EXHIBIT 10.1

EXECUTION COPY
SECOND AMENDED AND RESTATED LOAN AGREEMENT

between

(i) LGI HOMES GROUP, LLC, (ii) LGI HOMES-PRESIDENTIAL GLEN, LLC, (iii) LGI
HOMES-QUAIL RUN, LLC, (iv) LGI HOMES-FW, LLC, (v) LGI HOMES-SAN TAN HEIGHTS,
LLC, (vi) LGI HOMES-TEXAS, LLC, (vii) LGI HOMES-DECKER OAKS, LLC, (viii) LGI
HOMES AZ CONSTRUCTION, LLC, (ix) LGI HOMES-WOODLAND CREEK, LLC, (x) LGI
HOMES-LAKES OF MAGNOLIA, LLC, (xi) LGI HOMES-SALTGRASS, LLC, (xii) LGI HOMES –
STEWARTS FOREST, LLC, (xiii) LGI HOMES – GLENNWILDE, LLC, (xiv) LGI HOMES-E SAN
ANTONIO, LLC, (xv) LGI HOMES-WINDMILL FARMS, LLC, (xvi) LGI HOMES-ARIZONA, LLC,
(xvii) LGI HOMES – FLORIDA, LLC, (xviii) LGI HOMES – GEORGIA, LLC, (xix) LGI
HOMES-MAPLE LEAF, LLC, (xx) LGI HOMES AVONDALE, LLC, (xxi) LGI HOMES-SHALE
CREEK, LLC, (xxii) LGI HOMES-STERLING LAKES PARTNERS, LLC, (xxiii) LGI CROWLEY
LAND PARTNERS, LLC, (xxiv) LGI HOMES-MAPLE PARK, LLC, (xxv) LGI HOMES – SUNRISE
MEADOW, LLC, (xxvi) LGI HOMES CORPORATE, LLC, (xxvii) LGI HOMES SERVICES, LLC,
(xxviii) LGI HOMES AZ SALES, LLC, (xxix) LGI HOMES – NEW MEXICO, LLC, (xxx) LGI
HOMES NM CONSTRUCTION, LLC, (xxxi) LGI JV HOLDINGS, LLC, (xxxii) LGI HOMES –
LUCKEY RANCH, LLC, (xxxiii) LGI JV HOLDINGS II, LLC, (xxxiv) LGI HOMES – WEST
MEADOWS, LLC, (xxxv) LGI JV HOLDINGS III, LLC, (xxxvi) LGI HOMES – SONTERRA,
LLC, (xxxvii) LGI JV HOLDINGS IV, LLC, (xxxviii) LGI HOMES – BLUE HILLS, LLC,
(xxxix) LGI HOMES – KRENSON WOODS, LLC, (xl) LGI HOMES – NORTHPOINTE, LLC, (xli)
LGI HOMES – OAK HOLLOW PHASE 6, LLC, (xlii) LUCKEY RANCH PARTNERS, LLC, and
(xliii) LGI FUND III HOLDINGS, LLC

and

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

Dated as of
January 17, 2014

        

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SECOND AMENDED AND RESTATED LOAN AGREEMENT
This SECOND AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is dated as
of January 17, 2014, and entered into by and between TEXAS CAPITAL BANK,
NATIONAL ASSOCIATION, a national banking association (“Lender”), and (i) LGI
HOMES GROUP, LLC, a Texas limited liability company, (ii) LGI HOMES-PRESIDENTIAL
GLEN, LLC, a Texas limited liability company, (iii) LGI HOMES-QUAIL RUN, LLC, a
Texas limited liability company, (iv) LGI HOMES-FW, LLC, a Texas limited
liability company, (v) LGI HOMES-SAN TAN HEIGHTS, LLC, an Arizona limited
liability company, (vi) LGI HOMES-TEXAS, LLC, a Texas limited liability company,
(vii) LGI HOMES-DECKER OAKS, LLC, a Texas limited liability company, (viii) LGI
HOMES AZ CONSTRUCTION, LLC, an Arizona limited liability company, (ix) LGI
HOMES-WOODLAND CREEK, LLC, a Texas limited liability company, (x) LGI
HOMES-LAKES OF MAGNOLIA, LLC, a Texas limited liability company, (xi) LGI
HOMES-SALTGRASS, LLC, a Texas limited liability company, (xii) LGI HOMES –
STEWARTS FOREST, LLC, a Texas limited liability company, (xiii) LGI HOMES –
GLENNWILDE, LLC, an Arizona limited liability company, (xiv) LGI HOMES-E SAN
ANTONIO, LLC, a Texas limited liability company, (xv) LGI HOMES-WINDMILL FARMS,
LLC, a Texas limited liability company, (xvi) LGI HOMES-ARIZONA, LLC, an Arizona
limited liability company, (xvii) LGI HOMES – FLORIDA, LLC, a Florida limited
liability company, (xviii) LGI HOMES – GEORGIA, LLC, a Georgia limited liability
company, (xix) LGI HOMES-MAPLE LEAF, LLC, a Texas limited liability company,
(xx) LGI HOMES AVONDALE, LLC, a Texas limited liability company, (xxi) LGI
HOMES-SHALE CREEK, LLC, a Texas limited liability company, (xxii) LGI
HOMES-STERLING LAKES PARTNERS, LLC, a Texas limited liability company, (xxiii)
LGI CROWLEY LAND PARTNERS, LLC, a Texas limited liability company, (xxiv) LGI
HOMES-MAPLE PARK, LLC, a Georgia limited liability company, (xxv) LGI HOMES –
SUNRISE MEADOW, LLC, a Texas limited liability company, (xxvi) LGI HOMES
CORPORATE, LLC, a Texas limited liability company, (xxvii) LGI HOMES SERVICES,
LLC, a Texas limited liability company, (xxviii) LGI HOMES AZ SALES, LLC, an
Arizona limited liability company, (xxix) LGI HOMES – NEW MEXICO, LLC, a New
Mexico limited liability company, (xxx) LGI HOMES NM CONSTRUCTION, LLC, a New
Mexico limited liability company, (xxxi) LGI JV HOLDINGS, LLC, a Delaware
limited liability company, (xxxii) LGI HOMES – LUCKEY RANCH, LLC, a Delaware
limited liability company, (xxxiii) LGI JV HOLDINGS II, LLC, a Delaware limited
liability company, (xxxiv) LGI HOMES – WEST MEADOWS, LLC, a Delaware limited
liability company, (xxxv) LGI JV HOLDINGS III, LLC, a Delaware limited liability
company, (xxxvi) LGI HOMES – SONTERRA, LLC, a Delaware limited liability
company, (xxxvii) LGI JV HOLDINGS IV, LLC, a Delaware limited liability company,
(xxxviii) LGI HOMES – BLUE HILLS, LLC, an Arizona limited liability company,
(xxxix) LGI HOMES – KRENSON WOODS, LLC, a Delaware limited liability company,
(xl) LGI HOMES – NORTHPOINTE, LLC, a Delaware limited liability company, (xli)
LGI HOMES – OAK HOLLOW PHASE 6, LLC, a Delaware limited liability company,
(xlii) LUCKEY RANCH PARTNERS, LLC, a Delaware limited liability company, and
(xliii) LGI FUND III HOLDINGS, LLC, a Texas limited liability company
(individually and collectively referred to herein as “Borrower,” together with
any additional entities that are subsequently approved by Lender to become a
Borrower hereunder).
RECITALS
A.    Borrower owns or will own certain Land (as herein defined) and Lots (as
herein defined).
B.    Borrower proposes to construct the Houses (as herein defined) on the Lots.
The Houses shall be constructed in accordance with the Plans and Specifications
(as herein defined). Furthermore, Borrower proposes to acquire Land, and to
develop Lots and other A&D Improvements (as herein defined)

SECOND AMENDED AND RESTATED LOAN AGREEMENT - Page 1

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thereon. Borrower has requested from Lender a loan or loans for the purpose of
such construction and development, and for the acquisition of Lots and Land.
C.    Lender and several of the entities that comprise Borrower entered into (or
subsequently assumed) that certain Amended and Restated Loan Agreement, dated
June 24, 2013, providing for a revolving line of credit in the maximum amount of
$35,000,000 (with all amendments thereto, the “Prior Agreement”).
D.     Borrower and Lender desire to amend and restate the Prior Agreement in
its entirety, and to increase the maximum amount of the revolving line of credit
to $50,000,000.
THEREFORE, Borrower and Lender agree as follows:
ARTICLE I. DEFINITIONS
1.1    Defined Terms. The following capitalized terms generally used in this
Agreement shall have the meanings defined or referenced below. Certain other
capitalized terms used only in specific Sections of this Agreement are defined
in such sections.
“Account” ‑ shall mean an account with Lender or another financial institution
acceptable to Lender in the name of Borrower into which Credit Facility proceeds
will be deposited.
“Accounts Payable Report” ‑ shall mean an itemization of Borrower’s accounts
payable with an identification of which specific accounts relate to particular
Lot, House or A&D Project, and an itemization of the age of each item in such
accounts payable.
“ADA” ‑ shall mean the Americans with Disabilities Act, 42 U.S.C. §§ 12101,
et seq. as heretofore or hereafter amended or modified.
“Advance” ‑ shall mean a disbursement by Lender, whether by journal entry,
deposit to Borrower’s account, check to third party or by other means, of any of
the proceeds of the Credit Facility or any insurance proceeds relating to a
casualty to the Mortgaged Property and held by Lender.
“Affidavit of Commencement” ‑ shall have the meaning ascribed to such term in
Section 5.14 hereof.
“Affidavit of Completion” ‑ shall have the meaning ascribed to such term in
Section 5.15 hereof.
“Affiliates” ‑ shall mean an entity’s partners, joint venturers, members or
managers, or parent and subsidiary entities, or sponsoring entity for an
employee benefit plan, and their respective affiliates, shareholders, directors,
officers, employees and agents.
“Agreement” ‑ shall have the meaning ascribed to such term in the preamble
hereto, as same may from time to time be amended, restated or supplemented.
“Allocations” ‑ shall mean the amount allocated for each stage of construction
set forth in Section D of Exhibit ”B” attached hereto for each House and/or Lot
for which Advances under the Credit Facility will be made.
“Appraisal” ‑ shall mean (a) with respect to each A&D Project, an appraisal, not
more than 365 days old, prepared by a MAI or other qualified appraiser
acceptable to Lender which shall satisfy all internal policy requirements of
Lender and all rules, regulations (including, without limitation, 12 C.F.R.
Sec. 34.45(2)) and laws to which Lender is subject, and (b) with respect to each
House or Lot type within each Approved Subdivision which constitutes Collateral,
an appraisal, not more than 365 days old, prepared by a MAI or other qualified
appraiser acceptable to Lender which shall satisfy all internal policy
requirements of Lender

SECOND AMENDED AND RESTATED LOAN AGREEMENT - Page 2

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and all rules, regulations (including, without limitation, 12 C.F.R.
Sec. 34.45(2)) and laws to which Lender is subject, as more particularly
required in Section 2.11 hereof.
“Appraised Value” ‑ shall have the meaning ascribed to such term in Section 2.11
hereof.
“Approved Sales Contract” ‑ shall mean a bona fide, legally binding, enforceable
contract for the sale of a House, between Borrower, as seller, and a third party
unrelated to Borrower, as buyer, with respect to which (i) the form and
substance of such contract of sale shall have been previously approved in
writing by Lender, (ii) a non-refundable earnest money deposit in an amount
acceptable to Lender has been delivered to either an independent escrow agent or
to Borrower; and (iii) Borrower has undertaken a preliminary screening of the
creditworthiness of such buyer and has concluded that such buyer should qualify
for a mortgage loan commitment for the financing of the applicable House.
“Approved Subdivision” ‑ shall mean each subdivision approved by Lender for
disbursement of the Credit Facility proceeds for the acquisition of Lots and the
construction of Houses located therein, meeting the criteria specified in
Section 2.14 hereof, and located in in one of the approved metropolitan areas
listed in Exhibit “A” attached hereto.
“Bankruptcy Code” ‑ shall mean the Bankruptcy Reform Act of 1978 (11 U.S.C.
§ 101‑1330) as heretofore or hereafter amended or recodified.
“Borrower” ‑ shall have the meaning ascribed to such term in the preamble
hereto.
“Borrowing Base” ‑ shall mean as of the date of determination thereof, the
Maximum Credit Amount for all Collateral.
“Borrowing Base Report” ‑ shall have the meaning ascribed to such term in
Section 3.1(f) hereof for the Borrowing Base.
“Business Day” ‑ shall mean a day of the week (but not a Saturday, Sunday or
holiday) on which the offices of Lender are open to the public for carrying on
substantially all of Lender’s business functions. Unless specifically referenced
in this Agreement as a Business Day, all references to “days” shall be to
calendar days.
“Calendar Quarter” ‑ shall mean the three (3) calendar month period (or portion
thereof for the first period) ending on each March 31st, June 30th, September
30th and December 31st.
“Collateral” ‑ shall mean the Mortgaged Property and all other property, assets
and accounts of Borrower and all other funds, deposits or other property given
by Borrower and accepted by Lender as security for repayment of the Indebtedness
and performance of the Obligations under this Credit Facility.
“Commencement Date” ‑ shall mean, with respect to each House, any day within
thirty (30) days after the recordation of the applicable Security Instrument.
“Completion Date” ‑ shall mean, with respect to each House which is part of the
Mortgaged Property, the date that is six (6) months after the date of
recordation of the Security Instrument covering such Improvement, but in no
event beyond the Maturity Date of the Note.
“Compliance Certificate” ‑ shall have mean a written certification by the
principal financial officer of Borrower and Guarantor, in the form attached
hereto as Exhibit “D”, certifying that Borrower and Guarantor are in compliance
with all covenants, representations and warranties contained in the Loan
Documents, demonstrating in reasonable detail (including but not limited to
showing all calculations) compliance with the financial covenants set forth in
Section 10.1 hereof, and including such documentation required by Lender to
support or evidence the statements contained therein.

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“Construction Contract” ‑ shall mean, collectively, any and all contracts or
agreements, written or oral, between Borrower and any other party, and between
any of the foregoing and any subcontractor, and between any of the foregoing and
any other person or entity relating in any way to the construction of Houses or
A&D Improvements including the performance of labor or the furnishing of
standard or specially fabricated materials or other supplies or services in
connection therewith.
“Contractor” ‑ shall mean any general contractor with whom Borrower has
contracted for the construction of Houses or A&D Improvements; provided,
however, if Borrower acts as its own general contractor in the construction of
the Improvements, then any and all references in this Agreement to “Contractor”
shall be deemed to be a reference to Borrower or shall be deemed inapplicable
and deleted, as the context thereof shall suggest or require.
“Control” ‑ shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person which
shall include, at a minimum, ownership of at least 51% of all classes and
different types of any voting securities or beneficial interests, as applicable;
and with respect to a partnership, then such control shall be with respect to
all general partners, as a class, and all limited partners, as a class; and with
respect to a limited liability company, then such control shall be with respect
to all members, as a class; and with respect to a trust, then such control shall
be with respect to all trustees, as a class.
“Credit Facility” ‑ shall mean the revolving, secured line of credit in the
maximum sum of the Credit Facility Amount and governed by this Agreement and the
other Loan Documents.
“Credit Facility Amount” ‑ shall have the meaning set forth in Exhibit “A”
attached hereto.
“Credit Facility Fee” ‑ shall have the meaning set forth in Exhibit “A” attached
hereto.
“Credit Facility Termination Date” ‑ shall have the meaning set forth in Exhibit
“A” attached hereto.
“Default Rate” ‑ shall have the meaning ascribed to such term in the Note.
“Design Professional” ‑ shall mean the person or firm which designed the Houses
or A&D Improvements and prepared all or a portion of the Plans and
Specifications; provided, however, if the design of the Houses or A&D
Improvements and preparation of the Plans and Specifications were done by
Borrower without assistance from an independent design professional, then any
and all references in this Agreement to “Design Professional” shall be deemed to
be a reference to Borrower or shall be deemed inapplicable and deleted, as the
context thereof shall suggest or require.
“Design Professional’s Agreement” ‑ shall mean that certain agreement, if any,
by and between Borrower and Design Professional with respect to the Design
Professional’s design of the Houses or the A&D Improvements and preparation of
the Plans and Specifications.
“Disposition” ‑ shall mean any sale, lease (except as permitted under the
Security Instrument), exchange, absolute or collateral assignment, conveyance,
transfer, trade, or other disposition of or creation of any security interest,
lien, pledge or hypothecation in, to or of all or any portion of the Mortgaged
Property (or any interest therein) or all or any part of the beneficial
ownership interest in Borrower (if Borrower is a corporation, partnership,
general partnership, limited partnership, joint venture, trust, or other type of
business association or legal entity), and in any entity which has any
beneficial ownership interest in another entity which owns any beneficial
interest in Borrower, except pursuant to a partial release of the lien of a
Security Instrument pursuant to the applicable provisions hereof and of the
other Loan Documents.
“Distributions” ‑ shall have the meaning ascribed to such term in Section 10.5
hereof.
“Draw Request” ‑ shall mean the request by Borrower to Lender for the Advance of
Credit Facility proceeds.

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“Draw Request Form” ‑ shall mean the form for submission by Borrower to Lender
as a condition precedent for an Advance in connection with the acquisition of a
Lot of the construction of a House, in the form of Exhibit ”C” attached hereto,
or such other form as Lender may approve from time to time. Lender, in its sole
discretion, may allow Borrower to submit Draw Request Forms via electronic mail.
Furthermore, Lender, in its sole discretion, may establish rules and procedures,
from time to time, for such electronic transmissions.
“ERISA” ‑ shall mean the Employee Retirement Income Security Act of 1974,
29 U.S.C. § 1001, et seq., as heretofore or hereafter amended from time to time.
“Event of Default” ‑ shall have the meaning ascribed to such term in Article XI
hereof.
“Financial Statement” ‑ shall mean the consolidated and/or consolidating
financial statements of Borrower and each Guarantor. With respect to Borrower
and any Guarantor who is not a natural person, the term “financial statement”
shall mean the consolidated (or consolidating, as may be applicable) balance
sheet, statement of profit and loss, statement and reconciliation of capital
accounts, and statement of changes in financial position (cash flow statement)
as commonly defined and prepared in accordance with GAAP, certified by the
principal financial officer of the entity to whom the financial statement
pertains or by an independent certified public accountant (as may be required by
Lender). For any Guarantor who is a natural person, the term “financial
statement” shall mean a personal statement of assets and liabilities. In each
case where indicated herein, the applicable Financial Statement shall be either
“internally prepared” and certified by the principal financial officer of the
entity, or “reviewed,” “compiled,” or “audited” by, and certified by an
independent certified public accountant, or “self-prepared” by the individual
person as to whom the financial statement pertains and certified by such
individual. For monthly, quarterly, or semi-annual financial statements for
Borrower or any Guarantor that is not a natural person, the financial statements
shall be certified to have been prepared in accordance with GAAP consistently
followed throughout the period indicated except to the extent stated therein,
subject to normal changes resulting from year‑end adjustment.
“Financing Statement” ‑ shall mean the financing statement or financing
statements on the Uniform Commercial Code Financing Statement (Form UCC‑1) with
Borrower, as the debtor, and Lender, as the secured party, covering all or a
portion of the Collateral for the Credit Facility, which shall be in form and
substance acceptable to Lender. Borrower shall be required to pay for the
preparation and filing of all Financing Statements required by Lender.
“GAAP” ‑ shall mean generally accepted accounting principles in the United
States set forth in the statements and interpretations, as codified, of the
Financial Accounting Standards Board or such other principles as may be approved
by a significant segment of the accounting profession in the United States, that
are applicable to the circumstances as of the date of determination.
“Governmental Authority” ‑ shall mean any and all applicable courts, boards,
agencies, commissions, offices, or authorities of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or
otherwise), whether now or hereafter in existence.
“Governmental Requirements” ‑ shall mean all statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any Governmental Authority
applicable to Borrower or the Mortgaged Property.
“Guarantor” ‑ shall have the meaning set forth in Exhibit “A” attached hereto.
“Guaranty” ‑ shall mean that certain Guaranty, dated of even date herewith,
executed by Guarantor, in connection with the Credit Facility.
“Hazardous Materials” ‑ shall have the meaning ascribed to such term in
Section 8.1(a) hereof.
“Hazardous Materials Claims” ‑ shall have the meaning ascribed to such term in
Section 8.1(c) hereof.

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“Hazardous Materials Laws” ‑ shall have the meaning ascribed to such term in
Section 8.1(b) hereof.
“House” ‑ shall mean a single family detached residences to be constructed by
Borrower upon a Lot, as more particularly described in the Plans and
Specifications and in accordance with the applicable provisions hereof. Where
the context requires, the term “House” shall include the Lot upon which the
single-family residence is constructed.
“Indebtedness” ‑ shall mean (i) the principal of, interest on and all other
amounts, payments and premiums due under or secured by the Note, the Security
Instrument and any and all other Loan Documents; (ii) such additional sums, with
interest thereon, as may hereafter be borrowed from Lender, its successors or
assigns, by the Borrower or then record owner of the Mortgaged Property, when
evidenced by a promissory note which, by its terms, is secured by the Security
Instrument (it being contemplated that such future indebtedness may be
incurred); and (iii) any and all other indebtedness, obligations and liabilities
of any kind of the Borrower to Lender, now or hereafter existing, absolute or
contingent, joint and/or several, secured or unsecured, due or not due, arising
by operation of law or otherwise, or direct or indirect, including, but not
limited to, indebtedness, obligations and liabilities to Lender of the Borrower
as a member of any partnership, joint venture, trust or other type of business
association, or other group, and whether incurred by Borrower as principal,
surety, endorser, guarantor, accommodation party or otherwise.
“Initial Due Date” ‑ shall mean the date that Borrower is required to pay the
Partial Release Price for a House or Lot to Lender. The Initial Due Dates for
Model Houses, Pre-Sold Houses, Spec Houses and Lots are set forth in Exhibit “A”
attached hereto.
“Inspection Fee” ‑ shall mean the costs actually incurred by Lender for the
Inspector, or Lender’s standard charge for the inspection by an employee of
Lender or Lender’s Affiliates, together with such other sums required to be paid
hereunder for the inspection of the Houses and/or Lots pursuant to the
applicable provisions of this Agreement.
“Inspector” ‑ shall mean a person or entity (which may be independent from,
affiliated with or an employee of, Lender) as designated by Lender from time to
time, who may inspect the House or A&D Improvements from time to time for the
benefit of Lender.
“Inventory and Sales Status Report” ‑ shall mean a periodic report prepared by
Borrower with respect to the Lots or other property owned and the completion
status of each House under construction by Borrower (whether or not financed by
Lender unless otherwise stated below), properly completed by Borrower and in
form and substance satisfactory to Lender. The Inventory and Sales Status Report
shall include a sales and closing report by subdivision acceptable to Lender
reflecting (a) sales of Houses since the last report, (b) as to completed
Houses, whether or not they are subject to a Sales Contract, (c) as to Houses
under construction, whether or not they are sold and the closing status of such
residences, and (d) such other information as Lender may reasonably request with
respect to the Borrower’s inventory, sales of Houses, closing of said sales and
information regarding Borrower’s business operations.
“Land” ‑ shall mean unimproved real property or interest therein, together with
all right, title, interest, and privileges of the owner thereof in and to
(i) all streets, ways, roads, alleys, easements, rights‑of‑way, licenses, rights
of ingress and egress, vehicle parking rights and public places, existing or
proposed, abutting, adjacent, used in connection with or pertaining to such real
property, the interests therein and the improvements thereon; (ii) any strips or
gores of real property between such real property and abutting or adjacent
properties; (iii) all water and water rights, timber and crops pertaining to
such real estate; and (iv) all appurtenances and all reversions and remainders
in or to such real property.
“Lender” ‑ shall have the meaning ascribed to such term in the preamble hereof.
“Leverage Ratio” - shall mean the ratio of (i) Total Liabilities, to (ii)
Tangible Net Worth.

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“Liquidity” ‑ shall mean the aggregate of (i) cash, cash equivalent assets and
those assets that are readily convertible to cash, plus (ii) amounts available
to be drawn by Borrower under existing lines of credit plus (iii) amounts
receivable from title companies for closed sales minus (iv) amounts payable to
suppliers and other trade payables, all as determined by Lender in its sole
discretion.
“Loan Documents” ‑ shall mean those documents, as hereafter amended, restated,
supplemented, renewed, extended, replaced or modified, properly executed and in
recordable form, if necessary, together with any and all other documents now or
hereafter executed by Borrower, Guarantor or any other person in connection with
the Credit Facility evidenced by the Note or in connection with the payment of
the Indebtedness or the performance and discharge of the Obligations.
“Lot” ‑ shall mean (i) a single platted and subdivided portion of Land
(ii) within an Approved Subdivision, (iii) upon which a single House is to be,
has been or is in the process of being, constructed, together with all right,
title, interest, and privileges of Borrower in and to (A) all streets, ways,
roads, alleys, easements, rights‑of‑way, licenses, rights of ingress and egress,
vehicle parking rights and public places, existing or proposed, abutting,
adjacent, used in connection with or pertaining to such real property or the
interest therein; (B) any strips or gores of real property between such real
property and abutting or adjacent properties; (C) all water and water rights,
timber and crops pertaining to such real estate; and (D) all appurtenances and
all reversions and remainders in or to such real property, and (iv) with all
required municipal approvals and utilities (including, without limitation,
streets, alleys and sidewalks, potable water, storm and sanitary sewer,
electricity, telephone, gas and cable television facilities), fully completed
and each connected to or available at the boundaries of such Lot.
“Lot Inventory Subfacility” ‑ shall have the meaning ascribed to such term in
Section 3.2 hereof.
“Master Deed of Trust” ‑ shall mean that certain Master Form Deed of Trust and
Security Agreement, recorded by Lender as a master form deed of trust, mortgage
or deed to secure debt pursuant to Section 12.009 of the Texas Property Code, in
each Texas county in which any Mortgaged Property is to be situated, and being
more particularly described in one or more Supplemental Deeds of Trust.
“Maturity Date” ‑ shall have the meaning set forth in Exhibit “A” attached
hereto.
“Maximum Credit Amount” ‑ shall mean the maximum amount for each item of
Collateral securing the Credit Facility, based on the latest Borrowing Base
Report approved by Lender and calculated as provided in Section 3.1(e) hereof.
“Model House” ‑ shall mean a House which is to be, has been, or is in the
process of being, constructed, and which is not the subject of an Approved Sales
Contract and, as of the date of recordation of the Security Instrument covering
such House, is intended by Borrower to be furnished and used by Borrower for
on‑site office and/or marketing purposes.
“Mortgaged Property” ‑ shall mean, collectively, any Land, Lots, Houses or A&D
Improvements, and all other collateral intended as security for this Credit
Facility which is covered by any Security Instrument.
“Note” ‑ shall mean that certain Fourth Amended, Restated and Increased
Promissory Note, dated of even date herewith, in the original principal amount
of $50,000,000.00, executed by Borrower and payable to the order of Lender, as
hereafter amended, restated, supplemented, renewed or extended.
“Obligations” ‑ shall mean any and all of the covenants, conditions, warranties,
representations and other obligations (other than to repay the Indebtedness)
made or undertaken by Borrower or any other person or party to Lender or others
as set forth in the Note, this Agreement and all other Loan Documents now or
hereafter executed by Borrower or any other person or party in connection with
the Credit Facility and in any deed, lease, sublease or other form of conveyance
or any other agreement pursuant to which Borrower is granted or owns a
possessory interest in the Mortgaged Property or other rights in and to the
Collateral.

