance reasonably satisfactory to Lender:
(i) Summary
of Loans. A summary of each Investment made by Xxxxxxxx,
including the name and material of information with respect to the client
of
Borrower to whom the Investment is made and a summary of concentration of
credit
by client and geographical region.
(ii) Schedule
of Maturities. A summary of scheduled maturities for each
Investment and payment status for all Investments.
(iii) Note
Proceeds. A summary of all proceeds of this Note that are
allocated by Borrower to each Investment.
(b) Aggregate
Investment-to-Value. Xxxxxxxx agrees that at no time shall the
sum of (i) all Investments, plus (ii) any Senior Indebtedness exceed ninety
percent (90%) of the market value of the property securing the
Investments.
(c) Maximum
Investment Amount. No single Investment may exceed twenty percent
(20%) of the Commitment (i.e., $14,000,000). Investments with any
single client of Borrower or group of related clients may not exceed twenty
percent (20%) of the Commitment (i.e., $14,000,000).
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(d) Use
of Proceeds. The proceeds of this Note shall be used solely to
acquire Investments approved by Xxxxxx and for business and commercial purposes
approved by Lender that are related to Investments. In no event shall
any funds advanced under this Note be used, directly or indirectly, by any
person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring
or
carrying any “margin stock” (as such term is defined in Regulation U promulgated
by the Board of Governors of the Federal Reserve System).
12. Default.
(a) For
purposes of this Note, the following events shall constitute an “Event of
Default”:
(i) the
default by Borrower in any payment required by this Note by the fifth (5th) day
following the
date when due, whether on or prior to the Maturity Date; or
(ii) Borrower
breaches any representation or warranty contained in this Note or any other
Loan
Document, or fails to perform or observe any covenant or agreement that is
set
forth in this Note or any other Loan Document, and such breach if capable
of
being cured, is not cured within ten (10) days after written notice of such
breach is received from Lender; or
(iii) the
entry of a decree or order for relief by a court having jurisdiction in respect
of Borrower in an involuntary case under the federal bankruptcy laws, as
now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, which is not vacated or dismissed within
thirty
(30) days, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Borrower for any substantial
part of
Borrower’s property, or ordering the winding up or liquidation of such person's
affairs; or
(iv) the
commencement by Borrower of a voluntary case under the federal bankruptcy
laws,
as now constituted or hereafter amended, or any other applicable federal
or
state bankruptcy, insolvency or other similar law, or the consent by it to
the
appointment to or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of Borrower
for any
substantial part of its property, or the making by Borrower of any assignment
for the benefit of creditors, or the admission by Borrower in writing of
Xxxxxxxx’s inability to pay its debts generally as they become due;
or
(v) the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of all or a substantial
part of its assets or of any part of the Collateral in a proceeding brought
against or initiated by Borrower; or
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(vi) Borrower
is liquidated or winds up its affairs; or
(vii) any
Disposition of any Collateral occurs without the prior written consent of
Lender, unless the full amount of proceeds from such Disposition of Collateral
is paid by Borrower to Lender to reduce the indebtedness of Borrower owing
to
Lender under this Note; or
(viii) any
Loan Document ceases to become valid, binding and enforceable for any reason
other than its release by Lender; or
(ix) the
sale or liquidation of all or substantially all of the assets of Borrower,
without the prior written consent of Lender or the payment in full of the
indebtedness of Borrower owing to Lender under this Note.
(b) Upon
the occurrence of an Event of Default described in subsection (a)(iii),
(iv) or (v) above, all obligations under this Note and the other Loan
Documents shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice
of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which
are
hereby expressly waived by Borrower and any and all sureties, guarantors
and
endorsers of this Note. During the continuance of any other Event of
Default, then and in every such case Lender may do any or all of the following:
(i) declare the principal of this Note together with all accrued and unpaid
interest on the unpaid principal balance, and Loan Expenses and other amounts
due to Lender under this Note or the other Loan Documents, to be due and
payable
immediately, and the same shall become and be due and payable, without notices,
demands for payment, presentations for payment, notices of payment default,
notices of intention to accelerate maturity, protest and notice of protest,
and
any other notices of any kind, all of which are expressly waived by Borrower
and
any and all sureties, guarantors and endorsers of this Note, and/or
(ii) exercise any or all of its rights under all or any of the Loan
Documents, and/or (iii) refuse to advance any additional funds hereunder,
and/or
(iv) exercise any or all other rights and remedies available to Lender at
law
and at equity, including, without limitation, such rights existing under
the
Uniform Commercial Code. No delay on the part of Lender in exercising
any power under this Note shall operate as a waiver of such power or right
nor
shall any single or partial exercise of any power or right preclude further
exercise of that power or right.
