EX-10.1
2
ex10-1.htm
SECURED PROMISSORY NOTE BY CENTURION ACQUISITIONS, L.P.
SECURED
PROMISSORY NOTE
U.S. $5,272,250.00
Dallas, Texas
November
16, 2006
FOR
VALUE RECEIVED,
CENTURION
ACQUISITIONS, L.P.,
a Texas
limited partnership (“Borrower”)
hereby
makes and issues this Secured Promissory Note (this “Note”),
and
promises to pay to the order of UNITED
DEVELOPMENT FUNDING III, L.P.,
a
Delaware limited partnership
(together with its successors and assigns, “Lender”),
the
principal sum of U.S. Five Million Two Hundred Seventy-Two Thousand Two
Hundred
Fifty and NO/100 Dollars ($5,272,250.00) 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.
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. 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, and payable as provided herein.
(b) “Base
Rate”
shall
mean the lesser of (i) sixteen and one-half percent (16.5%), accrued and
compounded monthly, or (ii) the Highest Lawful Rate.
(c) “Collateral”
shall
have the meaning given to such term in the Security Agreement.
(d) “Commitment”
shall
mean the aggregate amount of U.S. Four Million Five Hundred Thousand and
NO/100
Dollars ($4,500,000.00).
(e) “Commitment
Advance”
shall
mean full or partial advance of the Commitment to Borrower pursuant to
the terms
hereof.
(f) “Commitment
Fee”
shall
mean the fee paid by Borrower to Lender or its assigns pursuant to that
certain
Commitment Letter dated September 18, 2006, in consideration of Xxxxxx’s
commitment to make the Loan, subject to the terms and conditions hereof.
(g) “Default
Rate”
shall
mean the lesser of (i) eighteen percent (18%), accrued and compounded annually,
or (ii) the Highest Lawful Rate.
(h) “Effective
Date”
shall
mean November 16, 2006.
(i) “Event
of Default”
shall
have the meaning given to such term in Section
10
of this
Note.
(j) “General
Partner”
means
Pars Investments, Inc., a Texas corporation and the general partner of
Xxxxxxxx.
(k) “Guaranty”
shall
mean that certain Continuing Unconditional Guaranty executed by the General
Partner in favor of Lender dated the Effective Date, as such Guaranty may
be
amended from time to time.
(l) “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 Xxxxxx
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.
(m) “Interest
Reserve”
shall
mean an aggregate of up to U.S. Six Hundred and No/100 Dollars ($600,000.00)
to
be advanced by Lender hereunder and to be applied against Accrued Interest
Payments, subject to the provisions of Sections
4(b)
and
4(c)
of this
Note.
(n) “Interest
Reserve Advance”
means
an advance under this Note in the amount of an Accrued Interest Payment
pursuant
to Section
4(b)
of this
Note.
(o) “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.
(p) “Loan”
shall
mean the loan made to Borrower pursuant to this Note.
(q) “Loan
Administration Fee”
shall
mean a fee charged by Lender in consideration of administrative costs and
expenses incurred by Xxxxxx in connection with each Commitment Advance
hereunder.
(r) “Loan
Documents”
shall
mean, collectively, this Note, the Pledge Agreement, the Security Agreement,
the
Guaranty, the error and omissions letter and all other documents, certificates,
instruments, and agreements executed, entered into or delivered by Borrower,
Millennium, the General Partner, or any of their respective affiliates
in
connection with the Loan, as each such document may be amended from time
to
time.
(s) “Loan
Expenses”
shall
mean all fees and expenses incurred by Lender in connection with the loan
made
pursuant to this Note and the preparation of this 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.
(t) “Millennium”
means
Millennium NTX Properties, L.L.C., a Texas limited liability
company.
(u) “Maturity
Date”
means
December 31, 2010.
(v) “Partnership
Agreement”
means
the Agreement of Limited Partnership of Centurion Acquisitions, L.P., as
it may
be amended from time to time.
(w) “Pledge
Agreement”
shall
mean that certain Pledge Agreement executed by the Pledgors in favor of
Xxxxxx
dated as of the Effective Date, pursuant to which the Pledgors pledge their
respective interests in the Pledged Securities to Lender, as such agreement
may
be amended from time to time.
(x) “Pledged
Securities”
shall
have the meaning given to such term in the Pledge Agreement.
(y) “Pledgors”
mean,
collectively, Borrower and Millennium.
(z) “Properties”
shall
mean, collectively, all real properties now owned or hereinafter acquired
by
those corporations, partnerships and limited liability companies, the equity
interests of which are Pledged Securities under the Pledge
Agreement.
(aa) “Security
Agreement”
shall
mean that certain Security Agreement executed by Xxxxxxxx in favor of Xxxxxx
dated as of the Effective Date, as it may be amended from time to
time.
(bb) “Senior
Indebtedness”,
if
any, shall mean the amount of indebtedness owed to a Senior Lender that
Xxxxxx
has agreed in writing will have (i) priority in payment over the indebtedness
evidenced by this Note, and/or (ii) priority over the Liens created by
the
Pledge Agreement and/or the Security Agreement.