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“Other Related Documents” ‑ shall mean those documents, as hereafter amended,
supplemented, replaced or modified from time to time, properly executed and in
recordable form, if necessary, and other certificates or items listed in
Exhibit ”A” as Other Related Documents.
“Out-of-Texas Subfacility” ‑ shall have the meaning ascribed to such term in
Section 3.2 hereof.
“Partial Release Price” ‑ shall mean either (i) with respect to a House or a Lot
that is not the subject of an A&D Loan, the Maximum Credit Amount for the
portion of such House or Lot constituting Collateral which is to be released, as
evidenced by Lender’s books and records regarding the same; or (ii) with respect
to a House (but not a vacant Lot), if no Event of Default is then in existence,
the greater of (a) One Thousand and No/100 Dollars ($1,000.00) per House, or (b)
the amount, if any, necessary to reduce the aggregate of the outstanding
principal balance of the Note to an amount equal to or less than the Borrowing
Base; provided further, however, that during the existence of an Event of
Default, the Partial Release Price for any Collateral constituting the Mortgaged
Property is subject to adjustment pursuant to Section 2.10 hereof.
“Participant” ‑ shall have the meaning ascribed to such term in Section 13.13
hereof.
“Plans and Specifications” ‑ shall mean the plans and specifications for the
construction of the Houses or A&D Improvements, approved by Lender as required
herein, by all applicable Governmental Authorities, by any party to a purchase
or construction contract with a right of approval, and all amendments and
modifications thereof approved in writing by the same.
“Pre‑Sold House” ‑ shall mean a House which is to be, has been or is in the
process of being, constructed, and which, at the date of recordation of the
Security Instrument covering such House, and at all times thereafter, is the
subject of an Approved Sales Contract.
“Sales Contracts” ‑ shall have the meaning ascribed to such term in Section 2.6
hereof.
“Security Agreement” ‑ shall mean any and all security agreements, whether
contained in the Security Instrument, a separate security agreement or other
document creating a security interest or common law pledge or hypothecation of
any cash, funds, deposit accounts, escrow funds or accounts, personal properties
and fixtures of Borrower (including proceeds and products thereof, replacements,
substitutions and after‑acquired property) which constitutes or is intended to
constitute Collateral for the Credit Facility.
“Security Instrument” ‑ shall mean individually and collectively (a) the Master
Deed of Trust and each applicable Supplemental Deed of Trust pursuant to which
Borrower (or any entity that comprises Borrower) mortgages the portions of the
Mortgaged Property that are located in the State of Texas, to secure the Credit
Facility, and (b) any other deed of trust, mortgage, deed to secure debt or
other security instrument, pursuant to which Borrower (or any entity that
comprises Borrower) mortgages the portions of the Mortgaged Property that are
located outside the State of Texas, to secure the Credit Facility.
“Spec and Model House Subfacility” ‑ shall have the meaning ascribed to such
term in Section 3.2 hereof.
“Spec House” ‑ shall mean a House which is to be, has been or is in the process
of being, constructed, and which at the date of recordation of the Security
Instrument covering such House, (i) is not the subject of an Approved Sales
Contract, (ii) is not a Model House, and (iii) any House which, at the date of
recordation of the Security Instrument covering such House, was subject to an
Approved Sales Contract, but which Approved Sales Contract has subsequently been
terminated, cancelled, voided or breached by the purchaser or which otherwise no
longer qualifies as an Approved Sales Contract.
“Supplemental Deed of Trust” ‑ shall mean one or more supplemental deeds of
trust, in form and content acceptable to Lender, pursuant to which the terms,
covenants, conditions, grants, liens and warranties of the Master Deed of Trust
are incorporated, and by which Borrower (or an affiliated entity as grantor,
trustor or mortgagor) mortgages, any Mortgaged Property to secure this Credit
Facility.

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“Tangible Net Worth” ‑ shall mean Total Assets minus Total Liabilities.
“Title Company” ‑ shall mean the title insurance company (and its issuing agent,
if applicable) issuing the Title Insurance, which shall be acceptable to Lender
in its sole and absolute discretion.
“Title Insurance” ‑ shall mean one or more title insurance commitments,
construction binders or policies, as Lender may require, issued by the Title
Company, on a coinsurance or reinsurance basis (with direct access endorsement
or rights) if and as required by Lender, in the amount specified in Section 6.1
hereof with respect to each House, Lot or A&D Project, insuring or committing to
insure that the applicable Security Instrument constitutes a valid first lien
covering the applicable House, Lot or A&D Project subject only to those
exceptions which Lender may approve.
“Total Assets” ‑ shall mean any and all assets of Borrower as determined in
accordance with GAAP, consistently applied; provided, however, that in computing
Total Assets, (a) any intangible assets (i.e. goodwill) shall be excluded, and
(b) any notes or obligations either receivable from Affiliates (other than those
specifically approved by Lender in writing) or which are deemed by Lender to be
inadequately secured shall be given no value as assets, and (c) any “step-up” in
value of assets that results from a transaction with an Affiliate or between
Affiliates, or recognition of a gain or profit from a sale or contribution of an
asset to an Affiliate or a transaction between Affiliates will not be recognized
unless Lender specifically approves, and (d) certain debts that are approved by
Lender in writing and that are subordinated to the Credit Facility and to
Lender’s interests pursuant to a subordination agreement of a form approved by
Lender shall be included, all as determined on a consolidated basis.
“Total Cost” ‑ shall mean, (a) with respect to a House or Lot which is
Collateral, the aggregate amount of the following costs: (i) the acquisition
costs of the applicable Lot (including the purchase price and all reasonable,
necessary and customary closing costs for the acquisition of such Lot), (ii) the
amount of construction hard costs actually incurred in the construction of the
House, (iii) the amount of Borrower’s overhead and soft costs directly
attributable to the construction and completion of such Improvements, as
submitted by Borrower and approved by Lender, in its sole and absolute
discretion, and (iv) the amount of interest estimated to accrue and be payable
on the Note which is directly attributable to such House; and (b) with respect
to an A&D Project which is Collateral, the aggregate amount of the following
costs: (i) the acquisition costs of the applicable Land (including the purchase
price and all reasonable, necessary and customary closing costs for the
acquisition of such Land), (ii) the amount of construction hard costs actually
incurred in the construction of the A&D Improvements, (iii) the amount of
Borrower’s overhead and soft costs directly attributable to the construction and
completion of such A&D Improvements, as submitted by Borrower and approved by
Lender, in its sole and absolute discretion, and (iv) the amount of interest
estimated to accrue and be payable on the Note which is directly attributable to
such A&D Project.
“Total Liabilities” ‑ shall mean any and all notes, guaranties and other
evidence of indebtedness (fixed or contingent), accounts payables, contingent
liabilities, lease obligations, to the extent same are considered liabilities in
accordance with GAAP, and any and all other obligations treated as liabilities
in accordance with GAAP.
“Unrestricted Cash” ‑ shall mean the legal tender of the United States of
America, which is available for payment of the Credit Facility, and which is not
pledged as security for any obligation other than the Credit Facility.
1.2    A&D Subfacility Definitions. The following capitalized terms, used in
this Agreement in connection with the A&D Subfacility, shall have the meanings
defined or referenced below.
“A&D Budget” ‑ shall mean for each A&D Project added to the A&D Subfacility,
that certain budget for the Land to be acquired and the A&D Improvements to be
constructed, attached to the applicable A&D Project Loan Sheet and incorporated
therein by reference.

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“A&D Budget Allocations” ‑ shall mean shall mean, for each A&D Loan to be made
hereunder, the line items set forth in each applicable A&D Budget relating to
each A&D Project for which Advances of Credit Facility proceeds will be made.
“A&D Commencement Date” ‑ shall mean, with respect to each A&D Project, the date
set forth in the applicable A&D Project Loan Sheet.
“A&D Completion Date” ‑ shall mean, with respect to each A&D Project, the date
set forth in the applicable A&D Project Loan Sheet.
“A&D Draw Request Form” ‑ shall mean the form for submission by Borrower to
Lender as a condition precedent for an Advance under an A&D Loan, in the form of
Exhibit ”H” attached hereto.
“A&D Improvements” ‑ shall mean Lots, streets, sidewalks, utilities, landscaping
and other infrastructure, amenities or improvements in connection with the
development of a residential subdivision.
“A&D Loan” ‑ shall mean a loan from Lender to Borrower to finance a specific A&D
Project under the A&D Subfacility. Each A&D Loan made under the A&D Subfacility
shall be a non-revolving loan, and any sums borrowed and repaid under each A&D
Loan shall not be re-advanced by Lender for the subject A&D Project.
“A&D Loan Advance Termination Date” ‑ shall mean, with respect to each A&D
Project, the date set forth in the applicable A&D Project Loan Sheet.
“A&D Loan Amount” ‑ shall mean, with respect to each A&D Project, the amount set
forth in the applicable A&D Project Loan Sheet.
“A&D Loan Closing Conditions” ‑ shall mean the conditions listed on Exhibit “G”
attached hereto, which Borrower must satisfy, before Lender will consider
Borrower’s request for an A&D Loan.
“A&D Loan Maturity Date” ‑ shall mean, for each A&D Loan to be made under the
A&D Subfacility, the date designated as the “A&D Loan Maturity Date” in the
applicable A&D Project Loan Sheet, and shall be the date on which Advances under
said A&D Loan must be repaid in full.
“A&D Partial Release Price” ‑ shall mean shall mean, for each A&D Loan, the
portion of the outstanding principal balance of the A&D Loan to be paid by
Borrower to Lender for a partial release of a finished Lot or a portion of Land
from the lien of the applicable Security Instrument. If Borrower elects to
construct a House on such Lot with proceeds from the Credit Facility, then
Borrower shall pay the applicable A&D Partial Release Price, but Lender shall
not release the lien of the applicable Security Instrument. The A&D Partial
Release Price for each Lot or portion of the Land shall be the sum set forth in
the applicable A&D Project Loan Sheet.
“A&D Project” ‑ shall mean either (a) the acquisition of Land in the State of
Texas, or (b) the acquisition of Land in the State of Texas, and the development
of Lots and other A&D Improvements thereon.
“A&D Project Loan Sheet” ‑ shall mean each term sheet executed by Borrower and
Lender for any A&D Project approved hereunder, which term sheet shall set forth
the terms and conditions of the subject A&D Loan to be made by Lender for said
A&D Project, including without limitation any terms or conditions that are
different than or in addition to the terms and conditions set forth in this
Agreement. Each A&D Project Loan Sheet to be used for an A&D Loan made hereunder
shall be in the form attached hereto as Exhibit “F”.
“A&D Subfacility” ‑ shall have the meaning ascribed to such term in Section 3.2
hereof.

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1.3    Additional Definitions. As used herein, the following terms shall have
the following meanings:
(a)    “Hereof,” “hereby,” “hereto,” “hereunder,” “herewith,” and similar terms
mean of, by, to, under and with respect to, this Agreement or to the other
documents or matters being referenced.
(b)    “Heretofore” means before, “hereafter” means after, and “herewith” means
concurrently with, the date of this Agreement.
(c)    All pronouns, whether in masculine, feminine or neuter form, shall be
deemed to refer to the object of such pronoun whether same is masculine,
feminine or neuter in gender, as the context may suggest or require.
(d)    All terms used herein, whether or not defined in Section 1.1 hereof, and
whether used in singular or plural form, shall be deemed to refer to the object
of such term whether such is singular or plural in nature, as the context may
suggest or require.
1.4    Exhibits Incorporated. All exhibits, schedules or other items attached
hereto, or referred to herein, are hereby incorporated into this Agreement by
such attachment for all purposes.
ARTICLE II.    CREDIT FACILITY
2.1    Credit Facility.
(a)    Revolving Note. The principal balance of the Note represents a revolving
credit, all or any part of which may be advanced to Borrower, paid by Borrower
and readvanced to Borrower from time to time, subject to the other terms hereof
and the conditions, if any, contained in any of the Loan Documents; provided,
however, that the maximum principal amount shall not exceed the Credit Facility
Amount. Borrower’s liability for repayment of the interest on the Note shall be
limited to and calculated with respect to Credit Facility proceeds actually
disbursed to Borrower pursuant to the terms of this Agreement and the other Loan
Documents and only from the date or dates of such disbursements and during the
period of time such amount is outstanding. The Note shall be secured, in part,
by the Security Instrument.
(b)    Cross‑Collateralization. Borrower acknowledges and agrees that the liens,
assignments, pledges and security interests of each Security Instrument shall
secure the Indebtedness and any and all renewals, increases, modifications,
rearrangements and extensions of the Note and each Security Instrument. Borrower
acknowledges and agrees that any and all collateral under each Security
Instrument and the other Loan Documents shall further secure the repayment of
the Note and the other Indebtedness and the performance of the Obligations,
regardless of whether or not the Indebtedness or Obligations arose out of or
with respect to any one of such Security Instrument.
(c)    Net/Gross Facility. The Credit Facility is a net/gross borrowing base,
and although the maximum amount of Credit Facility proceeds that may be advanced
and outstanding at any one time is the Credit Facility Amount, the aggregate
amount of Credit Facility proceeds allocated for Lots, Houses or A&D Projects in
the Borrowing Base at any one time may equal, but not exceed the amount set
forth in Exhibit “A” attached hereto.
2.2    Purposes. Advances made to or on behalf of Borrower pursuant to the Loan
Documents shall be used for the purposes set forth in Article III hereof and for
such other purposes and uses as may be permitted under this Agreement and the
other Loan Documents or as otherwise agreed to from time to time by Lender, in
its sole and absolute discretion.

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2.3    Payment of Fees. Borrower shall pay to Lender the following fees at the
date and the amount specified below:
(a)    Credit Facility Fee. Borrower shall pay a quarterly installment of the
Credit Facility Fee to Lender on the date of this Agreement, again on March 31,
2014, and again on the last day of each subsequent calendar quarter.
(b)    Inspection Fee. Borrower shall pay to Lender the Inspection Fee on a
monthly basis, within five (5) days after the end of each calendar month during
the term of this Credit Facility.
2.4    Loan Documents. Borrower shall deliver to Lender concurrently with this
Agreement each of the Loan Documents, properly executed and in recordable form
as applicable, required by Lender. Borrower shall deliver to Lender such other
Loan Documents as required by Lender, properly executed and in recordable form,
as applicable, and, upon Lender’s request, the Other Related Documents listed in
Exhibit ”A” of this Agreement as a condition to any such property, asset or
right becoming qualified as Collateral.
2.5    Credit for Principal Payments. Any payment made upon the outstanding
Indebtedness of the Credit Facility shall be credited as of the Business Day
received, provided such payment is received by Lender no later than 2:00 p.m.
(Dallas, Texas time) and constitutes immediately available funds. Any payment
received after said time shall be credited upon such funds having become
unconditionally and immediately available to Lender.
2.6    Assignment of Sales Contracts. Borrower, as additional security for the
payment and performance of the covenants, agreements and obligations of Borrower
to Lender arising under this Agreement and under all of the Loan Documents,
hereby grants a security interest in, and sells, transfers, assigns and sets
over, to Lender, its successors and assigns, all of Borrower’s title and
interest in and to, and Borrower’s rights, benefits and privileges under, any
and all sales contracts (the “Sales Contracts”) relating to the sale of Lots
and/or Houses which are Collateral whether now existing or hereafter entered
into. In furtherance of the foregoing, Borrower hereby agrees that this
assignment of Sales Contracts is made upon the following terms and conditions:
(a)    Borrower shall pay and perform all of Borrower’s covenants, agreements
and obligations under the Sales Contracts and shall promptly notify Lender in
writing, as part of the sales reports to be delivered to Lender pursuant to the
terms and conditions of this Agreement, of any termination of any Sales
Contract. Borrower hereby covenants and agrees not to (i) materially modify,
amend or change any Sales Contract after full execution thereof (except with
regard to change orders and extras), (ii) terminate or otherwise cancel any
fully executed Sales Contract except in the event of a default thereunder by the
purchaser or the purchaser’s failure to satisfy any contingency thereunder,
(iii) take any action or exercise any right or option which would permit a
purchaser to terminate or otherwise cancel a Sales Contract, unless said
purchaser is in default thereunder, or (iv) further assign or create any further
encumbrance or hypothecation of Borrower’s interest in any of the Sales
Contracts, without the prior written consent of Lender, unless required by any
Governmental Authority, in which case Borrower shall give Lender prior written
notice thereof.
(b)    Upon the occurrence of an Event of Default, Lender may elect, in its sole
discretion, to exercise, in the name of Borrower, all of Borrower’s rights,
benefits and privileges under each of the Sales Contracts, including, without
limitation, all rights in and to all deposits and other amounts collected or
otherwise received from purchasers under the Sales Contracts; in connection with
such exercise of rights, benefits and privileges, Lender shall have full power
and authority to do all acts as may be necessary, as determined in Lender’s sole
discretion, to close any transaction contemplated under any Sales Contract,
including, without limitation, to receive any and all amounts paid or to be paid
by a purchaser in connection therewith. Lender shall not be required to give any
notice of

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such election to Borrower. Borrower hereby covenants and agrees to pay to Lender
promptly upon demand any and all reasonable costs and expenses, including,
without limitation, reasonable attorneys’ fees and expenses incurred by Lender
in connection with such an election by Lender to exercise its rights under this
Section. Furthermore, promptly upon demand by Lender, Borrower shall take such
actions and execute such documents as may be necessary to facilitate Lender’s
exercise of its rights hereunder, including, without limitation, (i) delivering
to Lender all then existing Sales Contracts, (ii) delivering, jointly with
Lender, notices to purchasers of the assignment of their respective Sales
Contracts, (iii) conveying fee simple title to the purchaser of any of the Lots
and/or Houses by a proper, recordable warranty deed in connection with the
closing of a transaction under any of the Sales Contracts, and (iv) instructing
any necessary party such as a title company handling a closing to pay to Lender
the proceeds of sale which would otherwise have been paid or payable to
Borrower.
(c)    BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER AND ITS
AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS,
PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION, DEFENSES, COSTS,
JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR EXPENSES OF ANY KIND OR
NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES),
CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME BE EITHER DIRECTLY OR
INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED OR AWARDED AGAINST LENDER OR
ANY OF LENDER’S AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY
ACTION OR ACTIONS TAKEN BY LENDER PURSUANT TO THIS SECTION, OTHER THAN ANY LOSS,
LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF
LENDER’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS. BORROWER’S DUTY
AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER SHALL SURVIVE THE
PAYMENT OF THE INDEBTEDNESS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR
ACTION IN LIEU OF FORECLOSURE) OF THE LIEN OF THE SECURITY INSTRUMENT, AND THE
EXERCISE BY LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER LOAN
DOCUMENTS.
(d)    So long as no Event of Default has occurred, Borrower may continue to
receive and exercise all of its rights, benefits and privileges under the Sales
Contracts, except as herein restricted or provided otherwise.
(e)    Neither the assignment contained in this Section, nor any action or
actions on the part of Lender, shall constitute an assumption of any of the
covenants, agreements or obligations of Borrower by Lender under the Sales
Contracts and Borrower shall continue to be liable for all such covenants,
agreements or obligations. BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
LENDER AND ITS AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
OBLIGATIONS, PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION,
DEFENSES, COSTS, JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR
EXPENSES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS’ FEES AND EXPENSES), CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME
BE EITHER DIRECTLY OR INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED OR
AWARDED AGAINST LENDER OR ANY OF LENDER’S AFFILIATES IN CONNECTION WITH, ARISING
FROM OR RELATING TO ANY FAILURE OF BORROWER TO PERFORM AND OBSERVE ANY OF SUCH
OBLIGATIONS, OTHER THAN ANY LOSS, LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE
OR COST ARISING SOLELY BY REASON OF LENDER’S WILLFUL MISCONDUCT OR GROSS

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NEGLIGENCE OR OMISSIONS. BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND
HOLD HARMLESS LENDER SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS AND THE
RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE) OF
THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY LENDER OF ANY AND ALL
REMEDIES SET FORTH HEREIN OR IN THE OTHER LOAN DOCUMENTS.
(f)    Lender shall have the right, at any time (but shall have no obligation),
to take in its name or in the name of Borrower or otherwise, such action as
Lender may at any time or from time to time reasonably determine to be necessary
to protect the rights of Lender as the assignee of Borrower hereunder. Lender
shall incur no liability on account of any action taken by it or on its behalf
in good faith pursuant to the foregoing sentence or otherwise hereunder, whether
or not the same shall prove to be improper, inadequate or invalid, in whole or
in part.
2.7    Assignment of Design Professional’s Agreement and Plans and
Specifications. Borrower, as additional security for the payment and performance
of the covenants, agreements and obligations of Borrower to Lender arising under
this Agreement and under all of the Loan Documents, hereby grants a security
interest in, and sells, transfers, assigns and sets over, to Lender, its
successors and assigns, all of Borrower’s title and interest in and to, and
Borrower’s rights, benefits and privileges under, all of the Design
Professional’s Agreements and the Plans and Specifications which were prepared
by Borrower’s employees and/or an Design Professional in connection with the
Improvements. In furtherance of the foregoing, Borrower hereby agrees that this
assignment of the Design Professional’s Agreements and the Plans and
Specifications is made upon the following terms and conditions:
(a)    Borrower hereby covenants and agrees not to materially modify, amend or
change the Plans and Specifications or any portion thereof, except as provided
in Section 5.5(a) hereof, or the Design Professional’s Agreements or further
assign or create any further encumbrance or hypothecation of Borrower’s interest
in the Plans and Specifications or the Design Professional’s Agreements, without
the prior written consent of Lender, unless required by any Governmental
Authority, in which case Borrower shall give Lender prior written notice
thereof.
(b)    Borrower hereby represents and warrants to Lender that the Plans and
Specifications are not subject to any claim, set‑off, lien or encumbrance of any
kind or nature and are owned by Borrower; provided, however, if the Plans and
Specifications are owned by the Design Professional, Borrower agrees to have
executed by Design Professional and delivered to Lender a Consent of Design
Professional, in form and substance acceptable to Lender, at the execution and
delivery hereof or upon the design of any new or additional Houses or A&D
Improvements which are to become Collateral hereunder and as a condition
precedent to such Houses or A&D Improvements becoming Collateral hereunder.
(c)    Upon the occurrence of an Event of Default, Lender may elect, in its sole
discretion, to utilize the Plans and Specifications and the Design
Professional’s Agreements solely for the benefit of Lender. Furthermore,
promptly upon demand by Lender, Borrower shall take such actions and execute
such documents as may be necessary to facilitate Lender’s exercise of its rights
hereunder.
(d)    BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER AND ITS
AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS,
PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION, DEFENSES, COSTS,
JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR EXPENSES OF ANY KIND OR
NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES),
CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME BE EITHER DIRECTLY OR
INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED OR AWARDED AGAINST LENDER OR
ANY OF LENDER’S AFFILIATES IN

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CONNECTION WITH, ARISING FROM OR RELATING TO ANY ACTION OR ACTIONS TAKEN BY
LENDER PURSUANT TO THIS SECTION, OTHER THAN ANY LOSS, LIABILITY, DAMAGE, SUIT,
CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY REASON OF LENDER’S WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS. BORROWER’S DUTY AND OBLIGATION TO
DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER SHALL SURVIVE THE PAYMENT OF THE
INDEBTEDNESS AND THE RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU
OF FORECLOSURE) OF THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY
LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE OTHER LOAN DOCUMENTS.
(e)    So long as no Event of Default has occurred, Borrower may continue to
receive and exercise all of its rights, benefits and privileges under the Plans
and Specifications and the Design Professional’s Agreements, except as herein
restricted or provided otherwise.
(f)    In any event, upon the occurrence of an Event of Default, the Plans and
Specifications (and all future plans and specifications and additions and
supplements thereto and modifications thereof) may be used by Lender, its
successors, assigns or designees, without additional cost or expense to Lender,
for any purpose relating to the Houses or A&D Improvements, including, without
limitation, the completion of the construction, improvement, inspection,
maintenance and protection of the Houses of A&D Improvements.
(g)    Neither this assignment nor any action or actions on the part of Lender
shall constitute an assumption of any of the covenants, agreements or
obligations of Borrower by Lender with respect to the Plans and Specifications
and Borrower shall continue to be liable for all such covenants, agreements or
obligations. BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER AND ITS
AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS,
PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION, DEFENSES, COSTS,
JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR EXPENSES OF ANY KIND OR
NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES),
CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME BE EITHER DIRECTLY OR
INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED OR AWARDED AGAINST LENDER OR
ANY OF LENDER’S AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY
FAILURE OF BORROWER TO PERFORM AND OBSERVE ANY OF SUCH OBLIGATIONS, OTHER THAN
ANY LOSS, LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY
REASON OF LENDER’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER
SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS AND THE RELEASE, PARTIAL RELEASE
OR FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE) OF THE LIEN OF THE INSTRUMENT,
AND THE EXERCISE BY LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN OR IN THE
OTHER LOAN DOCUMENTS.
(h)    Lender shall have the right, at any time (but shall have no obligation),
to take in its name or in the name of Borrower or otherwise, such action as
Lender may at any time or from time to time reasonably determine to be necessary
to protect the rights of Lender as the assignee of Borrower hereunder. Lender
shall incur no liability on account of any action taken by it or on its behalf
in good faith pursuant to the foregoing sentence or otherwise hereunder, whether
or not the same shall prove to be improper, inadequate or invalid, in whole or
in part.

