DEVELOPMENT LOAN AGREEMENT

FOR A LOAN IN THE AMOUNT OF

$8,800,000.00

MADE BY AND BETWEEN

GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company c/o
Wellsford Real Properties, Inc.
6700 Palomino Parkway
Highlands Ranch, Colorado 80130

AND

KEYBANK NATIONAL ASSOCIATION,
(INCOME PROPERTY GROUP)
A NATIONAL BANKING ASSOCIATION,
1675 BROADWAY, SUITE 400
DENVER, COLORADO 80202

Dated as of April 6, 2005

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DEVELOPMENT LOAN AGREEMENT

Project Commonly Known as
“Gold Peak at Palomino Park”

        THIS DEVELOPMENT LOAN AGREEMENT (“Agreement”) is made as of April 6,
2005, by and between GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited
liability company (“Borrower”), and KEYBANK NATIONAL ASSOCIATION, a national
banking association, its successors and assigns (“Lender”).

        W I T N E S S E T H:

RECITALS

A.     Borrower is the owner in fee simple of land located in the City of
Highlands Ranch, County of Douglas, State of Colorado, and legally described in
Exhibit A attached hereto (the “Land”). Borrower proposes to construct a
condominium project to be known as “Gold Peak at Palomino Park” on the Land
consisting of thirty-nine (39) two (2)-story buildings containing two hundred
fifty-nine (259) Units (as hereinafter defined) and approximately seven hundred
twenty-three (723) parking spaces consisting of two hundred twenty (220)
attached two-car garages, thirty-nine (39) attached one-car garages, thirty-two
(32) detached one-car garages and two hundred twelve (212) surface parking
spaces (the “Project”).

B.     Borrower has applied to Lender for a loan in the amount of up to Eight
Million Eight Hundred Thousand and 00/100 DOLLARS ($8,800,000.00) (the “Loan”)
to reimburse Borrower for development costs incurred in connection with the
development of the Project, and Lender is willing to make the Loan on the terms
and conditions hereinafter set forth.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

        Incorporation of Recitals and Exhibits. The foregoing preambles and all
other recitals set forth herein are made a part hereof by this reference.
Exhibits A through I, to this Agreement are attached hereto are incorporated in
this Agreement and expressly made a part hereof by this reference.

ARTICLE 1
DEFINITIONS

1.1 Defined Terms. The following terms as used herein shall have the following
meanings:

        Adjusted Prime Rate: A rate per annum equal to the sum of (a) the Prime
Rate Margin and (b) the greater of (i) the Prime Rate or (ii) one percent (1%)
in excess of the Federal Funds Rate. Any change in the Adjusted Prime Rate shall
be effective immediately from and after a change in the Adjusted Prime Rate (or
the Federal Funds Rate, as applicable).

        Affiliate: With respect to a specified person or entity, any individual,
partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with such person or entity, including, without limitation, any general
or limited partnership in which such person or entity is a partner.

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        Agreement: This Development Loan Agreement.

        Appraisal: An MAI certified appraisal of the Project performed in
accordance with FIRREA and Lender's appraisal requirements by an appraiser
selected and retained by Lender.

        Architect/Engineer: Harrington Architectural Partnership LLC, a Colorado
limited liability company.

        Architect’s/Engineer’s Certificate: A certificate in the form of Exhibit
E attached hereto executed by the Architect/Engineer in favor of Lender.

        Assignment of Condominium Documents: That certain Conditional Assignment
of Condominium Unit Sales Contracts, Condominium Documents and Condominium
Developer’s Rights executed of even date herewith by Borrower in favor of
Lender, as the same may be amended, supplemented, extended, renewed, replaced
and/or restated from time to time in accordance with its terms.

        Authorized Representative: David M. Strong.

        Bankruptcy Code: Title 11 of the United States Code entitled
“Bankruptcy” as now or hereafter in effect, or any successor thereto or any
other present or future bankruptcy or insolvency statute.

        Budget: The budget specifying all costs and expenses of every kind and
nature whatever to be incurred by Borrower in connection with the development of
the Project prior to the Maturity Date.

        Budget Line Item: As such term is defined in Section 7.2.

        Business Day: A day of the year on which banks are not required or
authorized to close in Cleveland, Ohio.

        Change Order: Any request for changes in the Plans and Specifications
(other than minor field changes).

        Closing Date: Means the date of this Agreement.

        Commitment Fee: As such term is defined in Section 5.1.

        Completion Date: September 1, 2006.

        Completion Guaranty: A guaranty of performance and completion in form
and substance acceptable to Lender, executed by Guarantor.

        Condominium: The Gold Peak at Palomino Park Condominium, a condominium
to be established in accordance with the Condominium Statute pursuant to the
Condominium Documents.

        Condominium Building. Each residential condominium structure, containing
five (5) or seven (7) Units that the Borrower will construct on each Condominium
Building Site with proceeds of the Construction Loan.

        Condominium Building Site. A Building Site upon which a Condominium
Building shall be constructed.

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        Condominium Documents: All of the documents required by the Condominium
Statute or otherwise, relating to the submission of the Project to the
provisions of the Condominium Statute or to the regulation, operation,
administration or sale thereof after such submission, including, but not limited
to Declaration, Map, Articles of Incorporation, by-laws and rules and
regulations of a condominium association, management agreement, and the Contract
of Sale and deed forms to be used in connection with the sale of the Units or
Parking Spaces, all of which must be reasonably acceptable to Lender in form and
substance.

        Condominium Statute: C.R.S. 38-33.3-101 et seq., as the same may be
amended from time to time.

        Construction or construction: The construction and equipping of the
Improvements in accordance with the Plans and Specifications required to be
performed by Borrower for the development of the Project.

        Construction Commencement Date: Not later than thirty (30) days from the
date of this Agreement.

        Construction Loan. That certain revolving loan in the amount of Twenty
Million and 00/100 Dollars ($20,000,000.00) from Lender to Borrower for
construction of Condominium Buildings and parking garages.

        Construction Schedule: A schedule reasonably satisfactory to Lender and
Lender’s Consultant, establishing a timetable for completion of the
Construction, showing, on a monthly basis, the anticipated progress of the
Construction and also showing that the Improvements can be completed on or
before the Completion Date.

        Contingency Fund: A Budget Line Item which shall represent an amount
necessary to provide reasonable assurances to Lender that additional funds are
available to be used if additional costs and expenses are incurred or additional
interest accrues on the Loan, or unanticipated events or problems occur.

        Contract Deposits: All reservations, deposits, down payments, or the
like paid under Contracts of Sale or reservation receipts for Units at the
Project.

        Contract of Sale: A legally enforceable contract, in form and content
reasonably satisfactory to Lender and Lender’s counsel, between Borrower and a
bona fide third party purchaser for the sale and purchase of an individual Unit
with a Contract Deposit of not less than $2,500.00, which Contract Deposit shall
have been paid and such deposit shall be in the form of cash or immediately
available funds and held by the Title Insurer in an account established by such
Title Insurer at Lender.

Each contract must by the terms thereof (i) be expressly inferior and
subordinate to the lien of any deeds of trust now or hereafter existing for the
benefit of Lender which encumbers the Project, (ii) be non-assignable without
the Lender’s prior written consent, and (iii) otherwise comply with all
requirements of Governmental Authorities so that the purchaser of such Unit
shall have no election or right to rescind such contract without the loss of its
Contract Deposit. A purchaser shall not be considered a bona fide third party
purchaser if it has contracted, directly or indirectly, for the purchase of more
than two (2) Units. In addition, no more than two (2) Units may be purchased by
purchasers of multiple Units. Moreover, a bona fide third party purchaser shall
not include the Borrower, any member or manager of the Borrower, any
stockholder, director, officer, partner, member or manager of any member or
manager

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of Borrower, or any partner, member, manager, stockholder, director or officer
of any constituent party of any member or manager of the Borrower, or any member
of the immediate family or affiliate (as defined in Rule 405 of the Securities
Act of 1933) of any of the foregoing parties.

        Control: As such term is used with respect to any person or entity,
including the correlative meanings of the terms “controlled by” and “under
common control with”, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of such person
or entity, whether through the ownership of voting securities, by contract or
otherwise.

        Daily LIBOR Rate: The rate of interest calculated by Lender on a daily
basis equal to the one month rate of interest (rounded upward to the next
highest 1/16th of 1%) of the one month London interbank offered rate for
deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on the second
preceding Business Day; as determined and adjusted from time to time in Lender’s
sole discretion. For purposes of this Definition, “Business Day” means a day
other than a Saturday or Sunday on which commercial banks are open for
international business, including dealings in U. S. Dollar deposits, in London,
England.

        Deed of Trust: A Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (Development Loan), executed by Borrower for the benefit of
Lender securing this Agreement, the Note, and all obligations of Borrower in
connection with the Loan, granting a first priority lien on Borrower’s fee
interest in the Project, subject only to the Permitted Exceptions.

        Default or default: Any event, circumstance or condition, which, if it
were to continue uncured, would, with notice or lapse of time or both,
constitute an Event of Default hereunder.

        Default Rate: A rate per annum equal to three percentage points (300
basis points) in excess of the Interest Rate otherwise applicable on each
outstanding advance of the Loan, but shall not at any time exceed the highest
rate permitted by law.

        Deficiency Deposit: As such term is defined in Section 8.1.

        Environmental Indemnity: An environmental indemnity from the Borrower
and Guarantor, jointly and severally, indemnifying Lender with regard to all
matters related to Hazardous Material and other environmental matters.

        Environmental Proceedings: Any environmental proceedings, whether civil
(including actions by private parties), criminal, or administrative proceedings,
relating to the Project.

        Environmental Report: An environmental report prepared at Borrower’s
expense by a qualified environmental consultant approved by Lender, dated not
more than three (3) months prior to the date of this Agreement and addressed to
Lender (or subject to separate letter agreement permitting Lender to relay on
such environmental report) and satisfactory to Lender in form and substance, as
determined by Lender in its sole discretion.

        ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder from time to time.

        Event of Default: As such term is defined in Article 13.

        Extended Maturity Date: As such term is defined in Section 3.6.

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        Extension Option: As such term is defined in Section 3.6.

        Extention Term: The period of time commencing on the day after the
Initial Maturity Date and ending on the Extended Maturity Date.

        Federal Funds Rate: Shall mean, for any day, the rate per annum (rounded
upward to the nearest on one-hundredth of one percent (1/100 of 1%)) announced
by the Federal Reserve Bank of Cleveland on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal
funds brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank in substantially the same manner as such Federal Reserve
Bank computes and announces the weighted average it refers to as the “Federal
Funds Effective Rate.”

        FIRREA: The Financial Institutions Reform, Recovery And Enforcement Act
of 1989, as amended from time to time.

        General Contract: The contract between Borrower and General Contractor,
pertaining to the construction of all onsite and offsite Improvements for the
Project.

        General Contractor: Tri-Star Construction West, LLC, a Colorado limited
liability company.

        Governmental Approvals: Collectively, all consents, licenses, and
permits and all other authorizations or approvals required from any Governmental
Authority for the Construction in accordance with the Plans and Specifications.

        Governmental Authority: Any federal, state, county or municipal
government, or political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality, or public body, or any court, administrative tribunal, or
public utility.

        Guarantor: Wellsford Real Properties, Inc., a Maryland corporation.

        Hazardous Material: Means and includes gasoline, petroleum, asbestos
containing materials, explosives, radioactive materials or any hazardous or
toxic material, substance or waste which is defined by those or similar terms or
is regulated as such under any Law of any Governmental Authority having
jurisdiction over the Project or any portion thereof or its use, including:
(i) any “hazardous substance” defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C.A. § 9601(14) as may be amended from time to time, or any so-called
“superfund” or “superlien” Law, including the judicial interpretation thereof;
(ii) any “pollutant or contaminant” as defined in 42 U.S.C.A. § 9601(33);
(iii) any material now defined as “hazardous waste” pursuant to 40 C.F.R. Part
260; (iv) any petroleum, including crude oil or any fraction thereof;
(v) natural gas, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel; (vi) any “hazardous chemical” as defined pursuant to 29 C.F.R.
Part 1910; and (vii) any other toxic substance or contaminant that is subject to
any other Law or other past or present requirement of any Governmental
Authority. Any reference above to a Law, includes the same as it may be amended
from time to time, including the judicial interpretation thereof.

    Improvements.        (A) All earthwork, infrastructure and other
improvements necessary for the development on the Land of thirty-nine (39)
Condominium Building Sites, and to make each such Condominium Building Site
suitable for the issuance of a building permit for the construction of a
Condominium Building and Units therein, and (B) the construction of the
amenities identified in the

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Plans and Specifications, without limitation, the clearing, filling to grade,
compacting and grading of the Land, the installation and paving of roads, the
installation of a drainage system, the installation of water and sewer lines and
other utilities to the Land and to each individual Condominium Building Site and
to the amenities, landscaping and all other improvements needed to develop the
Land, both onsite and offsite which are necessary to permit construction, use,
occupancy and enjoyment of the Condominium Buildings and Units, all in
accordance with the Plans and Specifications.

        In Balance or in balance: As such term is defined in Section 8.1.

         Including or including: Including but not limited to.

         Initial Maturity Date. November 1, 2006.

         Interest Rate Agreement. As such term is defined in Section 3.8.

         Interest Rate Protection Product. As such term is defined in Section
3.8.

         Internal Revenue Code: The Internal Revenue Code of 1986, as amended
from time to time.

         Land: As such term is defined in Recital A.

        Laws: Collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
precedential authority in the applicable jurisdiction.

        Late Charge: As such term is defined in Section 3.6.

        Leases: The collective reference to all leases, subleases and occupancy
agreements affecting the Project or any part thereof now existing or hereafter
executed and all amendments, modifications or supplements thereto approved in
writing by Lender.

        Lender: As defined in the opening paragraph of this Agreement.

         Lender's Consultant: An independent consulting architect, inspector,
and/or engineer designated by Lender in Lender's sole discretion.

         LIBOR Business Day: A Business Day on which dealings in U.S. dollars
are carried on in the London Interbank Market.

        LIBOR Rate Margin: 1.65 percent (one hundred sixty-five (165) basis
points) per annum.

        Loan: As defined in Recital B.

        Loan Amount: The maximum amount of the Loan as set forth in Section
3.1(b) as reduced by principal payments made from time to time.

        Loan Documents: The collective reference to this Agreement, the
documents and instruments listed in Section 3.2, and all the other documents and
instruments entered into from time to time, evidencing or securing the Loan or
any obligation of payment thereof or performance of Borrower’s or Guarantor’s
obligations in connection with the transaction contemplated hereunder, and any
Interest Rate Agreement, each as amended.

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        Major Subcontractor: Any subcontractor under a Major Subcontract.

        Major Subcontracts: All subcontracts between Borrower or General
Contractor and any subcontractors and materials suppliers which provide for an
aggregate contract price equal to or greater than $100,000.00.

        Material Adverse Change or material adverse change: If, in Lender’s
reasonable discretion, the business prospects, operations or financial condition
of a person, entity or property has changed in a manner which could impair the
value of Lender’s security for the Loan, prevent timely repayment of the Loan or
otherwise prevent the applicable person or entity from timely performing any of
its material obligations under the Loan Documents.

        Maturity Date: The Initial Maturity Date, provided, if Borrower timely
satisfies the conditions to extend the term of the Loan pursuant to Section 3.7,
then the Maturity Date shall be extended to the Extended Maturity Date.

        Net Sales Proceeds: Shall mean the purchase price for each Unit and
garage or parking space, including all amounts paid for extras and the like
(excluding, however, amounts for extras and the like paid for from sources other
than Loan proceeds), less a third party brokerage fee not to exceed six percent
(6%) of such purchase price to the extent due from Borrower and customary
closing costs and adjustments paid by the Borrower for deed stamps, recording
fees, taxes, title insurance premiums and a $575.00 fee paid to a third-party
warranty management company not to exceed three percent (3%) of such purchase
price.

        Note: A promissory note, in the Loan Amount, executed by Borrower and
payable to the order of Lender, evidencing the Loan.

        Operating Account: A deposit account opened and maintained by Borrower
with Lender, to be utilized in the manner set forth in Section 3.1(c).

        Payment Guaranty: A guaranty of payment executed by Guarantor and
pursuant to which the Guarantor guarantees payment of principal, interest and
other amounts due under the Loan Documents.

        Permitted Exceptions: Those matters listed on Schedule B to the Title
Policy to which title to the Project may be subject on the date of the initial
Loan disbursement and thereafter such other title exceptions as Lender may
reasonably approve in writing.

        Plans and Specifications: Detailed plans and specifications for the
Improvements, as approved by Lender, as modified hereafter with Lender’s prior
written approval or as otherwise expressly permitted by this Agreement.

        Prime Rate: That interest rate established from time to time by Lender
as Lender’s prime rate, whether or not such rate is publicly announced; the
Prime Rate may not be the lowest interest rate charged by Lender for commercial
or other extensions of credit;

        Prime Rate Margin: 0% (zero basis points) per annum.

        Proceeding: As such term is defined in Section 16.15.

        Project: As set forth in Recital A.

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        Required Permits: Each building permit, environmental permit, utility
permit, land use permit, wetland permit and any other permits, approvals or
licenses issued by any Governmental authority which are required in connection
with Construction.

        Soil Report: A soil test report prepared by a licensed engineer
satisfactory to Lender indicating to the satisfaction of Lender that the soil
and subsurface conditions underlying the Project will support the Improvements.

        State: The state of Colorado.

        Subcontracts: Subcontracts for labor or materials to be furnished to the
Project.

        Tenant: The tenant under a Lease.

        Title Insurer: Land Title Guarantee Company as agent for Chicago Title
Insurance Company, or such other title insurance company licensed in the State
as may be approved in writing by Lender.

