<PAGE>   1
                                                                    EXHIBIT 10.5

                           WATERMARK COMMUNITIES, INC.
                 1998 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN
                            AS RESTATED MAY 21, 1999

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

1.        PURPOSE OF THE PLAN

          The purpose of the Plan is to aid the Company in attracting, retaining
and compensating non-employee directors and to enable them to increase their
ownership of Shares. The Plan will be beneficial to the Company and its
stockholders since it will allow non-employee directors of the Board to have a
greater personal financial stake in the Company through the ownership of Shares,
in addition to underscoring their common interest with stockholders in
increasing the value of the Shares on a long-term basis.

2.        DEFINITIONS

          The following capitalized terms used in the Plan have the respective
meanings set forth in this Paragraph:

                  (a)      Act: The Securities Exchange Act of 1934, as amended,
                           or any successor thereto.

                  (b)      Beneficial Owner: As such term is defined in Rule
                           13d-3 under the Act (or any successor rule thereto).

                  (c)      Board: The Board of Directors of the Company.


                  (d)      Change in Control: (i) Any "person" as defined in
                           Section 3(a)(9) of the Securities Exchange Act of
                           1934, as amended (the "Exchange Act"), and as used in
                           Section 13(d) and 14(d) thereof, including a "group"
                           as defined in Section 13(d) of the Exchange Act
                           (excluding any person holding securities representing
                           50% or more of the combined voting power of the
                           Company's outstanding securities as of the Effective
                           Date, the Company, any Subsidiary and any employee
                           benefit plan sponsored or maintained by the Company
                           or any Subsidiary (including any trustee of such plan
                           acting as trustee)), directly or indirectly, becomes
                           the "beneficial owner" (as defined in Rule 13d-3
                           under the Exchange Act), of securities of the Company
                           representing 50% (or 25% after an initial public
                           offering) or more of the combined voting power of the
                           Company's then outstanding securities (unless the
                           event causing the 50% (or 25% after an initial public
                           offering) threshold to be crossed is an acquisition
                           of securities directly from the Company); or


                           (ii) the shareholders of the Company shall approve
                           any merger or other business combination of the
                           Company, sale of 50% or more
<PAGE>   2
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 2


                            of the Company's assets, liquidation or dissolution
                            of the Company or combination of the foregoing
                            transactions (the "Transactions") other than a
                            Transaction immediately following which the
                            shareholders of the Company and any trustee or
                            fiduciary of any Company employee benefit plan
                            immediately prior to the Transaction own at least
                            80% of the voting power, directly or indirectly, of
                            (A) the surviving entity in any such merger or other
                            business combination; (B) the purchaser of or
                            successor to the Company's assets; (C) both the
                            surviving entity and the purchaser in the event of
                            any combination of Transactions; or (D) the parent
                            company owning 100% of such surviving entity,
                            purchaser or both the surviving entity and the
                            purchaser, as the case may be; or

                           (iii) within any twenty-four month period, the
                           persons who were directors immediately before the
                           beginning of such period (the "Incumbent Directors")
                           shall cease (for any reason other than death) to
                           constitute at least a majority of the Board or the
                           board of directors of a successor to the Company. For
                           this purpose, any director who was not a director at
                           the beginning of such period shall be deemed to be an
                           Incumbent Director if such director was elected to
                           the Board by, or on the recommendation of or with the
                           approval of, at least two-thirds of the directors who
                           then qualified as Incumbent Directors (so long as
                           such director was not nominated by a person who has
                           entered into an agreement to effect a Change in
                           Control or expressed an intention to cause such a
                           Change in Control).

                  (e)      Code: The Internal Revenue Code of 1986, as amended.

                  (f)      Committee: The Compensation Committee of the Board,
                           or any successor thereto or other committee
                           designated by the Board to assume the obligations of
                           the Committee hereunder.

                  (g)      Company: Watermark Communities, Inc.

                  (h)      Effective Date: The date on which the Plan takes
                           effect, as defined pursuant to Paragraph 15 of the
                           Plan.

                  (i)      Fair Market Value: Such value of a Share as reported
                           for stock exchange transactions if listed on an
                           exchange, or if not so listed, as determined in
                           accordance with any applicable resolutions or
                           regulations of the Committee in effect at the
                           relevant time, provided that if a Participant is a
                           party to a management stockholder's agreement with
                           the Company, the applicable provisions of such
                           management stockholder's agreement will apply.
<PAGE>   3
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 3


                  (j)      Meetings Fees: Means compensation to which a
                           Non-Employee Director is entitled for attending a
                           meeting of the Board of Directors or a meeting of any
                           committee of the Board of Directors, exclusive of any
                           amounts paid by the Corporation or its subsidiaries
                           to such director for services rendered to the
                           Corporation or its Subsidiaries in a capacity other
                           than as a director.

                  (k)      Non-Employee Director: Means a director of the
                           Corporation whom while a director is not an employee
                           or an officer of the Corporation or any Subsidiary of
                           the Corporation.

                  (l)      Option: A Non-Qualified Stock Option to purchase
                           Shares granted pursuant to Paragraph 6 of the Plan.