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2.8    Assignment of Construction Contract. Borrower, as additional security for
the payment and performance of the covenants, agreements and obligations of
Borrower to Lender arising under this Agreement and under all of the Loan
Documents, hereby grants a security interest in, and sells, transfers, assigns
and sets over, to Lender, its successors and assigns, all of Borrower’s title
and interest in and to, and Borrower’s rights, benefits and privileges under,
any and all Construction Contracts relating to the Improvements. In furtherance
of the foregoing, Borrower hereby agrees that this assignment is made upon the
following terms and conditions:
(a)    Borrower shall pay and perform all of Borrower’s covenants, agreements
and obligations under the Construction Contracts and shall promptly notify
Lender in writing of any material default under or termination of any
Construction Contract. Borrower hereby covenants and agrees not to
(i) materially modify, amend or change any Construction Contract after full
execution thereof (except with regard to change orders and extras),
(ii) terminate or otherwise cancel any fully executed Construction Contract
except in the event of a default thereunder by any party thereto other than
Borrower, (iii) take any action or exercise any right or option which would
permit any party thereto other than Borrower to terminate or otherwise cancel a
Construction Contract, unless the other party thereto is in default thereunder,
or (iv) further assign or create any further encumbrance or hypothecation of
Borrower’s interest in any of the Construction Contracts, without the prior
written consent of Lender, unless required by any Governmental Authority, in
which case Borrower shall give Lender prior written notice thereof.
(b)    Borrower hereby represents and warrants that the Construction Contracts
for all Mortgaged Property not fully constructed which are Collateral (i) is in
full force and effect, (ii) there are no uncured breaches or defaults by either
Borrower or the Contractor thereunder, (iii) are not subject to any lien,
set-off, pledge, hypothecation or other assignment, and (iv) Borrower has the
full and unconditional right to collaterally assign same to Lender for the
purposes herein contemplated. Further, Borrower agrees to have executed by each
Contractor and delivered to Lender a Consent of Contractor, in form and
substance acceptable to Lender, at the execution and delivery hereof or within
five (5) days after the execution of any new or additional Construction Contract
for any Improvements which are to become Collateral hereunder and as a condition
precedent to such Improvements becoming Collateral hereunder.
(c)    Upon the occurrence of an Event of Default, Lender may elect, in its sole
discretion, to exercise, in the name of Borrower, all of Borrower’s rights,
benefits and privileges under each of the Construction Contracts. Lender shall
make such election, if at all, by written notice to such contractor or
subcontractor, which notice shall contain Lender’s agreement to pay for such
contractor’s or subcontractor’s continued performance pursuant to the terms of
the applicable Construction Contract. Lender shall not be required to give any
notice of any such election to Borrower. Borrower hereby covenants and agrees to
pay to Lender promptly upon demand any and all reasonable costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred
by Lender in connection with such an election by Lender to exercise its rights
under this assignment. Furthermore, promptly upon demand by Lender, Borrower
shall take such actions and execute such documents as may be necessary to
facilitate Lender’s exercise of its rights hereunder.
(d)    BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER AND ITS
AFFILIATES FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS,
PENALTIES, CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION, DEFENSES, COSTS,
JUDGMENTS, SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR EXPENSES OF ANY KIND OR
NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES),
CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME BE EITHER DIRECTLY OR
INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED

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OR AWARDED AGAINST LENDER OR ANY OF LENDER’S AFFILIATES IN CONNECTION WITH,
ARISING FROM OR RELATING TO ANY ACTION OR ACTIONS TAKEN BY LENDER PURSUANT TO
THIS SECTION, OTHER THAN ANY LOSS, LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE
OR COST ARISING SOLELY BY REASON OF LENDER’S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OR OMISSIONS. BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND
HOLD HARMLESS LENDER SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS AND THE
RELEASE, PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE) OF
THE LIEN OF THE SECURITY INSTRUMENT, AND THE EXERCISE BY LENDER OF ANY AND ALL
REMEDIES SET FORTH HEREIN OR IN THE OTHER LOAN DOCUMENTS.
(e)    So long as no Event of Default has occurred, Borrower may continue to
receive and exercise all of its rights, benefits and privileges under the
Construction Contracts, except as herein restricted or provided otherwise.
(f)    Neither this assignment nor any action or actions on the part of Lender
shall constitute an assumption of any of the covenants, agreements or
obligations of Borrower by Lender under the Construction Contracts and Borrower
shall continue to be liable for all such covenants, agreements or obligations.
BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER AND ITS AFFILIATES
FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS, PENALTIES,
CLAIMS, FINES, LOST PROFITS, DEMANDS, LITIGATION, DEFENSES, COSTS, JUDGMENTS,
SUITS, PROCEEDINGS, DAMAGES, DISBURSEMENTS OR EXPENSES OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES),
CONSEQUENTIAL OR OTHERWISE, WHICH MAY AT ANY TIME BE EITHER DIRECTLY OR
INDIRECTLY IMPOSED UPON, INCURRED BY OR ASSERTED OR AWARDED AGAINST LENDER OR
ANY OF LENDER’S AFFILIATES IN CONNECTION WITH, ARISING FROM OR RELATING TO ANY
FAILURE OF BORROWER TO PERFORM AND OBSERVE ANY OF SUCH OBLIGATIONS, OTHER THAN
ANY LOSS, LIABILITY, DAMAGE, SUIT, CLAIM, EXPENSE, FEE OR COST ARISING SOLELY BY
REASON OF LENDER’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR OMISSIONS.
BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER
SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS AND THE RELEASE, PARTIAL RELEASE
OR FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE) OF THE LIEN OF THE SECURITY
INSTRUMENT, AND THE EXERCISE BY LENDER OF ANY AND ALL REMEDIES SET FORTH HEREIN
OR IN THE OTHER LOAN DOCUMENTS.
(g)    Lender shall have the right, at any time (but shall have no obligation),
to take in its name or in the name of Borrower or otherwise, such action as
Lender may at any time or from time to time reasonably determine to be necessary
to protect the rights of Lender as the assignee of Borrower hereunder. Lender
shall incur no liability on account of any action taken by it or on its behalf
in good faith pursuant to the foregoing sentence or otherwise hereunder, whether
or not the same shall prove to be improper, inadequate or invalid, in whole or
in part.
2.9    Partial Releases. At any time prior to the Maturity Date, Lender shall,
at Borrower’s request, pursuant to an arms‑length sale with an independent third
party purchaser, issue partial releases from the lien of the Security Instrument
of one or more Houses or one or more Lots which are Collateral; provided,
however, that prior to or simultaneously with each such partial release all of
the following conditions shall be satisfied:

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(a)    No Event of Default shall exist, or would exist with notice or passage of
time, or both, under the Loan Documents;
(b)    Lender shall have received any and all sums then due and owing under the
Loan Documents and Borrower has paid to the Title Company or other applicable
escrow agent all escrow, closing and recording costs, the costs of preparing and
delivering such partial release and the cost of any title insurance endorsements
required by Lender;
(c)    Lender shall have received the Partial Release Price, to be applied as a
reduction of the outstanding Indebtedness of this Credit Facility; and
(d)    Lender shall have received a written release satisfactory to Lender of
any set aside letter, letter of credit or other form of undertaking which Lender
has issued to any surety, Governmental Authority or any other party in
connection with the Lots and/or the Houses, as applicable, which is the subject
matter of such partial release.
Neither the acceptance of any payment nor the issuance of any partial release by
Lender shall affect Borrower’s obligation to repay all amounts owing under the
Loan Documents or under the lien of the Security Instrument on the remainder of
the Collateral which is not released therefrom. Partial releases of Lots or Land
that are part of an A&D Project shall be governed by Article XII of this
Agreement, not this Section.
2.10    Default Partial Release Price. If at any time during the existence of an
Event of Default, Borrower requests a partial release of the lien of the
Security Instrument pursuant to an arms‑length sale with an independent third
party purchaser, then notwithstanding anything to the contrary in any of the
Loan Documents, the Partial Release Price shall be the greater of (i) the net
proceeds from such sale (being the gross sales price less reasonable, ordinary
and necessary expenses therefor), or (ii) the amounts required pursuant to
Section 2.9 hereof; provided, however, that the gross sales price for such
transaction is equal to or greater than the greater of (a) one hundred percent
(100%) of the Appraised Value for such Lot and/or House, or (b) the Maximum
Credit Amount for such Lot and/or House, as of the date of the latest Lender
approved Borrowing Base Report covering same. If Borrower does not qualify for a
partial release pursuant to the foregoing, then Borrower shall be entitled to a
partial release, if at all, only upon such terms and conditions as Lender may
determine, in its sole and absolute discretion. Partial releases of Lots or Land
that are part of an A&D Project shall be governed by Article XII of this
Agreement, not this Section.
2.11    Appraisals; Appraised Value. Lender shall have obtained an Appraisal for
each Lot and/or House which is, or is to become, Collateral. With respect to
each House, the Appraisal shall be in the form of a master appraisal for each
specific model type and style of Improvement for each specific Approved
Subdivision. Lender shall also have the right, on an annual basis (based on the
date such Collateral first constituted part of the Borrowing Base, at Borrower’s
cost, to obtain a new or updated Appraisal for each Lot and/or House
constituting Collateral. The value for each particular item of Collateral as
reflected in the original or updated Appraisal therefor, shall be deemed to be
the fair market value (“Appraised Value”) for such item of Collateral for all
purposes under this Credit Agreement, until such time as a new or updated
Appraisal indicates a different Appraised Value for such item of Collateral. If,
on the basis of one or more new or updated Appraisals and revised Appraised
Values, the Maximum Credit Amount of all Collateral constituting the Borrowing
Base does not equal or exceed the outstanding balance of the Credit Facility,
then Borrower shall immediately make such payments on account of the Credit
Facility so that the Maximum Credit Amount of all Mortgaged Property included as
Collateral under the Borrowing Base equals or exceeds the outstanding balance of
the Credit Facility.
2.12    Inspections. Lender, Lender’s employees and agents, and the Inspector
shall have the right to make inspections of all or any portion of the Collateral
at any time during the term of this Credit Facility, at Borrower’s sole cost and
expense. Lender (or the Inspector) will only inspect 30% of the Collateral each
month, unless Lender reasonably determines that additional inspections are
required to verify the accuracy of the Borrowing Base.

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2.13    Cost Reviews. Borrower hereby acknowledges and agrees that Lender shall
have the right to make periodic cost reviews on each House type or style in each
Approved Subdivision, and an initial cost review of each new House type or style
or in each new Approved Subdivision prior to the time that such House is to
become Collateral. Such review will be at Lender’s expense; however, Borrower
agrees to supply Lender with appropriate copies of the Plans and Specifications
for each House type and style, and such other information as Lender may
reasonably request in connection with such cost review.
2.14    Approved Subdivisions. Houses and Lots may be considered for inclusion
as Collateral in the Borrowing Base only for those subdivisions meeting the
criteria set forth herein, and located in a market area approved by Lender in
its sole discretion: (i) such subdivision must not be located in a flood plain,
as reasonably determined by Lender; (ii) such subdivision must be the subject of
a proper subdivision plat map meeting the requirements of all applicable
governmental bodies and recorded in the appropriate public records for such plat
maps; and (iii) Lender must have been provided and have approved, a lot takedown
contract with respect to each Lot (not a part of a House) to be included as
Collateral. In connection with any request by Borrower for approval of any new
subdivision by Lender, Borrower shall deliver to Lender such documentation and
due diligence items as Lender may request.
ARTICLE III.    BORROWING BASE AND SUBFACILITIES
3.1    Borrowing Base. Subject to the terms, provisions and conditions of this
Agreement, Lender shall lend to Borrower, and Borrower hereby agrees that it
shall borrow from Lender, a sum up to the Credit Facility Amount. The principal
balance of the Credit Facility represents a revolving credit, all or any part of
which may be advanced to Borrower, paid by Borrower and readvanced to Borrower
from time to time, subject to the other terms hereof and the conditions, if any,
contained in any of the Loan Documents; provided, however, that Lender shall not
be obligated to make any Advances under the Credit Facility if an Event of
Default then exists or if such would cause the sum of the principal amount of
all Advances under the Credit Facility outstanding as of such time, together
with accrued but unpaid interest thereon to exceed the Credit Facility Amount.
The sum of the outstanding principal amount of all Advances under the Credit
Facility may never exceed the Credit Facility Amount, and Borrower shall make
principal reduction payments in the amounts, and at the times, necessary to
prevent such outstanding principal amount from ever exceeding the Credit
Facility Amount.
(e)    Advance Limitation. In addition to any and all limitations and conditions
contained herein, Borrower shall not be entitled to an Advance under the Credit
Facility which would cause the aggregate outstanding balance of all Advances,
together with accrued but unpaid interest thereon, together with all Credit
Facility proceeds allocated to be Advanced to complete Houses and A&D Projects
that are already included in the Borrowing Base, to exceed the lesser of (i) the
amount of the Borrowing Base for the Credit Facility, or (ii) the Credit
Facility Amount.
(f)    Purpose. The purpose for which Advances will be made under the Credit
Facility shall be for (i) the financing of the acquisition of Lots and the
construction of Houses on such Lots, and (ii) the financing of the acquisition
of Land and the construction of A&D Improvements on such Land.
(g)    Qualified Collateral. Houses (including Pre‑Sold Houses, Spec Houses and
Model Houses), Lots, Land and A&D Improvements for which all of the following
conditions have been satisfied shall qualify as Collateral, subject to Lender’s
absolute approval rights set forth in Section 3.1(h) of this Agreement:
(i) Borrower has executed and delivered to Lender all of the Loan Documents
listed and such other documents as Lender may require with respect to such
Collateral, all of which shall be in form and substance acceptable to Lender,
(ii) if requested by Lender, Borrower has delivered to Lender all of the Other
Related Documents listed in Exhibit ”A” hereto, and such other items as Lender
may require with respect to such Collateral, all of which shall be in form and
substance acceptable to Lender, (iii) Lender has accepted the state of title to
such Collateral and has

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approved the recorded Security Instrument covering such Collateral, and
(iv) Borrower has included such Collateral in the most recently submitted and
Lender approved Borrowing Base Report.
(h)    Credit Facility Term. Subject to the terms, provisions and conditions of
this Agreement, Lender’s obligations to accept new Collateral in the Borrowing
Base under the Credit Facility shall automatically terminate as of the Credit
Facility Termination Date; provided, however, the occurrence of the Credit
Facility Termination Date shall not cause an acceleration or default under this
Credit Facility; provided further, however, that all outstanding Indebtedness
with respect to the Credit Facility shall, in any event, be due and payable on
the Maturity Date. Lender shall have no obligation to extend the Credit Facility
Termination Date or the Maturity Date, and may refuse to do so at its sole
discretion. After the Credit Facility Termination Date and prior to the Maturity
Date, Lender will continue to make Advances under the Credit Facility in
connection with Collateral theretofore included in the Borrowing Base in
accordance herewith. Following the Credit Facility Termination Date, Lender
shall have no obligation, and Borrower shall have no right to request, any new
Lots, Houses, Land or A&D Improvements to be added as Collateral to the
Borrowing Base.
(i)    Maximum Credit Amount. The Maximum Credit Amount of the Collateral, for
the purpose of determining the amount of the Borrowing Base under this Credit
Facility, shall be, subject to the limitations and adjustments set forth in
Exhibit “A” attached hereto, as well as the other limitations set forth in this
Agreement.
(j)    Borrowing Base Reports. Borrower shall deliver to Lender a Borrowing Base
Report (i) within five (5) Business Days after Lender’s request, from time to
time, and (ii) concurrently with any Draw Request for an Advance. The delivery
to Lender of a Borrowing Base Report shall be a certification by Borrower that
the facts represented therein are true, correct and complete as of the date of
such Borrowing Base Report. As used herein, the term “Borrowing Base Report”
shall mean a report in the form attached hereto as Exhibit ”E” or otherwise in
form and substance acceptable to Lender, which contains the following
information as to each Lot, House or A&D Project, as applicable, which is
Collateral: (i) the effective date of such Borrowing Base Report; (ii) a listing
of each House and/or Lot, as applicable, by street address or lot, block and
subdivision and by status (Model, Spec or Pre‑Sold House or Lot) and type or
style of Improvement, if applicable; (iii) a listing of each A&D Project;
(iv) the date of recordation of the Security Instrument covering such Lot, House
or A&D Project, as applicable; (v) the Maximum Credit Amount for each Lot, House
or A&D Project, as applicable; (vi) if a House, (A) the Total Cost actually
incurred to date, (B) the amount of Advances therefor drawn to date, (C) the
draw stages that have been completed, and (D) the aggregate percentage of
completion pursuant to the draw schedule in Section D of Exhibit ”B”; (vii) the
maximum amount of Advances available for such House and/or Lot, as applicable,
being calculated as the lesser of (A) the Maximum Credit Amount for such House
and/or Lot, as applicable, or (B) the amount in subclause (vi)(A) above less the
amount of subclause (vi)(B) above, less (C) any staleness or other loan
limitations as herein provided applicable to such House and/or Lot, as
applicable; (viii) the maximum amount of Advances available for each A&D
Project, (ix) the total Borrowing Base for all Lots, Houses and A&D Projects;
(x) the then outstanding Indebtedness under the Note; (xi) the total of all
liabilities of Borrower to Lender for Obligations under the Credit Facility; and
(xii) the amount of the Borrowing Base available for an Advance, being
calculated as the amount specified in clause (ix) above less the sum of the
amounts specified in clauses (x) and (xi) above.
(k)    Borrowing Base Report Approval. Lender shall have the right to review and
approve or disapprove (and to make appropriate adjustments as contemplated in
this Agreement for approval) each Borrowing Base Report; provided, however,
until such Borrowing Base Report is approved or adjusted by Lender, the most
recent Borrowing Base Report submitted by Borrower and approved or adjusted,
from time to time as herein contemplated, by Lender shall be in effect. The
funding of

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an Advance based upon a Borrowing Base Report submitted to Lender shall not be
deemed to be an unconditional approval thereof. If Lender believes that any
current or prior Borrowing Base Report is incomplete or inaccurate in any
respect which causes the Credit Facility to be funded in excess of what is
specified in this Agreement, then the Borrowing Base shall be limited to such
amount as Lender reasonably determines to be applicable in accordance with the
provisions of this Agreement until such time as the Borrowing Base Report is
determined by Lender to be true, correct and complete.
(l)    Guidance Line. Notwithstanding anything herein to the contrary, Lender
may, in its sole and absolute discretion, for any reason or for no reason,
exclude any Lot, House or A&D Project from the Collateral or the Borrowing Base.
(m)    Initial Due Date. Borrower must pay Lender the Partial Release Price for
each Lot or House prior to the applicable Initial Due Date. The Maximum Credit
Amount of any Lot or House which has been included in the Borrowing Base beyond
the applicable Initial Due Date shall be reduced to zero (0), and such Lot or
House shall thereafter be disqualified from the Borrowing Base. Lender shall be
under no obligation to extend any Initial Due Date. Any extension of an Initial
Due Date must be evidenced by a written instrument signed by Lender. Lender may
condition an extension upon such matters as Lender may require in its sole
discretion, including, without limitation, payment of a principal reduction
payment or payment of an extension fee (which shall not be applied toward
reduction of the outstanding principal balance of the Note).
(n)    Model House Limitation. Notwithstanding anything to the contrary
contained herein, no single Approved Subdivision may contain more than the
amount of Model Homes set forth in Exhibit “A” attached hereto.
3.2    Subfacilities.
(c)    Spec and Model House Subfacility. Notwithstanding anything to the
contrary contained in this Agreement or the other Loan Documents, the amount of
Credit Facility proceeds advanced or committed to be advanced with respect to
Spec Houses and Model Houses, at any one time, shall not exceed the amount set
forth in Exhibit “A” attached hereto (the “Spec and Model House Subfacility”).
The amount of Credit Facility proceeds used, requested by Borrower or otherwise
committed with respect to this Spec and Model House Subfacility shall reduce on
a pro tanto basis the amount of proceeds otherwise available under this Credit
Facility.
(d)    Lot Inventory Subfacility. Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents, the amount of Credit
Facility proceeds advanced or committed to be advanced with respect to Lots, at
any one time, shall not exceed the amount set forth in Exhibit “A” attached
hereto (the “Lot Inventory Subfacility”). The amount of Credit Facility proceeds
used, requested by Borrower or otherwise committed with respect to this Lot
Inventory Subfacility shall reduce on a pro tanto basis the amount of proceeds
otherwise available under this Credit Facility.
(e)    Out-of-Texas Subfacility. Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents, the amount of Credit
Facility proceeds advanced or committed to be advanced with respect to Lots and
Houses located outside the State of Texas, at any one time, shall not exceed the
amount set forth in Exhibit “A” attached hereto (the “Out-of-Texas
Subfacility”). The amount of Credit Facility proceeds used, requested by
Borrower or otherwise committed with respect to this Out-of-Texas Subfacility
shall reduce on a pro tanto basis the amount of proceeds otherwise available
under this Credit Facility.
(f)    A&D Subfacility. Notwithstanding anything to the contrary contained in
this Agreement or the other Loan Documents, the amount of Credit Facility
proceeds advanced or

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committed to be advanced with respect to A&D Projects, at any one time, shall
not exceed the amount set forth in Exhibit “A” attached hereto (the “A&D
Subfacility”). The amount of Credit Facility proceeds used, requested by
Borrower or otherwise committed with respect to this A&D Subfacility shall
reduce on a pro tanto basis the amount of proceeds otherwise available under
this Credit Facility. Advances of proceeds under the A&D Subfacility shall be
handled separately from Advances of proceeds under the remainder of the Credit
Facility. Additional terms and conditions regarding the operation of the A&D
Subfacility are set forth in Article XII of this Agreement.
3.3    Removal of Collateral From Borrowing Base. If Lender determines that any
portion of the Collateral, although previously included in the Borrowing Base,
is or becomes the subject of a condition which violates any of the provisions
hereof, then Lender may (if said condition is not cured within twenty (20) days
following written notice thereof from Lender to Borrower) remove such portion of
the Collateral from the Borrowing Base and such portion shall have a Maximum
Credit Amount of zero (0). If the condition is thereafter cured, the removed
portion of the Collateral will be thereafter included in the Borrowing Base,
however, the date the portion of the Collateral was initially included in the
Borrowing Base shall be used in calculation of the adjustments to the Borrowing
Base for the determination of the Maximum Credit Amount as specified herein.