(cc) “Senior
Lender”
shall
mean any bank, financial institution or other lender having made a loan
to any
Borrower and/or Pledgor that has a senior position ahead of Lender with
respect
to the payment of Borrower is indebtedness under this Note and/or the priority
of Liens against the Pledged Securities or the Collateral, or any other
granted
or pledged as security for the Loan; provided, that Xxxxxx has agreed in
writing
to be subordinate thereto.
2. Loan
Expenses; Fees.
(a) Loan
Expenses.
Upon
Xxxxxx’s demand from time to time, Borrower shall pay Lender, the full amount
of
all Loan Expenses incurred by Xxxxxx.
(b) Loan
Administration Fee.
In
consideration of administrative costs and expenses incurred by Xxxxxx in
connection with Commitment Advances, Xxxxxxxx agrees to pay Lender a Loan
Administration Fee at the time of each Commitment Advance equal to one-quarter
percent (0.25%) of such Commitment Advance. The Loan Administration Fee
with
respect to each Commitment Advance made hereunder is fully earned by Xxxxxx
at
the time such Commitment Advance is funded and, if not otherwise paid,
shall be
funded by Xxxxxx at the time of the Commitment Advance and upon disbursement
shall automatically constitute principal outstanding hereunder and cause
a
corresponding increase in the aggregate amount of Borrower’s obligations
hereunder (even if such disbursement causes the aggregate amount outstanding
hereunder to exceed the face amount of this Note).
(c) Commitment
Fee.
Pursuant to the terms and conditions of that certain Commitment Letter
between
Xxxxxxxx and lender dated September 18, 2006, Xxxxxxxx agreed to pay Lender
a
Commitment Fee in the amount of $153,000.00 in consideration of Xxxxxx’s
commitment to make the Loan to Borrower. Pursuant to Xxxxxxxx’s request, the
Commitment Fee shall be funded by Lender under this Note and upon disbursement
shall automatically constitute principal outstanding hereunder and cause
a
corresponding increase in the aggregate outstanding amount of Borrower’s
obligations hereunder.
(d) Usury
Savings Clause Applies.
Borrower, the General Partner, Millennium and Lender agree that Lender
has
provided, and shall provide, separate and distinct consideration for the
fees
and expenses described in Sections
2(a), (b)
and
(c)
above
and/or that such fees and expenses represent bona fide fees and expenses
incurred by Lender. Borrower, the General Partner, Millennium and Lender
further
agree that such fees and expenses are not, are not intended to be, and
shall not
be characterized as, interest or as compensation for the use, forbearance
or
detention of money. Despite the foregoing and notwithstanding anything
else in
this Note and the other Loan Documents to the contrary, if any fees or
expenses
charged or chargeable to Borrower hereunder are determined to constitute
interest and such fees or expenses, when added to the interest charged
hereunder, would cause the aggregate interest charged hereunder to exceed
the
Highest Lawful Rate, then Section
11 of
this
Note shall automatically apply to reduce the interest charged hereunder
so as
not to exceed the Highest Lawful Rate.
(e) Assignment.
The
Loan Administration Fee and all Loan Expenses are assignable by the payee
to any
affiliate or third party.
3. Closings;
Commitment Advances; Borrowing Procedures; etc.
(a) Closings;
Commitment Advances.
Subject
to the terms and conditions of this Note, Xxxxxx agrees to make Commitment
Advances to Borrower from time to time prior to the Maturity Date in an
aggregate amount not to exceed the Commitment. It is anticipated that at
the
closing of the Loan, the following amounts shall be funded: $900,000.000
of the
Commitment, the Commitment Fee, a $2,250.00 Loan Administration Fee and
$8,000.00 in anticipated Loan Expenses. It is anticipated that the remainder
of
the Commitment shall be funded through one or more Commitment Advances
in the
first year this Note is outstanding. 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.
(b) Procedure
for Borrowing.
Each
Commitment Advance after the initial closing hereof shall be made by Xxxxxxxx’s
delivery of a written request to Xxxxxx. Such notice must be received by
Lender
no less than five (5) business days prior to the date that is the requested
funding date, and shall specify the amount of the Commitment Advance so
requested, and the requested funding date.
(c) Making
of Commitment Advances.
Subject
to the terms and conditions of this Note, after receipt of a request for
an
Commitment Advance pursuant to Section
2(b),
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 any Commitment Advance unless each of the conditions
precedent in Section
7
have
been satisfied.
(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). The making by Lender of any Discretionary Advance
shall
not cure any Event of Default hereunder, unless Xxxxxx provides Borrower
with a
written waiver of such Event of Default.
(e) Face
Amount of Note.
The
$5,272,250.00 face amount of the Note consists of the sum of (i) the Commitment
($4,500,000.00), plus
(ii) the
Interest Reserve ($600,000.00), plus
(iii)
the Commitment Fee, ($153,000.00), plus
(iv) an
aggregate of $19,250.00 in anticipated Loan Expenses and Loan Administration
Fees.
4. Interest;
Payments.
(a) Interest
Rate.