                  (m)      Option Price: The purchase price per Share subject to
                           an Option, as provided pursuant to Paragraph 6 of the
                           Plan.

                  (n)      Participant: Any director of the Company who is not
                           an employee of the Company or any Subsidiary of the
                           Company as of the date that an Option is granted.

                  (o)      Plan: The Restated 1998 Watermark Communities, Inc.
                           Non-Employee Directors' Stock Incentive Plan.

                  (p)      Plan Year: Means the twelve (12) consecutive month
                           period beginning January 1 and ending December 31.

                  (q)      Shares: Shares of common stock, par value $0.0001 per
                           share, of the Company.

                  (r)      Stock Option Agreement: An agreement between the
                           Company and a Participant that sets forth the terms,
                           conditions and limitations applicable to an Option.

                  (s)      Subsidiary: Any corporation in an unbroken chain of
                           corporations beginning with the Company if each of
                           the corporations, or group of commonly controlled
                           corporations, other than the last corporation in the
                           unbroken chain then owns stock possessing 50% or more
                           of the total combined voting power of all classes of
                           stock in one of the other corporations in such chain.


3.        SHARES SUBJECT TO THE PLAN

          The total number of Shares, which may be issued under the Plan, is One
<PAGE>   4
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 4


Hundred Fifty Thousand (150,000). The Shares may consist, in whole or in part,
of unissued Shares or treasury Shares. The grant of Options shall reduce the
total number of Shares available under the Plan. Shares subject to Options that
terminate or lapse may be granted again under the Plan.


4.        ADMINISTRATION

          (a) The Plan shall be administered by the Committee, which may
delegate its duties and powers in whole or in part to any subcommittee thereof;
provided, however, that the members of the Committee or subcommittee shall
qualify to administer the Plan for purposes of Rule 16b-3 under the Act (or any
successor rule thereto) to the extent that the Company is subject to such rule;
provided, further, that any action permitted to be taken by the Committee or
subcommittee may be taken by the Board, in its discretion. The Committee may
adopt its own rules of procedure, and action of a majority of the members of the
Committee taken at a meeting, or action taken without a meeting by unanimous
written consent, shall constitute action by the Committee. The Committee shall
have the power and authority to administer, construe and interpret the Plan, to
make rules for carrying it out and to make changes in such rules. Any such
interpretations, rules, and administration shall be consistent with the basic
purposes of the Plan.

         (b) The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Company its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee may designate and grant Options to Participants who are subject to
Section 16 of the Exchange Act.

         (c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company, and the
officers and directors of the Company shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Participants, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Options, and all members of the Committee shall be fully protected by the
Company with respect to any such action, determination or interpretation.


5.        ELIGIBILITY AND TERMS


          All Participants shall be eligible to participate under this Plan. The
terms, conditions and limitations of each Option granted under the Plan shall be
set forth in a Stock Option Agreement, in a form consistent with the terms of
the Plan; provided, however, that such Stock Option Agreement, (i) shall contain
provisions dealing with the treatment of Options in the event of the
termination, death or disability of a Participant, (ii) shall contain provisions
which accommodate the deferral of fees payable to a director for the purchase of
Shares and, (iii) may also include provisions concerning the treatment of

<PAGE>   5
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 5


Options in the event of a Change in Control of the Company.


6.        OPTIONS


          From time to time, the Committee will, in its discretion, grant
Options to Participants. The Options shall be Non-Qualified Stock Options, which
are not designated by the Committee as "Incentive Stock Options". At the time of
grant of an Option the Committee shall determine, and shall include in the Stock
Option Agreement or other Plan rules, the Option exercise period, the Option
Price and such other conditions or restrictions on the grant or exercise of the
Option as the Committee deems appropriate. In addition to other restrictions
contained in the Plan, an Option granted under this Paragraph 6 (i) may not be
exercised more than 10 years after the date of grant and (ii) may not have an
Option Price less than 50% of the Fair Market Value of Shares on the date of
grant. Payment of the Option Price shall be made (i) in cash, (ii) in Shares,
(iii) in a combination thereof or (iv) through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Option Price for the Shares being purchased, in each case, in
accordance with the terms of the Plan, the Stock Option Agreement and of any
applicable guidelines of the Committee in effect at the time.



7.       DEFERRED MEETING FEES

         A Non-Employee Director may elect to defer all or a portion of such
Non-Employee Director's Meeting Fees by indicating at the space provided
therefor in the Annual Deferral Notice, to apply said deferral to the exercise
price for vested Shares in lieu of payment of Meeting Fees to the Non-Employee
Director that are earned by the Non-Employee Director in such upcoming Plan
Year; provided that a Non-Employee Director may elect to defer Meeting Fees for
the period of the 1999 Plan Year from and after February 22, 1999, having made
such election on February 22, 1999, with such election to apply with respect to
Meeting Fees earned during the 1999 Plan Year from and after the date of such
election and for each succeeding Plan year thereafter by making such election on
or before December 31 of each year. The maximum amount of Meeting Fees that may
be deferred shall not exceed the amount required to exercise vested Option
Shares by the Non-Employee Director.