ARTICLE IV.    DISBURSEMENT
4.1    Conditions Precedent. Lender’s obligation to make any Advance or take any
other action under the Credit Facility, including the A&D Subfacility, shall be
subject at all times to satisfaction of each of the following conditions
precedent:
(g)    There shall exist no Event of Default nor any default under any of the
other Loan Documents, nor any event, omission or failure of condition which
would constitute an Event of Default after notice or lapse of time, or both.
(h)    Lender shall have received all Loan Documents, other documents,
instruments, policies, and forms of evidence or other materials requested by
Lender under the terms of this Agreement or any of the other Loan Documents.
(i)    Upon Lender’s request, Lender shall have received and approved, in form
and substance satisfactory to Lender, the Other Related Documents.
(j)    If required by Lender, Lender shall have received from the Title Company
a title report, at Borrower’s cost, dated within two (2) days of the requested
Advance, showing no state of facts objectionable to Lender, including, but not
limited to, a showing that title to such Houses, Lots or A&D Projects is vested
in Borrower and that no claim for mechanics’ or materialmen’s liens has been
filed against such Houses, Lots or A&D Projects.
(k)    Lender shall have received from Borrower a current (meaning within the
last seven (7) days) Borrowing Base Report, such other documents, reports and
other matters specified in the Loan Documents, and a fully completed and signed
Draw Request Form (or A&D Draw Request Form, if applicable), including the
approval of such request for Advance from the Inspector with respect to any
Advance which relates to Houses or A&D Improvements.
(l)    During the existence of an Event of Default or the existence of any fact
or circumstance which with notice and or lapse of time or both could constitute
an Event of Default or otherwise upon the request of Lender, Borrower shall have
received and furnished to Lender, from each contractor, subcontractor and
materialman, including Contractor, an invoice, lien waiver and such other
instruments and documents as Lender may from time to time specify, in form and
content,

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and containing such certifications, approvals and other data and information, as
Lender may require. The invoice, lien waiver and other documents shall cover and
be based upon work actually completed or materials actually furnished. The lien
waiver of each contractor, subcontractor and materialman shall, if required by
Lender, be received by Lender prior to the making of any Advance hereunder, for
all work done prior to the date of the Borrowing Base Report which is the basis
for such Advance.
(m)    The Houses or A&D Improvements shall not have been materially injured,
damaged or destroyed by fire or other casualty, nor shall any part of the
Mortgaged Property be subject to condemnation proceedings or negotiations for
sale in lieu thereof.
(n)    Borrower shall have complied with all requirements of the Inspector and
all Governmental Authorities.
(o)    Lender shall have received payment of the Inspection Fee and any and all
other fees required pursuant to Section 2.3 hereof or otherwise under the Loan
Documents.
(p)    Upon request by Lender, with respect to any Houses or A&D Improvements
for which construction has not yet commenced, Borrower shall have recorded the
Affidavit of Commencement as required under this Agreement.
4.2    Account, Pledge and Assignment, and Disbursement Authorization. The
proceeds of this Credit Facility and any insurance proceeds held by Lender when
qualified for an Advance, shall be deposited into the Account or otherwise
disbursed to or for the benefit or account of Borrower under the terms of this
Agreement; provided, however, that any direct disbursements from the Credit
Facility which are made by means of wire transfer, shall be subject to the
provisions of that certain Section entitled Funds Transfer Disbursements.
Advances hereunder may be made by Lender upon receipt of a fully completed Draw
Request Form (or A&D Draw Request Form, if applicable), executed by any person
who has been authorized by Borrower to request such Advance until such time as
written notice of Borrower’s revocation of such authority is received by Lender
at the address shown in Exhibit ”B”. As additional security for Borrower’s
performance under the Loan Documents, Borrower hereby irrevocably pledges and
assigns to Lender all monies at any time deposited in the Account.
4.3    Advances. Advances shall be made in accordance with the terms and
conditions of Exhibit ”B”. All Advances shall be held by Borrower in trust and
applied by Borrower solely for the purposes for which the funds have been
disbursed. Lender has no obligation to monitor or determine Borrower’s use or
application of the Advances.
4.4    Total Cost Documentation. In connection with each Draw Request, Borrower
shall furnish to Lender evidence of the Total Cost for each Lot, House or A&D
Project, in form and substance acceptable to Lender, which should include,
without limitation, the following: (i) a copy of each invoice, statement or bill
for each item constituting a portion of the Total Cost for which an Advance is
being requested, (ii) evidence of the payment of the invoices, statements or
bills included in Total Cost prior to the subject Draw Request, and (iii) such
other matters as Lender may reasonably request from time to time.
4.5    Staged Advances. For the purposes of determining Total Cost for the
construction of Houses, such Total Cost shall be determined by the various
stages of construction and the respective amounts or percentages of such stages
of construction set forth in the draw schedule portion of Section D of
Exhibit ”B” hereto. Lender shall not be obligated to include in Total Cost for
any stage of construction set forth in such draw schedule if, in Lender’s sole
and absolute discretion, all of the necessary work to qualify for such stage of
construction has not been fully completed in accordance with the Plans and
Specifications. The sole purpose for which Credit Facility proceeds are
allocated for a Lot shall be limited to the “closing stage” for each applicable
Lot as set forth in the draw schedule portion of Section D of Exhibit ”B”, and
no other stages of construction as shown in the Draw Request Form shall be
applicable until construction of a House thereon has been authorized and
approved by Lender and commenced by Borrower.

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(i)    Closing Stage. The amount of the closing stage allocation of such draw
schedule applicable to each House and/or Lot, as applicable, shall be included
in Total Cost upon the closing of the House or Lot acquisition, as applicable,
and recordation of the Security Instrument.
(j)    Construction Stages. Total Cost for any construction of Improvements
shall include each stage of construction approved by Lender, but in no event
shall Total Cost for any construction stage allocation exceed the percentage
allocation of the construction amount designated in such draw schedule for the
applicable stage of construction.
(k)    General. The stages of construction for each House, as set forth in the
draw schedule contained in Section D of Exhibit ”B”, that must be completed
prior to including same in Total Cost is set forth in such draw schedule;
however, it is not necessary that the construction stages be completed in the
order shown in such draw schedule.
4.6    Reallocations. Lender reserves the right, at its option, to disburse
Credit Facility proceeds allocated to any of the stages of construction, or any
percentage allocated to each stage of construction as set forth in such draw
schedule, for such other purposes or in such different percentages as Lender
may, in its sole discretion, deem necessary or advisable. Borrower shall not be
entitled to require that Lender reallocate funds among the stages or percentages
among the various stages of construction as set forth in such draw schedule.
4.7    Funds Transfer Disbursements. Borrower hereby authorizes Lender to
disburse the proceeds of any Loan(s) made by Lender or its affiliate pursuant to
the Loan Documents as requested by an authorized representative of the Borrower
to any of the accounts designated by Borrower in writing. Borrower agrees to be
bound by any transfer request: (i) authorized or transmitted by Borrower; or,
(ii) made in Borrower’s name and accepted by Lender in good faith and in
compliance with these transfer instructions, even if not properly authorized by
Borrower. Borrower further agrees and acknowledges that Lender may rely solely
on any bank routing number or identifying bank account number or name provided
by Borrower to effect a wire or funds transfer even if the information provided
by Borrower identifies a different bank or account holder than named by the
Borrower. Lender is not obligated or required in any way to take any actions to
detect errors in information provided by Borrower. If Lender takes any actions
in an attempt to detect errors in the transmission or content of transfer or
requests or takes any actions in an attempt to detect unauthorized funds
transfer requests, Borrower agrees that no matter how many times Lender takes
these actions Lender will not in any situation be liable for failing to take or
correctly perform these actions in the future and such actions shall not become
any part of the transfer disbursement procedures authorized under this
provision, the Loan Documents, or any agreement between Lender and Borrower.
Borrower agrees to notify Lender of any errors in the transfer of any funds or
of any unauthorized or improperly authorized transfer requests within fourteen
(14) days after Lender’s confirmation to Borrower of such transfer. Lender will,
in its sole discretion, determine the funds transfer system and the means by
which each transfer will be made. Lender may delay or refuse to accept a funds
transfer request if the transfer would: (i) violate the terms of this
authorization, (ii) require use of a bank unacceptable to Lender or prohibited
by government authority, (iii) cause Lender to violate any Federal Reserve or
other regulatory risk control program or guideline, or (iv) otherwise cause
Lender to violate any applicable law or regulation. Lender shall not be liable
to Borrower or any other parties for (i) errors, acts or failures to act of
others, including other entities, banks, communications carriers or
clearinghouses, through which Borrower’s transfers may be made or information
received or transmitted, and no such entity shall be deemed an agent of the
Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars,
civil disturbances, power surges or failures, acts of government, labor
disputes, failures in communications networks, legal constraints or other events
beyond Lender’s control, or (iii) any special, consequential, indirect or
punitive damages, whether or not (a) any claim for these damages is based on
tort or contract, or (b) Lender or Borrower knew or should have known the
likelihood of these damages in any situation. Lender makes no representations or
warranties other than those expressly made in this Agreement.

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ARTICLE V.    CONSTRUCTION
5.1    Commencement and Completion. Borrower shall cause the construction of
each House to commence by the Commencement Date and to be prosecuted with
diligence and continuity and will complete the same in accordance with the Plans
and Specifications on or before the Completion Date, free and clear of liens or
claims for liens for material supplied and for labor services performed in
connection with the construction of such House. No more than one (1) House shall
be constructed upon each Lot. Borrower shall cause the construction of each A&D
Project to commence by the applicable A&D Commencement Date and to be prosecuted
with diligence and continuity and will complete the same in accordance with the
Plans and Specifications on or before the applicable A&D Completion Date, free
and clear of liens or claims for liens for material supplied and for labor
services performed in connection with the construction of such A&D Project.
5.2    Force Majeure. The time within which construction of a House must be
completed shall be extended for a period of time equal to the period of any
delay directly affecting construction which is caused by fire, earthquake or
other Acts of God, strike, lockout, acts of public enemy, riot, insurrection, or
governmental regulation of the sale or transportation of materials, supplies or
labor; provided, however, that Borrower shall furnish Lender with written notice
satisfactory to Lender evidencing any such delay within ten (10) days from the
occurrence of any such delay. In no event shall the time for completion of the
House be extended beyond the Maturity Date or more than sixty (60) days beyond
the Completion Date. The time within which construction of an A&D Project must
be completed shall be extended for a period of time equal to the period of any
delay directly affecting construction which is caused by fire, earthquake or
other Acts of God, strike, lockout, acts of public enemy, riot, insurrection, or
governmental regulation of the sale or transportation of materials, supplies or
labor; provided, however, that Borrower shall furnish Lender with written notice
satisfactory to Lender evidencing any such delay within ten (10) days from the
occurrence of any such delay. In no event shall the time for completion of the
A&D Project be extended beyond the applicable A&D Loan Maturity Date or more
than sixty (60) days beyond the applicable A&D Completion Date.
5.3    Construction Contract. Borrower shall require Contractor and all
subcontractors and materialmen to perform in accordance with the terms of the
Construction Contract and shall not amend, modify or alter the responsibilities
of Contractor and all subcontractors and materialmen under the Construction
Contract without Lender’s prior written consent; provided, however, Borrower and
Contractor shall be entitled to amend the Construction Contract without Lender’s
prior written consent if and to the extent such changes are consistent with
changes in the Plans and Specifications allowed pursuant to and in accordance
with the terms and provisions of Section 5.5 hereof, and upon delivery to Lender
of the amendment to the Construction Contract.
5.4    Design Professional’s Agreement. Borrower shall require Design
Professional to perform in accordance with the terms of the Design
Professional’s Agreement and shall not amend, modify or alter the
responsibilities of Design Professional under the Design Professional’s
Agreement without Lender’s prior written consent.
5.5    Plans and Specifications.
(h)    Changes; Lender Consent. Except as otherwise provided in this Agreement,
Borrower shall not make any changes in the Plans and Specifications, whether for
Houses or A&D Improvements, without Lender’s prior written consent. Without
limiting the above, Lender agrees that Borrower may make minor changes in the
Plans and Specifications for Houses without Lender’s prior written consent,
provided that (i) such changes do not violate any of the conditions specified
herein or (ii) such changes are contractually required to be paid by the
purchaser of a Pre‑Sold House, and Borrower has collected good funds from such
purchaser if, and to the extent, that such changes or extras exceed $5,000.00.
Borrower shall at all times maintain, for inspection by Lender,

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a full set of working drawings (reflecting such changes and extras) for all
Houses and A&D Improvements.
(i)    Changes; Submission Requirements. Borrower shall submit any proposed
change in the Plans and Specifications to Lender at least ten (10) days prior to
the commencement of construction relating to such proposed change whether or not
such change is subject to Lender’s consent. Requests for any change which
requires Lender’s consent shall be accompanied by working drawings and a written
description of the proposed change, submitted on a change order form acceptable
to Lender, signed by Borrower and, if required by Lender, also signed by the
Design Professional and the Contractor. At Lender’s option, Lender may require
Borrower to provide: (i) evidence satisfactory to Lender of the cost and time
necessary to complete the proposed change; and (ii) a complete set of “as built”
Plans and Specifications for the completed House or A&D Improvements.
(j)    Consent Process. Borrower acknowledges that Lender’s review of any
changes and required consent may result in delays in construction and hereby
consents to any such delays.
(k)    Final Plans and Specifications. Upon completion of construction of a
House or A&D Improvements, and upon Lender’s request, Borrower shall deliver to
Lender within ten (10) days a set of final “as-built” Plans and Specifications.
5.6    Contractor/Construction Information. Within ten (10) days of Lender’s
written request, Borrower shall deliver to Lender from time to time in a form
acceptable to Lender: (i) a list detailing the name, address and phone number of
each contractor, subcontractor and material supplier to be or which has been
employed or used for construction of the Houses and A&D Improvements which
constitute Collateral, together with the dollar amount, including changes, if
any, of each contract and subcontract, and the portion thereof, if any, paid
through the date of such list; (ii) copies of each contract and subcontract
identified in such list, including any changes thereto; (iii) a cost breakdown
of the projected Total Cost of constructing each applicable House and A&D
Improvement, and that portion, if any, of each cost item which has been
incurred; and (iv) a construction progress schedule detailing the progress of
construction and the projected sequencing and completion time for uncompleted
work, all as of the date of such schedule. Borrower agrees that Lender has the
right, but shall not be obligated, to disapprove any contractor, subcontractor
or material supplier which, in Lender’s good faith determination, is deemed
financially or otherwise unqualified; provided, however, that the absence of any
such disapproval shall not constitute a warranty or representation of
qualification by Lender. Lender shall have the right to contact any contractor,
subcontractor or material supplier to discuss the course of construction.
5.7    Prohibited Contracts. Without Lender’s prior written consent, Borrower
shall not contract for any materials, furnishings, equipment, fixtures or other
parts or components of the Houses or A&D Improvements, if any third party shall
retain any ownership interest (other than lien rights created by operation of
law) in such items after their delivery to the Lot and/or Land. Borrower shall
have five (5) days to effect the removal of any such retained interest.
5.8    Liens Claims. If a lien claim or affidavit is recorded or is served upon
Lender which affects the Mortgaged Property, or if Borrower is otherwise unable
to satisfy the provisions of Section 4.1(f) hereof, Borrower shall, on or before
the earlier of: (i) within ten (10) days of such recording or service,
(ii) within five (5) days of Lender’s demand, or (iii) on or before the date of
the requested Advance if Borrower is relying on this Section 5.8 for
satisfaction of Section 4.1(f) hereof, take one of the following courses of
action: (A) pay and discharge the same; (B) effect the release thereof by
recording and delivering to Lender a surety bond as described below; (C) provide
Lender with other assurance which Lender deems, in its sole discretion, to be
satisfactory for the payment of such lien claim or affidavit and for the full
and continuous protection of Lender from the effect of such lien claim or
affidavit; or (D) contest such claim, with diligence, in good faith and as
required by applicable law, in a manner which will have the effect of releasing
or bonding such claim prior to the applicable Completion Date (or Sales Contract
sale date, if earlier) or A&D Completion

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Date. In the case of a lien contest pursuant to clause (D) above, the Collateral
affected by such claim should be revalued on the Borrowing Base Report if the
amount thereof is material; provided, however, unless Lender disapproves same or
requires action under clauses (A), (B) and (C) above, Borrower may escrow with
the Title Company cash in an amount required by the Title Company to provide
“insurance around” such lien claim. A surety bond which satisfies the provisions
of clause (C) above, shall be a bond meeting the requirements of Texas Property
Code, Chapter 53, subchapter H, Sections 53.171 et seq. (or other applicable law
of the State where the affected portion of the Mortgaged Property is located),
as same may be hereafter amended or supplemented; provided, however, if such
provisions are ever repealed, then such surety bond shall be in form, amount and
issued by a surety acceptable to Lender, in its sole and absolute discretion.
5.9    Construction Responsibilities. Borrower shall construct or cause the
construction of the Houses and A&D Improvements in a workmanlike manner
according to the Plans and Specifications and the recommendations of any soils
or engineering report acceptable by Lender. The construction of the Houses and
A&D Improvements shall be in compliance with all applicable Governmental
Requirements. If necessary, the Plans and Specifications shall be modified to
comply with the Governmental Requirements, subject to the provisions of
Section 5.5 hereof. Borrower shall be solely responsible for all aspects of
Borrower’s business in connection with the construction of the Houses and A&D
Improvements, including, without limitation, for the quality and suitability of
the Plans and Specifications and their compliance with all Governmental
Requirements, the supervision of the work of construction, the qualifications,
financial condition and performance of all architects, engineers, contractors,
material suppliers and consultants, and the accuracy of all Borrowing Base
Reports, Draw Requests and the proper application of all Advances. Lender is not
obligated to supervise, inspect or inform Borrower or any third party of any
aspect of the construction of the Improvements or any other matter referred to
above.
5.10    Assessments and Community Facilities. Without Lender’s prior written
consent, Borrower shall not cause or suffer to become effective or otherwise
consent to the formation of any community facilities or assessment district or
association which includes all or any part of the Collateral, nor shall Borrower
cause or otherwise consent to the levying of special taxes or assessments
against the Collateral by any such community facilities or assessment district
or association.
5.11    Delay. Borrower shall promptly notify Lender in writing of any event
causing delay or interruption of construction, or the timely completion of
construction of the Houses or A&D Improvements. The notice shall specify the
particular work delayed, and the cause and period of each delay.
5.12    Inspections. Lender and Inspector shall have the right to enter upon the
Mortgaged Property, at all reasonable times, to inspect the Collateral and the
construction work to verify information disclosed pursuant to this Agreement, or
for any other purpose. Any inspection or review of the Collateral by Lender or
Inspector is solely to determine whether Borrower is properly discharging its
obligations to Lender and may not be relied upon by Borrower or by any third
party. Lender owes no duty of care to Borrower or any third party to protect
against, or to inform Borrower or any third party of, any negligent, faulty,
inadequate or defective design or construction of the Houses or A&D Improvements
as determined by Lender.
5.13    Surveys. Upon request by Lender, Borrower shall deliver to Lender:
(i) upon completion of the foundation of each House, a survey showing the
location of the House on the Lot and confirming that the Improvement is located
entirely within the Lot and does not encroach upon any easement or set‑back
line, or breach or violate any Governmental Requirements; (ii) upon completion
of each House, an as‑built survey acceptable to a title insurer for purposes of
issuing a standard mortgagee policy of title insurance; and (iii) upon
acquisition of any parcel of Land, a survey acceptable to a title insurer for
purposes of issuing a standard mortgagee policy of title insurance. All such
surveys shall be performed and certified by a licensed engineer or surveyor
acceptable to Lender and the title insurer.
5.14    Affidavit of Commencement. Upon request by Lender, Borrower, within ten
(10) days after the Commencement Date for each House, or the A&D Commencement
Date for each A&D Project, but not

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before construction of the House, or A&D Improvements, has actually begun, shall
file in the appropriate records of the county in which the Lot or A&D Project is
situated, an affidavit (“Affidavit of Commencement”), in form and substance
acceptable to Lender, duly executed and notarized by Borrower and Contractor.
The date of commencement of work set forth in such Affidavit of Commencement
shall not be the date of or prior to the date on which the applicable Security
Instrument was recorded.
5.15    Affidavit of Completion. Upon request by Lender, Borrower, within ten
(10) days after construction of the House or A&D Project has been completed,
shall file in the appropriate records in the county in which the Lot or A&D
Project is situated an affidavit (“Affidavit of Completion”), in form and
substance acceptable to Lender, duly executed and notarized by Borrower and
Contractor.
ARTICLE VI.    INSURANCE
Borrower shall, while any obligation of Borrower under any Loan Document remains
outstanding, maintain at Borrower’s sole expense, the following policies of
insurance in form and substance satisfactory to Lender. Capitalized terms used
in this Article shall have the same meaning as such terms are commonly and
presently defined in the insurance industry.
6.1    Title Insurance. Title Insurance, together with any endorsements which
Lender may require, insuring Lender of the validity and the priority of the lien
of the Security Instrument upon the applicable Mortgaged Property, subject only
to matters approved by Lender in writing. During the term of the Loan, Borrower
shall deliver to Lender, within five (5) days of Lender’s written request, such
other endorsements to the Title Insurance as Lender may require. The amount of
such Title Insurance shall be in the amount not less than the greater of (i) the
Maximum Credit Amount for such House and/or Lot, (ii) the A&D Loan Amount for
such A&D Project, or (iii) the amount reasonably required by Lender. With
respect to each House or Lot, Borrower shall only be required to obtain and
maintain a mortgagee title policy binder on interim construction loan; provided,
however, if a binder is not available or cannot be extended, then Borrower will
obtain a loan policy of title insurance.
6.2    Property Insurance. If applicable, an All Risk/Special Form Property
Insurance policy, including without limitation, coverage for loss or damage by
fire, lightning, windstorm, explosion, hail, tornado, theft and such other
coverages and endorsements as Lender may require, insuring Lender against damage
to the Mortgaged Property in an amount not less than 100% of the full
replacement cost (on a completed value basis), including the cost of debris
removal, without deduction for depreciation and sufficient to prevent Borrower
and lender from becoming a coinsurer. Such coverage should adequately insure any
and all Loan collateral, whether such collateral is onsite, stored offsite or
otherwise. Lender shall be named on the policy as Mortgagee and named under a
Lender’s Loss Payable Endorsement and Standard Mortgage Clause Endorsement (in
forms acceptable to Lender).
6.3    Flood Hazard Insurance. If, and to the extent any portion of the
Mortgaged Property is located in a flood plain, a policy of flood insurance, as
deemed necessary by Lender, in an amount equal to the lesser of (a) the full
replacement cost of the affected Improvements or A&D Improvements, or (b) the
maximum coverage amount allowed by applicable law.
6.4    Liability Insurance. A policy of Commercial General Liability insurance
on an occurrence basis, with Borrower as the named insured, insuring against
liability for injury and/or death to any person and/or damage to any property
occurring on all Mortgaged Property, with an annual aggregate limit of not less
than $1,000,000, and a limit per occurrence of not less than $1,000,000.
6.5    Worker’s Compensation. Statutory worker’s compensation insurance for the
benefit of Borrower as insured (and if applicable, for the benefit of any
contractor as named insured, with Borrower as an additional insured) meeting
state law benefit requirements with a minimum $100,000 employer’s liability
coverage.

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6.6    Other Coverage. Borrower shall provide to Lender evidence of such other
reasonable insurance in such reasonable amounts as Lender may from time to time
request against such other insurable hazards which at the time are commonly
insured against for property similar to the subject Mortgaged Property located
in or around the region in which the applicable Mortgaged Property is located.
Such coverage requirements may include but are not limited to coverage for
earthquake, acts of terrorism, business income, delayed business income, rental
loss, sink hole, soft costs, tenant improvement or environmental.
6.7    General. Borrower shall provide to Lender insurance certificates or other
evidence of coverage in form acceptable to Lender, with coverage amounts,
deductibles, limits and retentions as required by Lender. All insurance policies
shall provide that the coverage shall not be cancelable or materially changed
without 10 days prior written notice to Lender of any cancellation for
nonpayment of premiums, and not less than 30 days (45 days for flood insurance)
prior written notice to Lender of any other cancellation or any modification
(including a reduction in coverage). Lender shall be named under a Lender’s Loss
Payable Endorsement and Standard Mortgage Clause Endorsement (in forms
acceptable to Lender) on all insurance policies which Borrower actually
maintains with respect to the Mortgaged Property. All insurance policies shall
be issued and maintained by insurers approved to do business in the state in
which the Mortgaged Property is located and must have an A.M. Best Company
rating of A-\IX or better.
6.8    Contractor Insurance. A Builders Risk Completed Value Hazard Insurance
policy, including, without limitation, any endorsements which Lender may
require, insuring Lender against damage to the Mortgaged Property in an amount
acceptable to Lender. Lender shall be named on such policy under a Lender’s Loss
Payable Endorsement acceptable to Lender.
6.9    COLLATERAL PROTECTION INSURANCE NOTICE. (A) BORROWER IS REQUIRED TO:
(i) KEEP THE MORTGAGED PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT LENDER
SPECIFIES; (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO
BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND
(iii) NAME LENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A
LOSS; (B) BORROWER MUST, IF REQUIRED BY LENDER, DELIVER TO LENDER A COPY OF THE
POLICY AND PROOF OF THE PAYMENT OF PREMIUMS THEREFOR; AND (C) IF BORROWER FAILS
TO MEET ANY REQUIREMENT LISTED IN CLAUSES (A) OR (B) HEREOF, LENDER MAY OBTAIN
COLLATERAL PROTECTION INSURANCE ON BEHALF OF BORROWER AT BORROWER’S EXPENSE.
ARTICLE VII.    REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender’s execution of this Agreement, Borrower
represents and warrants to Lender as of the date hereof and continuing as of
each day thereafter as follows:
7.1    Authority/Enforceability. Borrower is in compliance with all laws and
regulations applicable to its organization, existence and transaction of
business and has all necessary rights and powers to own the Collateral and
construct the Improvements and A&D Improvements (if applicable) as contemplated
by the Loan Documents.
7.2    Binding Obligations. Borrower is authorized to execute, deliver and
perform its obligations under the Loan Documents, and such obligations shall be
valid and binding obligations of Borrower.
7.3    Formation and Organizational Documents. Borrower has delivered to Lender
all formation and organizational documents of Borrower, and of the partners,
joint venturers or members of Borrower, if any, and all such formation and
organizational documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender. Borrower shall
immediately provide Lender with copies of any amendments or modifications of
such formation or organizational documents.