(c) If
this Note is placed in the hands of an attorney for collection after an Event
of
Default or failure to pay under this Note, or if all or any part of the
indebtedness represented hereby is proved, established or collected in any
court
or in any bankruptcy, receivership, debtor relief, probate or other court
proceedings, Xxxxxxxx and all endorsers, sureties and guarantors of this
Note,
jointly and severally, agree to pay reasonable attorneys' fees and collection
costs to Lender in addition to the principal and interest payable under this
Note.
11
13. Usury
Laws.
(a) Notwithstanding
anything to the contrary contained in this Note or any other Loan Document,
(i)
this Note shall never bear interest in excess of the Highest Lawful Rate,
and
(ii) if at any time the rate at which interest is payable on this Note is
limited by the Highest Lawful Rate by the foregoing clause (i) or by reference
to the Highest Lawful Rate in the definitions of Base Rate and Default Rate,
then this Note shall bear interest at the Highest Lawful Rate and shall continue
to bear interest at the Highest Lawful Rate until such time as the total
amount
of interest accrued on this Note equals (but does not exceed) the total amount
of interest which would have accrued on this Note, had there been no Highest
Lawful Rate applicable to this Note.
(b) It
is the intention of the parties hereto that all aspects of this Note and
the
other Loan Documents, and the transactions contemplated hereby and thereby,
comply with all laws, including, specifically, any applicable usury
laws. In furtherance thereof, Xxxxxxxx and Xxxxxx stipulate and agree
that none of the terms and provisions contained in this Note or the other
Loan
Documents shall ever be construed to create a contract to pay for the use,
forbearance, or detention of money, or interest, in excess of the maximum
amount
of interest permitted to be charged by applicable law in effect from time
to
time. Neither Borrower nor any present or future guarantors,
endorsers, or other persons or entities hereafter becoming liable for payment
of
Borrower’s obligations hereunder and under the other Loan Documents shall ever
be liable for unearned interest thereon or shall ever be required to pay
interest thereon in excess of the maximum amount that may be lawfully charged
under applicable law from time to time in effect, and the provisions of this
Section 13 shall control over all other provisions of the Loan Documents
that may be in conflict or apparent conflict herewith. Lender
expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of this Note is
accelerated. If (i) the maturity of this Note is accelerated for any reason,
(ii) this Note is prepaid and as a result any amounts held to constitute
interest are determined to be in excess of the legal maximum, or (iii) Lender
or
any other holder of this Note shall otherwise collect moneys which are
determined to constitute interest which would otherwise increase the interest
hereon to an amount in excess of that permitted to be charged by applicable
law,
then all sums determined to constitute interest in excess of such legal limit
shall, without penalty, be promptly applied to reduce the then outstanding
principal of this Note or, at Lender's or such holder's option, promptly
returned to Borrower or the other payor thereof upon such determination.
In
determining whether or not the interest paid or payable, under any specific
circumstance, exceeds the maximum amount permitted under applicable law,
Lender
and Borrower (and any other payors of this Note) shall to the greatest extent
permitted under applicable law, (i) characterize any non-principal payment
as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate,
and
spread the total amount of interest throughout the entire contemplated term
of
this Note in accordance with the amounts outstanding from time to time hereunder
and the maximum legal rate of interest from time to time in effect under
applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law. In the event applicable law provides
for an interest ceiling under Chapter 303 of the Texas Finance Code (the
“Texas Finance Code”) as amended, for that day, the ceiling shall be the
“weekly ceiling” as defined in the Texas Finance Code. As used in
this section, the term “applicable law” means the laws of the State of Texas or
the laws of the United States of America, whichever laws allow the greater
interest, as such laws now exist or may be changed or amended or come into
effect in the future.