        Title Policy: An ALTA Mortgagee’s Loan Title Insurance Policy acceptable
to Lender in its sole discretion with extended coverage issued by the Title
Insurer insuring the lien of the Deed of Trust as a valid first, prior and
paramount lien upon the Project and all appurtenant easements, and subject to no
other exceptions other than the Permitted Exceptions.

        Transfer: Any sale, transfer, lease (other than a Lease approved by
Lender), conveyance, alienation, pledge, assignment, mortgage, encumbrance
hypothecation or other disposition of (a) all or any portion of the Project or
any portion of any other security for the Loan, (b) all or any portion of the
Borrower’s right, title and interest (legal or equitable) in and to the Project
or any portion of any other security for the Loan, or (c) any interest in
Borrower or any interest in any entity which directly or indirectly holds an
interest in, or directly or indirectly controls, Borrower.

        Unavoidable Delay: Any delay in the construction of the Project, caused
by natural disaster, fire, earthquake, floods, explosion, extraordinary adverse
weather conditions, inability to procure or a general shortage of labor,
equipment, facilities, energy, materials or supplies in the open market, failure
of transportation, strikes or lockouts for which Borrower has notified Lender in
writing.

        Unit.        Each residential condominium unit located within a
Condominium Building which is constructed on the Land.

        1.2 Other Definitional Provisions. All terms defined in this Agreement
shall have the same meanings when used in the Note, Deed of Trust, any other
Loan Documents, or any certificate or other document made or delivered pursuant
hereto. The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement.

ARTICLE 2
BORROWER’S REPRESENTATIONS AND WARRANTIES

        2.1 Representations and Warranties. To induce Lender to execute this
Agreement and perform its obligations hereunder, Borrower hereby represents and
warrants to Lender as follows:

(a)     Borrower has good and marketable fee simple title to the Project,
subject only to the Permitted Exceptions.

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(b)     No litigation or proceedings are pending, or to the best of Borrower’s
knowledge threatened, against Borrower or Guarantor, which could, if adversely
determined, cause a Material Adverse Change with respect to Borrower, Guarantor
or the Project. There are no pending Environmental Proceedings and Borrower has
no knowledge of any threatened Environmental Proceedings or any facts or
circumstances which may give rise to any future Environmental Proceedings.

(c)     Borrower is a duly organized and validly existing limited liability
company and has full power and authority to execute, deliver and perform all
Loan Documents to which Borrower is a party, and such execution, delivery and
performance have been duly authorized by all requisite action on the part of
Borrower.

(d)     No consent, approval or authorization of or declaration, registration or
filing with any Governmental Authority or nongovernmental person or entity,
including any creditor, partner, or member of Borrower or Guarantor, is required
in connection with the execution, delivery and performance of this Agreement or
any of the Loan Documents.

(e)     The execution, delivery and performance of this Agreement, the execution
and payment of the Note and the granting of the Deed of Trust and other security
interests under the other Loan Documents have not constituted and will not
constitute, upon the giving of notice or lapse of time or both, a breach or
default under any other agreement to which Borrower or Guarantor is a party or
may be bound or affected, or a violation of any law or court order which may
affect the Project, any part thereof, any interest therein, or the use thereof.

(f)     There is no default under this Agreement or any of the other Loan
Documents, nor any condition which, after notice or the passage of time or both,
would constitute a default or an Event of Default under said documents.

(g)     No condemnation of any portion of the Project, (ii) no condemnation or
relocation of any roadways abutting the Project, and (iii) no proceeding to deny
access to the Project from any point or planned point of access to the Project,
has commenced or, to the best of Borrower’s knowledge, is contemplated by any
Governmental Authority.

(h)     The amounts set forth in the Budget present a full and complete
itemization by category of all costs, expenses and fees which Borrower
reasonably expects to pay or reasonably anticipates becoming obligated to pay to
complete the Construction of the Improvements.

(i)     Neither the Construction of the Improvements nor the use of the Project
when completed and the contemplated accessory uses will, to the best of
Borrower’s knowledge, violate (i) any Laws (including subdivision, zoning,
building, environmental protection and wetland protection Laws), or (ii) any
building permits, restrictions of record, or agreements affecting the Project or
any part thereof. Neither the zoning authorizations, approvals or variances nor
any other right to construct or to use the Project is to any extent dependent
upon or related to any real estate other than the Land. All Government Approvals
required for the Construction in accordance with the Plans and Specifications
have been or will be obtained prior to the initial disbursement, all Laws
relating to the Construction of the Improvements have been complied with, and
all permits and licenses required for the operation of the Project which cannot
be obtained until the Construction is completed can be obtained if the
Improvements are completed in accordance with the Plans and Specifications.

(j)     The Project will have adequate water, gas and electrical supply, storm
and sanitary sewerage facilities, other required public utilities, fire and
police protection, and means of access

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between the Project and public highways; none of the foregoing will be
foreseeably delayed or impeded by virtue of any requirements under any
applicable Laws.

(k)     No brokerage fees or commissions are payable by or to any person in
connection with this Agreement or the Loan to be disbursed hereunder.

(l)     All financial statements and other information previously furnished by
Borrower or Guarantor to Lender in connection with the Loan are true, complete
and correct in all material respects and fairly present the financial conditions
of the subjects thereof as of the respective dates thereof and do not fail to
state any material fact necessary to make such statements or information not
misleading, and no Material Adverse Change with respect to Borrower or Guarantor
has occurred since the respective dates of such statements and information.
Neither Borrower nor Guarantor has any material liability, contingent or
otherwise, not disclosed in such financial statements.

(m)     Except as disclosed in that certain Phase I Environmental Site
Assessment – Gold Peak at Palomino Park report prepared by Terracon Consulting
Engineers and Scientists – Project No. 25047934 and dated January 11, 2005, to
Borrower’s actual knowledge, (i) the Project is in a clean, safe and healthful
condition, and, except for materials used in the ordinary course of the
Construction of the Improvements, is free of all Hazardous Material and is in
compliance with all applicable Laws; (ii) neither Borrower nor, to the best
knowledge of Borrower, any other person or entity, has ever caused or permitted
any Hazardous Material to be placed, held, located or disposed of on, under, at
or in a manner to affect the Project, or any part thereof, and the Project has
never been used (whether by Borrower or, to the best knowledge of Borrower, by
any other person or entity) for any activities involving, directly or
indirectly, the use, generation, treatment, storage, transportation, or disposal
of any Hazardous Material; (iii) neither the Project nor Borrower is subject to
any existing, pending, or, to the best of Borrower’s knowledge, threatened
investigation or inquiry by any Governmental Authority, and the Project is not
subject to any remedial obligations under any applicable Laws pertaining to
health or the environment; and (iv) there are no underground tanks, vessels, or
similar facilities for the storage, containment or accumulation of Hazardous
Materials of any sort on, under or affecting the Project.

(n)     The Project is taxed separately without regard to any other property and
for all purposes the Project may be mortgaged, encumbered, conveyed and
otherwise dealt with as an independent parcel.

(o)     The Loan is not being made for the purpose of purchasing or carrying
“margin stock” within the meaning of Regulation G, T, U or X issued by the Board
of Governors of the Federal Reserve System, and Borrower agrees to execute all
instruments necessary to comply with all the requirements of Regulation U of the
Federal Reserve System.

(p)     Borrower is not a party in interest to any plan defined or regulated
under ERISA, and the assets of Borrower are not “plan assets” of any employee
benefit plan covered by ERISA or Section 4975 of the Internal Revenue Code.

(q)     Borrower is not a “foreign person” within the meaning of Section 1445 or
7701 of the Internal Revenue Code. Borrower uses no trade name other than its
actual name set forth herein.

(r)     The principal place of business of Borrower is 6700 Palomino Parkway,
Highlands Ranch, Colorado 80130. Borrower’s place of formation or organization
is the State of Colorado.

(s)     Neither Borrower nor Guarantor is (or will be) a person with whom Lender
is restricted from doing business under regulations of the Office of Foreign
Asset Control (“OFAC”) of the

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Department of the Treasury of the United States of America (including, those
Persons named on OFAC’s Specially Designated and Blocked Persons list) or under
any statute, executive order (including, the September 24, 2001 Executive Order
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism), or other governmental action and is not and
shall not engage in any dealings or transactions or otherwise be associated with
such persons. In addition, Borrower hereby agrees to provide to the Lender with
any additional information that the Lender deems necessary from time to time in
order to ensure compliance with all applicable Laws concerning money laundering
and similar activities.

(t)     Contracts of Sale. To the best of Borrower’s knowledge, all of the
Contracts of Sale when entered into will be valid and enforceable. The Borrower
will not commit or suffer any act or omission which would or could constitute a
default on its part entitling any purchaser to damages, rights of set-off or
right to terminate any Contract of Sale. All Contract Deposits shall be held
pursuant to the Contract of Sale by the Title Insurer.

(u)     Condominium Documents. To the extent such approval is required, the
Condominium Documents will be approved by all applicable federal, state or local
governmental agencies or entities with approval authority over such documents,
and Borrower agrees to maintain such approvals in good standing throughout the
term of the Loan.

        2.2 Survival of Representations and Warranties. Borrower agrees that all
of the representations and warranties set forth in Section 2.1 and elsewhere in
this Agreement are true as of the date hereof, and, except for matters which
have been disclosed by Borrower and approved by Lender in writing, at all times
thereafter. Each request for a disbursement under the Loan Documents shall
constitute a reaffirmation of such representations and warranties, as deemed
modified in accordance with the disclosures made and approved as aforesaid, as
of the date of such request. It shall be a condition precedent to each
disbursement of the Loan that each of said representations and warranties is
true and correct as of the date of such requested disbursement. Each
disbursement of Loan proceeds shall be deemed to be a reaffirmation by Borrower
that each of the representations and warranties is true and correct as of the
date of such disbursement. In addition, at Lender’s request, Borrower shall
reaffirm such representations and warranties in writing prior to each
disbursement hereunder.

ARTICLE 3
LOAN AND LOAN DOCUMENTS

        3.1 Agreement to Borrow and Lend; Lender’s Obligation to Disburse.

(a)     Subject to the terms, provisions and conditions of this Agreement and
the other Loan Documents, Borrower agrees to borrow from Lender and Lender
agrees to lend to Borrower the Loan, for the purposes and subject to all of the
terms, provisions and conditions contained in this Agreement. Lender agrees,
upon Borrower’s compliance with and satisfaction of all conditions precedent and
provided the Loan is In Balance, no Material Adverse Change has occurred with
respect to Borrower, Guarantor, or the Project and no default or Event of
Default has occurred and is continuing hereunder, to disburse Loan proceeds to
reimburse Borrower for a portion of the costs incurred by Borrower in connection
with the development of the Project and the Construction of the Improvements, to
the extent provided for in the Budget.

(b)     The maximum aggregate amount of the Loan shall not exceed Eight Million
Eight Hundred Thousand Dollars ($8,800,000.00).

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(c)     Borrower shall open an Operating Account. Borrower authorizes Lender to
disburse Loan proceeds by crediting the Operating Account; provided, however,
that Lender shall not be obligated to use such method. Lender is further
authorized to pay and principal or interest due upon the Note when and as same
shall become due by debiting funds on deposit in the Operating Account.

        3.2 Loan Documents. Borrower agrees that it will, on the date of this
Agreement execute and deliver or cause to be executed and delivered to Lender
the following documents in form and substance acceptable to Lender:

(a)     The Note.

(b)     The Deed of Trust.

(c)     The Completion Guaranty.

(d)     The Payment Guaranty.

(e)     The Environmental Indemnity.

(f)     A collateral assignment of construction documents, including, without
limitation, the General Contract, all architecture and engineering contracts,
Plans and Specifications, permits, licenses, approvals and development rights,
together with consents to the assignment and continuation agreements from the
General Contractor, the architect and other parties reasonably specified by
Lender.

(g)     Such UCC financing statements as Lender determines are advisable or
necessary to perfect or notify third parties of the security interests intended
to be created by the Loan Documents.

(h)     An Assignment of Declarant’s Rights.

(i)     An Assignment of Rights under Contracts of Sale.

(j)     Such other documents, instruments or certificates as Lender and its
counsel may reasonably require, including such documents as Lender in its sole
discretion deems necessary or appropriate to effectuate the terms and conditions
of this Agreement and the Loan Documents, and to comply with the laws of the
State.

        3.3 Term of the Loan. All principal, interest and other sums due under
the Loan Documents shall be due and payable in full on the Maturity Date without
relief from valuation and appraisement laws.

        3.4 Principal Repayment. The principal amount of the Loan shall be
repaid as follows: Upon the initial advance of the proceeds of the Construction
Loan, Borrower shall pay to Lender, on principal, a sum equal to $159,133.00 if
a Condominium Building contains five (5) Units, or $240,190.00 if such
Condominium Building contains seven (7) Units.

        3.5 Prepayments. Borrower shall have the right to make prepayments of
the Loan, in whole or in part, without prepayment penalty, upon one (1) day’s
prior written notice to Lender.

        3.6 Late Charge. Any and all amounts due hereunder or under the other
Loan Documents, except principal and accrued interest due on the Maturity Date,
which remain unpaid more than five (5)

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days after the date said amount was due and payable shall incur a fee (the “Late
Charge”) of five percent (5%) per annum of said amount, or $25.00, whichever is
greater, which payment shall be in addition to all of Lender’s other rights and
remedies under the Loan Documents, provided that no Late Charge shall apply to
the final payment of principal on the Maturity Date.

        3.7 Extension of Loan.

(a)     All principal, interest and other sums due under the Loan Documents
shall be due and payable in full on the Maturity Date. All references herein to
the Maturity Date shall mean the Initial Maturity Date, provided that Borrower
shall have the right to extend the Maturity Date for one (1) additional period
of six (6) months (“Extension Option 1”), and a second additional period of nine
(9) months (“Extension Option 2”), thereby extending the Maturity Date to May 1,
2007 with respect to Extension Option 1 (the “First Extended Maturity Date”) and
February 1, 2008 with respect to Extension Option 2 (the “Second Extended
Maturity Date”).

(b)     Borrower may only exercise each of Extension Option 1 and Extension
Option 2 upon satisfying the following conditions:

  (i) Borrower shall have delivered to Lender written notice of such election no
earlier than sixty (60) days and no later than thirty (30) prior to the Initial
Maturity Date or the First Extended Maturity Date, as applicable;

  (ii) Such notice with respect to Extension Option 2 is accompanied by an
extension fee in the amount of one-tenth of one percent of the outstanding
principal balance of the Loan. No extension fee shall be required with respect
to Extension Option 1;

  (iii) Lender shall have received Borrower’s and Guarantor’s current financial
statements, certified as correct by Borrower and Guarantor. There must be no
material adverse change in Borrower’s or Guarantor’s financial condition;

  (iv) Construction of the Improvements has been completed in accordance with
all requirements of this Loan Agreement;

  (v) With respect to Extension Option 1, Borrower shall have repaid on the
principal amount of the Loan the sum of $4,500,000.00. With respect to Extension
Option 2, Borrower shall have repaid on the principal amount of the Loan the sum
of $6,000,000.00; and

  (vi) No Event of Default exists under the Loan Documents, nor any event which
would be an Event of Default if not cured within the time allowed.

        3.8 INTEREST RATE AGREEMENTS.

(a)     If Borrower purchases an interest rate swap, cap, collar or other
interest rate protection product (“Interest Rate Protection Product”) from
Lender, Borrower shall enter into such party’s customary form of agreement
(“Interest Rate Agreement”) relating to such Interest Rate

Protection Product. Any indebtedness incurred pursuant to an Interest Rate
Agreement entered into by Borrower and Lender shall constitute indebtedness
evidenced by the Note and secured by the Deed of Trust and the other Loan
Documents to the same extent and effect as if the terms and provisions of such
Interest Rate

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Agreement were set forth herein, whether or not the aggregate of such
indebtedness, together with the disbursements made by Lender of the proceeds of
the Loan, shall exceed the face amount of the Note.

(b)     Borrower hereby collaterally assigns to Lender any and all Interest Rate
Protection Products purchased or to be purchased by Borrower in connection with
the Loan, as additional security for the Loan, and agrees to provide Lender with
any additional documentation requested by Lender in order to confirm or perfect
such security interest during the term of the Loan. If Borrower obtains an
Interest Rate Protection Product from a party other than Lender, Borrower shall
deliver to Lender such third party’s consent to such collateral assignment. No
Interest Rate Protection Product purchased from a third party may be secured by
an interest in Borrower or the Project.

ARTICLE 4
INTEREST

        4.1 Interest Rate.

(a)     Provided that no Event of Default exists, the Loan will bear interest at
the sum of (a) the Daily LIBOR Rate plus (b) the LIBOR Rate Margin. Borrower
shall pay interest in arrears on the first (1st) Business Day of each calendar
month in the amount of all interest accrued during the immediately preceding
calendar month. The rate of interest shall change immediately and
contemporaneously with any change in the Daily LIBOR Rate.

(b)     If the introduction of or any change in any Law, regulation or treaty,
or in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof, shall make it unlawful for Lender to
maintain a Daily LIBOR Rate with respect to the Loan or any portion thereof, or
to fund the Loan or any portion thereof in Dollars in the London interbank
market, or to give effect to its obligations to charge interest, then (1) Lender
shall notify Borrower that Lender is no longer able to maintain the Daily LIBOR
Rate, and (2) the interest rate of the Loan shall automatically be converted to
the Adjusted Prime Rate.

(c)     Interest on the Loan shall be calculated for the actual number of days
elapsed on the basis of a 360-day year, including the first date of the
applicable period to, but not including, the date of repayment.

ARTICLE 5
FEES AND LOAN EXPENSES

        5.1 Fees. The Borrower shall pay the following fees to Lender:

        Borrower shall pay to Lender on or before the date of this Agreement a
commitment fee in the amount of $44,000.00 [(1/2% of the Loan amount] (the
“Commitment Fee”). Such Commitment Fee is fully earned and non-refundable as of
closing.