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7.4    No Violation. Borrower’s execution, delivery, and performance under the
Loan Documents do not (i) require any consent or approval not heretofore
obtained under any partnership agreement, operating or limited liability company
agreement, articles of incorporation, bylaws or other document; (ii) violate any
Governmental Requirements applicable to the Collateral or Borrower; or
(iii) conflict with, or constitute a breach or default or permit the
acceleration of obligations under any agreement, contract, lease, or other
document by which Borrower or the Collateral is bound or regulated.
7.5    Compliance with Governmental Requirements. Borrower has, and at all times
shall have obtained, all permits, licenses, exemptions, and approvals necessary
to construct (if applicable), occupy and market the Houses and A&D Improvements,
and shall maintain compliance with all Governmental Requirements applicable to
the Houses and A&D Improvements and necessary for the transaction of Borrower’s
business.
7.6    Litigation. Except as disclosed to Lender in writing, there are no
claims, actions, suits, or proceedings pending, or to Borrower’s knowledge,
threatened against Borrower or affecting the Collateral.
7.7    Financial Condition. All financial statements and information heretofore
delivered to Lender by Borrower, including, without limitation, information
relating to the financial condition of Borrower, the Collateral, the partners,
joint venturers or members of Borrower fairly and accurately represent the
financial condition of the subject thereof and have been prepared (except as
noted therein) in accordance with GAAP consistently applied. Borrower
acknowledges and agrees that Lender may request and obtain additional
information from third parties regarding any of the above, including, without
limitation, credit reports.
7.8    No Material Adverse Change. There has been no material adverse change in
the financial condition of Borrower since the dates of the latest financial
statements furnished to Lender and, except as otherwise disclosed to Lender in
writing, Borrower has not entered into any material transaction which is not
disclosed in such financial statements.
7.9    Accuracy. All reports, documents, instruments, information and forms of
evidence delivered to Lender concerning this Credit Facility or the Collateral
or required by the Loan Documents are accurate, correct and sufficiently
complete to give Lender true and accurate knowledge of their subject matter, and
do not contain any misrepresentation or omission.
7.10    Tax Liability. Borrower has filed all required federal, state, county
and municipal tax returns and has paid all taxes and assessments against the
Collateral owed and payable, and Borrower has no knowledge of any basis for any
additional payment with respect to any such taxes and assessments, except that
which may result from the increased valuation resulting from the construction of
the Improvements.
7.11    Utilities. All utility services, including, without limitation, gas,
water, sewage, electrical and telephone, necessary for the construction and
occupancy of the Houses which constitute Collateral are available at or within
the boundaries of each such Lot or A&D Project.
7.12    Compliance. Borrower is familiar with and in compliance with all
Governmental Requirements for the construction of the Houses and A&D
Improvements and will conform to and comply with all Governmental Requirements
and the Plans and Specifications.
7.13    Americans With Disabilities Act Compliance. If applicable, the Houses
have been designed and shall be constructed and completed, and thereafter
maintained, in strict accordance and full compliance with all of the
requirements of the Americans with Disabilities Act, of July 26, 1990, Pub. L.
No. 101‑336, 104 Stat. 327, 42 U.S.C. § 12101, et seq., and with applicable
state and local laws, as each may be amended from time to time. Borrower shall
be responsible for the cost of compliance with the ADA and all other applicable
laws.

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7.14    Access. With respect to each House or Lot, all roads necessary for the
full utilization of the Lots and/or Houses for their intended purposes have been
completed, dedicated and accepted by the appropriate Governmental Authority.
With respect to each A&D Project, all roads necessary to access the Land have
been completed, dedicated and accepted by the appropriate Governmental
Authority.
7.15    No Commencement. With respect to each House or Lot, as of the date of
each applicable Security Instrument, no steps to commence construction on the
applicable Lots, including steps to clear or otherwise prepare such Lots for
construction thereon or the delivery of material for use in construction of the
Improvements, have been taken. With respect to each A&D Project, as of the date
of each applicable Security Instrument, no steps to commence construction on the
applicable Land, including steps to clear or otherwise prepare such Lots for
construction thereon or the delivery of material for use in construction of the
A&D Improvements, have been taken.
7.16    Disclaimer of Permanent Financing. Borrower acknowledges and agrees that
Lender has not made any commitments, either express or implied, to make or
extend the financing under this Credit Facility past the Maturity Date.
7.17    Interstate Land Sales Act. Borrower’s construction of the Houses and A&D
Improvements and the sale of Lots and/or Houses are exempt from the registration
under and any requirements of the Interstate Land Sales Full Disclosure Act and
the regulations promulgated thereunder.
7.18    Required Documentation. Borrower has in its possession the instruments,
evidence, items and certificates specified below, and Borrower shall provide
copies of such materials to Lender upon Lender’s request:
(a)    With respect to Lots and Houses, evidence that all the streets furnishing
access to the Lots and/or Houses have been fully completed, dedicated to public
use and accepted by applicable Governmental Authorities. With respect to A&D
Projects, evidence that all the streets furnishing access to the Land have been
fully completed, dedicated to public use and accepted by applicable Governmental
Authorities
(b)    With respect to Lots and Houses, evidence satisfactory to Lender showing
the availability of all necessary utilities at the boundary lines of each Lot,
including sanitary and storm sewer facilities, potable water, telephone,
electricity, gas, and municipal services. With respect to A&D Projects, evidence
satisfactory to Lender showing the availability of all necessary utilities at
the boundary lines of each parcel of Land, including sanitary and storm sewer
facilities, potable water, telephone, electricity, gas, and municipal services.
(c)    Evidence that the proposed use of the Land, Lots and/or Houses and, as
applicable, construction of the Houses or A&D Improvements complies with all
Governmental Requirements.
(d)    A cost breakdown for each House or A&D Project satisfactory to Lender
showing the Total Costs and other costs required to be paid to satisfactorily
complete the House or A&D Project, free and clear of liens or claims for liens
for material supplied and for labor services performed.
(e)    Original or a copy of each fully executed Construction Contract, if
applicable.
(f)    Waiver of lien or lien subordination agreement(s) executed by Contractor
and by each contractor, subcontractor, laborer and supplier furnishing labor or
materials for the construction of the Houses or A&D Improvements, in a form
acceptable to Lender.
(g)    A copy of the Plans and Specifications for each House or A&D Project.

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(h)    Building permit(s) and all other permits required with respect to the
construction of the Houses and A&D Improvements.
(i)    Evidence that all applicable zoning ordinances and restrictive covenants
affecting the Mortgaged Property permit the use for which the Mortgaged Property
is intended and have been or will be complied with.
ARTICLE VIII.    HAZARDOUS MATERIALS
8.1    Special Representations and Warranties. Without in any way limiting the
other representations and warranties set forth in this Agreement, and after
reasonable investigation and inquiry, Borrower hereby specially represents and
warrants to the best of Borrower’s knowledge as of the date of this Agreement as
follows:
(l)    Hazardous Materials. The Mortgaged Property is not and has not been a
site for the use, generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or presence of any oil,
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, hazardous wastes, toxic or contaminated substances or similar
materials, including, without limitation, any substances which are “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,”
“wastes,” “regulated substances,” “industrial solid wastes,” or “pollutants”
under the Hazardous Materials Laws, as described below, and/or other applicable
environmental laws, ordinances and regulations (collectively, the “Hazardous
Materials”).
(m)    Hazardous Materials Laws. The Mortgaged Property is in compliance with
all laws, ordinances and regulations relating to Hazardous Materials (“Hazardous
Materials Laws”), including, without limitation: the Clean Air Act, as amended,
42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive
Environment Response, Compensation and Liability Act of 1980, as amended
(including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”),
42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended,
29 U.S.C. Section 651, the Emergency Planning and Community Right‑to‑Know Act of
1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977,
as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of
other jurisdictions or orders and regulations.
(n)    Hazardous Materials Claims. There are no claims or actions (“Hazardous
Materials Claims”) pending or threatened against Borrower or the Mortgaged
Property by any Governmental Authority or by any other person or entity relating
to Hazardous Materials or pursuant to the Hazardous Materials Laws.
(o)    Storage Tanks. No storage tanks (including, without limitation, petroleum
or heating oil storage tanks), underground or above‑ground, are present on or
under the Mortgaged Property, or have been on or under the Mortgaged Property.
8.2    Hazardous Materials Covenants. Borrower agrees as follows:
(l)    No Hazardous Activities. Borrower shall not cause or permit the Mortgaged
Property to be used as a site for the use, generation, manufacture, storage,
treatment, release, discharge, disposal, transportation or presence of any
Hazardous Materials.
(m)    Compliance. Borrower shall comply and cause the Mortgaged Property to
comply with all Hazardous Materials Laws.

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(n)    Notices. Borrower shall immediately notify Lender in writing of: (i) the
discovery of any Hazardous Materials on, under or about the Mortgaged Property;
(ii) any knowledge by Borrower that the Mortgaged Property does not comply with
any Hazardous Materials Laws; (iii) any Hazardous Materials Claims; and (iv) the
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of the Mortgaged Property.
(o)    Remedial Action. In response to the presence of any Hazardous Materials
on, under or about the Mortgaged Property, Borrower shall immediately take, at
Borrower’s sole expense, all remedial action required by any Hazardous Materials
Laws or any judgment, consent decree, settlement or compromise in respect to any
Hazardous Materials Claims.
8.3    Inspection By Lender. Upon reasonable prior notice to Borrower, Lender,
its employees and agents, may from time to time (whether before or after the
commencement of a nonjudicial or judicial foreclosure proceeding) enter and
inspect the Mortgaged Property for the purpose of determining the existence,
location, nature and magnitude of any past or present release or threatened
release of any Hazardous Materials into, onto, beneath or from the Mortgaged
Property.
8.4    Hazardous Materials Indemnity. BORROWER HEREBY AGREES TO DEFEND,
INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES,
LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEY’S FEES AND EXPENSES) WHICH LENDER MAY
INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE,
STORAGE, DISPOSAL, THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS
MATERIALS IN, ON, UNDER OR ABOUT THE MORTGAGED PROPERTY. BORROWER SHALL
IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY,
TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE
DEFAULT RATE. BORROWER’S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD
HARMLESS LENDER SHALL SURVIVE: (i) THE CANCELLATION OF THE NOTE AND THE RELEASE
OR PARTIAL RELEASE OF THE LIEN OF THE SECURITY INSTRUMENT, (ii) ANY JUDICIAL OR
NON‑JUDICIAL FORECLOSURE UNDER THE SECURITY INSTRUMENT, OR TRANSFER OF THE
MORTGAGED PROPERTY IN LIEU THEREOF; AND (iii) THE SATISFACTION OF ALL OF
BORROWER’S OBLIGATIONS UNDER THE LOAN DOCUMENTS.
ARTICLE IX.    COVENANTS OF BORROWER
9.1    Expenses. Borrower shall immediately pay Lender upon demand all costs and
expenses incurred by Lender in connection with: (a) the preparation of this
Agreement and all other Loan Documents and the preparation, review or other
action relating to the Other Related Documents contemplated hereby; (b) the
administration of this Agreement, the other Loan Documents and Other Related
Documents for the term of the Credit Facility; and (c) the enforcement or
satisfaction by Lender of any of Borrower’s obligations under this Agreement,
the other Loan Documents or the Other Related Documents. For all purposes of
this Agreement, Lender’s costs and expenses shall include, without limitation,
all appraisal fees, cost engineering and inspection fees, legal fees, accounting
fees, environmental consultant fees, auditor fees, and the cost to Lender of any
title insurance premiums, title surveys, releases and notary fees. Borrower
recognizes and agrees that Appraisals of the Mortgaged Property by a licensed
independent appraiser may be required by Lender’s internal procedures and/or
federal regulatory reporting requirements on an annual and/or specialized basis
and that Lender may, at its option, require inspection of the Mortgaged Property
by an independent supervising architect and/or cost engineering specialist
(i) prior to each Advance, (ii) at least once each month during the course of
construction even though no Advance is to be made for that month, (iii) upon
completion of a House or A&D Project, and (iv) at least semi‑annually
thereafter. If any of the services described above

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are provided by an employee of Lender, Lender’s costs and expenses for such
services shall be calculated in accordance with Lender’s standard charge for
such services.
9.2    ERISA Compliance. Borrower shall at all times comply with the provisions
of ERISA with respect to any retirement or other employee benefit plan to which
it is a party as employer, and as soon as possible after Borrower knows, or has
reason to know, that any Reportable Event (as defined in ERISA) with respect to
any such plan of Borrower has occurred, it shall furnish to Lender a written
statement setting forth details as to such Reportable Event and the action, if
any, which Borrower proposes to take with respect thereto, together with a copy
of the notice of such Reportable Event furnished to the Pension Benefit Guaranty
Corporation.
9.3    Opinion of Legal Counsel. Upon Lender’s request, Borrower shall provide,
at Borrower’s expense, an opinion of legal counsel in form and content
satisfactory to Lender to the effect that: (a) upon due authorization, execution
and recordation or filing as may be specified in the opinion, each of the Loan
Documents shall be legal, valid and binding instruments, enforceable against the
makers thereof in accordance with their respective terms; (b) Borrower is duly
formed and has all requisite authority to enter into the Loan Documents; and
(c) such other matters, incident to the transactions contemplated hereby, as
Lender may reasonably request.
9.4    Further Assurances. Upon Lender’s request and at Borrower’s sole cost and
expense, Borrower shall execute, acknowledge and deliver any other instruments
and perform any other acts necessary, desirable or proper, as determined by
Lender, to carry out the purposes of this Agreement and the other Loan Documents
or to perfect and preserve any liens created by the Loan Documents.
9.5    Assignment. Without the prior written consent of Lender, Borrower shall
not assign Borrower’s interest under any of the Loan Documents, or in any monies
due or to become due thereunder, and any assignment without such consent shall
be void. In this regard, Borrower acknowledges that Lender would not agree to
the Credit Facility except in reliance on Borrower’s expertise, reputation,
prior experience in constructing single family residential properties, Lender’s
knowledge of Borrower, and Lender’s understanding that this Agreement is more in
the nature of an agreement involving personal services than a standard loan
where Lender would rely on security which was already fully constructed.
ARTICLE X.     FINANCIAL COVENANTS
10.1    Financial Information. Borrower shall deliver to Lender, and cause
Guarantor to deliver to Lender, the Financial Statements, Accounts Payable
Reports, Borrowing Base Reports, Compliance Certificates, Inventory and Sales
Status Reports, federal tax returns, and other financial information described
in Exhibit “A” attached hereto, on or before the applicable delivery deadline
set forth therein. Furthermore, Borrower shall deliver to Lender, and cause
Guarantor to deliver to Lender, such other financial documents as Lender may
reasonably request from time to time.
10.2    Books and Records. Borrower shall maintain complete books of account and
other records for the Collateral and for disbursement and use of the proceeds of
Advances under this Credit Facility, and the same shall be available for
inspection and copying by Lender upon reasonable prior notice.
10.3    Unsecured Debt. From and after the date hereof, Borrower shall not
voluntarily or involuntarily incur or suffer any Unsecured Debt, unless Lender
expressly approves an item of Unsecured Debt in writing, prior to the time that
Borrower incurs such item of Unsecured Debt. As used herein the term “Unsecured
Debt” shall mean Total Liabilities less the amount thereof which is fully
secured by a valid and enforceable lien or security interest against specific
assets of Borrower, except to the extent the value of the security is less than
the amount of the corresponding liability, or any liability secured on a
non‑recourse basis by a lien or security interest against specific assets of
Borrower, and otherwise in accordance with GAAP; provided, however, Unsecured
Debt shall not include trade payables and Borrower’s current period payroll
liabilities.

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10.4    Subordination of Unsecured Debt. All indebtedness or liabilities from
Borrower to any Affiliate or other intercompany transactions and obligations, as
determined in accordance with GAAP, shall be fully subordinated to the full and
complete repayment of the Indebtedness and performance of the Obligations to
Lender under this Credit Facility, such subordination to be in form and
substance acceptable to Lender in its sole and absolute discretion. However,
upon the occurrence of an Event of Default, Borrower agrees that it will not
make any payments of principal or interest under any such intercompany
obligations until such time as the events or circumstances giving rise to such
Event of Default have been fully cured or satisfied, as determined by Lender in
its sole and absolute discretion.
10.5    Limitation on Distributions. Borrower shall not make any Distributions
(a) at any time that an Event of Default remains uncured, or (b) which would
cause Borrower to fail to comply with any financial covenant set forth herein.
As used herein, the term “Distribution” shall mean any payment, whether in cash,
tangible or intangible property, securities or other rights in and to any
income, revenues, receipts or other assets of Borrower (excluding all normal and
reasonable operating expenses of Borrower and payment of all construction costs
of Improvements) distributed to the partners, shareholders or joint venturers of
Borrower in an amount equal to the projected federal income tax liabilities of
such partners, shareholders or joint venturer of Borrower associated with the
business operations of Borrower for such corresponding tax year, as same has
been approved by Lender prior to such payment or distribution by Borrower, which
such approval shall be in Lender’s sole and absolute discretion as to whether it
accurately reflects the federal income tax liability of such partners,
shareholders or joint venturer directed associated with the business operations
of Borrower.
10.6    Other Financial Covenants. Until such time as the Credit Facility has
been fully repaid, terminated and Lender has no further obligation to make any
advances under the Credit Facility, Borrower shall comply with the other
financial covenants set forth on Exhibit “A” attached hereto.
ARTICLE XI.    DEFAULTS AND REMEDIES
11.1    Default. The occurrence of any one or more of the following shall
constitute an “Event of Default” under this Agreement and the other Loan
Documents:
(a)    Monetary. Borrower’s failure to pay when due any sums payable under the
Note or any of the other Loan Documents.
(b)    Performance of Obligations. Borrower’s failure to perform any
Obligations, exclusive of those referenced in Section 11.1(a) hereof, under any
of the Loan Documents.
(c)    Construction; Use. (i) There is any material deviation in the work of
construction from the Plans and Specifications or Governmental Requirements or
the appearance or use of defective workmanship or materials in constructing any
House or A&D Project, and Borrower fails to remedy the same to Lender’s
satisfaction within ten (10) days of Lender’s written demand to do so; or
(ii) there is a cessation of construction of any House or A&D Project prior to
completion for a continuous period of more than fifteen (15) days (except as
caused by an event of force majeure for which a longer delay may be permitted
under Article V hereof); or (iii)  the construction or sale of any House of Lot
in accordance with the Loan Documents is prohibited, enjoined or delayed for a
continuous period of more than thirty (30) days; or (iv)  utilities or other
public services necessary for the full occupancy and utilization of the
Mortgaged Property are curtailed for a continuous period of more than thirty
(30) days.
(d)    Liens, Attachment; Condemnation. (i) The recording of any claim of lien
against the Collateral and the continuance of such claim of lien for twenty (20)
days without discharge, satisfaction or provision for payment being made by
Borrower in a manner satisfactory to Lender; or (ii) the condemnation, seizure
or appropriation of, or occurrence of an uninsured casualty with respect to any
material portion of the Collateral; or (iii) the sequestration or attachment of,
or any

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levy or execution upon any of the Collateral, any other collateral provided by
Borrower under any of the Loan Documents, any monies in the Account or any
substantial portion of the other assets of Borrower, which sequestration,
attachment, levy or execution is not released, expunged or dismissed prior to
the earlier of thirty (30) days thereafter or the sale of the assets affected
thereby.
(e)    Representations and Warranties. (i) The failure of any representation or
warranty of Borrower in any of the Loan Documents; or (ii) any material adverse
change in the financial condition of Borrower or any other person or entity in
any manner obligated to Lender under the Loan Documents from the financial
condition represented to Lender as of the date hereof.
(f)    Voluntary Bankruptcy; Insolvency; Dissolution. (i) The filing of a
petition by Borrower for relief under the Bankruptcy Code, or under any other
present or future state or federal law regarding bankruptcy, reorganization or
other debtor relief law; (ii) the filing of any pleading or an answer by
Borrower in any involuntary proceeding under the Bankruptcy Code or other debtor
relief law which admits the jurisdiction of the court or the petition’s material
allegations regarding Borrower’s insolvency; (iii) a general assignment by
Borrower for the benefit of creditors; or (iv) Borrower applying for, or the
appointment of, a receiver, trustee, custodian or liquidator of Borrower or any
of its property.
(g)    Involuntary Bankruptcy. The failure of Borrower to effect a full
dismissal of any involuntary petition under the Bankruptcy Code or any other
debtor relief law that is filed against Borrower or in any way restrains or
limits Borrower or Lender regarding the Note or the Mortgaged Property, prior to
the earlier of the entry of any court order granting relief sought in such
involuntary petition, or thirty (30) days after the date of filing of such
involuntary petition.
(h)    Constituent Parties. The occurrence of any of the events specified in
Subsections 11.1(f) and (g) hereof as to any person or entity other than
Borrower which is in any manner obligated to Lender under the Loan Documents.
(i)    Loss of Priority. The failure at any time of the Security Instrument to
be a valid first lien upon the Mortgaged Property, or any portion thereof.
(j)    Dissolution and Reorganization. If Borrower, or, if Borrower is a
partnership, joint venture, trust or other type of business association, if any
of the parties comprising Borrower shall dissolve, terminate or liquidate, or
merge with or be consolidated into any other entity.
(k)    No Further Encumbrances. If Borrower, without the prior written consent
of Lender, creates, places or permits to be created or placed, or through any
act or failure to act, acquiesces in the placing of, or allows to remain, any
mortgage, pledge, lien (statutory, constitutional or contractual), security
interest, exception, encumbrance or charge, or conditional sale or other title
retention agreement, regardless of whether same are expressly subordinate to the
liens of the Loan Documents, with respect to the Collateral, other than the
Permitted Exceptions (as defined in the applicable Security Instrument);
provided, however, that if such further encumbrance is a mechanic’s lien, then
the provisions of Section 11.1(d) shall exclusively govern same.
(l)    Disposition of Mortgaged Property and Beneficial Interest in Borrower. If
Borrower makes a Disposition without the prior written consent of Lender. It is
expressly agreed that in connection with determining whether to grant or
withhold such consent, Lender may (but is not obligated to), among other things,
(i) consider the creditworthiness of the party to whom such Disposition will be
made and its management ability with respect to the Mortgaged Property,
(ii) consider whether or not the security for repayment of the Indebtedness and
the performance of the Obligations, or Lender’s ability to enforce its rights,
remedies and recourses with respect to such security, will be impaired in any
way by the proposed Disposition, (iii) require as a condition to granting such
consent, an increase in the rate of interest payable under the Note or any other
change

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in the terms and provisions of the Note and other Loan Documents, (iv) require
that Lender be reimbursed for all costs and expenses incurred by Lender in
investigating the creditworthiness and management ability of the party to whom
such Disposition will be made and in determining whether Lender’s security will
be impaired by the proposed Disposition, (v) require the payment to Lender of a
transfer fee to cover the cost of documenting the Disposition in its records,
(vi) require the payment of its reasonable attorneys’ fees in connection with
such Disposition, (vii) require the express assumption of payment of the
Indebtedness and performance of the Obligations by the party to whom such
Disposition will be made (with or without the release of Borrower from liability
for such Indebtedness and Obligations), (viii) require the execution of
assumption agreements, modification agreements, supplemental loan documents and
financing statements satisfactory in form and substance to Lender, (ix) require
endorsements (to the extent available under applicable law) to any existing
Title Insurance insuring Lender’s liens and security interests covering the
Mortgaged Property, and (x) require additional security for the payment of the
Indebtedness and performance of the Obligations.
(m)    Destruction of Mortgaged Property. If all or any portion of the Mortgaged
Property is demolished, destroyed or substantially damaged so that (in Lender’s
judgment) it cannot be restored or rebuilt with available funds to the condition
existing immediately prior to such demolition, destruction or damage within a
reasonable period of time.
(n)    Foreclosure of Other Liens. If the holder of any lien or security
interest on all or any portion of the Mortgaged Property (without hereby
implying Lender’s consent to the existence, placing, creating or permitting of
any such lien or security interest) institutes foreclosure or other proceedings
for the enforcement of its remedies thereunder.
(o)    Condemnation. If any condemnation proceeding is instituted or threatened
which would, in Lender’s sole judgment, materially impair the use and enjoyment
of all or any portion of the Mortgaged Property for its intended purposes.
(p)    Abandonment. If Borrower abandons all or any portion of the Mortgaged
Property.
(q)    Hazardous Materials. The discovery of any significant Hazardous Materials
in, on or about the Mortgaged Property subsequent to the date hereof. Any such
Hazardous Materials shall be “significant” for this purpose if said Hazardous
Materials, in Lender’s sole discretion, have a materially adverse impact on the
value of the affected portion of the Mortgaged Property.
(r)    Default under Other Loans. The existence of any monetary or non‑monetary
default (after any and all notices and grace or cure periods) under the terms of
any loan or obligation of Borrower (whether as a primary or secondary obligor).
(s)    Loan Documents. If any of the Loan Documents are alleged by Borrower or
any of their Affiliates, or determined by a court of applicable jurisdiction or
believed by Lender, in its good faith judgment, to be invalid, unenforceable or
otherwise not binding against any party (other than Lender) thereto.
(t)    Outstanding Judgments. If Borrower has any unsatisfied judgment (whether
or not abstracted or filed in any real property records) against it.
(u)    Cross‑Default. Borrower acknowledges and agrees that any Event of Default
under any of the Security Instruments or any of the Loan Documents relating to
the Note shall constitute an Event of Default under all of the Security
Instruments and all of the Loan Documents relating to the Note, upon Lender’s
election. Notwithstanding the foregoing, however, if both the Security
Instrument and this Agreement describe the same Event of Default, but the
Security Instrument allows Borrower a grace or cure period with respect to such
Event of Default, or requires that Lender

