SECURED BY DEED OF TRUST
$3,675,000.00 August 6, 1997 Irving, Texas
Interest Rate Available: Reference Rate plus three-fourths percent (0.75%) per year;
Maturity Date: August 6, 1999 (see Section 8 below for extension option).
1. FOR VALUE RECEIVED, PACIFIC UNITED, L.P., a Texas limited partnership ("Borrower"), promises to pay to the order of BANK OF AMERICA TEXAS, N.A. ("Bank") at Bank's Real Estate Division Office in Irving, Dallas County, Texas, or at such other place as Bank from time to time may designate, the principal sum of Three Million Six Hundred Seventy- Five Thousand and No/100 Dollars ($3,675,000.00) (the "Maximum Loan Amount"), or so much thereof as may be advanced, plus interest as specified in this Note. This Note evidences a construction loan ("Loan") from Bank to Borrower.
2. This Note is secured by a Deed of Trust, Security Agreement, Financing Statement and Assignment of Rental of even date herewith ("Deed of Trust") covering certain real and personal property in Dallas County, Texas, as therein described (the "Property"). It may also be secured by other collateral. This Note and the Deed of Trust are two of several Loan Documents, as defined and designated in a construction loan agreement ("Loan Agreement") between Bank and Borrower. It may also be secured by other collateral. Some or all of the Loan Documents, including the Loan Agreement, contain provisions for the acceleration of the maturity of this Note.
3. The principal sum outstanding from time to time under this Note shall bear interest at Bank's Reference Rate plus three-fourths percent (0.75%) per year (the "Reference-based Rate"). As used here, "Reference Rate" means the per annum rate of interest publicly announced from time to time by Bank at Irving, Texas, as its Reference Rate. The Reference Rate is set by Bank based on various factors, including. Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing loans. Bank may price loans at, above or below the Reference Rate. Any change in the Reference Rate shall take effect on the day specified in the public announcement of such change. Interest shall be calculated on the basis of a 365-day year and actual days elapsed.
4. Accrued interest shall be payable on the tenth (10th) day of each calendar month. The first installment of interest shall be payable on September 10, 1997.
5. Prior to the Maturity Date, principal shall be payable in quarterly installments of Three Hundred Thousand and No/100 Dollars ($300,000.00) each, commencing on the date (the "Initial Principal Payment Date") that is the tenth (10th) day of the calendar month immediately following the earlier to occur of (i) the Phase I Completion Date (as such term is defined in the Loan
Promissory Note ($3,675,000)/Pacific United, L.P.
Page 1 2 Agreement) or (ii) May 10, 1998, with additional installments being due and payable quarter-annually thereafter, on the tenth (10th) day of each third month thereafter from the Initial Principal Payment Date until the Maturity Date, when the entire unpaid balance of principal and accrued interest shall be due and payable. Prepayments of principal made during a calendar quarter in connection with Borrower's sale of Lots (as such term is defined in the Loan Agreement) shall be credited against the next maturing installment of principal due hereunder.
6. [Intentionally omitted]
7. (Intentionally omitted].
8. (a) All unpaid principal and all accrued, unpaid interest shall be due and payable on the Maturity Date.
(b) "Maturity Date" shall mean August 6, 1999, unless extended to August 6, 2001, pursuant to subsection (c) following.
(c) So long as no Event of Default has occurred and is continuing and no event has occurred that with notice or the passage of time could become an Event of Default, Bank shall extend the Maturity Date to August 6, 2001, upon the occurrence of the following:
(i) Receipt by Bank from Borrower, on a date
which is not more than ninety (90) days before and not less
than sixty (60) days before the Maturity Date, of a written
extension request (provided, Borrower may request such
extension more than 90 days prior to the Maturity Date in
connection with commencing construction of the "Phase II
Improvements", as such term is defined in the Loan Agreement);
(ii) Receipt by Bank of an appraisal of the
Property (at Borrower's expense), in form and substance
satisfactory to Bank, indicating that the value of the
Property is equal to or greater than the quotient of (1) the
outstanding principal balance of the Loan as of the date of
calculation (after credit for any principal prepayment made by
Borrower), divided by (2) seventy percent (70%);
(iii) Borrower shall have sold by August 4, 1999
not less than thirty-six (36) Lots upon the terms set forth in
the Existing Lot Sales Contract (as defined in the Loan
(iv) Borrower shall execute and deliver to Bank
such documents and instruments as Lender shall reasonably
require to evidence such extension of the Maturity Date and of
the hens, rights, security interests, and guaranties securing
the Loan; and
Promissory Note ($3,675,000)/Pacific United, L.P.
Page 2 3
(v) Borrower shall procure an endorsement to the
mortgagee policy of title insurance insuring the hen of the
Deed of Trust under Procedural Rule P9b3 of the State Board of
9. Borrower may prepay some or all of the principal under this Note without premium or penalty.
10. If Borrower fails to make any payment of principal or interest within fifteen (15) days after it becomes due and payable, Borrower agrees to pay interest on the late payment at an annual rate (the "Default Rate") equal to the lesser of (i) three (3) percent in excess of the Reference-based Rate or (ii) the highest non-usurious rate permitted by applicable law, from the date the payment becomes due until Borrower pays in full the amount past due.
11. From and after maturity of this Note, whether by acceleration or otherwise, all sums then due and payable under this Note, including all principal and all accrued and unpaid interest, shall bear interest until paid in full at the Default Rate.
12. Borrower will be in default under this Note and the Deed of Trust upon the occurrence of any one or more of the following events (an "Event of Default"), but notwithstanding anything herein to the contrary, it is expressly understood and agreed that the Bank shall not undertake to exercise any of its rights and remedies hereunder (except for required notices) until after the expiration of the applicable cure period, if any, for each Event of Default:
(a) The failure of Borrower to pay the Note or any part thereof, as it becomes due in accordance with the terms of the Note or any other Loan Documents and the continuance thereof for a period of at least three (3) days after notice of such failure from Bank; or when accelerated pursuant to any power to accelerate contained in this Note, the Deed of Trust, or any of the other Loan Documents; or