        5.2 Loan and Administration Expenses. Borrower unconditionally agrees to
pay all expenses of the Loan, including all amounts payable pursuant to
Section 5.1 and any and all other fees owing to Lender pursuant to the Loan
Documents, and also including, without limiting the generality of the foregoing,
all reasonable attorneys’ fees and expenses, all recording, filing and
registration fees and charges, documentary taxes, all insurance premiums, title
insurance premiums and other charges of the Title Insurer, survey fees and
charges, cost of certified copies of instruments, cost of premiums on surety

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company bonds and the Title Policy, charges of the Title Insurer or other
escrowee for administering disbursements, all fees and disbursements of Lender’s
Consultant, all appraisal fees, insurance consultant’s fees, environmental
consultant’s fees, and other expenses incurred by Lender in connection with the
determination of whether or not Borrower has performed the obligations
undertaken by Borrower hereunder or has satisfied any conditions precedent to
the obligations of Lender hereunder. If any default or Event of Default occurs
hereunder or under any of the Loan Documents or if the Loan or Note or any
portion thereof is not paid in full when and as due, Borrower shall pay all
costs and expenses of Lender (including, without limitation, court costs and
counsel’s fees and disbursements and fees and costs of paralegals) incurred in
attempting to enforce payment of the Loan and expenses of Lender incurred
(including court costs and counsel’s fees and disbursements and fees and costs
of paralegals) in attempting to realize, while a default or Event of Default
exists, on any security or incurred in connection with the sale or disposition
(or preparation for sale or disposition) of any security for the Loan. Borrower
agrees to pay all brokerage, finder or similar fees or commissions payable in
connection with the transactions contemplated hereby and shall indemnify and
hold Lender harmless against all claims, liabilities, costs and expenses
(including attorneys’ fees and expenses) incurred in relation to any claim by
broker, finder or similar person.

        5.3 Time of Payment of Fees and Expenses. Lender may require the payment
of outstanding fees and expenses as a condition to any disbursement of the Loan.
Lender is hereby authorized, without any specific request or direction by
Borrower, to make disbursements from time to time in payment of or to reimburse
Lender for all Loan expenses and fees (whether or not, at such time, there may
be any undisbursed amounts of the Loan allocated in the Budget for the same).

        5.4 Expenses and Advances Secured by Loan Documents. Any and all
advances or payments made by Lender under this Article 5 from time to time
shall, as and when advanced or incurred, constitute additional indebtedness
evidenced by the Note and secured by the Deed of Trust and the other Loan
Documents.

        5.5 Right of Lender to Make Advances to Cure Borrower’s Defaults. In the
event that Borrower fails to perform any of Borrower’s covenants, agreements or
obligations contained in this Agreement or any of the other Loan Documents
(after the expiration of applicable grace periods, except in the event of an
emergency or other exigent circumstances), Lender may (but shall not be required
to) perform any of such covenants, agreements and obligations, and any amounts
expended by Lender in so doing and shall constitute additional indebtedness
evidenced by the Note and secured by the Deed of Trust and the other Loan
Documents and shall bear interest at the Default Rate.

ARTICLE 6
REQUIREMENTS PRECEDENT
TO THE INITIAL DISBURSEMENT OF THE LOAN

        6.1 Non-Construction Conditions Precedent. Borrower agrees that Lender’s
obligation to make the initial disbursement of the Loan and each subsequent
disbursement is conditioned upon Borrower’s delivery, performance and
satisfaction of the following conditions precedent in form and substance
satisfactory to Lender:

(a)     Equity: Borrower shall have provided evidence reasonably satisfactory to
Lender that Borrower’s equity invested in the Project, including the appraised
value of the Land, is not less than the difference between the total Project
cost as set forth in the Budget and the maximum Loan Amount; provided, however,
in no event shall Borrower’s equity in the Project be less than $10,000,000.00;

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(b)     Title and Other Documents: Borrower shall have furnished to Lender the
Title Policy together with legible copies of all title exception documents cited
in the Title Policy and all other legal documents affecting the Project or the
use thereof;

(c)     Survey: Borrower shall have furnished to Lender an ALTA/ACSM “Class A”
Land Title Survey of the Project. Said survey shall be dated no earlier than
ninety (90) days prior to the date of this Agreement and shall be made (and
certified to have been made) form reasonably satisfactory to Lender in its sole
discretion. Such survey shall be sufficient to permit issuance of the Title
Policy in the form required by this Agreement. Such survey shall include the
legal description of the Land;

(d)     Insurance Policies: Borrower shall have furnished to Lender not less
than ten (10) days prior to the date of this Agreement policies or binders
evidencing that insurance coverages are in effect with respect to the Project
and Borrower, in accordance with the Insurance Requirements attached hereto as
Exhibit D, for which the premiums have been fully prepaid with endorsements
satisfactory to Lender;

(e)     No Litigation: Borrower shall have furnished evidence that no litigation
or proceedings shall be pending or threatened which could or might cause a
Material Adverse Change with respect to Borrower, Guarantor, or the Project;

(f)     Utilities: Borrower shall have furnished to Lender (by way of utility
letters or otherwise) evidence establishing to the satisfaction of Lender that
the Project when constructed will have adequate water supply, storm and sanitary
sewerage facilities, telephone, gas, electricity, fire and police protection,
means of ingress and egress to and from the Project and public highways and any
other required public utilities and that the Project is benefited by insured
easements as may be required for any of the foregoing;

(g)     Attorney Opinions: Borrower shall have furnished to Lender an opinion
from counsel for Borrower and Guarantor covering due authorization, execution
and delivery and enforceability of the Loan Documents and also containing such
other legal opinions as Lender shall reasonably require;

(h)     Appraisal: Lender shall have obtained an Appraisal, the appraised value
of which shall provide for a loan-to-cost ratio and loan-to-value ratio not to
exceed forty percent (40%), which Appraisal is satisfactory to Lender in all
respects;

(i)     Searches: Borrower shall have furnished to Lender current bankruptcy,
federal tax lien and judgment searches and searches of all Uniform Commercial
Code financing statements filed in the State demonstrating the absence of
adverse claims;

(j)     Financial Statements: Borrower shall have furnished to Lender current
annual financial statements of Borrower, the Guarantor, the General Contractor
and such other persons or entities connected with the Loan as Lender may
reasonably request, each in form and substance and certified by such individual
as acceptable to Lender. Borrower and the Guarantor shall provide such other
additional financial information Lender reasonably requires;

(k)     Management Agreements: Borrower shall have delivered to Lender executed
copies of any management and development agreements entered into by Borrower in
connection with the Construction of the Improvements within the Project;

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(l)     Flood Hazard: Lender has received evidence that the Project is not
located in an area designated by the Secretary of Housing and Urban Development
as a special flood hazard area, or flood hazard insurance acceptable to Lender
in its sole discretion;

(m)     Zoning: If the Title Policy does not include a zoning endorsement,
Borrower shall have furnished to Lender a zoning letter in form reasonably
acceptable to Lender as to compliance of the Project with zoning and similar
laws;

(n)     Organizational Documents: Borrower shall have furnished to Lender proof
satisfactory to Lender of Borrower’s and Guarantor’s authority, formation,
organization and good standing in their respective state of incorporation or
formation and, if applicable, qualification as a foreign entity in good standing
in the State, of all corporate, partnership, trust and limited liability company
entities (including Borrower and Guarantor) executing any Loan Documents,
whether in their own name or on behalf of another entity. Borrower and Guarantor
shall also provide certified resolutions in form and content satisfactory to
Lender, authorizing execution, delivery and performance of the Loan Documents to
be executed by each of them, and such other documentation as Lender may
reasonably require to evidence the authority of the persons executing the Loan
Documents;

(o)     Easements: Borrower shall have furnished Lender all easements reasonably
required for the Construction, maintenance or operation of and access to the
Project and such easements shall be insured by the Title Policy;

(p)     No Defaults: There shall be no uncured Default or Event of Default by
Borrower hereunder;

(q)     Additional Documents: Borrower shall have furnished to Lender such other
materials, documents, papers or requirements regarding the Project, Borrower and
Guarantor as Lender shall reasonably request.

        6.2 Required Construction Documents. On or before the date of this
Agreement, Borrower shall cause to be furnished to Lender the following, in form
and substance satisfactory to Lender and Lender’s Consultant in all respects,
for Lender’s approval:

(a)     Fully executed copies of the following, each satisfactory to Lender and
Lender’s Consultant in all respects: (i) a General Contract with the General
Contractor; (ii) Major Subcontracts; and (iii) all contracts with architects and
engineers;

(b)     A schedule of values, including a trade payment breakdown, setting forth
a description of all contracts let by Borrower and/or the General Contractor for
the design, engineering, construction and equipping of the Improvements;

(c)     An initial sworn statement of the General Contractor, approved by
Borrower, Architect/Engineer and Lender’s Consultant covering all work done and
to be done, together with lien waivers covering all work and materials for which
payments have heretofore been made by Borrower;

(d)     Copies of each of the Required Permits, except for those Required
Permits which cannot yet be issued, in which event such Required Permits will be
obtained by Borrower on a timely basis in accordance with all applicable
building, land use, zoning and environmental codes, statutes and regulations and
will be delivered to Lender at the earliest possible date. In all events the
Required

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Permits required to be delivered prior to the initial disbursement of Loan
proceeds shall include permits necessary to commence development of the
Improvements;

(e)     Full and complete detailed Plans and Specifications for the Improvements
in duplicate, prepared by the Architect/Engineer;

(f)     The Construction Schedule;

(g)     The Soil Report;

(h)     The Environmental Report;

(i)     A report from Lender’s Consultant which contains an analysis of the
Plans and Specifications, the Budget, the Construction Schedule, the General
Contract, all subcontracts then existing and the Soil Report. Such report shall
be solely for the benefit of Lender and contain (i) an analysis satisfactory to
Lender demonstrating the adequacy of the Budget to complete the Improvements and
(ii) a confirmation that the Construction Schedule is realistic. Lender’s
Consultant shall monitor construction of the Improvements and shall visit the
Project at least one (1) time each month, and shall certify as to amounts of
construction costs for all requested fundings;

(j)     The Architect’s/Engineer’s Certificate;

(k)     Certification from an engineer or other professional reasonably
acceptable to Lender in a form acceptable to Lender confirming that any wetlands
located on the Land will not preclude the development of the Project;

(l)     A Notice of Commencement, if required under applicable state or local
law; and

(m)     Such other reports, materials and documents as Lender may reasonably
require with respect to the Construction.

ARTICLE 7
BUDGET AND CONTINGENCY FUND

        7.1 Budget. Disbursement of the Loan shall be governed by the Budget, in
form and substance acceptable to Lender in Lender’s reasonable discretion. The
Budget shall specify the amount of equity invested in the Project, and all costs
and expenses of every kind and nature whatever to be incurred by Borrower in
connection with Construction of Improvements. The Budget shall include, in
addition to the Budget Line Items described in Section 7.2 below, the
Contingency Fund described in Section 7.3 below, and amounts satisfactory to
Lender for soft costs and other reserves acceptable to Lender. The initial
Budget is attached hereto as Exhibit F and made a part hereof. Once the Budget
is approved by Lender all changes to the Budget shall in all respects be subject
to the prior written approval of Lender.

        7.2 Budget Line Items. The Budget shall include as line items (“Budget
Line Items”), to the extent determined to be applicable by Lender in its
reasonable discretion, the cost of all labor, materials, equipment and fixtures
needed for the completion of the Construction of the Improvements, and all other
costs, fees and expenses relating in any way whatsoever to the Construction of
the Improvements, real estate taxes, and all other sums due in connection with
Construction of the Improvements and the ownership of the Land, the Loan, and
this Agreement. Borrower agrees that all

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Loan proceeds disbursed by Lender shall be used only for the Budget Line Items
for which such proceeds were disbursed. Subject to the provisions of Section
11.1(b) hereof, Borrower shall have the right to reallocate cost savings
effected by final Change Order or other appropriate final documentation to other
Budget Line Items subject to Lender’s prior written consent not to be
unreasonably withheld, conditioned or delayed. Lender shall not be obligated to
disburse any amount for any category of costs set forth as a Budget Line Item
which is greater than the amount set forth for such category in the applicable
Budget Line Item. Borrower shall pay as they become due all amounts set forth in
the Budget with respect to costs to be paid for by Borrower.

        7.3 Contingency Fund. The Budget shall contain a Budget Line Item
designated for the Contingency Fund. Borrower may from time to time request that
the Contingency Fund be reallocated to pay needed costs of Construction. Such
requests shall be subject to Lender’s written approval in its reasonable
discretion. Borrower agrees that the decision with respect to utilizing portions
of the Contingency Fund in order to keep the Loan In Balance shall be made by
Lender in its reasonable discretion, and that Lender may require Borrower to
make a Deficiency Deposit even if funds remain in the Contingency Fund.

        7.4 Optional Method for Payment of Interest. For Borrower’s benefit, the
Budget includes a Budget Line Item for interest payments on the Loan. Borrower
hereby authorizes Lender from time to time, for the mutual convenience of Lender
and Borrower, to disburse Loan proceeds to pay all the then accrued interest on
the Note regardless of whether Borrower shall have specifically requested a
disbursement of such amount. Any such disbursement, if made, shall be added to
the outstanding principal balance of the Note and shall, when disbursed, bear
interest at the Daily LIBOR Rate plus the LIBOR Rate Margin, or Default Rate, as
applicable. The authorization hereby granted, however, shall not obligate Lender
to make disbursements of the Loan for interest payments (except upon Borrower’s
qualifying for and requesting disbursement of that portion of the proceeds of
the Loan allocated for such purposes in the Budget) nor prevent Borrower from
paying accrued interest from its own funds.

ARTICLE 8
SUFFICIENCY OF LOAN

        8.1 Loan In Balance. Anything contained in this Agreement to the
contrary notwithstanding, it is expressly understood and agreed that the Loan
shall at all times be “In Balance”, on a Budget Line Item and an aggregate
basis. A Budget Line Item shall be deemed to be “In Balance” only if Lender
determines that the amount of such Budget Line Item is sufficient for its
intended purpose. The Loan shall be deemed to be “In Balance” in the aggregate
only when the total of the undisbursed portion of the Loan less the Contingency
Fund (subject to Borrower’s reallocation rights under Section 7.2) equals or
exceeds the aggregate of (a) the costs required to complete the Construction of
the Improvements in accordance with the Plans and Specifications and the Budget;
(b) the amounts to be paid as retainages to persons who have supplied labor or
materials to the Project; and (c) all other hard and soft costs not yet paid for
in connection with the Project, as such costs and amounts described in clauses
(a), (b) and (c) may be estimated and/or approved in writing by Lender from time
to time. Borrower agrees that if for any reason, in Lender’s reasonable
discretion, the amount of such undistributed Loan proceeds shall at any time be
or become insufficient for such purpose regardless of how such condition may be
caused, Borrower will, within ten (10) days after written request by Lender,
deposit the deficiency with Lender (“Deficiency Deposit”). The Deficiency
Deposit shall first be exhausted before any further disbursement of Loan
proceeds shall be made. Lender shall not be obligated to make any Loan
disbursements if and for as long as the Loan is not In Balance.

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ARTICLE 9
CONSTRUCTION PAYOUT REQUIREMENTS

        9.1 Monthly Payouts. After the initial disbursement of Loan proceeds,
further disbursements shall be made during Construction from time to time as the
Construction progresses, but no more frequently than once in each calendar
month. At Lender’s option, disbursements may be made by Lender into an escrow
and subsequently disbursed to Borrower or its General Contractor, Subcontractors
and materials suppliers by the Title Insurer or by Lender directly. If such
option is exercised, those Loan proceeds shall be deemed to be disbursed to
Borrower from the date of deposit into that escrow or the date of disbursement
by Lender and interest shall accrue on those proceeds from that date, regardless
of the date such proceeds are released by the Title Insurer if disbursed to such
Title Insurer.

        9.2 Additional Documents to be Furnished for Each Disbursement. As a
condition precedent to each disbursement of the Loan proceeds (including the
initial disbursement), Borrower shall furnish or cause to be furnished to Lender
the following documents covering each disbursement, in form and substance
satisfactory to Lender:

(a)     A completed Borrower’s Certificate in the form of Exhibit G attached
hereto and made a part hereof and a completed Soft and Hard Cost Requisition
Form in the form of Exhibit H attached hereto and made a part hereof, each
executed by the Authorized Representative of Borrower;

(b)     A completed standard AIA Form G702 and Form G703 signed by the General
Contractor, subcontractors, and the Project Architect/Engineer, together with
General Contractor’s sworn statements and unconditional waivers of lien, and all
subcontractors’, material suppliers’ and laborers’ sworn statements and
conditional waivers of lien, covering all work, paid with the proceeds of the
prior draw requests, together with such invoices, contracts or other supporting
data as Lender may require to evidence that all costs for which disbursement is
sought have been incurred;

(c)     Paid invoices or other evidence satisfactory to Lender that fixtures and
equipment, if any, have been paid for and are free of any lien or security
interest therein, and paid soft cost invoices in excess of $10,000.00, together
with an accounts payable listing with respect to soft cost invoices below such
amount;

(d)     An endorsement to the Title Policy issued to Lender covering the date of
disbursement and showing the Deed of Trust as a first, prior and paramount lien
on the Project subject only to the Permitted Exceptions and real estate taxes
that have accrued but are not yet due and payable and particularly that nothing
has intervened to affect the validity or priority of the Deed of Trust;

(e)     Copies of any proposed or executed Change Orders on standard AIA G701
form which have not been previously furnished to Lender and which require and
are not valid without the signatures of the General Contractor, Borrower and
Architect/Engineer, together with a copy of the pending change order log;

(f)     Copies of all construction contracts (including Major Subcontracts and
other Subcontracts, if required by Lender) which have been executed since the
last disbursement, together with any Bonds obtained or required to be obtained
with respect thereto;

(g)     All Required Permits and other Government Approvals then needed in
connection with the Project; and

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(h)     Such other instruments, documents and information as Lender or the Title
Insurer may reasonably request.