12
14. Further
Assurances. Borrower will, at its expense, to promptly execute
and deliver to Lender, all such other and further documents, agreements and
instruments, and shall deliver all such supplementary information, including,
without limitation, information with respect to Investments, as Lender may
request from time to time.
15. Cumulative
Remedies. All rights and remedies that Xxxxxx is afforded by
reason of this Note and the other Loan Documents are separate and cumulative
and
otherwise and may be pursued separately, successively, or concurrently, as
Lender deems advisable. In addition, all such rights and remedies are
non-exclusive and shall in no way limit or prejudice Lender’s ability to pursue
any other legal or equitable rights or remedies that may be available to
Lender.
16. Notice. All
notices and other communications under this Note will be in writing and will
be
mailed by registered or certified mail, postage prepaid, sent by facsimile,
delivered personally by hand, or delivered by nationally recognized overnight
delivery service addressed to Xxxxxxxx and Lender, respectively, at the
addresses set forth in Section 1 of this Note, or, with respect to
Borrower or Lender, to such other address as may have delivered by one to
the
other for purposes of notice. Each notice or other communication will
be treated as effective and as having been given and received (a) if sent
by
mail, at the earlier of its receipt or three (3) business days after such
notice
or other communication has been deposited in a regularly maintained receptacle
for deposit of United States mail, (b) if sent by facsimile, upon written
or
electronic confirmation of facsimile transfer, (c) if delivered personally
by
hand, upon written or electronic confirmation of delivery from the Person
delivering such notice or other communication, or (d) if sent by nationally
recognized overnight delivery service, upon written or electronic confirmation
of delivery from such service.
17. Enforcement
and Waiver by Xxxxxx. Lender shall have the right at all times to
enforce the provisions of this Note and the other Loan Documents in strict
accordance with their respective terms, notwithstanding any conduct or custom
on
the part of Lender in refraining from so doing at any time or
times. The failure of Lender at any time or times to enforce its
rights under such provisions, strictly in accordance with the same, shall
not be
construed as having created a custom or in any way or manner modified or
waived
the same.
18. CHOICE
OF LAW. EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
SECURITY INTERESTS OR REMEDIES IN RESPECT OF ANY PARTICULAR COLLATERAL IS
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS, THIS
NOTE
AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CONFLICTS
OF LAWS PROVISIONS.
13
19. JURISDICTION;
VENUE. BORROWER IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING IN
RESPECT OF THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE BROUGHT IN THE
DISTRICT COURTS OF TARRANT COUNTY, TEXAS OR THE UNITED STATES DISTRICT COURT
FOR
THE NORTHERN DISTRICT OF TEXAS, FORT WORTH DIVISION (THE “SPECIFIED
COURTS”). BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE SPECIFIED COURTS. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
NOW
OR HEREAFTER HAVE THAT THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH SPECIFIED COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM
AND HEREBY IRREVOCABLY AGREES TO A TRANSFER OF ALL SUCH PROCEEDINGS TO THE
SPECIFIED COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN
ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE
LAW.
20. Counterparts. This
Note and each other Loan Document may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together
shall
constitute but one and the same instrument.
21. Severability. If
any provision of this Note or any other Loan Document shall be held invalid
under any applicable laws, then all other terms and provisions of this Note
and
the Loan Documents shall nevertheless remain effective and shall be enforced
to
the fullest extent permitted by applicable law.