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first provide Borrower with written notice of such Event of Default, then the
grace, notice and cure provisions of the Security Instrument shall control.
11.2    Acceleration Upon Default; Remedies. Upon the occurrence of any Event of
Default, Lender may, at its sole option, declare all sums owing to Lender under
the Note, this Agreement and the other Loan Documents immediately due and
payable. Upon such acceleration, Lender may, in addition to all other remedies
permitted under this Agreement and the other Loan Documents and at law or
equity, apply any sums in the Account and all insurance proceeds relating to a
casualty to the Mortgaged Property which is then held by Lender to the sums
owing under the Loan Documents and any and all obligations of Lender to make
further Advances under the Loan shall terminate.
11.3    Disbursements to Third Parties. Upon the occurrence of an Event of
Default occasioned by Borrower’s failure to pay money to a third party as
required by this Agreement, Lender may but shall not be obligated to make such
payment from the Credit Facility proceeds, insurance proceeds relating to a
casualty to the Mortgaged Property which is then held by Lender, or other funds
of Lender. If such payment is made from proceeds of the Credit Facility,
Borrower shall immediately deposit with Lender, upon written demand, an amount
equal to such payment. If such payment is made from funds of Lender, Borrower
shall immediately repay such funds upon written demand of Lender. In either
case, the Event of Default with respect to which any such payment has been made
by Lender shall not be deemed cured until such deposit or repayment (as the case
may be) has been made by Borrower to Lender.
11.4    Lender’s Completion of Construction. Upon the occurrence of an Event of
Default, Lender may, upon five (5) days prior written notice to Borrower, and
with or without legal process, take possession of the Collateral, remove
Borrower and all agents, employees and contractors of Borrower from the
Mortgaged Property, complete the work of construction (if applicable) and market
and sell or lease the Collateral. For this purpose, Borrower irrevocably
appoints Lender as its attorney‑in‑fact, which agency is coupled with an
interest. As attorney‑in‑fact, Lender may, in Borrower’s name, take or omit to
take any action Lender may deem appropriate, including, without limitation,
exercising Borrower’s rights under the Loan Documents and all contracts
concerning the Collateral.
11.5    Lender’s Cessation of Construction. If Lender determines at any time
that the Improvements or A&D Improvements are not being constructed in
accordance with the Plans and Specifications and all Governmental Requirements,
Lender may immediately cause all construction to cease on any of the
Improvements or A&D Improvements affected by the condition of nonconformance.
Borrower shall thereafter not allow any construction work, other than corrective
work, to be performed on any of the Improvements affected by the condition of
nonconformance until such time as Lender notifies Borrower in writing that the
nonconforming condition has been corrected.
11.6    Repayment of Funds Advanced. Any funds expended by Lender in the
exercise of its rights or remedies under this Agreement and the other Loan
Documents shall be payable to Lender upon demand, together with interest at the
Default Rate from the date the funds were expended.
11.7    Rights Cumulative, No Waiver. All Lender’s rights and remedies provided
in this Agreement and the other Loan Documents, together with those granted by
law or at equity, are cumulative and may be exercised by Lender at any time.
Lender’s exercise of any right or remedy shall not constitute a cure of any
Event of Default unless all sums then due and payable to Lender under the Loan
Documents are repaid and Borrower has cured all other Events of Default. No
waiver shall be implied from any failure of Lender to take, or any delay by
Lender in taking, action concerning any Event of Default or failure of condition
under the Loan Documents, or from any previous waiver of any similar or
unrelated Event of Default or failure of condition. Any waiver or approval under
any of the Loan Documents must be in writing and shall be limited to its
specific terms.
ARTICLE XII.    A&D LOANS

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12.1    A&D Loans. Prior to the Credit Facility Termination Date, Borrower may
request that Lender make one or more A&D Loans. Lender, in its sole and absolute
discretion may agree to make one or more A&D Loans to Borrower on the basic
terms specified in the related A&D Project Loan Sheet at the time of the
approval of such A&D Loan. Notwithstanding the Borrower’s compliance with all of
the terms of this Agreement, Lender may establish unique requirements, terms and
conditions for each A&D Loan and may decline to make any A&D Loan during term of
this Agreement. Among the conditions that Borrower must satisfy before Lender
will consider Borrower’s request for an A&D Loan, are the A&D Loan Closing
Conditions. Upon approval of a specific A&D Loan, Borrower and Lender will
execute an A&D Project Loan Sheet which will specify the A&D Loan Amount, the
A&D Loan Maturity Date, and the A&D Partial Release Prices, and include an A&D
Budget, and such other terms, conditions and agreements as Lender may require.
The maximum amount of all Credit Facility proceeds that are either (a) advanced
and outstanding for A&D Loans, or (b) not advanced, but committed for A&D Loans,
at any one time, shall never exceed the amount of the A&D Loan Subfacility.
12.2    A&D Loan Minimum Standards. Each A&D Loan shall adhere to the following
minimum standards, in addition to such other requirements, terms and conditions
that Lender may establish from time to time:
(a)    Each A&D Project must be located in the State of Texas;
(b)    The A&D Loan Amount for any A&D Project shall not exceed the Maximum
Credit Amount for the Land and A&D Improvements (if any) contemplated for such
A&D Project;
(c)    The A&D Loan Maturity Date shall be no more than twenty-four (24) months
after the origination of the applicable A&D Loan; and
(d)    The A&D Partial Release Price shall result in one hundred twenty-five
percent (125%) acceleration for the repayment of the applicable A&D Loan.
12.3    A&D Subfacility is Revolving; Each A&D Loan is Not Revolving.
(a)    The A&D Subfacility shall constitute a revolving line of credit. Each A&D
Loan, however, shall constitute a non–revolving line of credit. No principal
amount repaid by Borrower under any A&D Loan may be reborrowed by Borrower under
the same A&D Loan.
(b)    Lender will make Advances under the A&D Subfacility to Borrower under
individual A&D Loans from time to time on any Business Day in such amounts as
Borrower may request up to the maximum amount approved for each said A&D Loan,
subject to the terms and conditions of the applicable A&D Project Loan Sheet,
and the A&D Budget Allocations set forth in the applicable A&D Budget. All sums
due and owing under each A&D Loan shall be paid in full on or prior to the
earlier to occur of (i) the Maturity Date, or (ii) A&D Loan Maturity Date.
12.4    A&D Loan Advances. The following provisions apply to each and every A&D
Loan made under the A&D Subfacility.
(a)    Purpose of A&D Loan Advances. The purposes for which A&D Loan proceeds
are allocated and the respective amounts of such A&D Budget Allocations are set
forth in the applicable A&D Budget for said A&D Loan, as approved by Lender in
the applicable A&D Project Loan Sheet. Advances for each A&D Loan shall only be
disbursed in accordance with the A&D Budget Allocations set forth in the A&D
Budget. Lender shall not be obligated to make an Advance under any A&D Loan for
an A&D Budget Allocation set forth in an A&D Budget to the extent that the
amount of the Advance for such A&D Budget Allocation would, when added to all
prior Advances for such A&D Budget Allocation, exceed the total of such A&D
Budget Allocation as set forth in said A&D Budget.

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(b)    Limitation on A&D Loan Advances. To the extent that A&D Loan proceeds
disbursed by Lender pursuant to the A&D Budget Allocations set forth in the
applicable A&D Budget are insufficient to pay all costs required for the
applicable element of the subject A&D Project, Borrower shall pay any and all
excess costs for such element with funds derived from sources other than the A&D
Loan (i.e., Borrower’s own funds). Under no circumstances shall Lender be
required to disburse any proceeds of any A&D Loan in excess of the minimum
amount set forth in the A&D Project Loan Sheet for said A&D Loan. Borrower shall
be limited to two (2) Advances under each A&D Loan per calendar month; provided,
however, that Lender may, in its sole discretion, but without any obligation to
do so, allow more than two (2) Advances in any calendar month.
(c)    Request for A&D Loan Advances. Borrower may request Advances under any
A&D Loan by submitting an A&D Draw Request Form to Lender, and by complying with
the other terms and conditions set forth in Section 4.1 of this Agreement. No
Advances shall be made under any A&D Loan after the applicable A&D Loan Advance
Termination Date. No Advance (whether interim or final) under any A&D Loan shall
be made unless all conditions precedent to such Advance have been satisfied.
12.5    Reallocation Among A&D Budget Line Items. Lender reserves the right, at
its option, to disburse A&D Loan proceeds reserved to any of the A&D Budget
Allocations for such other purposes or in such different proportions as Lender
may reasonably deem necessary or advisable. Borrower shall not be entitled to
require that Lender reallocate A&D Loan funds among the A&D Budget Allocations.
With respect to any amount allocated in an A&D Budget for “contingencies” or
other non–specific purposes (a) Lender, in its sole discretion, may disburse
such amounts to pay future contingent costs and expenses of completing,
maintaining, leasing and promoting the A&D Project and such other costs or
expenses as Lender shall approve, (b) under no circumstances shall Borrower have
the right to require Lender to disburse any amounts so allocated, and (c) Lender
may impose such requirements and conditions as it deems prudent and necessary
should it elect to disburse all or any portion of the amounts so allocated.
12.6    Retainage. Lender, at its sole discretion, may require and is hereby
authorized to retain, undisbursed from any Advance, the amount required by law
as “retainage” to protect Lender and Borrower from lien claims of
subcontractors, laborers and materialmen. If retainage is not specifically
authorized or directed by law, Lender shall have the right, in its sole
discretion, to retain up to ten percent (10%) of the amount payable to each
Contractor or subcontractor until the applicable A&D Project has been completed
in accordance with the Plans and Specifications to Lender’s satisfaction, and
upon Borrower’s written request therefor, accompanied by an affidavit from
Contractor that all bills for labor and materials have been paid, and final lien
releases from the Contractor and from any subcontractors, materialmen and
laborers as requested by Lender.
12.7    Withholding. Lender may (a) withhold from an Advance, or (b) on account
of subsequently discovered evidence, withhold from a later Advance, or
(c) require Borrower to repay to Lender the whole or any part of any earlier
Advance such sum as may be necessary to protect Lender from loss on account of
(i) defective work not remedied or requirements of this Agreement not performed,
(ii) liens filed or reasonable evidence indicating probable filing of liens,
(iii) failure of Borrower to make payments to subcontractors for material or
labor, or (iv) a reasonable doubt that the construction can be completed from
the balance of the A&D Loan then undisbursed. When all such grounds are removed,
payment shall be made of the applicable amount withheld.
12.8    Voluntary Prepayments; Partial Release Payments.
(a)    Voluntary Prepayments. Borrower may at its option prepay the principal
amount of any A&D Loan outstanding hereunder at any time in whole or from time
to time in part without premium or penalty, upon giving Lender prior notice of
the aggregate principal amount to be prepaid, together with accrued interest
thereon to the date of prepayment; provided, however, that (i) any prepayment
made pursuant to this Section 12.8(a) shall not constitute a prepayment pursuant
to

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Section 12.8(b), and (ii) any sum prepaid by Borrower under an A&D Loan may not
be re-borrowed by Borrower under the same A&D Loan.
(b)    Payments as a Result of Lot Sales or Refinancing. Except as provided in
Section 12.8(c) below for Lots upon which a House will be constructed with
proceeds of the Credit Facility, Lender agrees (provided that no Event of
Default, or condition which could become an Event of Default, has occurred and
is continuing) to release individual Lots from any Security Instrument in favor
of Lender which are financed under the A&D Loan upon payment by Borrower to
Lender of the A&D Partial Release Price and all other amounts due under this and
other any agreements between the parties. Upon payment by Borrower of the
appropriate A&D Partial Release Price and any additional sums as provided in
this Section, Lender will prepare and execute a partial release of lien and a
UCC-3 partial release (if applicable) in the form required by Lender.
(c)    No Release from Security Instrument. Notwithstanding anything to the
contrary contained in this Agreement or the Loan Documents, there shall not be
any partial releases of Lots from the Security Instrument upon payment of the
A&D Partial Release Price for said Lot (a) if the Lot is to be improved by the
construction of a House financed through the Credit Facility, and (b) until the
completed House and the associated Lot are sold to an independent third-party
pursuant to an Approved Sales Contract. In the event the Borrower elects to
finance the construction of a House on any Lot from a source other than the
Credit Facility, so long as no Event of Default, or condition which could become
an Event of Default, has occurred and is continuing, then Lender will promptly
release its liens against said Lot upon payment of the A&D Partial Release Price
for said Lot.
(d)    Repayment of A&D Loan. Notwithstanding any other provision of this
Agreement to the contrary, an A&D Loan made hereunder shall not be deemed to
have been paid in full merely because it has a zero (0) balance if any portion
of the A&D Loan commitment remains undisbursed, unless Borrower relinquishes in
writing its right to obtain any further Advances under said A&D Loan. In the
event the commitment for said A&D Loan is not relinquished and the A&D Loan has
a zero (0) balance, then Lender shall continue to collect the A&D Partial
Release Price.
(e)    Partial Release Expenses. Borrower shall pay all costs and expenses of
Lender arising in connection with any partial release of any Lot or any Land
from the lien of any Security Instrument, including (but not limited to),
reasonable legal fees of Lender’s counsel, all title insurance premiums arising
as a result of endorsements required by Lender in connection with such partial
release and all other costs arising in connection with the execution and
delivery of the partial release of said Lot or Land.
(f)    Acceptance of Partial Releases. If Lender accepts any payment or issues
any partial releases, it shall not affect Borrower’s obligation to repay all
amounts which are owing under the Loan Documents or any portion of the Mortgaged
Property secured by the Security Instrument which is not released. If Lender
does not require satisfaction of all of the conditions described above before
releasing one or more Lots or any Land, that alone shall not be a waiver of such
conditions, and Lender reserves the right to require their satisfaction in full
before releasing any further Lots or Land from the Security Instrument.
(g)    Application of Release Prices. All sums so paid for partial releases
under an A&D Loan shall be applied to principal next due under the Note. To the
extent mandatory or voluntary payments are made to reduce the amount of
Indebtedness in connection with any A&D Loan, and no partial release is
requested hereunder at the time of such payments, the amount of such payments
shall not constitute a credit to Borrower against the A&D Partial Release Prices
due for future partial releases.
(h)    No Interference with Ingress/Egress. No portion of any Mortgaged Property
shall be released from the Security Instrument if such partial release would
unreasonably interfere with

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ingress and egress to and from the portions of the Mortgaged Property not yet
released, or otherwise unreasonably burden, restrict, or harm the value of the
unreleased portions.
12.9    Mandatory Prepayments. At all times during the term of each A&D Loan,
the unpaid principal balance of an A&D Loan shall not exceed the lesser of (a)
the applicable A&D Loan Amount, or (b) the Maximum Credit Amount of the
applicable A&D Project. If for any reason the unpaid principal balance of any
A&D Loan exceeds the lesser of such amounts, then Borrower shall, upon Lender’s
demand, immediately pay Lender the amount necessary to reduce the unpaid
principal balance of said A&D Loan to an amount that would cause Borrower to
comply with the previous sentence.
12.10    MUD Receivables. For certain A&D Projects, the costs for constructing
utility infrastructure may be reimbursed by the applicable municipal utility
district (such reimbursements are referred to herein as “MUD Receivables”). At
the time of the origination of an A&D Loan for an A&D Project where MUD
Receivables are anticipated, Borrower shall execute such instruments as Lender
may reasonably require to assign the MUD Receivables to Lender as additional
collateral for payment of the Note, and any Advances for such A&D Loan shall be
conditioned upon the applicable municipal utility district’s execution and
delivery to Lender of a written acknowledgment of the assignment of the MUD
Receivables, in form and content reasonably acceptable to Lender.
ARTICLE XIII.    MISCELLANEOUS PROVISIONS
13.1    Indemnity. BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM
AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS,
JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES AND EXPENSES) WHICH LENDER OR SUCH OTHER INDEMNIFIED
PARTY MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF: (i) THE PURPOSE TO WHICH
BORROWER APPLIES THE CREDIT FACILITY PROCEEDS; (ii) THE FAILURE OF BORROWER TO
PERFORM ANY OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS; (iii) ANY FAILURE AT ANY TIME OF ANY OF BORROWER’S
REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT; OR (iv) ANY ACT OR
OMISSION BY BORROWER, ANY CONSTITUENT PARTNER OR MEMBER OF BORROWER, ANY
CONTRACTOR, SUBCONTRACTOR OR MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR OTHER
PERSON OR ENTITY WITH RESPECT TO ANY OF THE COLLATERAL. BORROWER SHALL
IMMEDIATELY PAY TO LENDER OR SUCH OTHER INDEMNIFIED PARTY UPON DEMAND ANY
AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE
INDEBTEDNESS ARISES UNTIL PAID AT THE DEFAULT RATE. BORROWER’S DUTY AND
OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER AND SUCH OTHER
INDEMNIFIED PARTY SHALL SURVIVE PAYMENT OF THE INDEBTEDNESS AND THE RELEASE,
PARTIAL RELEASE OR FORECLOSURE (OR ACTION IN LIEU OF FORECLOSURE) OF THE LIEN OF
THE SECURITY INSTRUMENT AND THE EXERCISE BY LENDER OF ANY AND ALL REMEDIES SET
FORTH HEREIN OR IN THE OTHER LOAN DOCUMENTS.
13.2    Form of Documents. The form and substance of all documents, instruments,
and forms of evidence to be delivered to Lender under the terms of this
Agreement and any of the other Loan Documents shall be subject to Lender’s
approval and shall not be modified, superseded or terminated in any respect
without Lender’s prior written approval.
13.3    No Third Parties Benefited. No person other than Lender and Borrower and
their permitted successors and assigns shall have any right of action under any
of the Loan Documents.

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13.4    Notices. All notices or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and shall be considered as
properly given if (i) mailed by first class United States mail, postage prepaid,
registered or certified with return receipt requested, (ii) by delivering same
in person to the intended addressee, or (iii) by delivery to an independent
third party commercial delivery service for same day or next day delivery and
providing for evidence of receipt at the office of the intended addressee.
Notice so mailed shall be effective upon its deposit with the United States
Postal Service or any successor thereto; notice sent by such a commercial
delivery service shall be effective upon delivery to such commercial delivery
service; notice given by personal delivery or by any other means shall be
effective only if and when received by the intended addressee. For purposes of
notice, the addresses of the parties shall be as set forth opposite the
signature of the parties on this Agreement; provided, however, that either party
shall have the right to change its address for notice hereunder to any other
location within the continental United States by the giving of thirty (30) days
notice to the other party in the manner set forth herein.
13.5    Attorney‑in‑Fact. Borrower hereby irrevocably appoints and authorizes
Lender, as Borrower’s attorney‑in‑fact, which agency is coupled with an
interest, to execute and/or record in Lender’s or Borrower’s name any notices,
instruments or documents that Lender deems appropriate to protect Lender’s
interest under any of the Loan Documents.
13.6    Actions. Borrower agrees that Lender, in exercising the rights, duties
or liabilities of Lender or Borrower under the Loan Documents, may commence,
appear in or defend any action or proceeding purporting to affect the Collateral
or the Loan Documents and Borrower shall immediately reimburse Lender upon
demand for all such expenses so incurred or paid by Lender, including, without
limitation, attorney’s fees and expenses and court costs.
13.7    Right of Contest. Borrower may contest in good faith any claim, demand,
levy or assessment (other than liens) by any person other than Lender which
would constitute an Event of Default if: (i) Borrower pursues the contest
diligently, in a manner which Lender determines is not prejudicial to Lender,
and does not impair the rights of Lender under any of the Loan Documents; and
(ii) Borrower deposits with Lender any funds or other forms of assurance which
Lender in good faith determines from time to time appropriate to protect Lender
from the consequences of the contest being unsuccessful. Borrower’s compliance
with this Section shall operate to prevent such claim, demand, levy or
assessment from becoming an Event of Default.
13.8    Relationship of Parties. The relationship of Borrower and Lender under
the Loan Documents is, and shall at all times remain, solely that of borrower
and lender, and Lender neither undertakes nor assumes any responsibility or duty
to Borrower or to any third party with respect to the Collateral, except as
expressly provided in this Agreement and the other Loan Documents.
13.9    Delay Outside Lender’s Control. Lender shall not be liable in any way to
Borrower or any third party for Lender’s failure to perform or delay in
performing under the Loan Documents (and Lender may suspend or terminate all or
any portion of Lender’s obligations under the Loan Documents) if such failure to
perform or delay in performing results directly or indirectly from, or is based
upon, the action, inaction, or purported action, of any Governmental Authority,
or because of war, rebellion, insurrection, strike, lock‑out, boycott or
blockade (whether presently in effect, announced or in the sole judgment of
Lender deemed probable), or from any Act of God or other cause or event beyond
Lender’s control.
13.10    Attorneys’ Fees; Enforcement. If any attorney is engaged by Lender to
enforce or defend any provision of this Agreement, any of the other Loan
Documents or Other Related Documents, or as a consequence of any Event of
Default, with or without the filing of any legal action or proceeding, Borrower
shall immediately pay to Lender, upon demand, the amount of all attorneys’ fees
and all costs incurred by Lender in connection therewith, together with interest
thereon from the date of such demand until paid at the Default Rate.

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13.11    Immediately Available Funds. Unless otherwise expressly provided for in
this Agreement, all amounts payable by Borrower to Lender shall be payable only
in United States currency, immediately available funds.
13.12    Lender’s Consent. Except where otherwise expressly provided herein, in
any instance hereunder where the approval, consent, or the exercise of judgment
of Lender is required, the granting or denial of such approval or consent, and
the exercise of such judgment, shall be within the sole discretion of Lender;
and Lender shall not, for any reason or to any extent, be required to grant such
approval or consent or exercise such judgment in any particular manner,
regardless of the reasonableness of either the request or Lender’s judgment. In
any instance when the approval or consent of Lender is contemplated or required
by the terms of this Agreement or any other Loan Document and unless otherwise
specifically provided, no such approval or consent shall be deemed to have been
given except by a specific writing intended for that purpose and executed by an
authorized representative of Lender.
13.13    Loan Sales and Participations; Disclosure of Information. Borrower
agrees that Lender may elect, at any time, to sell, assign or grant
participations in all or any portion of its rights and obligations under the
Loan Documents, and that any such sale, assignment or participation may be to
one or more financial institutions, private investors, and/or other entities, at
Lender’s sole discretion (“Participant”). Borrower further agrees that Lender
may disseminate to any such actual or potential purchaser(s), assignee(s) or
participant(s) all documents and information (including, without limitation, all
financial information) which has been or is hereafter provided to or known to
Lender with respect to: (i) the Collateral and their operation; (ii) any party
connected with the Credit Facility (including, without limitation, the Borrower,
any partner, joint venturer or member of Borrower, any constituent party of any
partner, joint venturer or member of Borrower, any Guarantor and any
non-Borrower grantor); and/or (iii) any lending relationship other than the
Credit Facility which Lender may have with any party connected with the Credit
Facility. In the event of any such sale, assignment or participation, Lender and
the parties to such transaction shall share in the rights and obligations of
Lender as set forth in the Loan Documents only as and to the extent they agree
among themselves. In connection with any such sale, assignment or participation,
Borrower further agrees that the Loan Documents shall be sufficient evidence of
the obligations of Borrower to each purchaser, assignee, or participant, and
upon written request by Lender, Borrower shall enter into such amendments or
modifications to the Loan Documents as may be reasonably required in order to
evidence any such sale, assignment or participation. THE INDEMNITY OBLIGATIONS
OF BORROWER UNDER THE LOAN DOCUMENTS SHALL ALSO APPLY WITH RESPECT TO ANY
PURCHASER, ASSIGNEE OR PARTICIPANT.
13.14    Capital Adequacy. If Lender determines that compliance with any law or
regulation or with any guideline or request from any central bank or other
governmental agency (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by Lender or
any corporation controlling Lender as a consequence of, or with reference to,
Lender’s or such corporation’s commitments or its making or maintaining advances
below the rate which Lender or such corporation controlling Lender could have
achieved but for such compliance (taking into account the policies of Lender or
corporation with regard to capital), then Borrower shall, from time to time,
within thirty (30) calendar days after written demand by Lender, pay to Lender
additional amounts sufficient to compensate Lender or such corporation
controlling Lender to the extent that Lender determines such increase in capital
is allocable to Lender’s obligations hereunder. A certificate as to such
amounts, submitted to Borrower by Lender, shall be conclusive and binding for
all purposes, absent manifest error.
13.15    Signs. Lender may place on the Mortgaged Property reasonable signs
standard to construction loan transactions stating that construction financing
is being provided by Lender and any other lenders or participants in the Credit
Facility.

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13.16    Lender’s Agents. Lender may designate an agent or independent
contractor to exercise any of Lender’s rights under this Agreement and any of
the other Loan Documents. Any reference to Lender in any of the Loan Documents
shall include Lender’s agents, employees or independent contractors.
13.17    Tax Service. Lender is authorized to secure, at Borrower’s expense, a
tax service contract with a third party vendor which shall provide tax
information on the Mortgaged Property satisfactory to Lender.
13.18    Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (i) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
13.19    Severability. If any provision or obligation under this Agreement and
the other Loan Documents shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, that provision shall be
deemed severed from the Loan Documents and the validity, legality and
enforceability of the remaining provisions or obligations shall remain in full
force as though the invalid, illegal, or unenforceable provision had never been
a part of the Loan Documents, provided, however, that if the rate of interest or
any other amount payable under the Note or this Agreement or any other Loan
Document, or the right of collectability therefor, are declared to be or become
invalid, illegal or unenforceable, Lender’s obligations to make Advances under
the Loan Documents shall not be enforceable by Borrower.
13.20    Heirs, Successors and Assigns. Except as otherwise expressly provided
under the terms and conditions of this Agreement, the terms of the Loan
Documents shall bind and inure to the benefit of the heirs, successors and
assigns of the parties.
13.21    Time. Time is of the essence of each and every term of this Agreement.
13.22    Headings. All Article, Section or other headings appearing in this
Agreement and any of the other Loan Documents are for convenience of reference
only and shall be disregarded in construing this Agreement and any of the other
Loan Documents.
13.23    Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Texas, except to the extent
preempted by United States federal law. Borrower and all persons and entities in
any manner obligated to Lender under the Loan Documents consent to the
jurisdiction of any federal or state court within the State of Texas having
proper venue and also consent to service of process by any means authorized by
Texas law or United States federal law.
13.24    Integration. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT

SECOND AMENDED AND RESTATED LOAN AGREEMENT - Page 45

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ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES. ANY REFERENCE TO THE LOAN DOCUMENTS INCLUDES ANY AMENDMENT,
RENEWALS OR EXTENSIONS NOW OR HEREAFTER APPROVED BY LENDER IN WRITING.
13.25    USA Patriot Act Notice Compliance. The USA Patriot Act of 2001 (Public
Law 107-56) and federal regulations issued with respect thereto require all
financial institutions to obtain, verify and record certain information that
identifies individuals or business entities which open an “account” with such
financial institution. Consequently, Lender may from time-to-time request, and
Borrower shall provide to Lender, Borrower’s name, address, tax identification
number and/or such other identification information as shall be necessary for
Lender to comply with federal law. An “account” for this purpose may include,
without limitation, a deposit account, cash management service, a transaction or
asset account, a credit account, a loan or other extension of credit, and/or
other financial services product.
13.26    Joint and Several Liability. The liability of all persons and entities
obligated in any manner under this Agreement and any of the Loan Documents shall
be joint and several.
13.27    Counterparts. To facilitate execution, this document may be executed in
as many counterparts as may be convenient or required. It shall not be necessary
that the signature of, or on behalf of, each party, or that the signature of all
persons required to bind any party, appear on each counterpart. All counterparts
shall collectively constitute a single document. It shall not be necessary in
making proof of this document to produce or account for more than a single
counterpart containing the respective signatures of, or on behalf of, each of
the parties hereto. Any signature page to any counterpart may be detached from
such counterpart without impairing the legal effect of the signatures thereon
and thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.
13.28    WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES BORROWER’S RIGHTS
UNDER THE PROVISIONS OF CHAPTER 17, SUBCHAPTER E, SECTION 17.41 THROUGH 17.63
INCLUSIVE OF THE TEXAS BUSINESS AND COMMERCE CODE, GENERALLY KNOWN AS THE
“DECEPTIVE TRADE PRACTICES‑CONSUMER PROTECTION ACT,” A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF
BORROWER’S OWN SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. IT IS
THE INTENT OF LENDER AND BORROWER THAT THE RIGHTS AND REMEDIES WITH RESPECT TO
THIS TRANSACTION SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER THAN THE TEXAS
DECEPTIVE TRADE PRACTICES‑CONSUMER PROTECTION ACT. THE WAIVER SET FORTH HEREIN
SHALL EXPRESSLY SURVIVE THE TERMINATION OF THE REFERENCED TRANSACTION. BORROWER
REPRESENTS AND WARRANTS TO LENDER THAT BORROWER (I) IS A BUSINESS CONSUMER,
(II) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE
BORROWER TO EVALUATE THE MERITS AND RISKS OF THE SUBJECT TRANSACTION, (III) IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH RESPECT TO THE SUBJECT
TRANSACTION, AND (IV) HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL (WHO WAS
NOT, DIRECTLY OR INDIRECTLY, IDENTIFIED, SUGGESTED OR SELECTED BY LENDER OR
LENDER’S AGENTS) IN CONNECTION WITH THE REFERENCED TRANSACTION.
13.29    Receipt of Master Deed of Trust. Pursuant to the provisions of Section
12.009 of the Texas Property Code, the Lender has duly recorded (or will record)
the Master Deed of Trust in each Texas county in which any Mortgaged Property is
to be situated. Borrower acknowledges that, at the time of the execution of this
Agreement, the Borrower has received a copy of the Master Deed of Trust.
13.30    Multiple Borrower Representations, Warranties and Agreements.