Disbursements shall be made approximately ten (10) days after receipt of all
information required by Lender to approve the requested disbursements.

        9.3 Retainages. At the time of each disbursement of Loan proceeds, five
percent (5%) of the total amount then due the General Contractor and the various
contractors, subcontractors and material suppliers for costs of the Construction
shall be withheld from the amount disbursed. Notwithstanding the foregoing,
there shall be no retainage with respect to the General Contractor’s fees;
provided, however, that the General Contractor’s fees shall not exceed the
amount set forth in the Budget and shall be disbursed based on the percentage of
completion of Construction. The retained Loan amounts for the Construction costs
will be disbursed only at the time of the final disbursement of Loan proceeds
under Article 12 below; provided, however, upon the satisfactory completion of
one hundred percent (100%) of the work with respect to any trade (including any
trade performed by the General Contractor) or the delivery of all materials
pursuant to a purchase order in accordance with the Plans and Specifications as
certified by the Architect and the Lender’s Consultant, Lender may decide on a
case by case basis (but shall not be obligated) to permit retainages with
respect to such trade or order, as the case may be, to be disbursed to Borrower
upon the Lender’s Consultant’s approval of all work and materials and Lender’s
receipt of a final waiver of lien with respect to such completed work or
delivered materials.

        9.4 Disbursements for Materials Stored On-Site. Any requests for
disbursements which in whole or in part relate to materials or equipment which
Borrower owns and which are not incorporated into the Improvements as of the
date of the request for disbursement, but are to be temporarily stored at the
Project, shall be made in Lender’s reasonable discretion. Any such request must
be accompanied by evidence satisfactory to Lender that (i) such stored materials
are included within the coverages of insurance policies carried by Borrower,
(ii) the ownership of such materials is vested in Borrower free of any liens and
claims of third parties, (iii)  such materials are properly insured and
protected against theft or damage, (iv) the materials used in the Construction
are not commodity items but are uniquely fabricated for the Construction, (v)
the Lender’s Consultant has viewed and inspected the stored materials, and (vi)
in the opinion of the Lender’s Consultant the stored materials are physically
secured and can be incorporated into the Project within forty five (45) days.
Lender may require separate Uniform Commercial Code financing statements to
cover any such stored materials.

        9.5 Disbursements for Offsite Materials. Lender may in its sole
discretion, but shall not be obligated to, approve disbursements for materials
stored off-site, in which event all of the requirements of Section 9.4 shall be
applicable to such disbursement as well as any other requirements which Lender
may, in its sole discretion, determine are appropriate under the circumstances.

ARTICLE 10
FINAL DISBURSEMENT FOR CONSTRUCTION

        10.1 Final Disbursement for Construction. Lender will advance to
Borrower the final disbursement for the cost of the Construction (including
retainages) when the following conditions have been complied with, provided that
all other conditions in this Agreement for disbursements have been complied
with:

(a)     The Improvements have been completed and equipped in accordance with the
Plans and Specifications free and clear of mechanics’ liens and security
interests;

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(b)     Borrower shall have furnished to Lender, to the extent necessary as
reasonably determined by Lender, “all risks” casualty insurance in form and
amount and with companies satisfactory to Lender in accordance with the
requirements contained herein;

(c)     Borrower shall have furnished to Lender copies of all licenses and
permits required by any Governmental Authority having jurisdiction for the use
of the Improvements and the operation thereof;

(d)     Borrower shall have furnished “as-built” plans covering the completed
Improvements;

(e)     All Improvements shall have been installed free and clear of all liens
and security interests, except in favor of Lender;

(f)     Borrower shall have furnished to Lender copies of all final waivers of
lien and sworn statements from the General Contractor, Major Subcontractors, and
if requested by Lender, Subcontractors and materials suppliers;

(g)     Borrower shall have furnished to Lender a certificate from the
Architect/Engineer or other evidence satisfactory to Lender dated at or about
the Completion Date stating that (i) the Improvements have been substantially
completed in accordance with the Plans and Specifications, and (ii) the
Improvements as so completed comply with all applicable Laws; and

(h)     Lender shall have received a certificate from the Lender’s Consultant
for the sole benefit of Lender that the Improvements have been satisfactorily
completed in accordance with the Plans and Specifications.

ARTICLE 11
OTHER COVENANTS

        11.1 Other Covenants. Borrower further covenants and agrees as follows:

(a)     Construction of Improvements. The Improvements shall be constructed and
fully equipped in a good and workmanlike manner with materials of high quality,
strictly in accordance with the Plans and Specifications (or in accordance with
any changes therein that may be approved in writing by Lender or as to which
Lender’s approval is not required), and such construction and equipping will be
commenced on or before the Construction Commencement Date and prosecuted with
due diligence and continuity in accordance with the Construction Schedule and
fully completed not later than the Completion Date. The Completion Date shall be
extended in writing by Lender by the number of days resulting from any
Unavoidable Delay in the construction of the Project, (but under no
circumstances shall Lender be obligated to extend the Completion Date beyond
sixty (60) days, provided that Lender shall not be obligated to grant any such
extension unless (a) Borrower gives notice of such delay to Lender within ten
(10) days of learning of the event resulting in such delay, (b) after giving
effect to the consequences of such delay, the Loan shall remain “In Balance.”

(b)     Changes in Plans and Specifications. No changes will be made in the
Plans and Specifications without the prior written approval of Lender; provided,
however, that Borrower may make changes to the Plans and Specifications if
(i) Borrower notifies Lender in writing of such change within seven (7) days
thereafter; (ii) Borrower obtains the approval of all parties whose approval is
required, sureties, and any Governmental Authority to the extent approval from
such parties is required; (iii) the structural integrity of the Improvements is
not impaired; (iv) the performance of the Improvements is not

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affected; (v) the cost of or reduction resulting from such change (x) does not
exceed $20,000.00 and (y) when added to all other changes which have not been
approved in writing by Lender, the resulting aggregate cost or reduction does
not exceed $60,000.00. Changes in the scope of construction work or to any
construction related contract must be documented with a change order on the AIA
Form G701 or equivalent form.

(c)     Inspection by Lender. Borrower will cooperate with Lender in arranging
for inspections by representatives of Lender of the progress of the Construction
from time to time including an examination of (i) the Improvements, (ii) all
materials to be used in the Construction, (iii) all plans and shop drawings,
(iv) any contracts, bills of sale, statements, receipts or vouchers in
connection with the Improvements, (v) all work done, labor performed, materials
furnished in and about the Improvements, (vi) all books, contracts and records
with respect to the Improvements, and (vii) any other documents relating to the
Improvements or the Construction. Borrower shall cooperate with Lender’s
Consultant to enable him to perform his functions hereunder. Borrower shall,
upon Lender’s or Lender’s Consultant’s request, correct any defect in the
Construction or any failure of the Construction to comply with the Plans and
Specifications.

(d)     Mechanics’ Liens and Contest and Settlement Thereof. Borrower will not
suffer or permit any mechanics’ lien claims to be filed or otherwise asserted
against the Project or any funds due to the General Contractor, and will
promptly discharge the same of record in case of the filing of any claims for
lien or proceedings for the enforcement thereof, provided, however, that
Borrower shall have the right to contest in good faith and with reasonable
diligence the validity of any such lien or claim provided that Borrower posts a
statutory lien bond which removes such lien from title to the Project within
twenty (20) days of written notice by Lender to Borrower of the existence of the
lien Lender will not be required to make any further disbursements of the
proceeds of the Loan until any mechanics’ lien claims have been removed of
record and Lender may, at its option, restrict disbursements to reserve
sufficient sums to pay 150% of the lien until released or discharged of record.
If Borrower shall fail promptly either (i) to discharge any such lien, or (ii)
post a statutory lien bond in the manner provided above  Lender may, at its
election (but shall not be required to), procure the release and discharge of
any such claim and any judgment or decree thereon and, further, may in its sole
discretion effect any settlement or compromise of the same, and any amounts so
expended by Lender, including premiums paid in connection with the issuance of
any surety company bonds, shall be deemed to constitute disbursement of the
proceeds of the Loan hereunder. In settling, compromising or discharging any
claims for lien, Lender shall not be required to inquire into the validity or
amount of any such claim.

(e)     Renewal of Insurance. Borrower shall cause insurance policies to be
maintained in compliance with Exhibit D at all times. Borrower shall timely pay
all premiums on all insurance policies required hereunder, and as and when
additional insurance is required, from time to time, during the progress of
Construction, and as and when any policies of insurance may expire, furnish to
Lender, premiums prepaid, additional and renewal insurance policies with
companies, coverage and in amounts satisfactory to Lender in accordance with
Section 6.1(d).

(f)     Payment of Taxes. Borrower shall pay all real estate taxes and
assessments and charges of every kind upon the Project before the same become
delinquent, provided, however, that Borrower shall have the right to pay such
tax under protest or to otherwise contest any such tax or assessment, but only
if (i) such contest has the effect of preventing the collection of such taxes so
contested and also of preventing the sale or forfeiture of the Project or any
part thereof or any interest therein, (ii) Borrower has notified Lender of
Borrower’s intent to contest such taxes, and (iii) Borrower has deposited
security in form and amount satisfactory to Lender, in its sole discretion, and
has increased the amount of such security so deposited promptly after Lender’s
request therefor. If Borrower fails to commence such

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contest or, having commenced to contest the same, and having deposited such
security required by Lender for its full amount, shall thereafter fail to
prosecute such contest in good faith or with due diligence, or, upon adverse
conclusion of any such contest, shall fail to pay such tax, assessment or
charge, Lender may, at its election (but shall not be required to), pay and
discharge any such tax, assessment or charge, and any interest or penalty
thereon, and any amounts so expended by Lender shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note). Borrower shall furnish
to Lender evidence that taxes are paid at least five (5) days prior to the last
date for payment of such taxes and before imposition of any penalty or accrual
of interest.

(g)     Tax and Insurance Escrow Accounts. Borrower shall, following the written
request of Lender and the occurrence of any Event of Default, make insurance and
tax escrow deposits, in amounts reasonably determined by Lender from time to
time as being needed to pay taxes and insurance premiums when due, in an
interest bearing escrow account held by Lender in Lender’s name and under its
sole dominion and control. All payments deposited in the escrow account, and all
interest accruing thereon, are pledged as additional collateral for the Loan.
Notwithstanding Lender’s holding of the escrow account, nothing herein shall
obligate Lender to pay any insurance premiums or real property taxes with
respect to any portion of the Project unless the Event of Default has been cured
to the satisfaction of Lender. If the Event of Default has been satisfactorily
cured, Lender shall make available to Borrower such funds as may be deposited in
the escrow account from time to time for Borrower’s payment of insurance
premiums or real property taxes due with respect to the Project.

(h)     Personal Property. All of Borrower’s personal property, fixtures,
attachments and equipment delivered upon, attached to or used in connection with
the Construction or the operation of the Project shall always be located at the
Project and shall be kept free and clear of all liens, encumbrances and security
interests.

(i)     Leasing Restrictions: Default Under Leases. Without the prior written
consent of Lender, Borrower and Borrower’s agents shall not (i) enter into any
Leases, (ii) modify, amend or terminate any Lease, or (iii) accept any rental
payment in advance of its due date. Borrower shall provide Lender with a copy of
all Leases, to which Borrower has requested Lender’s consent, no less than ten
(10) days prior to execution of such Leases. Borrower shall provide Lender with
a copy of the fully executed original of all Leases promptly following their
execution. Borrower will not enter into any residential Leases for a term of
more than one year and all such residential Leases shall be on a form approved
by Lender without material modification. Borrower will not suffer or permit any
breach or default to occur in any of Borrower’s obligations under any of the
Leases nor suffer or permit the same to terminate by reason of any failure of
Borrower to meet any requirement of any Lease including those with respect to
any time limitation within which any of Borrower’s work is to be done or the
space is to be available for occupancy by the lessee. Borrower shall notify
Lender promptly in writing in the event a Tenant commits a material default
under a Lease. At Lender’s request, Borrower shall cause Tenants to execute a
Subordination, Non-Disturbance and Attornment Agreement reasonably satisfactory
to Lender. Lender reserves the right to subordinate the Deed of Trust to any
Lease.

(j)     Appraisals. Lender shall have the right to obtain a new or updated
Appraisal of the Project from time to time. Borrower shall cooperate with Lender
in this regard. If the Appraisal is obtained to comply with this Agreement or
any applicable law or regulatory requirement, or bank policy promulgated to
comply therewith, or if an Event of Default exists, Borrower shall pay for any
such Appraisal upon Lender’s request.

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(k)     Sign and Publicity. Upon Lender’s request, Borrower shall permit Lender
to erect a sign in a conspicuous location on the Project adjacent to Business
Center Drive during the Construction indicating that the financing for the
Project is provided by Lender. Lender reserves the right to publicize the making
of the Loan.

(l)     Lost Note. Upon Lender’s furnishing to Borrower of an affidavit to such
effect, Borrower shall, if the Note is mutilated, destroyed, lost or stolen,
deliver to Lender, in substitution therefor, a new note containing the same
terms and conditions as the Note.

(m)     No Additional Debt. Except for the Loan and the Construction Loan,
Borrower shall not incur any indebtedness (whether personal or nonrecourse,
secured or unsecured) other than customary trade payables paid within sixty (60)
days after they are incurred.

(n)     Compliance With Laws. Borrower shall comply with all applicable
requirements (including applicable Laws) of any Governmental Authority having
jurisdiction over Borrower or the Project.

(o)     Organizational Documents. Borrower shall not, without the prior written
consent of Lender, permit or suffer (i) a material amendment or modification of
its organizational documents, (ii) the admission of any new member, partner or
shareholder, or (iii) any dissolution or termination of its existence.

(p)     Furnishing Notices and Reports. Borrower shall provide Lender with
copies of all material notices pertaining to the Project received by Borrower
from any Governmental Authority or insurance company within seven (7) days after
such notice is received. Further, upon Lender’s request, Borrower shall provide
Lender with copies of all inspections, reports, test results and other
information received by any Borrower, which in any way relate to the Project or
any part thereof.

(q)     Management Contracts. Borrower shall not enter into, modify, amend,
terminate or cancel any management contracts for the Project or agreements with
agents or brokers, without the prior written approval of Lender.

(r)     Construction Contracts. Borrower shall not enter into, modify, amend,
terminate or cancel any contracts for the Construction, without the prior
written approval of Lender; provided, however, that Borrower may amend any such
contract as long as such amendment does not result in an increase in the amount
budgeted for the work to be performed under any such contract, or decrease the
quality of materials or scope of work to be performed under any such contract.
Borrower will furnish Lender promptly after execution thereof executed copies of
all contracts between Borrower, architects, engineers and contractors and all
Major Subcontracts and, if requested by Lender, Subcontracts, between the
General Contractor or contractors and all of their subcontractors and suppliers,
which contracts and subcontracts may not have been furnished at the time of the
execution of this Agreement.

(s)     Correction of Defects. Within five (5) days after Borrower acquires
knowledge of or receives notice from Lender or Lender’s Consultant of a defect
in the Improvements or any departure from the Plans and Specifications, or any
other requirement of this Agreement, Borrower will proceed with diligence to
correct all such defects and departures.

(t)     Hold Disbursements in Trust. Borrower shall receive and hold in trust
for the sole benefit of Lender (and not for the benefit of any other person,
including, but not limited to, contractors or any subcontractors) all advances
made hereunder directly to Borrower, for the purpose of paying costs of

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the Construction in accordance with the Budget. Borrower shall use the proceeds
of the Loan solely for the payment of costs as specified in the Budget. Borrower
will pay all other costs, expenses and fees relating to the acquisition,
equipping, use and operation of the Project.

(u)     Alterations. Without the prior written consent of Lender, Borrower shall
not make any material alterations to the Improvements (other than completion of
the Construction in accordance with the Plans and Specifications).

(v)     No Encroachments. When the Construction is completed in accordance with
the Plans and Specifications, none of the Improvements will encroach upon any
property line, building line, setback line, side yard line or any recorded or
visible easement (or other easement of which Borrower is aware or has reason to
believe may exist) with respect to the Project, other than as set forth in the
Plans and Specifications.

(w)     Prohibition of Transfers in Violation of ERISA. Borrower shall not
assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of
its interest or rights in this Agreement or in the Project, or attempt to do any
of the foregoing or suffer any of the foregoing, nor shall any party owning a
direct or indirect interest in Borrower assign, sell, pledge, mortgage,
encumber, transfer, hypothecate or otherwise dispose of any of its rights or
interest (direct or indirect) in Borrower, attempt to do any of the foregoing or
suffer any of the foregoing, if such action would cause the Loan, or the
exercise of any of Lender’s rights in connection therewith, to constitute a
prohibited transaction under ERISA or the Internal Revenue Code or otherwise
result in Lender being deemed in violation of any applicable provision of ERISA.
Borrower agrees to indemnify and hold Lender free and harmless from and against
all losses, costs (including attorneys’ fees and expenses), taxes, damages
(including consequential damages) and expenses Lender may suffer by reason of
the investigation, defense and settlement of claims and in obtaining any
prohibited transaction exemption under ERISA necessary or desirable in Lender’s
sole judgment or by reason of a breach of the foregoing prohibitions. The
foregoing indemnification shall be a recourse obligation of Borrower and shall
survive repayment of the Note, notwithstanding any limitations on recourse
contained herein or in any of the Loan Documents.