The
outstanding principal amount of this Note shall bear interest on each day
outstanding at the Base Rate in effect on such day, unless the Default
Rate
shall apply. Subject to the other provisions of this Note, upon the occurrence
and during the continuation of an Event of Default, the outstanding principal
amount of this Note shall, at Lender’s option, automatically and without the
necessity of notice, bear interest from the date of such Event of Default
at the
Default Rate, until all such delinquent amounts are paid or such breach
or Event
of Default is otherwise cured to the satisfaction of Lender or waived by
Lender
in writing.
(b) 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. 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 (iii) 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 agreed by Lender 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.
(c) Replenishment
of Interest Reserve.
To the
extent Borrower makes any prepayment of the Loan and such prepayment is
applied
to accrued interest in accordance with Section
5(a)
of this
Note, the Interest Reserve shall be replenished in an amount equal to the
prepayment of accrued interest; provided,
however,
that no
replenishment shall be made or required in the event that the Interest
Reserve
equals $600,000.00; provided
further, however,
that
the Interest Reserve will be replenished only to the extent of, and in
an amount
not greater than, the mathematical difference of $600,000.00 minus the
then
current balance of the Interest Reserve calculated as of the date of the
prepayment.
(d) Payments.
Subject
to the other provisions of this Note:
(i) Accrued
Interest Payments shall be due and payable as provided in Section
4(b)
of this
Note;
(ii) concurrently
with any sale and of any Property, Borrower shall pay or cause to be paid
to
Lender, the amount of full amount of such proceeds received or due therefrom
resulting from such sale, remaining after payment of any applicable Senior
Indebtedness;
(iii) concurrently
with any distribution from any Pledged Security to any Pledgor, Borrower
shall
pay or cause to be paid to Lender, the amount of full amount of such proceeds
received or due therefrom resulting from such sale, remaining after payment
of
any applicable Senior Indebtedness; and
(iv) 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(b)
of this
Note, all payments on this Note shall be applied first, to unpaid Loan
Expenses
due hereunder, next, to unpaid accrued interest, and last, to principal
outstanding under this Note. 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 Xxxxxx
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 (except as set forth below), 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 Xxxxxxxx, the General Partner,
and Millennium, as applicable;
(b) the
most
recent financial statements of Borrower and the General Partner, Millennium
and
the Pledged Securities, in the form specified in Section
9(f),
and
accompanied by the certification required by Section
9(f);
(c) a
certified copy of Borrower’s, the General Partner’s, Millennium’s and the
Pledged Securities’ formation documents and all amendments thereto;
(d) certificates
of existence and good standing for Borrower, the General Partner, Millennium
and
the Pledged Securities, issued by the appropriate state
authorities;
(e) resolutions
of the General Partner and Millennium authorizing Xxxxxxxx’s, the General
Partner’s and Millennium’s execution, delivery, and performance of this Note and
the other Loan Documents, and the transactions contemplated hereby and
thereby;
(f) an
opinion of counsel for Xxxxxxxx, the General Partner and Millennium,
satisfactory in all respects to Lender and its counsel, including, without
limitation, an opinion that the Loan Documents and the Loan made pursuant
thereto are not usurious, which shall be delivered to Lender within thirty
(30)
days following the initial closing of the Loan;
(g) a
certificate of Borrower’s and the General Partner’s general liability policies,
evidence of payment of the premium through at least one year and endorsements
of
such policies to Lender;
(h) a
certificate (the “Officer’s
Certificate”)
executed by the President of the General Partner certifying that (i) no
Event of
Default has occurred and is continuing under this Note, (ii) all
representations and warranties made by Borrower, the General Partner and
Millennium, respectively, in this Note and the other Loan Documents are
true and
correct in all respects, and (iii) Borrower, the General Partner and
Millennium 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, the bylaws of the General
Partner and all amendments thereto, and the regulations, operating agreement
and/or limited liability company agreement;
(j) copies
of
all loan documents evidencing any Senior Indebtedness in effect as of the
Effective Date, and all amendments thereto;
(k) all
written consents that are required with respect to the Note and the other
Loan
Documents and the transactions contemplated thereby, including, without
limitation, any consents that are required in respect to the pledge of
the
Pledged Securities to Lender pursuant to the Pledge Agreement; and
(l) such
other and further documents, agreements and certificates as are reasonably
required by Lender.
7. Conditions
Precedent to Commitment Advances.
Borrower and the General Partner agree that, notwithstanding anything to
the
contrary contained herein or in the other Loan Documents, Xxxxxx’s obligation to
fund each Commitment Advance shall be conditioned upon the satisfaction
of each
of the following conditions, on and as of the funding date for the applicable
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 Commitment Advances made hereunder to exceed the Commitment;
and
(c) No
Event
of Default shall have occurred and be continuing, and no event that would
be an
Event of Default, but for the passage of time, shall have occurred and
be
continuing.
8. Representations
and Warranties.
Each of
Borrower, the General Partner and Millennium jointly and severally represents
and warrants to Lender that:
(a) Organization
and Good Standing; Authorization.
Each of
Borrower, the General Partner and Millennium (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
Xxxxxxxx, the General Partner and Millennium to approve this Note and the
other
Loan Documents and the transactions contemplated hereby and thereby, have
been
duly taken. Borrower, the General Partner and Millennium are 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 aggregately, on their respective
financial condition or operations.