SECOND AMENDED AND RESTATED LOAN AGREEMENT - Page 46

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(a)    The Borrowers each represent and warrant that they are 100% owned by a
common owner and share a common enterprise interest in jointly supporting the
business plans and activities of the other Borrowers; and that the reasons for
the Borrowers’ separate legal existence is primarily for tax, financial and
accounting purposes to more clearly distinguish the locations, states or other
tax jurisdictions where each entity is doing business.
(b)    Each of the Borrowers is solvent before making this Agreement and the
effect of making this Agreement and the recognition of the joint and several
liability of each Borrower for the entire amount that is or may be advanced and
outstanding under the Credit Facility will not cause any of the Borrowers to be
insolvent.
(c)    Each of the Borrowers recognizes and agrees that having the Credit
Facility structured as a master credit facility upon which each of the Borrower
may obtain Advances based in part on the values of property owned by the other
Borrowers, and that each Borrower’s property is pledged to secure the entire
Credit Facility promotes the common enterprise of all of the Borrowers and the
owner of the Borrowers. The Borrowers expressly recognize and agree that the
availability of the Credit Facility to them on a joint and several basis and the
cross-collateralization of their respective obligations has been agreed upon to
promote the joint and common enterprise interest as well the individual business
interests of each Borrower. The Borrowers each acknowledge and agree that having
the amount of the Credit Facility made available to each of them (if not
previously committed to the others) gives each Borrower a unique business
opportunity to obtain Credit Facility proceeds and conduct business investments
and activities that they would not otherwise be able to obtain, and the
potential increased credit availability under this arrangement constitutes good
and sufficient consideration for each Borrower’s acceptance of the risk that
their otherwise unencumbered equity in their individually owned assets may be
required to secure the lesser secured obligations of the other Borrowers.
(d)    The Borrowers expressly waive any right to claim or allege that their
being jointly and severally liable for the obligations arising under the Credit
Facility either now or in the future is not or might not be supported by
adequate consideration or a reasonably equivalent value, is or in retrospect
might be considered to be a fraudulent conveyance or a conveyance that has the
intent or effect of putting any of their assets beyond the reach of their
creditors other than Lender. To this end, to the extent any Borrower’s assets or
equity in any assets (the “Paying Borrower”) is used to pay or satisfy in whole
or in part the obligations of any other Borrower (the “Obligated Borrower”), the
Paying Borrower shall have no right of subrogation unless all amounts owed to
Lender including principal, interest, all reimbursements of costs and expenses,
and protective advances, and all contingent or continuing obligations are fully
paid, satisfied and reimbursed. Further, and in addition to having no right of
subrogation, to the extent the Paying Borrower is or may at any time in the
future be a creditor of the Obligated Borrower, the Paying Borrower assigns to
Lender the right to vote the Paying Borrower’s creditor rights as a creditor of
the Obligated Borrower in any and all bankruptcy proceedings, insolvency
proceedings or other cases or proceedings involving such Obligated Borrower’s
debts. Lender shall be entitled to vote the rights of the Paying Borrower in any
such proceeding or case, and Lender’s right to vote is deemed a right coupled
with an interest, irrevocable and fully enforceable by Lender so long as any
amounts are owed under the Credit Facility, including any contingent or
continuing obligations.
13.31    Amendment and Restatement. This Agreement hereby amends, restates,
renews, replaces and supersedes the Prior Agreement in its entirety.
Furthermore, this Agreement replaces and supersedes that certain Third Amended
and Restated Financial Covenants, Reporting and Monitoring Agreement and
Covenants, Representations and Warranties, dated June 24, 2013, which shall be
of no further force or effect.
[The remainder of this page was intentionally left blank. The signature pages
follow.]

SECOND AMENDED AND RESTATED LOAN AGREEMENT - Page 47

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IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement.
NOTICE OF INDEMNIFICATION:

BORROWER HEREBY ACKNOWLEDGES
AND AGREES THAT THIS AGREEMENT
CONTAINS CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO SECTIONS

2.6(c), 2.6(e), 2.7(d), 2.7(g), 2.8(d), 2.8(f), 8.4
AND 13.1 HEREOF.
 
BORROWER:

 LGI HOMES GROUP, LLC, 
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – PRESIDENTIAL GLEN, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – QUAIL RUN, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – FW, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                  
 
Eric T. Lipar, Manager

LGI HOMES – SAN TAN HEIGHTS, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                  
 
Eric T. Lipar, Manager
                                                                
LGI HOMES – TEXAS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                  
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES – DECKER OAKS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES AZ CONSTRUCTION, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
LGI HOMES – WOODLAND CREEK, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – LAKES OF MAGNOLIA, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                

       Eric T. Lipar, Manager

LGI HOMES – SALTGRASS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                  

       Eric T. Lipar, Manager

LGI HOMES – STEWARTS FOREST, LLC, 
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
LGI HOMES – GLENNWILDE, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES – E SAN ANTONIO, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – WINDMILL FARMS, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – ARIZONA, LLC,
an Arizona limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – FLORIDA, LLC,
a Florida limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – GEORGIA, LLC,
a Georgia limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES – MAPLE LEAF, LLC, 
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES AVONDALE, LLC,
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
LGI HOMES – SHALE CREEK, LLC, 
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES – STERLING LAKES PARTNERS, LLC,
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI CROWLEY LAND PARTNERS, LLC,
a Texas limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – MAPLE PARK, LLC,
a Georgia limited liability company

By:    LGI Fund III Holdings, LLC,
a Texas limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – SUNRISE MEADOW, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES CORPORATE, LLC,
a Texas limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES SERVICES, LLC,
a Texas limited liability company

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
LGI HOMES AZ SALES, LLC,
an Arizona limited liability company

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – NEW MEXICO, LLC,
a New Mexico limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES NM CONSTRUCTION, LLC, 
a New Mexico limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI JV HOLDINGS, LLC, 
a Delaware limited liability company

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
       
LGI HOMES – LUCKEY RANCH, LLC,
a Delaware limited liability company

By:    LGI JV Holdings, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI JV HOLDINGS II, LLC,
a Delaware limited liability company

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
       
LGI HOMES – WEST MEADOWS, LLC,
a Delaware limited liability company

By:    LGI JV Holdings II, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Corporate, LLC,
a Texas limited liability company,
its Manager

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI JV HOLDINGS III, LLC, 
a Delaware limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES - SONTERRA, LLC,
a Delaware limited liability company

By:    LGI JV Holdings III, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI JV HOLDINGS IV, LLC,
a Delaware limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES – BLUE HILLS, LLC,
an Arizona limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – KRENSON WOODS, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LGI HOMES – NORTHPOINTE, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

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

 
 
LGI HOMES – OAK HOLLOW PHASE 6, LLC, 
a Delaware limited liability company

By:    LGI JV Holdings III, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

LUCKEY RANCH PARTNERS, LLC,
a Delaware limited liability company

By:    LGI JV Holdings IV, LLC,
a Delaware limited liability company,
its Manager

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager
LGI FUND III HOLDINGS, LLC,
a Texas limited liability company

By:    LGI Homes Group, LLC,
a Texas limited liability company,
Its Managing Member

By: /s/ Eric T. Lipar                                                 
 
Eric T. Lipar, Manager

Borrower’s Address:    

1450 Lake Robbins Drive
Suite 430
The Woodlands, Texas 77380

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

 
LENDER: 
 
TEXAS CAPITAL BANK,
NATIONAL ASSOCIATION 

 
By:    /s/ Larry Maywald
Name:    Larry Maywald
Title:    Senior Vice President
Lender’s Address:    2350 Lakeside Blvd.
Suite 800
Richardson, Texas 75082
Attn: Builder Finance Group

EXHIBITS AND ATTACHMENTS:

EXHIBIT “A”    ‑    Supplemental Terms Exhibit
EXHIBIT “B”    ‑    Disbursement Procedures
EXHIBIT “C”    ‑    Draw Request Form
EXHIBIT “D”    ‑    Compliance Certificate
EXHIBIT “E”    ‑    Borrowing Base Report Form
EXHIBIT “F”    ‑    A&D Project Loan Sheet Form
EXHIBIT “G”    ‑    A&D Loan Closing Conditions
EXHIBIT “H”    ‑    A&D Draw Request Form

SECOND AMENDED AND RESATTED LOAN AGREEMENT – Lender’s Signature Page

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EXHIBIT “A”
SUPPLEMENTAL TERMS EXHIBIT
The following terms and provisions are incorporated by reference to and made a
part of this Agreement:
1.
“Credit Facility Amount” ‑ shall mean Fifty Million and No/100 Dollars
($50,000,000.00). The Credit Facility Amount is the maximum amount that that be
advanced and outstanding at any one time under the Credit Facility. The Credit
Facility is a net/gross borrowing base, and although the maximum amount of
Credit Facility proceeds that may be advanced and outstanding at any one time is
the Credit Facility Amount, the aggregate amount of Credit Facility proceeds
allocated for Lots, Houses or A&D Projects in the Borrowing Base at any one time
may equal, but not exceed one hundred sixty-five percent (165%) of the Credit
Facility Amount (i.e., $82,500,000.00).

2.
“Credit Facility Fee” ‑ shall mean an annual fee of Two Hundred Fifty Thousand
and No/100 Dollars ($250,000.00), to be paid by Borrower to Lender in quarterly
installments of Sixty-Two Thousand Five Hundred and No/100 Dollars ($62,500.00).

3.
“Credit Facility Termination Date” ‑ shall mean June 30, 2015.

4.
“Guarantor” ‑ shall mean LGI Homes, Inc., a Delaware corporation.

5.
“Maturity Date” ‑ shall mean the date on which all outstanding principal and
interest on the Note becomes finally due and payable, which is June 30, 2016.

6.
Approved Metropolitan Areas. The approved metropolitan areas, referenced in the
definition of Approved Subdivision, are as follows: (a) certain metropolitan
areas in the States of Arizona, Florida, Georgia and Texas, as approved by
Lender from time to time, and (b) Albuquerque, New Mexico.

7.
Maximum Credit Amount. The Maximum Credit Amount of the Collateral for the
purpose of determining the amount of the Borrowing Base under this Credit
Facility shall be, subject to the other limitations and adjustments herein
provided, as follows:

(a)    Pre-Sold Houses: The amount which is the lesser of (i) seventy-five
percent (75%) of the Appraised Value thereof, or (ii) one hundred percent (100%)
of Total Cost of such Pre-Sold House.
(b)    Model Houses: The amount which is the lesser of (i) seventy-five percent
(75%) of the Appraised Value thereof, or (ii) one hundred percent (100%) of
Total Cost of such Model House.
(c)    Spec Houses. The amount which is the lesser of (i) seventy-five percent
(75%) of the Appraised Value thereof, or (ii) one hundred percent (100%) of
Total Cost of such Spec House.
(d)    Lots. The amount which is the lesser of (i) seventy-five percent (75%) of
the Appraised Value thereof, or (ii) seventy-five percent (75%) of Total Cost of
such Lot.
(e)    Land. The amount which is the lesser of (i) fifty percent (50%) of the
Appraised Value thereof, or (ii) fifty percent (50%) of Total Cost of such A&D
Improvements.
(f)    A&D Improvements. The amount which is the lesser of (i) sixty-five
percent (65%) of the Appraised Value thereof, or (ii) sixty-five percent (65%)
of Total Cost of such Lot.

EXHIBIT “A”, Supplemental Terms Exhibit - Page 1        

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1.
Initial Due Date. The Initial Due Dates for the following types of Collateral
shall be as set forth below:

(a)    Pre-Sold Houses: Nine (9) months.
(b)    Model Houses: Twelve (12) months.
(c)    Spec Houses. Twelve (12) months.
(d)    Lots. Twelve (12) months.
2.
Model House Limitation. Notwithstanding anything to the contrary contained
herein, no single Approved Subdivision may contain more than one (1) Model House
constituting Collateral at any one time.

3.
Spec and Model House Subfacility – shall not exceed the sum of $37,125,000.00.

4.
Lot Inventory Subfacility – shall not exceed the sum of $25,000,000.00.

5.
A&D Subfacility – shall not exceed the sum of $8,000,000.00.

6.
Financial Information. Borrower shall deliver to Lender, or cause Guarantor to
deliver to Lender, the following financial information, on or before the
applicable delivery deadline set forth in the table below:

Reporting Party:
Financial Information:
Delivery Deadline:
Borrower
Annual consolidated Financial Statements (audited by an independent certified
public accountant)
Within one hundred fifty (150) days after the end of each fiscal year of
Borrower
Borrower
Quarterly consolidated Financial Statement (internally prepared)
Within forty-five (45) days after the end of each Calendar Quarter
Borrower
Federal tax returns
Within forty-five (45) days after filing, but no later than the date required
for filing by applicable law
Borrower
Accounts Payable Report
Within five (5) Business Days after Lender’s written request
Borrower
Borrowing Base Report
Within five (5) Business Days after Lender’s written request
Borrower
Compliance Certificate
Within forty-five (45) days after the end of each Calendar Quarter
Borrower
Inventory and Sales Status Report
Within thirty (30) days after the end of each calendar month
Guarantor
Annual Financial Statements (audited by an independent certified public
accountant)
Within one hundred fifty (150) days after the end of each fiscal year of
Guarantor
Guarantor
Quarterly Financial Statement (internally prepared)
Within forty-five (45) days after the end of each Calendar Quarter
Guarantor
Federal tax returns
Within forty-five (45) days after filing, but no later than the date required
for filing by applicable law

7.
Borrower’s Minimum Tangible Net Worth. Borrower shall maintain its Tangible Net
Worth in an amount not less than $35,000,000.00.

EXHIBIT “A”, Supplemental Terms Exhibit - Page 2        

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8.
Guarantor’s Minimum Tangible Net Worth. Borrower shall cause Guarantor to
maintain its Tangible Net Worth in an amount not less than $125,000,000.00.

9.
Borrower’s Leverage Ratio. Borrower shall maintain a Leverage Ratio of not more
than 1.25 to 1.0.

10.
Guarantor’s Leverage Ratio. Borrower shall cause Guarantor to maintain a
Leverage Ratio of not more than 1.0 to 1.0.

11.
Liquidity. Borrower shall maintain Liquidity in excess of $10,000,000.00.

12.
Unrestricted Cash. Borrower and its Affiliates shall maintain Unrestricted Cash
in an amount not less than $5,000,000.00, in a deposit account with Lender.

13.
Quarterly Losses. Borrower shall not suffer net losses in more than two
consecutive calendar Quarters.

14.
Other Related Documents:

•
A full‑size, single sheet copy of the recorded subdivision or plat map of each
Approved Subdivision, as approved (to the extent required by Governmental
Requirements) by all Governmental Authorities

•
A complete set of Plans and Specifications for each style and type Home to be
constructed

•
Copies of the floor plans for each style and type of Home to be constructed

•
A detailed construction cost breakdown for each separate floor plan, style or
type of Home to be constructed

•
An environmental site assessment covering each Approved Subdivision, issued by
an engineering firm acceptable to Lender, which report shall be in form and
substance acceptable to Lender

•
A soils and geological report covering each Approved Subdivision, issued by a
laboratory approved by Lender, which report shall be satisfactory in form and
substance to Lender, and shall include a summary of soils test borings

•
Copies of any initial study, negative declaration, mitigated negative
declaration, environmental impact report, notice of determination or notice of
exemption prepared, adopted, certified or filed by or with any Governmental
Authority in connection with the Mortgaged Property, if any

•
Lot purchase contracts between Borrower, as the buyer, and a third party, as the
seller, relating to the right of Borrower to purchase Lots

•
One or more of the following, as requested by Lender: (i) an Appraisal of each
Lot and the Improvement to be constructed thereon prepared by Lender or Lender’s
appraiser (if applicable); or (ii) an Appraisal acceptable to Lender which
complies with applicable federal regulatory laws relating to Lender and with
Lender’s internal policies

•
A true, correct and complete copy of all homeowner association documentation
establishing the terms, conditions and restrictions governing the Approved
Subdivision.

EXHIBIT “A”, Supplemental Terms Exhibit - Page 3        

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•
Any and all documentation Lender reasonably requires with respect to accepting
Collateral in a new state

•
Evidence that the Mortgaged Property is not situated in a 100 year flood plain.

EXHIBIT “A”, Supplemental Terms Exhibit - Page 4        

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EXHIBIT “B”
DISBURSEMENT PROCEDURES
A.    Timing of Advances. Unless another provision of this Agreement specifies
otherwise, Borrower shall submit to Lender a Draw Request Form (or A&D Draw
Request Form, if applicable), fully completed, signed and acknowledged by
Borrower as a condition precedent to an Advance. Each Draw Request Form (or A&D
Draw Request Form, if applicable) shall be submitted at least by 2:00 p.m.,
Dallas, Texas time, on the fifth (5th) Business Day preceding (but not
including) the date for the requested Advance, to the Inspector and to Lender in
duplicate, with one copy being submitted to Lender at the address set forth on
the signature page of this Agreement and the other copy as follows:    
Texas Capital Bank
2350 Lakeside Blvd., Suite 800
Richardson, Texas 75082
Attn: Builder Finance Group
    
Each Draw Request Form (or A&D Draw Request Form, if applicable) submitted by
Borrower shall constitute a representation and warranty by Borrower that
Borrower is in compliance with all the conditions precedent to such Advance as
required in this Agreement.
B.    Lender’s Right to Condition Disbursements. Lender shall have the right to
condition any Advance upon Lender’s receipt and approval of the following:
1.    the Draw Request Form (or A&D Draw Request Form, if applicable), fully
completed and signed by Borrower; and
2.    the Borrowing Base Report, fully completed and signed by Borrower.
Borrower acknowledges that this approval process may result in disbursement
delays and Borrower hereby consents to all such delays.
C.    Optional Advance Methods. Lender may, in Lender’s discretion, whether or
not there then exists an Event of Default or any condition, circumstance or fact
which with notice, lapse of time, or both, would cause an Event of Default, make
Advances by journal entry to pay interest and financing costs and make Advances
directly to third parties to pay costs or expenses required to be paid (but not
then paid) by Borrower pursuant to this Agreement, including (without
limitation) ad valorem taxes, insurance premiums, mechanic’s lien claims and
construction costs. Credit Facility proceeds disbursed by Lender by journal
entry to pay interest or financing costs, and Credit Facility proceeds disbursed
directly by Lender to pay costs or expenses required to be paid by Borrower
pursuant to this Agreement, shall constitute Advances to Borrower.

EXHIBIT “B”, Disbursement Procedures - Page 1        

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D.    Periodic Disbursement by Draw Schedule. As construction progresses, the
Total Cost for each House under this Credit Facility shall be increased as
herein provided in accordance with the stage of construction draw schedule set
forth below. Total Cost for each Lot upon which construction of an Improvement
has not been commenced shall be as reflected in the “Closing” stage of the draw
schedule set forth below.
Stage of Construction Draw Schedule
Stage
Description of Construction to be Completed
Amount/
Percent
CLOSING
Acquisition of the Lot
Borrower’s purchase price and closing costs for such Lot
STAGE 1
Concrete – Slab
12%
STAGE 2
Frame
27%
STAGE 3
Roof Raised & Decked
32%
STAGE 4
Exterior Siding
34%
STAGE 5
Windows
36%
STAGE 6
Shingles
39%
STAGE 7
Plumbing Rough
42%
STAGE 8
Electrical Rough
44%
STAGE 9
Heating – A/C Rough
47%
STAGE 10
Fireplace
48%
STAGE 11
Insulation
49%
STAGE 12
Sheetrock
52%
STAGE 13
Tape & Float
54%
STAGE 14
Brick Veneer
59%
STAGE 15
Trim & Interior Doors
66%
STAGE 16
Cabinets – Kitchen & Bath
70%
STAGE 17
Tile Bath
72%
STAGE 18
Interior Paint
74%
STAGE 19
Exterior Paint
76%
STAGE 20
Counter Tops – Kitchen & Bath
78%
STAGE 21
Wallpaper
79%
STAGE 22
Electrical Final
81%
STAGE 23
Hardware
83%
STAGE 24
Plumbing Final
86%
STAGE 25
Flooring
90%
STAGE 26
Flatwork
92%

EXHIBIT “B”, Disbursement Procedures - Page 2        

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Stage of Construction Draw Schedule
STAGE 27
Appliances
94%
STAGE 28
Compressor Sets
96%
STAGE 29
Exterior Doors
98%
STAGE 30
Landscape & Clean
100%

EXHIBIT “B”, Disbursement Procedures - Page 3        

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EXHIBIT “C”
Draw Request Form

[The Draw Request Form follows this cover page.]

EXHIBIT “C”, Draw Request Form - Cover Page        

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(LETTERHEAD OF BORROWER)
Date: ____________________________
Texas Capital Bank
2350 Lakeside Blvd., Suite 800
Richardson, Texas 75082
Attn: Builder Finance Group (“Lender”)
Re:
Request for Advance to pay costs under Second Amended and Restated Loan
Agreement, dated January 17, 2014 (the “Loan Agreement”), between [list all
borrowing entities] (collectively “Borrower”), and Lender

Ladies and Gentlemen:
The undersigned authorized officer of Borrower requests an Advance under the
Loan Agreement to pay costs incurred in connection with the acquisition of Lots
or construction of Houses, in the amount of $__________________. All terms used
and not otherwise defined in this request for Advance are used as defined in the
Loan Agreement.
The proceeds of the Advance are to be used to pay the items listed on the
attached page(s).
Borrower represents as follows:
(a)The amount requested above has actually been incurred in connection with the
construction of the Improvements and no previous Advance has been made under the
Loan Agreement to pay any of the costs for which Borrower requests this Advance.
(a)    The representations in the Loan Agreement are true and correct as of the
date this request for Advance is submitted to Lender.
(b)    [Except as set forth on Schedule 1 to this request for Advance,] all
equipment, supplies and materials acquired or furnished in connection with the
construction of the House that are not affixed to or incorporated into the House
are stored on the Mortgaged Property.
(c)    No Event of Default has occurred under the Loan Agreement that has not
been waived by Lender or cured to the satisfaction of Lender.
[ADD IF Lender AGREES TO PAY FOR MATERIALS STORED OFFSITE:] [With respect to the
items described on Schedule 1 to this request for Advance, the following are
attached:
(a)    With respect to items stored in a bonded warehouse, an original warehouse
receipt covering those items; and
(b)    With respect to items not stored in a bonded warehouse, a written
certificate signed by Borrower certifying the location of all those items. Those
items must be insured by companies, on forms and in amounts, satisfactory to
Lender. Each location must be acceptable to Lender and all items must be stored
under adequate safeguards acceptable to Lender to minimize the possibility of
loss, theft, damage or commingling with other property.]

EXHIBIT “C”, Draw Request Form        

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

AUTHORIZED OFFICER:

                    

                        ______________________________________
Eric T. Lipar

EXHIBIT “C”, Draw Request Form        

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

EXHIBIT “D”
Compliance Certificate Form

[The Compliance Certificate Form follows this cover page.]

EXHIBIT “D”, Compliance Certificate Form - Cover Page    

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COMPLIANCE CERTIFICATE
With reference to that certain Second Amended and Restated Loan Agreement
(together with all amendments or supplements thereto, the “Agreement”), dated
January 17, 2014, by and between [LIST ALL BORROWING ENTITIES] (collectively
“Borrower”), and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a national banking
association (“Lender”), the undersigned officer of Borrower certifies,
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Agreement unless otherwise specified):
(a)
The representations and warranties of Borrower contained in the Agreement and
otherwise made in writing by or on behalf of Borrower pursuant to the Agreement
were true and correct when made, and are repeated at and as of the time of
delivery hereof and are true and correct at and as of the time of delivery
hereof.