(x)     Expenses. In addition to the fees and expenses of Lender agreed to be
paid by Borrower under the Loan Agreement, Borrower shall pay (promptly upon the
rendering of such a bill and delivery thereof to Borrower) all out-of-pocket
expenses incurred by the Lender in connection with the review of any proposed
easements, final approval and recordation of the Condominium Documents, partial
releases, and satisfaction of a loan of character contemplated hereby.

(y)     Condominium Documents. Once approved by Lender, Borrower shall not
modify, amend, or otherwise change (including without limitation, any change
that would permit any purchaser to cancel its respective Contract of Sale) in
any manner the Condominium Documents without the prior written consent of the
Lender. Borrower covenants and agrees that it shall comply with, to the extent
applicable to the Project, (a) all requirements of the Condominium Statute, (b)
all regulations promulgated from time to time by the State, pursuant thereto,
including without limitation, the filing requirements for the Condominium
Documents, and Borrower’s obligations as developer of the condominium project,
and (c) all requirements and requests of the applicable State authority or
agency in connection with the filing of the Declaration and the Unites States
Department of Housing and Urban Development, if applicable. The Borrower shall
pay in respect of any Units on or before the expiration of any applicable grace
or cure period all common expenses, charges and assessments, special or general,
and other items for the payment of which the Borrower is or may hereafter be
responsible under the terms of the Condominium Documents.

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(z)     Escrow Deposits. Except as may otherwise be required by Governmental
Authorities, all Contract Deposits shall be deposited into Escrow Account(s)
maintained by the Title Insurer with Lender. Borrower shall be responsible for
all of the costs of such escrow account(s), including, without limitation, all
of Title Insurer’s fees and the like. Borrower shall place or caused to be
placed all Contract Deposits in the escrow account subject to the return of such
Contract Deposit to a purchaser (including, to the extent of such purchaser’s
rights thereto, accrued interest on such Contract Deposit), when required by the
terms of any Contract of Sale to be paid over to the purchaser, and subject to
the payment of each such Contract Deposit to the Lender on account of the amount
to be paid to the Lender to release Units from the lien of the Deed of Trust, as
and when title to a Unit is transferred to a purchaser and the balance of the
consideration paid therefor. As and when any purchaser defaults under the terms
of any Contract of Sale and Lender determines that purchaser has no claim for
the return of the Contract Deposit such Contract Deposit shall be paid to the
Lender on account of then outstanding principal balance of the Loan or the
Construction, as determined by Lender.

(aa)     Furnishing Information.

        (i)     Borrower shall deliver or cause to be delivered to Lender the
following:

                        (a)     a Certificate of Compliance in the form of
Exhibit C attached hereto executed by Guarantor within sixty (60) days after the
end of each calendar quarter;

                        (b)     Borrower’s company prepared annual financial
statement within sixty (60) days after the end of each fiscal year.

                        (c)     Borrower’s annual Federal Income Tax Return
within thirty (30) days after timely filing, or if Borrower files a consolidated
tax return with Guarantor, a copy of Guarantor’s Federal Income Tax Return.

                        (d)     Borrower’s monthly Unit sales and closing report
within thirty (30) days following the end of each calendar month.

        (ii)     Guarantor shall deliver to cause to be delivered to Lender the
following:

                        (a)        Guarantor’s quarterly financial statement
within sixty (60) days after the end of each calendar quarter.

                        (b)        Guarantor’s annual financial statement within
one hundred twenty (120) days after the end of each calendar year.

        (iii)     All such financial statements shall be in a format approved in
writing by Lender in Lender’s reasonable sole discretion. Each financial
statement shall be certified as true, complete and correct in all material
respects by its preparer and by Borrower or, in the case of the Guarantor’s
financial statements, by the Guarantor.

        (iv)     Borrower and the Guarantor shall provide such additional
financial information as Lender reasonably requires. Borrower shall during
regular business hours permit Lender or any of its agents or representatives to
have access to and examine all of its books and records regarding the
development and operation of the Project.

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ARTICLE 12
CASUALTIES AND CONDEMNATION

        12.1 Lender’s Election to Apply Proceeds on Indebtedness.

(a)     Subject to the provisions of Section 12.1(b) below, Lender may elect to
collect, retain and apply upon the indebtedness of Borrower under this Agreement
or any of the other Loan Documents all proceeds of insurance or condemnation
(individually and collectively referred to as “Proceeds”) after deduction of all
expenses of collection and settlement, including attorneys’ and adjusters’ fees
and charges. Any proceeds remaining after repayment of the indebtedness under
the Loan Documents shall be paid by Lender to Borrower, subject to the
provisions of the Construction Loan.

(b)     Notwithstanding anything in Section 12.1(a) to the contrary, in the
event of any casualty to the Improvements or any condemnation of part of the
Project, Lender agrees to make available the Proceeds to restoration of the
Improvements if (i) no Event of Default exists, (ii) all Proceeds are deposited
with Lender, (iii) in Lender’s reasonable judgment, the amount of Proceeds
available for restoration of the Improvements (together with undisbursed
proceeds of the Loan, if any, allocated for the cost of the Construction and any
sums or other security acceptable to Lender deposited with Lender by Borrower
for such purpose) is sufficient to pay the full and complete costs of such
restoration, (iv) if the cost of restoration exceeds ten percent (10%) of the
Loan Amount, in Lender’s sole determination after completion of restoration the
Loan Amount will not exceed forty percent (40%) of the fair market value of the
Project, (v)  Guarantor reaffirms its Completion Guaranty and Payment Guaranty
in writing, and (vi) in Lender’s reasonable determination, such restoration is
likely to be completed within three (3) months after the casualty event.

        12.2 Borrower’s Obligation to Rebuild and Use of Proceeds Therefor. In
case Lender does not elect to apply or does not have the right to apply the
Proceeds to the indebtedness, as provided in Section 12.1 above, Borrower shall:

(a)     Proceed with diligence to make settlement with insurers or the
appropriate Governmental Authorities and cause the Proceeds to be deposited with
Lender;

(b)     In the event of any delay in making settlement with insurers or the
appropriate Governmental Authorities or effecting collection of the Proceeds, as
reasonably determined by Lender, deposit with Lender the full amount required to
restore and complete Construction of the damaged Improvements;

(c)     In the event the Proceeds and the available proceeds of the Loan are
insufficient to assure the Lender that the Loan will be In Balance, promptly
deposit with Lender any amount necessary to place the Loan In Balance; and

(d)     Promptly proceed with the Construction of the Improvements, including
the repair of all damage resulting from such fire, condemnation or other cause
and restoration to its former condition.

        Any request by Borrower for a disbursement by Lender of Proceeds and
funds deposited by Borrower shall be treated by Lender as if such request were
for an advance of the Loan hereunder, and the disbursement thereof shall be
conditioned upon Borrower’s compliance with and satisfaction of the same
conditions precedent as would be applicable under this Agreement for an advance
of the Loan.

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ARTICLE 13
EVENTS OF DEFAULT

        13.1 Events of Default. The occurrence of any one or more of the
following shall constitute an "Event of Default" as said term is used herein:

(a)     Failure of Borrower (i)  to make any principal or interest payment
within five (5) days after the date when due, except on the Maturity Date,
(ii) to observe or perform any of the other covenants, agreements or conditions
by Borrower to be performed under the terms of this Agreement or any other Loan
Document concerning the payment of money, for a period of ten (10) days after
written notice from Lender that the same is due and payable, or (iii) to observe
or perform any of the covenants, agreements or conditions by Borrower under the
terms of this Agreement or any of the other Loan Documents other than those set
forth in clauses (i) through (iii) above for a period of thirty (30) days after
written notice from Lender; provided that if any such failure concerning a
non-monetary covenant, agreement or condition is susceptible to cure and cannot
reasonably be cured within said thirty (30) day period, then Borrower shall have
an additional thirty (30) day period to cure such failure and no Event of
Default shall be deemed to exist hereunder so long as Borrower commences such
cure within the initial thirty (30) day period and diligently and in good faith
pursues such cure to completion within such resulting sixty (60) day period from
the date of Lender’s notice; provided, however, that if a different notice or
grace period is specified under any other subsection of this Section 13.1 with
respect to a particular breach, or if another subsection of this Section 13.1
applies to a particular breach and does not expressly provide for a notice or
grace period the specific provision shall control.

(b)     The disapproval by Lender or Lender’s Consultant at any time of any
construction work and failure of Borrower to cause the same to be corrected to
the satisfaction of Lender within the cure period provided in Section
13.1(a)(iii) above.

(c)     A delay in the Construction or a discontinuance for a period of fifteen
(15) days after written notice from Lender concerning such delay or
discontinuance (other than Unavoidable Delays), or in any event a delay in the
Construction so that the same is not, in Lender’s judgment (giving due
consideration to the assessment of Lender’s Consultant), likely to be completed
on or before the Completion Date.

(d)     The bankruptcy or insolvency of the General Contractor and failure of
Borrower to procure a contract with a new contractor satisfactory to Lender
within sixty (60) days from the occurrence of such bankruptcy or insolvency.

(e)     Any Transfer or other disposition by Borrower in violation of this
Agreement.

(f)     Any default by Borrower, as lessor, under the terms of any Lease,
consented to by Lender, following the expiration of any applicable notice and
cure period, provided that if the Lease does not provide a notice and cure
period, then the notice and cure period provided in (a)(i) above will apply to
any such monetary default, and the notice and cure period provided in (a)(iii)
will apply to any such non-monetary default (which respective periods shall
commence upon written notice of default from Lender or the applicable Tenant,
whichever occurs first).

(g)     If any warranty, representation, statement, report or certificate made
now or hereafter by Borrower or any Guarantor is untrue or incorrect in any
material respect at the time made or delivered, provided that if such breach is
reasonably susceptible of cure, then no Event of Default shall exist so long as
Borrower cures said breach (i) within the notice and cure period provided in
(a)(i) above for a breach

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that can be cured by the payment of money or (ii) within the notice and cure
period provided in (a)(iii) above for any other breach.

(h)     Borrower or Guarantor shall commence a voluntary case concerning
Borrower or Guarantor under the Bankruptcy Code; or an involuntary proceeding is
commenced against Borrower or Guarantor under the Bankruptcy Code and relief is
ordered against Borrower or Guarantor, or the petition is controverted but not
dismissed or stayed within sixty (60) days after the commencement of the case,
or a custodian (as defined in the Bankruptcy Code) is appointed for or takes
charge of all or substantially all of the property of Borrower or Guarantor; or
the Borrower or Guarantor commences any other proceedings under any
reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar Law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or Guarantor; or
there is commenced against Borrower or Guarantor any such proceeding which
remains undismissed or unstayed for a period of sixty (60) days; or the Borrower
or Guarantor fails to controvert in a timely manner any such case under the
Bankruptcy Code or any such proceeding, or any order of relief or other order
approving any such case or proceeding is entered; or the Borrower or Guarantor
by any act or failure to act indicates its consent to, approval of, or
acquiescence in any such case or proceeding or the appointment of any custodian
or the like of or for it for any substantial part of its property or suffers any
such appointment to continue undischarged or unstayed for a period of sixty (60)
days.

(i)     Borrower or Guarantor shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or shall consent to the appointment of a receiver or trustee or
liquidator of all of its property or the major part thereof or if all or a
substantial part of the assets of Borrower or Guarantor are attached, seized,
subjected to a writ or distress warrant, or are levied upon, or come into the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors.

(j)     If Borrower is enjoined, restrained or in any way prevented by any court
order from constructing the Improvements, operating the Project upon the
completion thereof, selling Units, entering into Contracts for Sale or conveying
Units pursuant to Contracts for Sale.

(k)     Failure by Borrower to make any Deficiency Deposit with Lender within
the time and in the manner required by this Agreement.

(l)     One or more final, unappealable judgments are entered against Borrower
in amounts aggregating in excess of $100,000 or if Guarantor breaches the
covenants of Guarantor set forth in Sections 14.(g) and 14.(h) of its Completion
Guaranty or Payment Guaranty and does not cure such breach within any applicable
cure period.

(m)     If Borrower or Guarantor shall fail to pay any debt owed by it or is in
default under the Construction Loan, any Interest Rate Agreement or any other
agreement with Lender or any other person or entity and such failure or default
continues after any applicable grace period specified in the instrument or
agreement relating thereto.

(n)     If a Material Adverse Change occurs with respect to Borrower, the
Project or Guarantor.

(o)     If Borrower fails to comply with and satisfy any of the final
disbursement conditions contained in Article 10 within sixty (60) days after the
Completion Date.

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(p)     The occurrence of any other event or circumstance denominated as an
Event of Default in this Agreement or under any of the other Loan Documents and
the expiration of any applicable grace or cure periods, if any, specified for
such Event of Default herein or therein, as the case may be.

(q)     If Guarantor’s net worth computed in accordance with generally accepted
accounting principles consistently applied is less than $50,000,000.00 as of the
end of any calendar quarter, and Borrower fails to pay to Lender the sum of
$2,000,000.00 within thirty (30) days after the end of the first such calendar
quarter. Upon receipt of such $2,000,000.00 payment, Lender agrees to first
apply such sum to the outstanding principal balance of this Loan, with any
excess to be applied by Lender to the outstanding principal balance of the
Construction Loan, and thereafter Lender shall hold any unapplied portion of
said $2,000,000.00 payment and disburse the same to Borrower for costs of
construction of any Condominium Building pursuant to the loan agreement for the
Construction Loan.

ARTICLE 14
LENDER’S REMEDIES IN EVENT OF DEFAULT

        14.1 Remedies Conferred Upon Lender. Upon the occurrence of any Event of
Default, Lender may pursue any one or more of the following remedies
concurrently or successively, it being the intent hereof that none of such
remedies shall be to the exclusion of any other:

(a)     Take possession of the Project and complete the Construction and do
anything which is necessary or appropriate in its sole judgment to fulfill the
obligations of Borrower under this Agreement and the other Loan Documents,
including either the right to avail itself of and procure performance of
existing contracts or let any contracts with the same contractors or others.
Without restricting the generality of the foregoing and for the purposes
aforesaid, Borrower hereby appoints and constitutes Lender its lawful
attorney-in-fact with full power of substitution in the Project: to complete the
Construction in the name of Borrower; to use unadvanced funds remaining under
the Note or which may be reserved, escrowed or set aside for any purposes
hereunder at any time, or to advance funds in excess of the face amount of the
Note; to complete the Construction; to make changes in the Plans and
Specifications which shall be necessary or desirable to complete the
Construction in substantially the manner contemplated by the Plans and
Specifications; to retain or employ general contractors, subcontractors,
architects, engineers and inspectors as shall be required for said purposes; to
pay, settle or compromise all existing bills and claims, which are or may be
liens or security interests against the Land, Improvements or Project, or to
avoid such bills and claims becoming liens against the Land, Improvements or
Project, or as may be necessary for the completion of the Improvements or the
clearance of title to the Land, Improvements or Project; to execute all
applications and certificates in the name of Borrower which may be necessary to
prosecute and defend all actions or proceedings in connection with the Land,
Improvements or Project or which may be required under or by any contract
pertaining to the Land, Improvements or Project; to take action and require such
performance as it deems necessary under any of the Bonds to be furnished
hereunder and to make settlements and compromises with the surety or sureties
thereunder, and in connection therewith, to execute instruments of release and
satisfaction; and to do any and every act which the Borrower might do in its own
behalf; it being understood and agreed that this power of attorney shall be a
power coupled with an interest and cannot be revoked;

(b)     Withhold further disbursement of the proceeds of the Loan and/or
terminate Lender’s obligations to make further disbursements hereunder;

(c)     Declare the Note to be immediately due and payable;

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(d)     Use and apply any monies or letters of credit deposited by Borrower with
Lender, regardless of the purposes for which the same was deposited, to cure any
such default or to apply on account of any indebtedness under this Agreement
which is due and owing to Lender; and

(e)     Exercise or pursue any other remedy or cause of action permitted under
this Agreement or any other Loan Documents, including the Deed of Trust, or
conferred upon Lender by operation of Law, including foreclosure of the Deed of
Trust.

Notwithstanding the foregoing, upon the occurrence of any Event of Default under
Section 13.1(h) with respect to Borrower, all amounts evidenced by the Note
shall automatically become due and payable, without any presentment, demand,
protest or notice of any kind to Borrower.

ARTICLE 15
CREATION OF PROJECT AS CONDOMINIUM, SALE OF CONDOMINIUM UNITS, AND
PARTIAL RELEASE OF CONDOMINIUM UNITS

        15.1 Joinder in Declaration. Borrower shall develop and operate the
Project as a residential condominium under the Condominium Documents and the
Condominium Statute. Provided that no Event of Default exists, Lender will, upon
its approval thereof, consent to the execution and recording, if applicable, of
Borrower’s Condominium Documents with respect to the applicable phase of the
Project, which consent shall be provided only upon the fulfillment of each and
every of the following conditions precedent:

(a)     Completion of all of the Improvements, the completion of each
Condominium Building and the appurtenant garages and common elements within each
phase of the Project submitted to condominium ownership, and the issuance of
Certificates of Occupancy (or temporary certificate of occupancy) for all Units
within such Condominium Buildings.

(b)     Verification satisfactory to Lender that any required approval by the
fire marshal or its equivalent having jurisdiction over the Project and any
other approval required by any Governmental Authority, to the extent that any
such approval is a condition to the lawful use and occupancy of a Condominium
Building and the opening of same to the public, has been obtained.

(c)     Verification satisfactory to Lender that the Condominium Documents have
been approved by every Governmental Authority from whom approval is required,
and have not been materially amended or modified from the form delivered to and
approved by Lender.

(d)     Verification satisfactory to Lender that all Units shall be sold upon a
fee simple basis with no obligatory lease of any type or any club membership
associated in any manner whatsoever with the condominium regime.

(e)     Verification satisfactory to Lender that Borrower shall have instituted
no program to offer a rental service of any kind to purchasers of Units, either
individually or in any form of pooling arrangement.