(b) Authority;
Validity.
Borrower, the General Partner and Millennium have 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 Xxxxxxxx, the General
Partner and Millennium of this Note and the other Loan Documents, and the
performance of their respective obligations thereunder, will not (i) violate
the
certificate of formation of Borrower, the General Partner or Millennium,
the
partnership agreement of Borrower, the General Partner’s bylaws,
or the
operating agreement, regulations and or limited liability company agreement
of
Millennium, (ii) violate any law or result in a default under any contract,
agreement, or instrument to which Borrower, Millennium or the General Partner
is
a party or by which Borrower, Millennium or the General Partner or any
of their
respective assets and properties are bound, or (iii) result in the creation
or
imposition of any Lien upon any of their respective assets. The Loan Documents
constitute the legal, valid and binding obligations of Borrower, Millennium
and
the General Partner and are enforceable against Borrower, Millennium and
the
General Partner 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.
To the
knowledge of each of Borrower, Millennium, and/or the General Partner,
there is
no pending order, notice, claim, litigation, proceeding or investigation
against
or affecting Borrower, Millennium or the General Partner or any of their
respective assets or properties, or any Property or Pledged Security, whether
or
not covered by insurance, that could materially and adversely affect either
the
financial condition or business prospects or Borrower, Millennium or the
General
Partner, if adversely determined.
(d) Indebtedness.
Borrower, the General Partner, Millennium and the Pledged Securities have
no
material indebtedness of any nature, to the extent disclosed in the latest
financial statements delivered to Lender or otherwise disclosed in writing
to
Xxxxxx and approved by Xxxxxx’s prior written consent.
(e) Environmental
Liability.
To the
best of Xxxxxxxx’s, the General Partner’s and Millennium’s knowledge, no
hazardous substances or solid wastes have been disposed of or otherwise
released
on any Property, 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, the General Partner and Millennium have filed, or caused to be
filed,
all federal, state, county, local, and foreign tax returns and reports
required
to have been filed by them or with respect to any Property or Pledged Security
(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, personal property, real property, employee withholding, social
security, unemployment, franchise, excise, use and sales taxes. Each of
Borrower, the General Partner and Millennium has paid, or cause to be 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 Xxxxxxxx’s, the General Partner’s and
Millennium’s knowledge, threatened against any Property or Pledged Security, or
against Borrower, the General Partner or Millennium or any of their respective
properties or assets.
(g) Commercial
Loan.
(i) Xxxxxxxx,
the General Partner and Millennium hereby acknowledge and agree that Xxxxxx
has
previously advised, and again hereby advises prior to the execution of
this Note
and the other Loan Documents, that they may and should seek the advice
of an
attorney and an accountant in connection with the Loan, this Note and the
other
Loan Documents.
(xx) Xxxxxxxx,
the General Partner and Millennium hereby jointly and severally confirm
that
they have had the opportunity to seek the advice of an attorney and an
accountant of their choice in connection with the Loan, this Note and the
other
Loan Documents.
9. Covenants.
Borrower, the General Partner and Millennium jointly and severally covenant
and
agree with Xxxxxx 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, the General Partner and Millennium 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 such business purposes as
are
approved in writing by Xxxxxx. 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.
Except
for any Senior Indebtedness in existence as of the Effective Date and any
other
indebtedness in existence on the Effective Date that is shown on the financial
statements delivered to Lender prior to the closing of this Note, Borrower
shall
not enter into any promissory note, loan documents, or other agreement
for
borrowed money without the prior written consent of Xxxxxx, including,
without
limitation, any loan documents evidencing Senior Indebtedness. Unless otherwise
agreed by Xxxxxx in writing, all loan documents evidencing any Senior
Indebtedness entered into after the Effective Date shall provide that (i)
the
Senior Lender shall give Lender written notice of any default or event
of
default occurring under the loan documents evidencing the Senior Indebtedness,
and (ii) upon any default by Xxxxxxxx, Lender shall have the right, but
not the
obligation, to cure Xxxxxxxx’s default thereunder and to purchase the loan and
the loan documents evidencing the Senior Indebtedness from the Senior Lender.
(d) Termination
of Existence.
Nether
Borrower nor the General Partner shall cause or permit, or enter into any
agreement to cause or permit, the dissolution or termination of the existence
of
Borrower, Millennium or the General Partner or the merger, consolidation,
or
reorganization of Borrower, Millennium or the General Partner with or into
any
other entity, whether or not such party would be the surviving entity.
(e) Notice
of Certain Events.
Borrower shall promptly notify Lender in writing of the occurrence of any
event
or series of events of which Borrower, Millennium or the General Partner
have
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,
Millennium, the General Partner, the Pledged Securities or any Property,
(ii)
the occurrence of any Event of Default (without giving effect to any cure
period
applicable thereto), or (iii) any default by Borrower, Millennium, the
General
Partner or the Pledged Securities, the acceleration of the maturity of
any
indebtedness owed by Xxxxxxxx, Millennium, the General Partner or the Pledged
Securities under the Senior Indebtedness or any indenture, mortgage, agreement,
promissory note, contract or other instrument to which Borrower, Millennium
or
the General Partner is a party or by which any material asset or property
of
Borrower, Millennium or the General Partner, or any Pledged Security or
any
Property, is bound. In addition, Xxxxxxxx agrees to notify Xxxxxx in writing
at
least twenty (20) business days prior to the date that Xxxxxxxx, the General
Partner, Millennium or any Pledged Security 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, Millennium 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, the
General
Partner, Millennium and each Pledged Security, 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 Xxxxxxxx, the General
Partner, Millennium and each Pledged Security prepared in accordance with
accepted accounting principles 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 an officer of the
General
Partner, Millennium or the Pledged Security, as applicable.