22. Amendments;
Waivers. No amendment or waiver of any provision of this Note nor
consent to any departure herefrom, shall in any event be effective unless
the
same shall be in writing and signed by Xxxxxx, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
23. Binding
Effect; Assignment. This Note and the other Loan Documents shall be binding
on Borrower and its successors and assigns, including, without limitation,
any
receiver, trustee or debtor in possession of or for Borrower, and shall inure
to
the benefit of Xxxxxx and its successors and assigns. Borrower shall
not be entitled to transfer or assign this Note and the other Loan Documents
in
whole or in part without the prior written consent of Lender. This Note and
the
other Loan Documents are freely assignable and transferable by Lender without
the consent of Borrower or Guarantor. Should the status, composition,
structure or name of Borrower or Guarantor change, this Note and the other
Loan
Documents shall continue to be binding upon such person and also cover such
person under the new status composition, structure or name according to the
terms hereof and thereof.
14
24. Captions. The
captions in this Note are for the convenience of reference only and shall
not
limit or otherwise affect any of the terms or provisions hereof.
25. Number
of Gender or Words. Except where the context indicates otherwise,
words in the singular number will include the plural and words in the masculine
gender will include the feminine and neutral, and vice versa, when they should
so apply.
26. WAIVER
OF JURY TRIAL, PUNITIVE DAMAGES, ETC. BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER MAY HAVE TO A TRIAL BY JURY
IN
RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY
TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR THE LOAN DOCUMENTS
OR
ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR ASSOCIATED HEREWITH OR
THEREWITH, BEFORE OR AFTER MATURITY OF THIS NOTE; (B) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER MAY HAVE TO CLAIM OR RECOVER
IN
ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED BELOW, (C) CERTIFIES THAT
NEITHER LENDER NOR ANY REPRESENTATIVE OF LENDER OR COUNSEL FOR ANY PARTY
HERETO
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT LENDER WOULD NOT,
IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(D) ACKNOWLEDGES THAT XXXXXX HAS BEEN INDUCED TO ENTER INTO THIS NOTE AND
THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
BASED UPON, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS
SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL SPECIAL,
CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED),
BUT
DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH BORROWER HAS EXPRESSLY PROMISED
TO
PAY OR DELIVER TO XXXXXX XXXXXX.
27. ACKNOWLEDGEMENT
AND CONSENT TO PLEDGE. THIS NOTE IS SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, AND PLEDGED AS COLLATERAL TO, PREMIER BANK AND ITS
ASSIGNS
(“PREMIER”). BY EXECUTION HEREOF, XXXXXXXX CONSENTS TO SUCH SECURITY
INTEREST AND PLEDGE OF THIS NOTE TO PREMIER, AND CONSENTS TO THE ASSIGNMENT
OF
THIS NOTE TO PREMIER IN ACCORDANCE THEREWITH.
28. ENTIRE
AGREEMENT. THIS NOTE AND THE OTHER LOAN
DOCUMENTS TOGETHER CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES CONCERNING
THE SUBJECT MATTER HEREOF, AND ALL PRIOR DISCUSSIONS, AGREEMENTS AND STATEMENTS,
WHETHER ORAL OR WRITTEN, ARE MERGED INTO THIS NOTE AND THE OTHER LOAN
DOCUMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
AND THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE
15
CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
[The
remainder of this page is intentionally left blank.]
16
This
Note has been executed by Xxxxxxxx
on this the 12th day of November, 2007, effective for all purposes as of
the
Effective Date.
BORROWER:
UNITED
DEVELOPMENT FUNDING X,
L.P.
a
Delaware limited
partnership
By: United
Development Funding X, Inc.
Its: General
Partner
By: /s/
Xxxxxx X. Xxxxxxxx
Name:
Xxxxxx X. Xxxxxxxx
Its: President
and Chief Executive Officer
The
terms
of this Note are hereby accepted by Xxxxxx.
LENDER:
UNITED
DEVELOPMENT FUNDING III, L.P.,
a
Delaware limited
partnership
By: UMTH
Land Development,
L.P.
Its: General
Partner
By: UMT
Services,
Inc.
Its: General
Partner
By: /s/
Xxx Xxxxxxx
Name:
Xxx Xxxxxxx
Its: Chief
Operating Officer
17
Schedule
1
ADVANCE
SCHEDULE
|
Date
of
Advance
|
Amount
Advanced
|
Date
of Principal Repayment
|
Amount
of Principal
Repayment
|
Aggregate
Principal Amount Outstanding
|