(f)     Verification satisfactory to Lender that no so-called “time-share
estate” or “interval ownership” shall be permitted.

(g)     Lender’s receipt of an assignment to Lender (as further security for the
Loan) in recordable form of all of Borrower’s right, title, and interest as
Declarant, as said term is defined in the

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Condominium Statute. Borrower agrees to execute any other documents requested by
Lender in order to evidence such assignment of its rights as Declarant in the
condominium project to Lender, and Borrower shall pay for the cost and expense
of documenting such assignment, including without limitation, all attorneys’
fees and costs associated therewith.

(h)     Borrower shall pay all out-of-pocket costs and expenses of Lender,
including, without limitation, Lender’s reasonable counsel fees in connection
with Lender’s review and consent to the Condominium Documents.

The Lender agrees that, upon its prior written approval of the Condominium
Documents and simultaneously with the recording of those Condominium Documents
required to be recorded and provided there is no Event of Default under the Loan
Documents, the Lender will confirm its consent to the Condominium Documents;
provided that Lender receives an endorsement from the Title Company insuring the
continued first priority lien of the Deed of Trust on all Units within the
Condominium and all rights and privileges reserved to Declarant under the
Condominium Documents, including, if applicable and without limitation, rights
to add future phases and make additions to or deletions from the property and
interests subjected to the Condominium Statute.

        15.2 Actions after Creation of Condominium. Upon and after the effective
submission of all or any portion of the Project to the Condominium Statute the
following shall be applicable:

(a)     The Borrower shall pay all common expense assessments and all other
assessments as required by the Condominium Documents, or any resolutions adopted
pursuant thereto, with respect to unsold Units and/or parking spaces and shall
promptly upon demand exhibit to Lender receipts for all such payments. The
failure of the Borrower to make any such payment or to exhibit such receipts
shall constitute an Event of Default under the Loan.

(b)     The Lender shall have all the rights and privileges which the owner of a
Unit has by virtue of the Condominium Statute and the Condominium Documents as
though the Lender were in fact a Unit owner, including without limiting the
generality of the foregoing, all voting rights accruing to the Borrower under
the terms of the Condominium Documents, it being understood that in the event of
an Event of Default by the Borrower under the terms of any of the Loan Documents
and so long as the same shall continue the Lender may vote in the place and
stead of the Borrower. Upon the occurrence of an Event of Default, the Lender
may exercise any and all of said rights hereinabove referred to, and the
Borrower hereby nominates and appoints the Lender so long as the Deed of Trust
remains in effect as the Borrower’s irrevocable proxy to vote and, as the
Borrower’s agent, to act with respect to all of said rights while any such
default shall continue. Written notice of default from the Lender to the
Condominium association shall be deemed conclusive as to the existence of such
default and as to the Lender’s rights and privileges under this paragraph,
including all voting rights accruing to the Borrower under the terms of the
Condominium Documents and the Condominium Statute. The provisions of this
paragraph shall in no event render the Lender liable for any common charges or
assessments required by the Condominium Documents, or any resolution adopted
pursuant to the Condominium Statute, nor shall they cause, in and of themselves,
the Lender to be deemed a Declarant.

(c)     The Borrower shall not, except after notice to the Lender and with the
prior written consent of the Lender: (i) vote for or consent to any modification
of, amendment to or relaxation in the enforcement of any provision of the
Condominium Documents; (ii) in the event of damage to or destruction of the
Project, vote in opposition to a motion to repair, restore, or rebuild; (iii) in
each and every case in which under the provisions of the Condominium Statute or
the Condominium Documents the unanimous consent or the unanimous vote of owners
of Units is required to vote or give such consent;

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(iv) partition or subdivide any Unit; (v) consent to the termination of the
Condominium; (vi) consent to any amendment to the Condominium Documents; (vii)
consent to the effectuation of any decision by the Condominium association to
terminate professional management and assume self-management of the Condominium;
or (viii) exercise any “Development Rights” reserved in the Condominium
Documents or “Special Declarant Rights.”

(d)     The Borrower shall fully and faithfully observe, keep and perform each
and every requirement, condition, covenant, agreement and provisions under the
Condominium Statute and the Condominium Documents on the part of the Borrower to
be observed, kept and performed. The Borrower shall promptly deliver to the
Lender a copy of each and every notice of default received by the Borrower with
respect to any obligation of the Borrower under the provisions of the
Condominium Statute or the Condominium Documents. In the event the Borrower
shall not cure or remedy any default within a period of thirty (30) days after
notice thereof from the Condominium association or the Lender then and in any
such case the Lender may from time to time at its option but without any
obligation to do so, cure or remedy any such default of the Borrower, and in
addition, at the option of the Lender, the entire indebtedness outstanding under
the Loan shall become due and payable at once without further notice (together
with any sums advanced by the Lender to cure or remedy any such default).

        15.3 Partial Releases of Condominium Units. Provided that no Event of
Default exists, and provided the condominium declaration for the Project
(“Declaration”) has been filed with the Clerk and Recorder of Douglas County,
Colorado, Lender agrees to release individual Units from the lien of the Deed of
Trust in accordance with and subject to all of the following terms, provisions
and conditions:

(a)     The Improvements shall have achieved Completion in accordance with the
Plans and Specifications and a Certificate of Occupancy (or a temporary
certificate of occupancy) for all of the Units in the Condominium Building in
which the applicable Unit is located shall have been issued and any required
approval by the fire marshal or its equivalent having jurisdiction over the
Project and any other approval required by any Governmental Authority, to the
extent that any such approval is a condition to the lawful use and occupancy of
such Units and the opening of same to the public, shall have been obtained.

(b)     Borrower shall pay to Lender, prior to the time of delivery of the
partial release for each Unit, in cash or immediately available funds (which
payment shall be applied in reduction of the unpaid principal balance of the
Loan), for each Unit sought to be released, a release price (the “Release
Price”) equal to one hundred percent (100%) of the Net Sales Proceeds in excess
of the applicable amount set forth in Exhibit I attached hereto for the
applicable model type of Unit for which a release has been requested.

(c)     Requests for partial releases must be in writing (a “Request for Partial
Release”), and must be accompanied by all data reasonably necessary to support
the Borrower’s being entitled to the partial release, including, without
limitation, a legal description for each Unit to be released, a partial release
document prepared by Borrower at Borrower’s expense in form and content
satisfactory to Lender and a schedule containing a list of those Units
previously released by Lender and those Units remaining to be released.

(d)     Releases of Units shall not affect or impair the lien of the Deed of
Trust and Lender’s lien and security interests created by the other Loan
Documents as to Units and other property encumbered by the Deed of Trust and the
other Loan Documents not theretofore released, and said liens and security
interests shall continue in full force and effect as to the unreleased Units and
such other property.

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(e)     As a condition precedent to Lender’s delivery of each partial release,
Borrower shall submit to Lender a photocopy of the final signed closing
statement with respect to the sale of each Unit.

(f)     Borrower shall pay all out-of-pocket costs and expenses of Lender,
including, without limitation, fees and expenses of Lender’s counsel in
connection with any partial release.

(g)     Borrower shall request each partial release not less than five (5)
Business Days prior to the date the partial release is needed.

(h)     Suitable easements or dedicated rights-of-way for ingress, egress and
utility installations for the remaining portion of the Land, as determined by
Lender, which have not been submitted to condominium ownership, remain
encumbered by the Deed of Trust and are available in the event of Lender’s
foreclosure of such remaining parcel of Land.

        15.4. Indemnification The Borrower hereby agrees to indemnify, defend,
and hold Lender harmless against and from (a) any and all liability, loss,
damage and expense (including without limitation all attorneys’ fees and
expenses) which it may incur or which may be asserted under or in connection
with the Condominium Documents, or any related documents or by reason of any
action taken by the Lender under the Deed of Trust, and (b) any and all claims
and demands whatsoever which may be incurred by or asserted against Lender by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants and conditions contained herein in the
Condominium Documents, or in any related documents. Should Lender incur any such
liability the amount thereof, together with interest thereon at the Default Rate
shall be payable by the Borrower to Lender immediately upon demand, or at its
option, Lender may reimburse itself therefor out of any sales proceeds or other
income of the Borrower related to the Project collected by the Lender and shall
be secured by the Deed of Trust until paid. The foregoing indemnification
agreement shall survive the payment of the Loan.

ARTICLE 16
GENERAL PROVISIONS

        16.1 Captions. The captions and headings of various Articles, Sections
and subsections of this Agreement and Exhibits pertaining hereto are for
convenience only and are not to be considered as defining or limiting in any way
the scope or intent of the provisions hereof.

        16.2 Modification; Waiver. No modification, waiver, amendment or
discharge of this Agreement or any other Loan Document shall be valid unless the
same is in writing and signed by the party against which the enforcement of such
modification, waiver, amendment or discharge is sought.

        16.3 Governing Law. Irrespective of the place of execution and/or
delivery, this Agreement shall be governed by, and shall be construed in
accordance with, the laws of the State of Colorado.

        16.4 Assignments. Lender may from time to time sell the Loan and the
Loan Documents (or any interest therein) and may grant participations in the
Loan. Borrower agrees to cooperate with Lender’s efforts to do any of the
foregoing and to execute all documents reasonably required by Lender in
connection therewith which do not materially adversely affect Borrower’s rights
under the Loan Documents. Borrower shall not assign or attempt to assign its
rights under this Agreement and any purported assignment shall be void. Without
the prior written consent of Lender, in Lender’s sole discretion, Borrower shall
not suffer or permit (a) any change in the management (whether direct or
indirect) of the Project, or (b) any Transfer.

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        16.5 Acquiescence Not to Constitute Waiver of Lender’s Requirements.
Each and every covenant and condition for the benefit of Lender contained in
this Agreement may be waived by Lender, provided, however, that to the extent
that Lender may have acquiesced in any noncompliance with any construction or
nonconstruction conditions precedent to any disbursement of Loan proceeds, such
acquiescence shall not be deemed to constitute a waiver by Lender of such
requirements with respect to any future disbursements of Loan proceeds.

        16.6 Disclaimer by Lender.

(a)     Lender shall have no liability, obligation or responsibility whatsoever
with respect to the Construction. Any inspections of the Construction made by or
through Lender are for purposes of administration of the Loan only and neither
Borrower nor any third party is entitled to rely upon the same with respect to
the quality, adequacy or suitability of materials or workmanship, conformity to
the Plans and Specifications, state of completion or otherwise;

(b)     Lender neither undertakes nor assumes any responsibility or duty to
Borrower to select, review, inspect, supervise, pass judgment upon or inform
Borrower of any matter in connection with the Project, including matters
relating to the quality, adequacy or suitability of: (i) the Plans and
Specifications, (ii) architects, contractors, subcontractors and material
suppliers employed or utilized in connection with the Construction, or the
workmanship of or the materials used by any of them, or (iii) the progress or
course of Construction and its conformity or nonconformity with the Plans and
Specifications; Borrower shall rely entirely upon its own judgment with respect
to such matters, and any review, inspection, supervision, exercise of judgment
or supply of information to Borrower by Lender in connection with such matters
is for the protection of Lender only, and neither Borrower nor any third party
is entitled to rely thereon; and

(c)     Lender owes no duty of care to protect Borrower or Guarantor against
negligent, faulty, inadequate or defective construction.

        16.7 Partial Invalidity; Severability. If any of the provisions of this
Agreement, or the application thereof to any person, party or circumstances,
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision or provisions to persons,
parties or circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.

        16.8 Definitions Include Amendments. Definitions contained in this
Agreement which identify documents, including, but not limited to, the Loan
Documents, shall be deemed to include all amendments and supplements to such
documents from the date hereof, and all future amendments, modifications, and
supplements thereto entered into from time to time to satisfy the requirements
of this Agreement or otherwise with the consent of Lender. Reference to this
Agreement contained in any of the foregoing documents shall be deemed to include
all amendments and supplements to this Agreement.

        16.9 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

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        16.10 Entire Agreement. This Agreement, taken together with all of the
other Loan Documents and all certificates and other documents delivered by
Borrower to Lender, embody the entire agreement and supersede all prior
agreements, written or oral, relating to the subject matter hereof.

        16.11 Waiver of Damages. In no event shall Lender be liable to Borrower
for punitive, exemplary or consequential damages, including, without limitation,
lost profits, whatever the nature of a breach by Lender of its obligations under
this Agreement or any of the Loan Documents, and Borrower for itself and
Guarantor waives all claims for punitive, exemplary or consequential damages.

        16.12 Claims Against Lender. Lender shall not be in default under this
Agreement, or under any other Loan Documents, unless a written notice
specifically setting forth the claim of Borrower shall have been given to Lender
within three (3) months after Borrower first had knowledge of the occurrence of
the event which Borrower alleges gave rise to such claim and Lender does not
remedy or cure the default, if any there be, promptly thereafter. Borrower
waives any claim, set-off or defense against Lender arising by reason of any
alleged default by Lender as to which Borrower does not give such notice timely
as aforesaid. Borrower acknowledges that such waiver is or may be essential to
Lender’s ability to enforce its remedies without delay and that such waiver
therefore constitutes a substantial part of the bargain between Lender and
Borrower with regard to the Loan. Guarantor is not intended to have any rights
as a third-party beneficiary of the provisions of this Section.

        16.13 Indemnification. Borrower shall indemnify Lender, including each
party owning an interest in the Loan and their respective officers, directors,
employees and consultants (each, an “Indemnified Party”) and defend and hold
each Indemnified Party harmless from and against all claims, injury, damage,
loss and liability, cost and expense (including attorneys’ fees, costs and
expenses) of any and every kind to any persons or property by reason of (a) the
Construction; (b) the operation or maintenance of the Project; (c) any breach of
representation or warranty, default or Event of Default under this Agreement or
any other Loan Document or Related Document; or (d) any other matter arising in
connection with the Loan, Borrower, Guarantor or the Project; provided, however,
that no Indemnified Party shall be entitled to be indemnified against its own
gross negligence or willful misconduct. The foregoing indemnification shall
survive repayment of the Loan and shall continue to benefit Lender following any
assignment of the Loan with respect to matters arising or accruing prior to such
assignment.

        16.14 Successors and Assigns. Subject to the foregoing restrictions on
transfer and assignment contained in this Agreement, this Agreement shall inure
to the benefit of and shall be binding on the parties hereto and their
respective successors and permitted assigns.

        16.15 WAIVER OF TRIAL BY JURY/JURISDICTION.

(a)     BORROWER, BY ITS EXECUTION HEREOF, AND LENDER, BY ITS ACCEPTANCE HEREOF,
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT THEY MAY
HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH
THIS AGREEMENT, THE NOTE, OR ANY OF THE OTHER LOAN DOCUMENTS, THE LOAN OR ANY
OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES THAT IT
HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL. BORROWER FURTHER ACKNOWLEDGES
THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF

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THIS WAIVER, (ii) THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE
LOAN, ENTER INTO THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, AND (iii)
THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH OTHER LOAN DOCUMENTS AS IF
FULLY INCORPORATED THEREIN.

(b)     WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS
AGREEMENT (EACH, A “PROCEEDING”), BORROWER IRREVOCABLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION
IN THE COUNTY OF DOUGLAS AND CITY AND COUNTY OF DENVER AND STATE OF COLORADO,
AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF
VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE
RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER
FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A
PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A
PROCEEDING IN ANY OTHER JURISDICTION.

        16.16 Time is of the Essence. Borrower agrees that time is of the
essence under this Agreement.

        16.17 Set-Offs. After the occurrence and during the continuance of an
Event of Default, Borrower hereby irrevocably authorizes and directs Lender from
time to time to charge Borrower’s accounts and deposits with Lender (or its
Affiliates), and to pay over to Lender an amount equal to any amounts from time
to time due and payable to Lender hereunder, under the Note or under any other
Loan Document. Borrower hereby grants to Lender a security interest in and to
all such accounts and deposits maintained by the Borrower with Lender (or its
Affiliates).

        16.18 Notices. Any notice, demand, request or other communication which
any party hereto may be required or may desire to give hereunder shall be in
writing and shall be deemed to have been properly given (a) if hand delivered,
when delivered; (b) if mailed by United States Certified Mail (postage prepaid,
return receipt requested), three Business Days after mailing (c) if by Federal
Express or other reliable overnight courier service, on the next Business Day
after delivered to such courier service or (d) if by telecopier on the day of
transmission so long as copy is sent on the same day by overnight courier as set
forth below:

If to Borrower:

          GOLD PEAK AT PALOMINO PARK LLC
          c/o Wellsford Real Properties, Inc.
          6700 Palomino Parkway
          Highlands Ranch, Colorado 80130
          Attention: David M. Strong
          Telephone: (303) 534-4396
          Facsimile: (303) 534-4398

38

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With a copy to:

          Brownstein Hyatt & Farber, P.C.
          410 Seventeenth Street, Twenty-Second Floor
          Denver, Colorado 80202
          Attention: Howard Pollack, Esq.
          Telephone: (303) 223-1100
          Facsimile: (303) 223-1111

If to Lender:

          KeyBank National Association
          Mailstop: CO-02-WT-0401
          1675 Broadway, Suite 400
          Denver, Colorado 80202
          Attention: Senior Vice President - Sales
                     Real Estate Capital Group
          Telephone (720) 904-4000
          Facsimile (720) 904-4420

With a copy to:

          KeyBank National Association
          Mailstop: CO-02-WT-0401
          1675 Broadway, Suite 400
          Denver, Colorado 80202
          Attention: Vice President - Servicing
                     Real Estate Capital Group
          Telephone (720) 904-4000
          Facsimile (720) 904-4420

or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice.