(g) Taxes.
Borrower, the General Partner and Millennium shall pay, and shall cause
all
Pledged Securities to pay, all federal, state and local taxes levied against
them and their respective properties and assets, including all Properties,
as
they become due and payable and before the same become delinquent. Borrower
or
such other person owing such tax 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 has notified Lender of the intent to contest such taxes, and
(iii) adequate reserves for the liability associated with such tax have
been
established in accordance with GAAP. Borrower 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) Certain
Liens.
Borrower, the General Partner and Millennium shall not create, incur, assume,
or
suffer to exist, directly or indirectly, or permit any Pledged Security
to
create, incur, assume or suffer to exist, any Lien on, against or with
respect
to the Pledged Securities or the Collateral, whether now owned or hereafter
acquired, or an income or profits therefrom, except for (i) Liens in favor
of
Lender, (ii) Liens in favor of the Senior Lender that secure Senior
Indebtedness, (iii) Liens in favor of United Development Funding, L.P.,
a Nevada
limited partnership, and (iv) other Liens approved by Xxxxxx’s prior written
consent; provided,
however,
notwithstanding any other provision contained in this Note, in the event
that
any one (1) or more of Borrower, the General Partner and Millennium
incurs, assumes, or suffers to exist, directly or indirectly, any Lien
that is a
mechanic’s or materialman’s lien (either one of which, a “Mechanic’s
Lien”)
on,
against or with respect to the Pledged Securities or the Collateral (or
permits
any Pledged Security to do so), and one (1) or more of Borrower, the General
Partner and Millenium diligently, and in good faith, contests (or causes
a
Pledged Security to contest) the validity of such Xxxxxxxx’s Lien by any one (1)
or more of a legal, equitable, and administrative proceeding, then none
of the
Borrower, the General Partner and Millenium shall be deemed to have fully
complied with this Section
9(h)
of this
Note for a period of ninety (90) days from the earlier of (x) the date
on which
any one (1) or more of Borrower, the General Partner and Millennium became
actually aware, or (y) through the exercise of commercially reasonable
monitoring of its business, should have become aware, of the creation,
incurrence, assumption, or sufferance of the Mechanic’s Lien (but as to the
certain contested Xxxxxxxx’s Lien only), provided that the one (1) or more of
the contesting Borrower, the General Partner and Millenium have set aside
adequate reserve for satisfaction of such Mechanic’s Lien in accordance with
GAAP.
(i) Indebtedness.
Borrower shall not incur any indebtedness for borrowed money after the
Effective
Date, other than Senior Indebtedness or other indebtedness for borrowed
money
approved by Xxxxxx’s prior written consent.
(j) Distributions.
At any
time when any amounts are due to Lender hereunder, without Xxxxxx’s prior
written consent, (i) Borrower shall not declare, pay, make, or authorize
any
dividends or distributions of any kind to its partners or any other person
or
entity, and (ii) neither Borrower nor the General Partner nor Millennium
shall
permit or cause any Pledged Security to declare, pay, make or authorize
any
dividends or distributions of any kinds to its owners or any other person
or
entity. If Lender approves any such dividend or distribution, Lender may,
in its
sole discretion, require that the full amount of such dividend or distribution
(or any portion thereof) to be paid to Lender to reduce any indebtedness
outstanding under this Note.
(k) Borrower
and Pledgor Documents.
In
addition to the information otherwise required to be provided to Lender
pursuant
to this Note, Borrower shall, promptly (but in any event within seven (7)
days)
upon request, furnish to Lender, all of the following documents:
(i) all
financial statements, pro formas, projections, budgets, capital expenditure
and
expense reports, and other material financial and operational information
related to Borrower, the General Partner, Millennium and the Pledged Securities;
(ii) minutes
of the meetings and all written consents of the board of directors, shareholders
and partners (or other governing authorities and owners) of Borrower, the
General Partner, Millennium and each Pledged Security;
(iii) all
loan
documents evidencing indebtedness for borrowed money of all Borrower, the
General Partner, Millennium and the Pledged Securities, and all amendments
thereto;
(iv) the
survey and/or plat for each Property, a copy of the owner’s title commitment for
each Property, the title exception documents and, upon issuance, a copy
of the
owner’s title policy for each Property;
(v) all
due
diligence documents related to each 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 of Borrower and the General Partner
and endorsements of such policies to Lender, in accordance with and meeting
the
requirement of Section
9(n)
hereof,
and copies of certificates of builder’s liability insurance covering each
Property; and
(vii) all
project updates, development reports, sales reports, budgets, pro formas,
and
similar information with respect to each Property.