(b)
Borrower has performed and complied with all agreements and conditions contained
in the Agreement required to be performed or complied with by it prior to or at
the time of delivery hereof.

(c)
Borrower has not incurred any material liabilities, direct or contingent since
_______________, 20__, except as disclosed or referred to in the financial
statements most recently delivered to Lender.

(d)
Since ______________, 20__, no material adverse change has occurred either in
any case or in the aggregate, in the condition, financial or otherwise, of
Borrower.

(e)
There exists no Event of Default under the Agreement or the other Loan
Documents.

(f)
The following is a true and accurate statement of actual figures as compared to
the figures required by financial covenants set forth in the Supplemental Terms
Exhibit attached to the Agreement for the Calendar Quarter ending
_______________________, 20___:

(i)
Minimum Tangible Net Worth – Borrower

Required: $35,000,000            Actual    $________________
(ii)
Minimum Tangible Net Worth – Guarantor

Required: $125,000,000        Actual    $________________
(iii)
Maximum Leverage Ratio - Borrower

Required: 1.25 to 1.0            Actual    ___________ to 1.0
(iv)
Maximum Leverage Ratio - Guarantor

Required: 1.0 to 1.0            Actual    ___________ to 1.0
(v)
Minimum Liquidity

Required: $10,000,000            Actual    $___________
(vi)
Minimum Unrestricted Cash

Required: $5,000,000            Actual    $___________

COMPLIANCE CERTIFICATE

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

(vii)
Maximum Consecutive Quarterly Losses

Required: No more than two        Actual    ___________

EXECUTED AND DELIVERED this ____ day of _____________, 20___.

AUTHORIZED OFFICER:    
 

 

______________________________________
Eric T. Lipar

 

 

 

COMPLIANCE CERTIFICATE

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

EXHIBIT “E”
Borrowing Base Report Form

[The Borrowing Base Report Form follows this cover page.]

EXHIBIT “E”, Borrowing Base Report Form - Cover Page

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BORROWING BASE REPORT
DATE:         ___________________, 20_____
LENDER:    TEXAS CAPITAL BANK, NATIONAL ASSOCIATION
BORROWER:    LGI HOMES GROUP, LLC, ET AL.
This Borrowing Base Report is delivered under the Second Amended and Restated
Loan Agreement (the "Agreement"), dated as of January 17, 2014, between Borrower
and Lender. Capitalized terms used in this Borrowing Base Report shall, unless
otherwise indicated, have the meanings set forth in the Agreement. On behalf of
Borrower, the undersigned authorized officer certifies to Lender on the date
hereof that (a) a review of the activities of Borrower has been made under my
supervision with a view to determining the amount of the current Borrowing Base,
(b) the Land, Lots, Houses or A&D Improvements included in the Borrowing Base as
shown on the attachment meet all conditions to qualify for inclusion therein as
set forth in the Agreement, and all representations and warranties set forth in
the Agreement with respect thereto are true and correct in all material
respects, and (c) the information set forth on the attachment hereto is true and
correct as of the date set forth above.

 

 
AUTHORIZED OFFICER:    

                   
Eric T. Lipar    

[Attach a schedule of the Collateral in the Borrowing Base]

[The approved form for the schedule of Collateral is attached to this Exhibit
E.]

BORROWING BASE REPORT

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

EXHIBIT “F”
Form of A&D Project Loan Sheet

[The form of A&D Project Loan Sheet follows this cover page.]

EXHIBIT “F”, Form of A&D Project Loan Sheet - Cover Page

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A&D PROJECT LOAN SHEET
[Name of Subdivision, City, County, Texas]

THIS A&D PROJECT LOAN SHEET (this “Loan Sheet”) is made as of _____________
_______, 20__, by [LIST ALL BORROWING ENTITIES] (collectively, “Borrower”), and
TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a national banking association
(“Lender”).
RECITALS
A.Lender established a master revolving line of credit for Borrower pursuant to
that certain Second Amended and Restated Loan Agreement, dated January 17, 2014,
by and between Lender and Borrower (as modified and amended from time to time,
the “Loan Agreement”). All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Loan Agreement.
A.    ____________________________, a _______________ (the “Project Borrower”)
wishes to apply to Lender for an A&D Loan for the purpose of acquiring [and
developing] an A&D Project on the real property described in the attached
Schedule “1” (the “Property”), pursuant to the terms of the Loan Agreement. The
A&D Loan described in this Loan Sheet shall be referred to herein as the “A&D
Loan.”
B.    As provided herein, the A&D Project which is the subject of the A&D Loan
is commonly referred to as “                  Project”. The Loan shall be in the
sum of                      Dollars ($        .00).
C.    The Loan shall provide financing for the acquisition of _______ acres of
Land [and the development of ____ Lots thereon].
D.    Project Borrower is the owner of the Property that is being pledged and
encumbered in connection with the making of the Loan described herein. All
references in this Loan Sheet to “Borrower” shall also include Project Borrower.
E.    Borrower has agreed to execute this Loan Sheet and the Security Instrument
in connection with Lender’s extension of the A&D Loan to Borrower, as described
herein. The Security Instrument of even date herewith executed in connection
with this Loan shall constitute a first lien against all of the real and
personal property collateral that is or shall be included in the development of
the A&D Project (collectively “Mortgaged Property”).
F.    It is a condition precedent to Lender’s approval of the A&D Loan that
Borrower execute this Loan Sheet and all other documents, instruments and
agreement set forth in the Loan Agreement and described in the attached Schedule
“2”.
NOW, THEREFORE, Borrower represents, warrants and agrees with and for the
benefit of Lender as follows:
AGREEMENT
1.    Recitals. The preamble, recitals and any exhibits hereto are hereby
incorporated into this Loan Sheet.
2.    Joinder of A&D Project Under the Loan Documents.
(a)    By its execution hereof, Project Borrower acknowledges and agrees to be
bound by all terms, conditions, and covenants set forth in the Loan Agreement,
the Note, the Security

EXHIBIT “F”, Form of A&D Project Loan Sheet

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

Instrument, and all of the other Loan Documents executed by Borrower in
connection with this A&D Loan.
(b)    Borrower acknowledges and agrees that its execution hereof is one of the
conditions precedent to Lender’s approval of this A&D Loan. Borrower shall be
liable for any and all obligations under the Loan Documents pertaining to the
acquisition, development and construction of the A&D Project, as modified and
supplemented by this Loan Sheet.
(c)    Borrower further acknowledges and agrees that the A&D Project, as
described above in Recital “C”, is an A&D Project under the Loan Agreement and
all of the other Loan Documents and, as such, Borrower is subject to and shall
comply with all of the covenants, promises, conditions, representations and
warranties applicable to this A&D Project pursuant to the terms and conditions
of the Loan Agreement.
(d)    Borrower also acknowledges and agrees that all funds to be disbursed
under the A&D Loan described herein shall be advanced pursuant to the terms,
conditions, limitations and restrictions set forth in the Loan Agreement and in
this Loan Sheet. To the extent that there is any inconsistency between the terms
of this Loan Sheet and the Loan Agreement, the provisions of this Loan Sheet
shall control; provided, however, that any term or condition included in the
Loan Agreement and not expressly included herein shall apply to the A&D Project
and the disbursement of A&D Loan funds hereunder.
3.    Budgets. The A&D Budget for the Loan is attached hereto as Schedule “3”.
4.    Additional Documents. Borrower shall execute any and all documents
required by the Loan Agreement or any of the other Loan Documents as a condition
to obtaining or effectuating the A&D Loan, including without limitation the
Security Instrument and such other Loan Documents as may be required by Lender.
5.    Conditions Precedent. In no event shall Lender have any obligation to
close this A&D Loan unless and until all of the following conditions are
satisfied:
(a)    No Defaults. There shall be no: (a) uncured Event of Default hereunder or
under the Loan Documents, (b) continuing representation, covenant or warranty
hereunder or under the Loan Documents that is false or misleading in any manner,
and (c) event currently existing which, with the passage of time, will result in
an Event of Default or the falsity of any continuing representation, covenant or
warranty hereunder or under the Loan Documents.
(b)    Title Insurance Policy. At Borrower’s sole cost and expense, Title
Insurance shall be issued by Title Company in connection the A&D Loan, with such
endorsement(s) to said title policy as may be reasonably approved by Lender.
(c)    No Financial Change. There has been no material adverse change in
Borrower’s or the A&D Project’s financial condition since the initial delivery
by Borrower to Lender of financial information for Borrower and/or this A&D
Project.
(d)    Payment of Lender’s Costs. Borrower shall pay all of Lender’s costs and
expenses incurred in connection with the documentation and closing of this A&D
Loan, including without limitation all reasonable attorneys’ fees, title costs,
recording charges and other closing fees and costs.

EXHIBIT “F”, Form of A&D Project Loan Sheet

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

(i)    To the extent Loan funds are available under the A&D Budget to pay for
the costs and expenses incurred by Lender in connection with this Loan Sheet,
such A&D Loan funds shall be disbursed to pay such costs and expenses.
(ii)    To the extent Loan funds are not available to pay for all or any portion
of such costs and expenses, Borrower shall deposit with Lender cash in an amount
estimated by Lender in its reasonable discretion as being sufficient to pay
Lender’s costs and expenses.
(iii)    In the event the above charges exceed the amount of Borrower’s cash
deposit, Borrower shall pay such excess upon demand by Lender. In the event
Borrower’s deposit exceeds the amount of the above charges, the excess shall be
refunded to Borrower, or, at Lender’s option, shall be credited to the next
interest installment due under the Note.
(e)    Additional Documents. Lender shall have received all additional documents
executed by Borrower and/or its respective officers and/or shareholders, as
reasonably required by Lender in connection with this Loan Sheet.
6.    Representations and Warranties. Borrower represents and warrants to Lender
that the following statements are true, correct and complete as of the date
hereof:
(a)    Organization and Powers. Borrower is duly organized and validly existing
under the laws of its respective states of formation. Borrower has all requisite
power and authority, rights and franchises to (i) own and operate its
properties, to carry on its businesses as now conducted and as proposed to be
conducted, and (ii) to enter into and perform under the Loan Agreement and other
Loan Documents. The address of Borrower’s chief executive office and principal
place of business continues to be as set forth in the Loan Agreement.
(b)    Good Standing. Borrower has made all filings and is in good standing in
each jurisdiction in which the character of the property it owns or the nature
of the business it transacts makes such filings necessary, or where the failure
to make such filings could have a materially adverse effect on the business,
operations, assets or condition (financial or otherwise) of Borrower.
(c)    Non-Foreign Status; Employer Identification Number. Borrower is not a
“foreign corporation,” “foreign partnership,” “foreign trust,” or “foreign
estate,” as those terms are defined in the Internal Revenue Code and the
regulations promulgated thereunder.
(d)    No Default. No Event of Default under any of the Loan Documents has
occurred that remains uncured, and no event has occurred which, with the giving
of notice or the passage of time, or both, would constitute an Event of Default
under any of the Loan Documents.
(e)    No New Liens. Borrower has granted no liens upon the Property or security
interests in the collateral described in the Loan Documents relating to the A&D
Project, except for the liens and security interests granted in favor of the
Lender.
(f)    No Claims or Defenses. As of the date hereof, neither Borrower nor any of
its officers, directors, employees and/or agents has any claims against Lender
nor defenses to the enforcement of any of the Loan Documents in accordance with
their respective terms, as amended by this Loan Sheet.
(g)    Satisfaction of Conditions. All of the conditions precedent set forth
above and all of the A&D Loan Closing Conditions set forth in the Loan
Agreement, as applicable to this A&D Project, have been fully satisfied.

EXHIBIT “F”, Form of A&D Project Loan Sheet

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

(h)    Other Matters. All other representations and warranties set forth in the
Loan Documents are true, complete and accurate as to Borrower as of the date
hereof. All of the terms and conditions of the Loan Agreement shall apply to the
Loan, except as expressly set forth in Schedule “2” attached hereto.
7.    Further Assurances. Borrower agrees to perform such other and further
acts, and to execute such additional documents, agreements, notices or financing
statements, as Lender deems necessary or desirable from time to time to create,
preserve, continue, perfect, validate or carry out any of Lender’s rights under
this Loan Sheet and the other Loan Documents.
8.    Integration. All rights, remedies, powers and interest provided for Lender
herein are in addition to the rights, remedies, powers and interests provided
for Lender in the Loan Documents, the terms and provisions of which are
incorporated herein by this reference and made a part hereof.
9.    Entire Agreement; Amendments. This Loan Sheet and the other Loan Documents
contain the entire agreement between Borrower and Lender with respect to this
A&D Project, and all prior negotiations, commitments, understandings and
agreements pertaining to the A&D Project are superseded by this Loan Sheet and
the Loan Documents. No amendment, modification, supplement, extension,
termination or waiver of any provision of this Loan Sheet, any Loan Document, or
any other agreement executed in connection with any of the foregoing shall be
effective unless in writing and signed by Lender and Borrower, and then only in
the specific instance and for the specific purpose given.
10.    Governing Law. This Loan Sheet shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Texas, without
regard to its conflict of laws principles.
11.    Section Headings. The section headings of this Loan Sheet are included
for convenience only, and shall not affect the construction or interpretation of
any provision of this Loan Sheet.
12.    Binding Effect. This Loan Sheet and the other Loan Documents shall be
binding upon, and shall inure to the benefit of, Borrower and Lender and their
respective successors and assigns, or heirs and personal representatives, as
applicable, subject to any provision of the Loan Documents restricting transfers
of the Property.
13.    Severability of Provisions. No provision of this Loan Sheet or any other
Loan Document that is held to be inoperative, unenforceable and invalid shall
affect the remaining provisions, and all provisions of this Loan Sheet and the
Loan Documents are hereby declared to be severable.
14.    Miscellaneous. No reference to this Loan Sheet is necessary in any
instrument or document at any time referring to the Loan Documents. A reference
to the Loan Documents shall be deemed a reference to such document as modified
hereby.
15.    No Other Amendments. Except as expressly amended herein, the Loan
Agreement, Note, Security Instrument and all of the other Loan Documents remain
unmodified and in full force and effect.
16.    [Insert other terms required by Lender for this specific A&D Project.]
17.    [Insert other terms required by Lender for this specific A&D Project.]
18.    [Insert other terms required by Lender for this specific A&D Project.]

EXHIBIT “F”, Form of A&D Project Loan Sheet

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

IN WITNESS WHEREOF, Borrower has caused this Loan Sheet to be executed as of the
date set forth above.
BORROWER:                

[Insert signature blocks for all borrowing entities]

LENDER:                

[Insert signature block]

EXHIBIT “F”, Form of A&D Project Loan Sheet

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Schedule “2”
Additional Project Loan Terms
The following terms and provisions are incorporated by reference to and made a
part of this Loan Sheet:

1.    Definitions.
(a)    A&D Loan Amount: The A&D Loan Amount shall not exceed the lesser of (i)
             Dollars ($        .00), or (ii) the sum required to comply with the
Maximum Credit Amount for this A&D Project.
(b)    Approved Subdivision. The Approved Subdivision shall be limited to the
Property included in that certain single-family home project to be developed by
Borrower in the City of     ,          County, State of         .
(c)    A&D Commencement Date:             , 20__.
(d)    A&D Completion Date:                 , 20__.
(e)    A&D Loan Advance Termination Date:                 , 20__.
(f)    A&D Loan Maturity Date:                 , 20__.
(g)    Number of Lots:          (    ) Lots within the A&D Project.
(h)    Design Professional:                         .
(i)    Contractor:                             .
2.    Maximum Credit Amount. The aggregate of all Advances under the A&D Loan
shall not exceed the Maximum Credit Amount set forth in the Loan Agreement.
3.    A&D Partial Release Price: The sum of                      Dollars
($    .00) per Lot. If the payment of the A&D Partial Release Price results in
the payment in full of the A&D Loan, accrued interest on the A&D Partial Release
Price must be paid concurrent with the A&D Partial Release Price
4.    Mandatory Prepayments. If the A&D Partial Release Prices paid to Lender
during a Calendar Quarter (beginning with the Calendar Quarter from _______
through _____) are less than the amounts shown in the table below, then on or
before the 15th day following Calendar Quarter, Borrower shall pay to Lender as
a reduction of the outstanding principal balance of the Loan, an amount that
would cause Lender to receive at least the amount shown in the table below for
such Calendar Quarter. If A&D Partial Release Prices paid to Lender in a
Calendar Quarter exceed the required amount shown in the table below, then the
amount of the excess may be carried forward to future quarters and applied
toward satisfaction of the requirements of this paragraph.

EXHIBIT “F”, Form of A&D Project Loan Sheet

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

 
 
 

 
 
 

5.    [Insert other terms required by Lender for this specific A&D Project.]
6.    [Insert other terms required by Lender for this specific A&D Project.]
7.    [Insert other terms required by Lender for this specific A&D Project.]

EXHIBIT “F”, Form of A&D Project Loan Sheet

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EXHIBIT “G”
A&D Loan Closing Conditions
Lender’s agreement to make any A&D Loan shall be shall be subject to the receipt
and approval by Lender (in its sole discretion) of the following documents,
certificates and other matters (together with such other documents, instruments,
certificates and matters as Lender may require) (at Borrower’s cost and
expense):
1.
Lender shall have received an A&D Project Loan Sheet, duly executed by Borrower.

2.
Lender shall have received evidence from Borrower of any required initial equity
funds in the form of either cash or verified prepaid expenses.

3.
Lender shall have received certified copies of resolutions or consents for each
entity comprising Borrower that is involved in the A&D Project, if such entity
is a corporation or a limited liability company, or a certified copy of a
consent of partners, if such entity is a partnership, or a certified copy of a
consent of members, if such entity is a limited liability company authorizing
execution, delivery and performance of the A&D Project Loan Sheet and all of the
Loan Documents and, along with such certificates of existence, certificates of
good standing and other certificates or documents as Lender may require.

4.
Lender shall have received true copies of all organization and entity documents
of each entity comprising Borrower that is involved in the A&D Project,
including all amendments or supplements thereto, along with such certificates or
other documents as Lender may require.

5.
Lender shall have received evidence that the A&D Project is not located within
any designated flood plain or special flood hazard area; or evidence that
Borrower has applied for and received flood insurance covering the Property in
the amount of the Loan or the maximum coverage available to Lender.

6.
Lender shall have received evidence of compliance with all Governmental
Requirements.

7.
Lender shall have received a full‑size, single sheet copy of all recorded or
planned subdivision or plat maps of the Land approved (to the extent required by
Governmental Requirements) by all Governmental Authorities, if applicable, and
legible copies of all instruments representing exceptions to the state of title
to the Property.

8.
Lender shall have received copies of the insurance policies described in this
Agreement.

9.
Lender shall have received the Title Insurance.

10.
Lender shall have received from Borrower such other instruments, evidence and
certificates as Lender may reasonably require, including the items indicated
below:

A.    Evidence that all the streets furnishing access to the Land have been
dedicated to public use and installed and accepted by applicable Governmental
Authorities.
B.    A final and recorded subdivision or tract map, or a current survey of the
Land prepared by a registered surveyor or engineer and certified to Lender,
Borrower and Title Company, in form and substance acceptable to Lender, showing
all easements, building or setback lines, rights‑of‑way and dedications
affecting the Land and showing no state of facts objectionable to Lender.

EXHIBIT “G”, A&D Loan Closing Conditions

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C.    Evidence satisfactory to Lender showing the availability of all necessary
utilities at the boundary lines of the Land, including sanitary and storm sewer
facilities, potable water, telephone, electricity, gas, and municipal services.
D.    Evidence that the current and proposed use of the Land and the
construction of the proposed A&D Improvements (as contemplated by the Plans and
Specifications) complies with all Governmental Requirements and any other
parties or persons having approval or consent rights with respect to the Plans
and Specifications.
E.    The A&D Budget, together with a cost breakdown satisfactory to Lender
showing the Total Costs, including, but not limited to, such related
non‑construction items as interest during construction, commitment, legal,
design professional and real estate agents’ fees, plus the amount of the Land
cost and direct construction costs of the Improvements required to be paid to
satisfactorily complete the Improvements, free and clear of liens or claims for
liens for material supplied and for labor services performed.
F.    Original or a copy of the proposed Construction Contract.
G.    Original or a copy of each fully executed Design Professional’s Agreement.
H.    A copy of the Plans and Specifications for the A&D Improvements (as
approved by all applicable Governmental Authorities and any other parties or
persons having consent or approval rights).
I.    All building permit(s), grading permit(s) and all other permits required
with respect to the construction of the A&D Improvements.
J.    Evidence that all applicable zoning ordinances and restrictive covenants
affecting the Land permit the use for which the A&D Improvements are intended
and have been or will be complied with.
K.    If requested by Lender, copies of all subcontracts and agreements
pertaining to the development, construction and completion of the A&D
Improvements or pertaining to materials to be used in connection therewith,
together with a schedule of anticipated dates and amounts of each Advance for
the same.
L.    Environmental site assessment report with respect to the Land prepared by
a firm of engineers approved by Lender, which report shall be satisfactory in
form and substance to Lender, certifying that there is no evidence that any
Hazardous Materials has been generated, treated, stored or disposed of on any of
the Land and none exists on, under or at the Land.
M.    A soils and geological report covering the Land issued by a laboratory
approved by Lender, which report shall be satisfactory in form and substance to
Lender, and shall include a summary of soils test borings.
11.
Lender shall have ordered and received, at Borrower’s expense, the Appraisal,
prepared by an appraiser acceptable to Lender and presented and based upon such
standards as may be required by Lender.

12.
Borrower shall furnish to Lender a copy of the purchase contract or other
evidence satisfactory to Lender with respect to the cost of the Land financed
under the A&D Loan.

EXHIBIT “G”, A&D Loan Closing Conditions

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13.
Lender shall have received and approved (in writing) any and all development
agreements encumbering the Land; and in connection therewith, Lender shall have
received written verification of any development fees or impositions (whether
imposed by any Governmental Authority or otherwise) and shall have confirmed
that such fees are included in the A&D Budget.

14.
Lender shall have received such other documents as it may reasonably have
requested at any time at or prior to the closing.

EXHIBIT “G”, A&D Loan Closing Conditions

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EXHIBIT “H”
A&D Draw Request Form
(LETTERHEAD OF BORROWER)
Date: ____________________________
Texas Capital Bank
2350 Lakeside Blvd., Suite 800
Richardson, Texas 75082
Attn: Builder Finance Group (“Lender”)
Re:
Request for Advance to pay costs for A&D Loan under Second Amended and Restated
Loan Agreement, dated January 17, 2014 (the “Loan Agreement”), between [list all
borrowing entities] (collectively “Borrower”), and Lender; [Insert description
of A&D Project] (the “A&D Project”)

Ladies and Gentlemen:
The undersigned authorized officer of Borrower requests an Advance under the
Loan Agreement to pay costs incurred in connection with development of the A&D
Project, in the amount of $__________________. All terms used and not otherwise
defined in this Draw Request are used as defined in the Loan Agreement.
The proceeds of the Advance are to be used to pay the items listed on the
attached page(s). If the advance will be used to pay Contractor(s), an
Application and Certificate for Payment for each Contractor to be paid is also
attached.
The status of costs for the A&D Improvements is as follows:
(a)    
Original costs per A&D Budget
   $   
(b)    
Additions to date
   $   
(c)    
Deductions to date
   ($   )
(d)    
Current projection of costs
   $   
(e)    
Total costs certified to date, including amount of this certificate
   ($   )
(f)    
Unpaid balance of projected costs (amount yet to be certified)
   $   

EXHIBIT “H”, A&D Draw Request Form

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The status of available funds from Borrower’s equity and under the Loan
Agreement is as follows:
(g)    
(1)
Total amount of A&D Loan
($   )
 
(2)
less Advances to date
- ($   )
 
(3)
equals Unadvanced A&D Loan proceeds
($   )
(h)    
(1)
Unpaid balance of projected costs (from (f) above)
($   )
 
(2)
plus Amount of this certification
+ ($   )
 
(3)
equals Total unpaid projected costs
($   )
(i)    
(1)
less Unadvanced A&D Loan proceeds ((g)(3))
- ($   )
 
(2)
equals Total Borrower’s equity required
($   )
(j)    
Amount of this certification
($   )
 
less Total Borrower’s equity required 
equals A&D Loan proceeds to be advanced
(if greater than $0).
- ($   )
 
($   )

If Total Borrower’s equity required is greater than the amount of this
certification, this certification is to be paid solely from Borrower’s equity.
Borrower represents as follows:
(a)    The amount requested above has actually been incurred in connection with
the construction of the A&D Improvements and no previous Advance has been made
under the Loan Agreement to pay any of the costs for which Borrower requests
this Advance.
(b)    The representations in the Loan Agreement are true and correct as of the
date this Draw Request is submitted to Lender.
(c)    [Except as set forth on Schedule 1 to this Draw Request,] all equipment,
supplies and materials acquired or furnished in connection with the construction
of the A&D Improvements that are not affixed to or incorporated into the A&D
Improvements are stored on the Land.
(d)    No Event of Default has occurred under the Loan Agreement that has not
been waived by Lender or cured to the satisfaction of Lender.
[ADD IF Lender AGREES TO PAY FOR MATERIALS STORED OFFSITE:] [With respect to the
items described on Schedule 1 to this Draw Request, the following are attached:
(e)    With respect to items stored in a bonded warehouse, an original warehouse
receipt covering those items; and
(f)    With respect to items not stored in a bonded warehouse, a written
certificate signed by Borrower certifying the location of all those items. Those
items must be insured by companies, on forms and in amounts, satisfactory to
Lender. Each location must be acceptable to Lender and all items must be stored
under adequate safeguards acceptable to Lender to minimize the possibility of
loss, theft, damage or commingling with other property.]
Very Truly Yours,
AUTHORIZED OFFICER:
                    

                        ______________________________________
Eric T. Lipar

EXHIBIT “H”, A&D Draw Request Form