        16.19 Authorized Representative. Borrower hereby authorizes its
Authorized Representative for purposes of dealing with Lender on behalf of
Borrower in respect of any and all matters in connection with this Agreement,
the other Loan Documents, and the Loan. The Authorized Representative shall have
the power, in his discretion, to give and receive all notices, monies,
approvals, and other documents and instruments, and to take another action on
behalf of Borrower. All actions by the Authorized Representative shall be final
and binding on Borrower. Lender may rely on the authority given to the
Authorized Representative until actual receipt by Lender of a duly authorized
resolution substituting a different person as the Authorized Representative. No
more than on person shall serve as Authorized Representative at any given time.

[SIGNATURE PAGES TO FOLLOW]

39

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        EXECUTED as of the date first set forth above.

BORROWER: GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company

  By: Wellsford Park Highlands Corp., a Colorado corporation, manager

By: /s/ David M. Strong

--------------------------------------------------------------------------------

Name:       David M. Strong
Title:      Vice President
Borrower's Tax ID No.      84-1539729

STATE OF COLORADO )     ) ss.   CITY AND COUNTY OF DENVER )  

        The foregoing instrument was acknowledged before me this 6th day of
April, 2005, by David M. Strong as Vice President of Wellsford Park Highlands
Corp., a Colorado corporation, manager of GOLD PEAK AT PALOMINO PARK LLC, a
Colorado limited liability company.

          Witness my hand and official seal.

          My commission expires ________________________.

  /s/ Diane Enebol

--------------------------------------------------------------------------------

Notary Public

40

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LENDER: KEYBANK NATIONAL ASSOCIATION

By: /s/ Patricia McLaughlin

--------------------------------------------------------------------------------

Name: Patricia McLaughlin Title Vice President

STATE OF COLORADO )     ) ss.   CITY AND COUNTY OF DENVER )  

The foregoing instrument was acknowledged before me this 6th day of April, 2005,
by Patricia McLaughlin as Vice President of KeyBank National Association.

          Witness my hand and official seal.

          My commission expires April 22, 2006.

  /s/ Dana G. Moore

--------------------------------------------------------------------------------

Notary Public

41

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EXHIBITS TO LOAN AGREEMENT

Exhibit A           Legal Description of Land
Exhibit B           Permitted Exceptions
Exhibit C           Certificate of Compliance
Exhibit D           Insurance Requirements
Exhibit E           Architect's/Engineer's Certificate
Exhibit F           Initial Budget
Exhibit G           Borrower's Certificate
Exhibit H           Soft and Hard Cost Requisition Form
Exhibit I           Amount to Be Subtracted from Net Sales Proceeds to Compute
Release Prices

42

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EXHIBIT A

Legal Description of Land

PARCEL 1:

LOT 5A, HIGHLANDS RANCH FILING NO. 126-A, 7TH AMENDMENT, RECORDED UNDER
RECEPTION NO. 2005016417, COUNTY OF DOUGLAS, STATE OF COLORADO.

PARCEL 2:

THAT CERTAIN EASEMENT INTEREST AND ESTATE APPURTENANT TO PARCEL 1 AND ALL RIGHTS
AND PRIVILEGES IN CONNECTION THEREWITH, GRANTED AND DEMISED TO GOLD PEAK AT
PALOMINO PARK, A COLORADO LIMITED LIABILITY COMPANY, ITS SUCCESSORS AND ASSIGNS,
UNDER AND PURSUANT TO THE TERMS OF THAT CERTAIN MASTER DECLARATION OF COVENANTS,
CONDITIONS AND RESTRICTIONS OF PALOMINO PARK DATED DECEMBER 26, 2000 AND
RECORDED JANUARY 31, 2001 IN BOOK 1956 AT PAGE 358 IN THE OFFICE OF THE CLERK
AND RECORDER OF DOUGLAS COUNTY, COLORADO, COVERING THE REAL PROPERTY MORE
PARTICULARLY DESCRIBED AS FOLLOWS:

LOT 1B, HIGHLANDS RANCH FILING NO. 126-A, 1ST AMENDMENT, AS FILED ON DECEMBER
19, 1995 UNDER RECEPTION NO. 9560621 IN THE OFFICE OF THE CLERK AND RECORDER OF
DOUGLAS COUNTY, COLORADO.

PARCEL 3:

THAT CERTAIN EASEMENT INTEREST AND ESTATE APPURTENANT TO PARCEL 1 AND ALL RIGHTS
AND PRIVILEGES IN CONNECTION THEREWITH, RESERVED BY PARK AT HIGHLANDS LLC, A
COLORADO LIMITED LIABILITY COMPANY, ITS SUCCESSORS, ASSIGNS AND DESIGNEES, UNDER
AND PURSUANT TO THE TERMS OF THAT CERTAIN SPECIAL WARRANTY DEED, EXECUTED BY
PARK AT HIGHLANDS LLC, GRANTOR, TO PALOMINO PARK PUBLIC IMPROVEMENTS
CORPORATION, A COLORADO NON-PROFIT CORPORATION, GRANTEE, RECORDED JANUARY 03,
1996, IN BOOK 1310 AT PAGE 1099 IN THE OFFICE OF THE CLERK AND RECORDER OF
DOUGLAS COUNTY, COLORADO, COVERING THE REAL PROPERTY MORE PARTICULARLY DESCRIBED
AS FOLLOWS:

TRACT A, HIGHLANDS RANCH FILING NO. 126-A, 1ST AMENDMENT, AS FILED ON DECEMBER
19, 1995 UNDER RECEPTION NO. 9560621 IN THE OFFICE OF THE CLERK AND RECORDER OF
DOUGLAS COUNTY, COLORADO.

A-1

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PARCEL 4:

THAT CERTAIN EASEMENT INTEREST AND ESTATE APPURTENANT TO PARCEL 1 AND ALL RIGHTS
AND PRIVILEGES IN CONNECTION THEREWITH, RESERVED BY PARK AT HIGHLANDS LLC, A
COLORADO LIMITED LIABILITY COMPANY, ITS SUCCESSORS, ASSIGNS AND DESIGNEES, UNDER
AND PURSUANT TO THE TERMS OF THAT CERTAIN SPECIAL WARRANTY DEED, EXECUTED BY
PARK AT HIGHLANDS LLC, GRANTOR, TO PALOMINO PARK PUBLIC IMPROVEMENTS
CORPORATION, A COLORADO NON-PROFIT CORPORATION, GRANTEE, RECORDED JANUARY 03,
1996 IN BOOK 1310 AT PAGE 1103 IN THE OFFICE OF THE CLERK AND RECORDER OF
DOUGLAS COUNTY, COLORADO, COVERING THE REAL PROPERTY MORE PARTICULARLY DESCRIBED
AS FOLLOWS:

TRACT B, HIGHLANDS RANCH FILING NO. 126-A, 1ST AMENDMENT, AS FILED ON DECEMBER
19, 1995 UNDER RECEPTION NO. 9560621 IN THE OFFICE OF THE CLERK AND RECORDER OF
DOUGLAS COUNTY, COLORADO.

A-2

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EXHIBIT B

Permitted Exceptions

  1. TAXES AND ASSESSMENTS FOR THE YEAR 2005 AND SUBSEQUENT YEARS, A LIEN, NOT
YET DUE AND PAYABLE.

  2. ANY WATER RIGHTS OR CLAIMS OR TITLE TO WATER IN, ON OR UNDER THE LAND,
WHETHER OF RECORD OR NOT.

  3. EASEMENT GRANTED TO THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY FOR
ROADWAY, BY INSTRUMENT RECORDED MAY 23, 1975, IN BOOK 276 AT PAGE 453 AND
RECORDED OCTOBER 1, 1975 IN BOOK 280 AT PAGE 829.

  A PORTION OF SAID EASEMENT WAS ELIMINATED BY QUIT CLAIM DEED RECORDED JULY 10,
1995 IN BOOK 1273 AT PAGE 1553.

        (AFFECTS PARCEL 3).

  4. EASEMENT GRANTED TO PUBLIC SERVICE COMPANY OF COLORADO FOR ROADWAY, BY
INSTRUMENT RECORDED MAY 23, 1975, IN BOOK 276 AT PAGE 459.

  A PORTION OF SAID EASEMENT WAS ELIMINATED BY QUIT CLAIM DEED RECORDED AUGUST
31, 1995 IN BOOK 1285 AT PAGE 1029.

        (AFFECTS PARCEL 3).

  5. EASEMENT GRANTED TO PUBLIC SERVICE COMPANY OF COLORADO FOR DOWNGUYS AND
ANCHORS, BY INSTRUMENT RECORDED NOVEMBER 18, 1975, IN BOOK 282 AT PAGE 589 AND
594.

  A PORTION OF SAID EASEMENT WAS ELIMINATED BY QUIT CLAIM DEED RECORDED AUGUST
31, 1995 IN BOOK 1285 AT PAGE 1029.

        (AFFECTS PARCEL 3).

  6. EXCEPTION OF WATER RIGHTS AND GROUND WATER GRANTED TO HIGHLANDS RANCH
DEVELOPMENT CORPORATION BY MISSION VIEJO COMPANY IN QUIT CLAIM DEED AND
ASSIGNMENT DATED SEPTEMBER 26, 1980, RECORDED OCTOBER 20, 1980, IN BOOK 396 AT
PAGE 520 AND IN QUIT CLAIM DEED, ASSIGNMENT AND BILL OF SALE DATED DECEMBER 27,
1988, RECORDED DECEMBER 27, 1988 IN BOOK 834 AT PAGE 63, AND IN QUIT CLAIM DEED
AND ASSIGNMENT DATED FEBRUARY 17, 1989, AND RECORDED MARCH 14, 1989, IN BOOK 844
AT PAGE 1139, AND IN QUIT CLAIM DEED AND ASSIGNMENT DATED APRIL 11, 1990,
RECORDED APRIL 25, 1990 IN BOOK 908 AT PAGE 1205, A PORTION OF WHICH WATER
RIGHTS AND GROUND WATER WERE GRANTED TO CENTENNIAL WATER AND SANITATION DISTRICT
BY HIGHLANDS RANCH DEVELOPMENT CORPORATION IN SPECIAL WARRANTY DEED, ASSIGNMENT
AND BILL OF SALE DATED DECEMBER 27, 1988, RECORDED DECEMBER 27, 1988, IN BOOK
834 AT PAGE 84, SPECIAL WARRANTY DEED AND ASSIGNMENT DATED

B-1

--------------------------------------------------------------------------------

    FEBRUARY 17, 1989, AND RECORDED MARCH 14, 1989, IN BOOK 844 AT PAGE 1142,
AND SPECIAL WARRANTY DEED AND ASSIGNMENT DATED APRIL 11, 1990, RECORDED APRIL
25, 1990, IN BOOK 908 AT PAGE 1196, AND RE-RECORDED MAY 18, 1990, IN BOOK 912 AT
PAGE 613, AND SUBJECT TO RELINQUISHMENT OF SURFACE RIGHTS DATED DECEMBER 20,
1988, BY CENTENNIAL WATER AND SANITATION DISTRICT, RECORDED DECEMBER 27, 1988,
IN BOOK 834 AT PAGE 119.

  RELINQUISHMENT OF SURFACE RIGHTS RECORDED MAY 3, 1995 IN BOOK 1260 AT PAGE
1916,

  RELINQUISHMENT OF SURFACE RIGHTS RECORDED MAY 13, 1998 IN BOOK 1548 AT PAGE
1842.

        (AFFECTS ALL PARCELS).

  7. MINERALS AND MINERAL RIGHTS GRANTED TO HIGHLANDS RANCH DEVELOPMENT
CORPORATION BY MISSION VIEJO COMPANY IN MINERAL DEED DATED SEPTEMBER 26, 1980,
AND RECORDED OCTOBER 20, 1980, IN BOOK 396 AT PAGE 514 AND MINERAL SUBSTANCES IN
THE “FULL MINERAL RIGHTS LAND” AND COAL IN THE “COAL LANDS” AS GRANTED TO
HIGHLANDS RANCH DEVELOPMENT CORPORATION BY UNION PACIFIC LAND RESOURCES
CORPORATION IN MINERAL DEED DATED MAY 1, 1981, RECORDED MAY 20, 1981, IN BOOK
412 AT PAGE 465, RESERVING TO UNION PACIFIC LAND RESOURCES CORPORATION A 25
PERCENT NONEXECUTORY INTEREST IN AND TO SUCH MINERAL SUBSTANCES AND COAL.

  RELINQUISHMENT OF SURFACE RIGHTS RECORDED MAY 3, 1995 IN BOOK 1260 AT PAGE
1916,

  RELINQUISHMENT OF SURFACE RIGHTS RECORDED MAY 13, 1998 IN BOOK 1548 AT PAGE
1842.

        (AFFECTS ALL PARCELS).

  8. COMMUNITY DECLARATION FOR HIGHLANDS RANCH COMMUNITY ASSOCIATION, INC.,
DATED SEPTEMBER 1, 1981 AND RECORDED SEPTEMBER 17, 1981 IN BOOK 421 AT PAGE 924,
SUPPLEMENTAL DECLARATION FOR ANNEXED PROPERTY NO. 231-E RECORDED MAY 12, 1999 IN
BOOK 1706 AT PAGE 911 AND AMENDMENT TO SAID SUPPLEMENTAL DECLARATION RECORDED
MAY 4, 2000 IN BOOK 1840 AT PAGE 627.

        (AFFECTS PARCEL 1)

  9. THE PLANNED COMMUNITY DISTRICT DEVELOPMENT GUIDE FOR THE NEW TOWN OF
HIGHLANDS RANCH, AS ADOPTED BY THE BOARD OF COUNTY COMMISSIONERS OF DOUGLAS
COUNTY, COLORADO, ON SEPTEMBER 17, 1979, RECORDED OCTOBER 25, 1979 IN BOOK 373
AT PAGE 187 AS THE SAME HAS BEEN OR MAY BE AMENDED FROM TIME TO TIME.

        (AFFECTS ALL PARCELS).

B-2

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  10. EASEMENTS, CONDITIONS, RESTRICTIONS, AND RESERVATIONS ON THE RECORDED PLAT
OF HIGHLANDS RANCH FILING NO. 126-A AND HIGHLANDS RANCH FILING NO. 126-A, 1ST
AMENDMENT, HIGHLANDS RANCH FILING NO. 126-A, 6TH AMENDMENT AND HIGHLANDS RANCH
FILING NO. 126-A, 7TH AMENDMENT.

        NOTE: PLAT CORRECTION APPROVAL CERTIFICATE RECORDED MAY 22, 2000 IN BOOK
1847 AT PAGE 1219.

        (AFFECTS ALL PARCELS).

  11. RESTRICTIVE COVENANTS, WHICH DO NOT CONTAIN A FORFEITURE OR REVERTER
CLAUSE, BUT OMITTING ANY COVENANT OR RESTRICTION BASED ON RACE, COLOR, RELIGION,
SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN UNLESS AND ONLY TO THE EXTENT
THAT SAID COVENANT (A) IS EXEMPT UNDER CHAPTER 42, SECTION 3607 OF THE UNITED
STATES CODE OR (B) RELATES TO HANDICAP BUT DOES NOT DISCRIMINATE AGAINST
HANDICAPPED PERSONS, AS CONTAINED IN INSTRUMENT RECORDED MAY 03, 1995, IN BOOK
1260 AT PAGE 1897.

        (AFFECTS PARCELS 2, 3 AND 4).

  12. TERMS, CONDITIONS AND PROVISIONS AND EASEMENTS AS SET FORTH IN ACCESS
EASEMENT AGREEMENT RECORDED MAY 3, 1995 IN BOOK 1260 AT PAGE 1919 AND AMENDMENT
THERETO RECORDED MAY 3, 1996 IN BOOK 1338 AT PAGE 1966.

        (AFFECTS PARCEL 3).

  13. TERMS, CONDITIONS AND PROVISIONS OF REC CENTER USE AGREEMENT RECORDED
JANUARY 03, 1996 IN BOOK 1310 AT PAGE 1154 AND AMENDMENT THERETO RECORDED MAY
30, 1997 IN BOOK 1434 AT PAGE 1942, AND RECORDED DECEMBER 21, 1998 IN BOOK 1644
AT PAGE 978.

        (AFFECTS PARCELS 1 AND 2)

  14. TERMS, CONDITIONS AND PROVISIONS OF HIGHLANDS RANCH PLANNED COMMUNITY
DISTRICT DEVELOPMENT PLAN ZONING MAPS RECORDED JUNE 03, 1996 AT RECEPTION NO.
9629695, JUNE 3, 1996 UNDER RECEPTION NO. 9629697 AND SEPTEMBER 12, 1997 UNDER
RECEPTION NO. 9751349.

        (AFFECTS ALL PARCELS)

  15. RESTRICTIVE COVENANTS, WHICH DO NOT CONTAIN A FORFEITURE OR REVERTER
CLAUSE, BUT OMITTING ANY COVENANT OR RESTRICTION BASED ON RACE, COLOR, RELIGION,
SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN UNLESS AND ONLY TO THE EXTENT
THAT SAID COVENANT (A) IS EXEMPT UNDER CHAPTER 42, SECTION 3607 OF THE UNITED
STATES CODE OR (B) RELATES TO HANDICAP BUT DOES NOT DISCRIMINATE AGAINST
HANDICAPPED PERSONS, AS CONTAINED IN INSTRUMENT RECORDED MAY 12, 1999, IN BOOK
1706 AT PAGE 934.

B-3

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    NOTE: AMENDMENT AGREEMENT RECORDED MAY 4, 2000 IN BOOK 1840 AT PAGE 627.

        

  16. TERMS, CONDITIONS, PROVISIONS, BURDENS AND OBLIGATIONS AS SET FORTH IN
INDEMNIFICATION ASSESSMENT AND LIEN RECORDED JUNE 30, 2000 IN BOOK 1863 AT PAGE
583.