(l) Audit.
Borrower, the General Partner and Millennium 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 (but not more than once annually), to (i)
audit
all books and records related to Borrower, the General Partner, Millennium,
the
Pledged Securities and the Properties, and the Collateral, and (ii) visit
and
inspect any of the offices of Xxxxxxxx, the General Partner, Millennium
and the
Pledged Securities and to inspect and make copies of all books and records,
and
to write down and record any information the Lender Representatives obtain.
The
reasonable expenses of any such audit shall be borne by Borrower. Borrower,
the
General Partner and Millennium agree to cooperate fully with Lender and
to cause
the Pledged Securities to cooperate fully with Lender in connection with
such
audits and inspections. Lender shall make commercially reasonable efforts
to
preserve any such information and return any such documents to Borrower
after
the Loan is paid in full.
(m) Assignments.
Borrower, the General Partner and Millennium shall not permit or cause,
and
shall not enter into any consent or agreement to permit or cause, any Pledgor
to
assign, transfer or convey, any Pledged Security, without Xxxxxx’s prior written
consent. Borrower and the General Partner shall take all actions, and refrain
from taking all actions, required to cause Pledgors to comply with this
Section
9(m).
(n) General
Liability Insurance.
Borrower and the General Partner shall, at all times, maintain or cause
to be
maintained, general liability insurance with no less than $1,000,000 in
coverage
amounts. Each such policy shall provide that Lender be given at least thirty
(30) days written notice as a condition precedent to any cancellation thereof
or
material change therein. Borrower and the General Partner shall obtain
an
endorsement to each such policy naming Lender as an additional insured
to each
such policy, and provide Lender annually with the insurance certificate,
evidencing such coverage, the endorsement of each such policy to Lender,
and
evidence of payment of the premium for each such policy.
(o) Property
Insurance.
Borrower shall, at all times, maintain or cause to be maintained, hazard
insurance on each Property with coverage amounts that are normal and customary
for similarly-situated entities engaged in similar businesses.
(p) Operation
of Business.
Borrower, the General Partner and Millennium shall operate their businesses
in
compliance with all applicable federal, state and local laws, rules,
regulations, and ordinances. Borrower, the General Partner and Millennium
shall
maintain their existence and good standing in each state where they operate
or
do any business, except in any jurisdictions where the failure to maintain
such
existence and good standing would not have a material adverse effect,
individually or in the aggregate, on its financial condition or operations.
Borrower, the General Partner and Millennium shall obtain, maintain and
keep
current, 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.
(q) Alterations.
Without
the prior written consent of Xxxxxx, Xxxxxxxx shall not enter into any
loan
documents evidencing Senior Indebtedness or any material amendment to any
loan
documents evidencing Senior Indebtedness, permit any increase in the maximum
amount of any Senior Indebtedness, or enter into any renewal or extension
of the
loan documents evidencing any Senior Indebtedness.
(r) Reimbursement
Contract.
Borrower, the General Partner and Millennium shall obtain Xxxxxx’s written
consent prior to entering into or permitting any affiliate (including any
Pledgor) to enter into any contract or agreement with any district or city
related to any Property (each, a “Reimbursement
Contract”).
As a
condition to giving its prior written consent to any such Reimbursement
Contract, Lender may, in its sole discretion, require that (i) the Reimbursement
Contract and/or the proceeds therefrom or related thereto be assigned to
Lender
to be applied to reduce Borrower’s obligations hereunder, or (ii) the proceeds
therefrom or related thereto be used for any business purposes specified
by
Lender. Borrower, the General Partner and Millennium agree to, and agree
to
cause the Pledged Securities and the respective affiliates of Borrower,
the
General Partner and Millennium to, execute, enter into and deliver to Lender
any
additional agreements or assignments that Lender may request in connection
with
the foregoing provisions hereof.
(s) Opinion
Letter.
Borrowers shall deliver the opinion letter required by Section
6(f),
which
shall be satisfactory in form and substance satisfactory to Lender and
its
counsel, to Lender within thirty (30) days following the date of the initial
closing of the Loan.