8.        SUCCESSORS AND ASSIGNS

          The Plan shall be binding on all successors and assigns of the Company
and a Participant, including without limitation, the estate of such Participant
and the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.


9.        CHOICE OF LAW

          The Plan shall be governed by and construed in accordance with the
laws of the State
<PAGE>   6
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 6


of Florida applicable to contracts made and to be performed in the State of
Florida, without regard to principles of conflicts of laws.

10.       LIMITATIONS AND CONDITIONS

         (a) No Options shall be granted under the Plan beyond ten years after
the effective date of the Plan, but the terms of Options made on or before the
expiration of the Plan may extend beyond such expiration. At the time an Option
is granted or amended or the terms or conditions of an Option are changed, the
Committee may provide for limitations or conditions on such Option.

         (b) Nothing contained herein shall affect the right of the Company to
remove any Participant from the Board at any time or for any reason.

         (c) Other than as specifically provided in the Stock Option Agreement,
no benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt to do so shall be void. No such benefit shall, prior to receipt thereof
by the Participant, be in any manner liable for or subject to the debts,
contracts, liabilities, engagements, or torts of the Participant.


         (d) Participants shall not be, and shall not have any of the rights or
privileges of stockholders of the Company in respect of any Shares purchasable
in connection with any Option unless and until certificates representing any
such Shares have been issued by the Company to such Participants.


         (e) No election as to benefits or exercise of any Option may be made
during a Participant's lifetime by anyone other than the Participant except by a
legal representative appointed for or by the Participant.

         (f) Absent express provisions to the contrary, any Option under this
Plan shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Company or its Subsidiaries and
shall not affect any benefits under any other benefit plan of any kind now or
subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.

         (g) Unless the Committee determines otherwise, no benefit or promise
under the Plan shall be secured by any specific assets of the Company or any of
its subsidiaries, nor shall any assets of the Company or any of its subsidiaries
be designated as attributable or allocated to the satisfaction of the Company's
obligations under the Plan.


11.       ADJUSTMENTS

          In the event of any change in the outstanding Shares by reason of a
stock split, spin-
<PAGE>   7
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 7


off stock dividend, stock combination or reclassification, reorganization,
recapitalization, merger, consolidation, spin-off or similar event, the
Committee shall adjust appropriately the number of Shares subject to the Plan
and available for or covered by Options and the Option Price of outstanding
Options and make such other revisions to outstanding Options as it deems are
equitably required.


12.      MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION, LIQUIDATION OR
         DISSOLUTION

          Except as otherwise provided in a Stock Option Agreement, in the event
of a Change in Control, the Committee may, in its absolute discretion and
without liability to any person, take such actions, if any, as it deems
necessary or desirable coincident with or after the grant of any Option, either
by the terms of such Option or by resolution adopted prior to the occurrence of
such Change in Control, including without limitation, (i) acceleration of the
exercisability of an Option (but subject to the provisions of Paragraph 9(a)),
(ii) the payment of a cash amount in exchange for the cancellation of an Option
and/or (iii) the requiring of the issuance of substitute benefits that will
substantially preserve the value, rights and benefits of any affected Option
previously granted hereunder; provided, however, that any Option that shall
remain exercisable after any such Change in Control, from and after such Change
in Control, shall be exercisable only for the kind and amount of securities
and/or other property, or the cash equivalent thereof (as determined by the
Committee in good faith), receivable as a result of such event by the holder of
a number of Shares for which such Option could have been exercised immediately
prior to such event.


13.       AMENDMENT AND TERMINATION

          The Committee shall have the authority to make such amendments to any
terms and conditions applicable to outstanding Options as are consistent with
this Plan, provided that no such action shall modify any Option in a manner
adverse to the Participant without the Participant's consent except as such
modification is provided for or contemplated in the terms of the Stock Option
Agreement or this Plan (except that any adjustment that is made pursuant to
Paragraph 10 or 11 hereof shall be made by the Committee in good faith). The
Board of Directors may amend, suspend or terminate the Plan except that no such
action, other than an action under Paragraph 10 or 11 hereof may be taken which
would, without shareholder approval, increase the aggregate number of Shares
available for Options under the Plan, decrease the Option Price of outstanding
Options, change the requirements relating to the Committee or extend the term of
the Plan.


14.       WITHHOLDING TAXES

          The Company shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with
<PAGE>   8
Watermark Communities, Inc.
Non-Employee Director Stock Incentive Plan
Page 8


respect to such payment. It shall be a condition to the obligation of the
Company to deliver Shares upon the exercise of an Option that the Participant
pay to the Company such amount as may be requested by the Company for the
purpose of satisfying any liability for such withholding taxes. Any Stock Option
Agreement may provide that the Participant may elect, in accordance with any
conditions set forth in such Stock Option Agreement, to pay a portion or all of
such withholding taxes in Shares.


15.       EFFECTIVE DATE AND TERMINATION DATES

          The Plan shall be effective as of December 4, 1998 and shall terminate
ten years later, subject to earlier termination by the Board of Directors
pursuant to Paragraph 12.