  17. TERMS, CONDITIONS, PROVISIONS, BURDENS AND OBLIGATIONS AS SET FORTH IN
PUBLIC IMPROVEMENTS OPERATION AND MAINTENANCE ASSESSMENT AND LIEN RECORDED JUNE
30, 2000 IN BOOK 1863 AT PAGE 606.

  18. TERMS, CONDITIONS, PROVISIONS, BURDENS, OBLIGATIONS AND EASEMENTS AS SET
FORTH AND GRANTED IN EASEMENT DEED TO PALOMINO PARK TELECOM, LLC, A COLORADO
LIMITED LIABILITY COMPANY RECORDED DECEMBER 22, 2000 IN BOOK 1939 AT PAGE 451.

  19. RESTRICTIVE COVENANTS, WHICH DO NOT CONTAIN A FORFEITURE OR REVERTER
CLAUSE, BUT OMITTING ANY COVENANT OR RESTRICTION BASED ON RACE, COLOR, RELIGION,
SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN UNLESS AND ONLY TO THE EXTENT
THAT SAID COVENANT (A) IS EXEMPT UNDER CHAPTER 42, SECTION 3607 OF THE UNITED
STATES CODE OR (B) RELATES TO HANDICAP BUT DOES NOT DISCRIMINATE AGAINST
HANDICAPPED PERSONS, AS CONTAINED IN INSTRUMENT RECORDED JANUARY 31, 2001, IN
BOOK 1956 AT PAGE 358.

  20. RESTRICTIVE COVENANTS, WHICH DO NOT CONTAIN A FORFEITURE OR REVERTER
CLAUSE, BUT OMITTING ANY COVENANT OR RESTRICTION BASED ON RACE, COLOR, RELIGION,
SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN UNLESS AND ONLY TO THE EXTENT
THAT SAID COVENANT (A) IS EXEMPT UNDER CHAPTER 42, SECTION 3607 OF THE UNITED
STATES CODE OR (B) RELATES TO HANDICAP BUT DOES NOT DISCRIMINATE AGAINST
HANDICAPPED PERSONS, AS CONTAINED IN DECLARATION OF COVENANTS, CONDITIONS AND
RESTRICTIONS OF GOLD PEAK, A RESIDENTIAL CONDOMINIUM COMMUNITY RECORDED
_____________, 2005 UNDER RECEPTION NO. ________________________.

  21. ANY RIGHTS OR INTERESTS WHICH MAY EXIST OR ARISE BY REASON OF THE
FOLLOWING FACTS SHOWN ON ALTA/ACSM LAND TITLE SURVEY DATED MARCH 14, 2005
PREPARED BY FORESIGHT WEST SURVEYING, INC., JOB NO. GOLDPEAK:

  A) ENCROACHMENT OF THE TRICKLE CHANNEL IN THE EASTERLY PORTION OF THE SUBJECT
PROPERTY

  B) ENCROACHMENT OF THE SIDEWALK IN THE NORTHWESTERLY PORTION OF THE SUBJECT
PROPERTY

  C) EASEMENTS, IF ANY, FOR FIRE HYDRANT, ELECTRIC TRANSFORMERS, ELECTRIC
SLEEVE, ELECTRIC BOXES, STORM MANHOLE AND GRATE, 30" COMPOSITE PIPE AND CABLE
RISER NOT LYING WITHIN RECORDED EASEMENTS.

B-4

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  22. TERMS, CONDITIONS, PROVISIONS, BURDENS, OBLIGATIONS AND EASEMENTS AS SET
FORTH AND GRANTED IN EASEMENT DEED AND AGREEMENT RECORDED __________, 2005,
UNDER RECEPTION NO. ______________________.

B-5

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EXHIBIT C

CERTIFICATE OF COMPLIANCE

KeyBank National Association
1675 Broadway, Suite 400
Denver, Colorado 80202

RE: Development Loan Agreement dated as of April 6, 2005 (as amended, modified,
supplemented, restated, or renewed, from time to time, the “Agreement”), between
GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company (the
“Borrower”), and KEYBANK NATIONAL ASSOCIATION (“Lender”).

Reference is made to the Agreement. Capitalized terms used in this Certificate
(including schedules and other attachments hereto, this “Certificate”) without
definition have the meanings specified in the Agreement.

Pursuant to applicable provisions of the Agreement, Borrower and Guarantor
hereby certify to the Lender that the information furnished in the attached
schedules, including, without limitation, each of the calculations listed below
are true, correct and complete in all material respects as of the last day of
the fiscal periods subject to the financial statements and associated covenants
being delivered to the Lender pursuant to the Agreement together with this
Certificate (such statements the “Financial Statements” and the periods covered
thereby the “reporting period”) and for such reporting periods.

The undersigned hereby further certifies to the Lender that:

  A. Covenant: Guarantor Liquidity to be not less than $7MM tested quarterly.

Calculation: Liquidity = Cash and Cash Equivalents + Marketable Securities(must
be listed on notable exchange).

Guarantor Liquidity______________ for period ending __________________

[See attached financial statement]

Compliance? (Yes or No)          ____________________

  B. Covenant: Guarantor Net Worth Covenant computed in accordance with
generally accepted accounting principles consistently applied of not less than
$66MM tested quarterly; provided, however, if Guarantor repurchases its
outstanding common stock and thereafter holds the same as treasury stock,
Guarantor’s net worth may be reduced on a dollar for dollar basis, but shall in
no event be less than Fifty Million Dollars ($50,000,000.00) notwithstanding
such stock purchases. If Guarantor’s net worth falls below $50,000,000.00 as of
the end of any calendar quarter, Borrower has paid to Lender the sum of
$2,000,000.00, within thirty (30) days after the first calendar quarter after
Guarantor’s net worth falls below $50,000,000.00.

C-1

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    Calculation: Guarantor Net Worth = Total Assets – Total Liabilities –
Intangible Assets

Guarantor Net Worth ___________for period ending ____________

See attached financial statement and evidence of repurchase of common stock held
as treasury stock.

Compliance? (Yes or No)           _____________________

2.     Review of Condition. The undersigned has reviewed the terms of the
Agreement, including, but not limited to, the representations and warranties of
the Borrower and Guarantor set forth in the Agreement and the covenants of the
Borrower set forth in the Agreement, and has made, or caused to be made under
his or her supervision, a review in reasonable detail of the transactions and
condition of the Borrower and Guarantor through the reporting periods.

3.     Representations and Warranties. To the undersigned’s actual knowledge,
the representations and warranties of the Borrower and Guarantor contained in
the Loan Documents, including those contained in the Agreement, are true and
accurate in all material respects as of the date hereof and were true and
accurate in all material respects at all times during the reporting period
except as expressly noted on Schedule A hereto.

4.     Covenants. To the undersigned’s actual knowledge, during the reporting
period, the Borrower observed and performed all of the respective covenants and
other agreements under the Agreement and the Loan Documents, and satisfied each
of the conditions contained therein to be observed, performed or satisfied by
the Borrower, except as expressly noted on Schedule A hereto.

5.     No Event of Default. To the undersigned’s actual knowledge, no Event of
Default exists as of the date hereof or existed at any time during the reporting
period, except as expressly noted on Schedule A hereto.

C-2

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IN WITNESS WHEREOF, this Certificate is executed by the undersigned this 6th day
of April, 2005.

BORROWER:

GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company

  By: Wellsford Park Highlands Corp., a Colorado corporation, manager

By: /s/ David M. Strong

--------------------------------------------------------------------------------

Name: David M. Strong
Title: Senior Vice President

  WELLSFORD REAL PROPERTIES, INC., a Maryland corporation

  By: /s/ David M. Strong

--------------------------------------------------------------------------------

  Name:   David M. Strong   Title:   Senior Vice President

C-3

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EXHIBIT D

Insurance Requirements

        Borrower shall obtain and keep in full force and effect either builder’s
risk insurance (the “Builder’s Risk Insurance policy”) coverage or permanent All
Perils or All Risks insurance coverage as appropriate, and as may be
satisfactory to Lender, on the Project. All insurance policies shall be issued
by carriers with a Best’s Insurance Reports policy holder’s rating of A and a
financial size category of Class X and shall include a standard mortgage clause
(without contribution) in favor of and acceptable to Lender. The policies shall
provide for the following, and any other coverage that Lender may from time to
time deem necessary:

  (a) Coverage Against All Peril and/or Builders Risk in the amount of 100% of
the replacement cost of all Improvements located or to be located on the Land.
If the policy is written on a CO-INSURANCE basis, the policy shall contain an
AGREED AMOUNT ENDORSEMENT as evidence that the coverage is in an amount
sufficient to insure the full amount of the mortgage indebtedness. “KeyBank
National Association and its successors and assigns”, 1675 Broadway, #400,
Denver, CO 80202, shall be named as the “Mortgagee,” “Loss Payee,” and
“Certificate Holder.”

  (b) Borrower’s Commercial General Liability coverage in a minimum amount of
not less than $2,000,000 per occurrence and $3,000,000 in the aggregate, or
$1,000,000 per occurrence and $2,000,000 in the aggregate with excess liability
totaling $3,000,000, including premise operations, completed operations and
contractual liability coverage. “KeyBank National Association and its successors
and assigns” shall be named as an “Additional Insured” and “Certificate Holder.”

  (c) Flood hazard coverage in a minimum amount available, if the premises are
located in a special flood hazard area (“Flood Hazard Area”) as designated by
the Federal Emergency Management Agency on its Flood Hazard Boundary Map and
Flood Insurance Rate Maps, and the Department of Housing and Urban Development,
Federal Insurance Administration, Special Flood Hazard Area Maps.

  (d) Workers Compensation and Disability insurance as required by law.

  (e) Contractor’s Comprehensive General Liability insurance in a minimum of
$3,000,000 with the General Contractor to be named as the “Named Insured” and
the Borrower and Lender to be named as “Additional Insured” and “Certificate
Holder.”

  (f) Such other types and amounts of insurance with respect to the premises and
the operation thereof which are commonly maintained in the case of other
property and buildings similar to the premises in nature, use, location, height,
and type of construction, as may from time to time be required by the mortgagee.

Each policy shall provide that it may not be canceled, reduced or terminated
without at least thirty (30) days prior written notice to Lender.

D-1

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EXHIBIT E

Architect’s/Engineer’s Certificate

        The firm of ___________________________________________ hereby certifies
for the benefit of KeyBank National Association that:

        The firm has been employed by Gold Peak at Palomino Park LLC, a Colorado
limited liability company, pursuant to a contract dated
___________________________________________ to provide architectural and
engineering services for the project commonly known as Gold Peak at Palomino
Park which is located at in Highlands Ranch, Douglas County, State of Colorado.

        The contract provides for the following services:

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  preparation of plans and specifications

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  Pre-qualification of contractors

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  Contract administration and supervision of construction

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  Tenant space design

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        The firm is duly licensed and in good standing under laws of the state
of Colorado, License No. __________________________________.

        The foundations were designed in accordance with the recommendations
contained in a soil report dated __________________________ which was prepared
by ___________________________.

        The following are all of the permits or governmental agency approvals
required for the construction and occupancy of the building:

    Issuing Agency   Date Issued

Excavation Permit  

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Foundation Permit  

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Building Permit  

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EPA - Water  

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EPA - Sewer  

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EPA - Air  

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Cert. Of Occupancy Bldg.  

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Cert. Of Occupancy - Tenant  

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Other (Specify)  

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E-1

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        All utilities necessary for the operation of the project are available
with sufficient capacity at the boundaries of the project. If utility services
must be brought to site, please explain:

___________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________.

.

        The plans listed on the attached Schedule I comprise all of the plans
which will be necessary for the complete construction of the project, excepting
tenant space designs, and when the project is built in accordance therewith the
project will (excepting completion of tenant improvements) be ready for
occupancy. The plans are complete and contain all detail necessary for
construction. Calculations of the gross building and the net rentable building
area are attached as Schedule II. The plans (and the project will, when
constructed in accordance therewith) comply with all applicable building,
zoning, land use, subdivision, environmental, fire, safety and other applicable
governmental laws, statutes, codes, ordinances, rules and regulations.

        The attached Schedule III, establishing a timetable for completion of
the project and showing on a monthly basis the anticipated progress of the work,
is realistic and can be adhered to.

        The following design drawings or plans have been or will be prepared by
other designers or contractors.

Type of Plans   Name of Preparing Firm

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The Specifications are:_________________________________shown on plans

                    __________________________Bound separately

  By:____________________________________________
  Title:___________________________________________
  Date:___________________________________________

E-2

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EXHIBIT F

Initial Budget

That portion of the attached Construction Budget identified in the column
labeled "Site A&D."

F-1

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EXHIBIT G

Borrower's Certificate

KeyBank National Association
1675 Broadway, Suite 400
Denver, Colorado 80202

ATTN: COMMERCIAL REAL ESTATE DEPARTMENT

RE: Application for Disbursement or confirmation of equity contribution in
connection with a $8,800,000.00 loan (#1805081955) to GOLD PEAK AT PALOMINO PARK
LLC, a Colorado limited liability company (“Borrower”).

1. Pursuant to that certain Development Loan Agreement dated April 6, 2005 (the
“Development Loan Agreement”) between Borrower and KeyBank National Association
(“Lender”) and Borrower

  (a) hereby requests a Loan disbursement as indicated on the Soft and Hard Cost
Requisition attached hereto. We acknowledge that this amount is subject to
inspection, verification, and available funds.

  (b) acknowledges and confirms an equity contribution as indicated on the Soft
and Hard Cost Requisition attached hereto.

Funding Instructions

2. This Borrower’s Certificate is to be utilized only in satisfaction of costs
and charges with respect to the Project and Improvements thereon as shown on the
Soft and Hard Cost Requisition Form, dated ____________________, attached
hereto.

3. The Borrower agrees to provide, if requested by Lender, a Vendor Payee
Listing showing the name and the amount currently due each party to whom
Borrower is obligated for labor, material and/or services supplies. This
information would be provided in support of the disbursements set forth in
paragraph 2(a) hereof.

4. The Borrower also certifies and agrees that:

  (a) It has complied with all duties and obligations required to date to be
carried out and performed by it pursuant to the terms of the Development Loan
Agreement;

  (b) No Event of Default as defined in the Development Loan Agreement, nor any
event, circumstance or condition which with notice or the passage of time or
both would be an Event of Default, has occurred and is continuing and;

  (c) All Change Orders or changes to the Schedule of Values have been submitted
to and approved by Lender to the extent required under the Development Loan
Agreement;

G-1

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  (d) All funds previously disbursed have been used for the purposes as set
forth in the Development Loan Agreement;

  (e) All outstanding claims for labor, materials and/or services furnished
prior to this draw period have been paid or will be paid from the proceeds of
this disbursement;

  (f) All construction prior to the date of this Borrower’s Certificate has been
accomplished in accordance with the Plans and Specifications approved by Lender;

  (g) All sums advanced by Lender will be used solely for the purpose of paying
costs of the Project owing as shown on the attached Soft and Hard Cost
Requisition and no disbursement requested hereunder has been the basis for any
prior disbursement of the Loan;

  (h) There are no liens outstanding against the subject project or its
equipment except for Lender’s liens and security interests as agreed upon in the
Development Loan Agreement;

  (i) The amount of undisbursed Loan proceeds and/or approved equity requirement
remaining is sufficient to pay the cost of completing the Improvements in
accordance with the Plans and Specifications and Budget approved by Lender as
modified by Lender in approved Change Orders;

  (j) All representations and warranties contained in the Development Loan
Agreement are true and correct as of the date hereof.

  (k) The undersigned understands that this certification is made for the
purpose of inducing Lender to make a disbursement to Borrower and that, in
making such disbursement, Lender will rely upon the accuracy of the matters
stated in this Certificate.

5. Disbursement of the loan proceeds hereby requested are subject to the receipt
by Lender, in those states where applicable, of a certificate from the issuing
title company stating that no claims have been filed of record which adversely
affects the title of Borrower to the Project, subsequent to the filing of the
Lender’s Deed of Trust.

6. The terms used in this Borrower’s Certificate have the same meaning and
definitions as those set forth in the Development Loan Agreement.

G-2

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7. The Borrower, or authorized signer, certifies that the statements made in
this Borrower’s Certificate and any documents submitted herewith and identified
herein are true and has duly caused this Borrower’s Certificate to be signed on
its behalf by the undersigned Authorized Representative.

  DATE:

  BORROWER:

  GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company

By: Wellsford Park Highlands Corp., a Colorado corporation, its manager

    By: /s/ David M. Strong

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    Name: David M. Strong     Title: Senior Vice President

G-3

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EXHIBIT H

Soft and Hard Cost Requisition Form

H-1

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EXHIBIT I

AMOUNTS TO BE SUBTRACTED FROM NET SALES PROCEEDS TO COMPUTE RELEASE PRICES

Phase I - Amounts to Be Subtracted

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Unit Type

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5-Plex

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7-Plex

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A UNIT $269,806  $263,917  B UNIT $           0  $245,840  C UNIT $136,751 
$133,766  D UNIT $262,414  $256,686  G1 UNIT $158,188  $154,735  G2 UNIT
$159,666  $156,181 

Phase II - Amounts to Be Subtracted

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Unit Type

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5-Plex

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7-Plex

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A UNIT $253,281  $253,281  B UNIT $           0  $235,933  C UNIT $128,375 
$128,375  D UNIT $246,341  $246,341  G1 UNIT $148,499  $148,499  G2 UNIT
$149,887  $149,887 

Phase III - Amounts to Be Subtracted

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Unit Type

--------------------------------------------------------------------------------

5-Plex

--------------------------------------------------------------------------------

7-Plex

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A UNIT $255,550  $255,550  B UNIT $           0  $238,047  C UNIT $129,525 
$129,525  D UNIT $248,549  $248,549  G1 UNIT $149,829  $149,829  G2 UNIT
$151,230  $151,230 

I-1