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(b),
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; or
(ii) any
financial statement, representation, warranty, or certificate made or furnished
by or with respect to Borrower, the General Partner or Millennium 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,
the General Partner or Millennium 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 Xxxxxx; 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
of such “event of default” or “default” is given by Xxxxxx; or
(v) the
entry
of a decree or order for relief by a court having jurisdiction in respect
of
Xxxxxxxx, the General Partner or Millennium 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 sixty (60) days, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of Borrower, the General Partner or Millennium for any substantial
part of their property, or ordering the winding up or liquidation of such
person’s affairs; or
(vi) the
commencement by Xxxxxxxx, the General Partner or Millennium 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, the General Partner or Millennium for any
substantial part of their respective properties, or the making by Xxxxxxxx,
the
General Partner or Millennium of any assignment for the benefit of creditors,
or
the admission by Xxxxxxxx, the General Partner or Millennium in writing
of its
inability to pay its debts generally as they become due; or
(vii) the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of all or a substantial
part of the assets of Borrower, the General Partner or Millennium, or of
any
Pledged Security or Property, in a proceeding brought against or initiated
by
Borrower, the General Partner or Millennium; or
(viii) if
Borrower, the General Partner or Millennium are liquidated or dissolved
or winds
up their affairs, or the sale or liquidation of all or substantially all
of the
assets of Borrower, the General Partner or Millennium; or
(ix) any
assignment, transfer, or conveyance of any Pledged Security occurs 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 Senior Indebtedness
or any credit agreement, loan agreement, promissory note, or other document
evidencing indebtedness for borrowed money incurred by Xxxxxxxx, the General
Partner or Millennium, or (B) any subordination agreement, security agreement,
pledge agreement, guaranty, deed of trust, or other agreement providing
security
or collateral for indebtedness, executed by Xxxxxxxx, the General Partner
or
Millennium, 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, the General Partner or Millennium 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);
(xi) the
death
or disability of Xxxxxxx Xxxxxxx; or
(xii) any
Loan
Document ceases to become valid and binding for any reason; or
(xiii) Borrower,
the General Partner or Millennium suffers the entry against it of a final
judgment for the payment of money in excess of $50,000 which is not covered
by
insurance; or
(xiv) Borrower,
the General Partner or Millennium suffers a writ or warrant of attachment
or any
similar process to be issued by any tribunal against all or any substantial
part
of its properties, assets or any collateral for this Note, and such writ
or
warrant of attachment or any similar process is not stayed or released
within
sixty (60) days after the entry or levy thereof or after any stay is vacated
or
set aside.
(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,
the General Partner and Millennium. 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 Xxxxxxxx,
the General Partner and Millennium and any and all sureties, guarantors
and
endorsers of this Note, (ii) exercise any its rights under any of the Loan
Documents, and/or (iii) exercise all other rights and remedies available
to
Lender at law and at equity, including, without limitation, such rights
existing
under the Uniform Commercial Code. No delay on the part of Lender in exercising
any power under this Note shall operate as a waiver of such power or right
nor
shall any single or partial exercise of any power or right preclude further
exercise of that power or right.
(c) If
this
Note is placed in the hands of an attorney for collection after an Event
of
Default or failure to pay under this Note, or if all or any part of the
indebtedness represented hereby is proved, established or collected in
any court
or in any bankruptcy, receivership, debtor relief, probate or other court
proceedings, Borrower, the General Partner and Millennium, 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.
(a) Notwithstanding
anything to the contrary contained in this Note or any other Loan Document,
(i)
this Note shall never bear interest in excess of the Highest Lawful Rate,
and
(ii) if at any time the rate at which interest is payable on this Note
is
limited by the Highest Lawful Rate by the foregoing clause (i) or by reference
to the Highest Lawful Rate in the definitions of Base Rate and Default
Rate,
then this Note shall bear interest at the Highest Lawful Rate and shall
continue
to bear interest at the Highest Lawful Rate until such time as the total
amount
of interest accrued on this Note equals (but does not exceed) the total
amount
of interest which would have accrued on this Note, had there been no Highest
Lawful Rate applicable to this Note.
(b) It
is the
intention of the parties hereto that all aspects of this Note and the other
Loan
Documents, and the transactions contemplated hereby and thereby, comply
with all
laws, including, specifically, any applicable usury laws. In furtherance
thereof, Borrower, the General Partner, Millennium 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 Millennium nor the General Partner 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 (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, Borrower, the General Partner and Millennium (and any other
payors
of this Note) agree that Lender 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. Indemnity;
Release.
Each of
Borrower, the General Partner and Millennium, 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, Millennium or 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 Xxxxxxxx, the
General Partner and Millennium) 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, the General Partner and Millennium jointly and severally represents
and warrants to Lender that it and each of its principals has read and
fully
understands the terms and provisions of this Note and the other Loan Documents,
has had an opportunity to review this Note and the other Loan Documents
with
legal counsel and has executed this Note and/or any Loan Document to which
it is
a party 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 Xxxxxxxx, the General Partner, Millennium 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 and the other Loan
Documents.
14. Further
Assurances.
Each of
Borrower, the General Partner and Millennium, at their expense, will promptly
execute and deliver to Lender, and cause the Pledged Securities to execute
and
deliver to Lender, all such other and further documents, agreements and
instruments, and shall deliver all such supplementary information, in compliance
with or accomplishment of the agreements of Borrower, the General Partner
and
Millennium under this Note and the other Loan Documents, as Lender shall
request.
15. Cumulative
Remedies.
Each of
Borrower, the General Partner and Millennium hereby agree that all rights
and
remedies that Xxxxxx is afforded by reason of this Note are separate and
cumulative with respect to Borrower, the General Partner and Millennium
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, the General Partner and Millennium
at
0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Facsimile No. (000)
000-0000 or, with respect to Lender, to Lender at 0000 Xxxxx Xxxx, Xxxxx
000,
Xxxxxxx, Xxxxx 00000, Facsimile No. (000) 000-0000 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 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; 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 AND MILLENNIUM
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.
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 or any other Loan Document
nor
consent to any departure herefrom, shall in any event be effective unless
the
same shall be in writing and signed by Xxxxxx 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, the General
Partner and Millennium, and their respective successors and assigns, including,
without limitation, any receiver, trustee or debtor in possession of or
for
Borrower, the General Partner or Millennium, and shall inure to the benefit
of
Lender and its successors and assigns. Neither Borrower nor the General
Partner
nor Millennium 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 without the consent of Borrower, the General Partner, Millennium
or any
of their respective affiliates. Should the status, composition, structure
or
name of Borrower, the General Partner or Millennium change, this Note and
the
other Loan Documents shall continue to be binding upon such person or entity
and
also cover such person or entity under the new status composition, structure
or
name according to the terms hereof and thereof.
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. Confidentiality.
Lender
agrees to keep confidential any information furnished or made available
to by
Borrower pursuant to this Agreement; provided
that
nothing herein shall prevent Lender from disclosing such information (a)
to any
affiliate, officer, director, employee, agent, or advisor of Lender, (b)
to any
other person if reasonably incidental to the administration of the Note,
(c) as
required by any law, rule, or regulation, including, without limitation,
the
federal securities laws, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to Lender other than as a result of a disclosure by Lender prohibited by
this
Agreement, (g) in connection with any litigation to which Lender or any
of its
affiliates may be a party, whether to defend itself, reduce its liability,
protect or exercise any of its claims, rights, remedies or interests under
or in
connection with the Loan Documents or otherwise, (h) to the extent necessary
in
connection with the exercise of any remedy under this Note or any other
Loan
Document or to any actual or proposed participant or assignee; provided
that
such party is informed of the confidential nature of such information and
that
by receiving such information it is agreeing to be bound by these provisions,
(i) to an investor or prospective investor in Lender that also agrees that
the
information shall be used solely for the purpose of evaluating an investment
in
Lender, or (j) any assignee of or participant in, or potential assignee
of or
participant in, any of its rights or obligations under this Agreement;
provided
that
such party is informed of the confidential nature of such information and
that
by receiving such information it is agreeing to be bound by these
provisions.
26. WAIVER
OF JURY TRIAL, PUNITIVE DAMAGES, ETC.
EACH OF BORROWER, THE GENERAL PARTNER AND MILLENNIUM HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT
ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR THE LOAN DOCUMENTS
OR
ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR ASSOCIATED HEREWITH OR
THEREWITH, BEFORE OR AFTER MATURITY OF THIS NOTE; (B) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SUCH PARTY MAY HAVE TO CLAIM OR
RECOVER
IN ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED BELOW, (C) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF LENDER OR COUNSEL FOR ANY
PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT 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 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.
27. ENTIRE
AGREEMENT.
THIS NOTE AND THE OTHER LOAN DOCUMENTS TOGETHER CONSTITUTE THE ENTIRE AGREEMENT
AMONG THE PARTIES CONCERNING THE SUBJECT MATTER HEREOF, AND ALL PRIOR
DISCUSSIONS, AGREEMENTS AND STATEMENTS, WHETHER ORAL OR WRITTEN, ARE MERGED
INTO
THIS NOTE AND THE OTHER LOAN DOCUMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES AND THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
[The
remainder of this page is left blank intentionally.]
This
Note
has been executed by Xxxxxxxx, the General Partner, Millennium and Lender
on
this the ___ day of November, 2006, effective for all purposes as of the
Effective Date.
| BORROWER: | | |
| |
CENTURION
ACQUISITIONS, L.P.
a Texas Limited Partnership
By: Pars Investments, Inc.
Its: General Partner
|
|
|
|
|
| | By: | /s/ Xxxxxxx
Xxxxxxx |
| |
Name: Xxxxxxx Xxxxxxx |
| | Its:
President |
GENERAL
PARTNER:
Pars
Investments, Inc., a Texas corporation 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 this Note),
and
(ii) makes the representations, warranties, covenants and agreements in
this
Note which are, by their terms, applicable to General Partner.
| | | |
| |
PARS
INVESTMENTS, INC.
a Texas corporation
|
|
|
|
|
| | By: | /s/ Xxxxxxx
Xxxxxxx |
| |
Name: Xxxxxxx Xxxxxxx |
| | Its:
President |
MILLENNIUM:
Millennium
NTX Properties, L.L.C., a Texas limited liability company acting in its
own
capacity, hereby (i) agrees with and accepts all of the terms and conditions
of
this Note which are applicable to Millennium (as such term is defined in
this
Note), and (ii) makes the representations, warranties, covenants and agreements
in this Note which are, by their terms, applicable to Millennium.
| | | |
| |
MILLENNIUM
NTX PROPERTIES, L.L.C.
a Texas limited liability company
|
|
|
|
|
| | By: | /s/ Xxxxxxx
Xxxxxxx |
| |
Name: Xxxxxxx Xxxxxxx |
| | Its:
Sole
Managing Member |
| LENDER: | | |
| |
UNITED
DEVELOPMENT FUNDING III, L.P.
a Delaware limited partnership
By: UMTH Land Development, L.P.
Its: General Partner
By: UMT Services Inc.
|
|
|
|
|
| Date: | By: | /s/ Xxxx
Xxxxxxx |
| |
Name: Xxxx Xxxxxxx |
| | Its:
Executive Vice President |
