<PAGE>   1
                                                                   EXHIBIT 10.74


                         MASTER REVOLVING LINE OF CREDIT
                                 LOAN AGREEMENT
                         (BORROWING BASE AND WAREHOUSE)

                                 By and Between

                 DESERT MOUNTAIN PROPERTIES LIMITED PARTNERSHIP
                                  ("BORROWER")

                                       And

                            NATIONAL BANK OF ARIZONA
                                   ("LENDER")


                               Dated: May 14, 1998





<PAGE>   2



                         MASTER REVOLVING LINE OF CREDIT
                                 LOAN AGREEMENT
                         (BORROWING BASE AND WAREHOUSE)


         This MASTER REVOLVING LINE OF CREDIT LOAN AGREEMENT (BORROWING BASE AND
WAREHOUSE), dated as of May 14, 1998, is made and entered into by and between
DESERT MOUNTAIN PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership
("BORROWER"), and NATIONAL BANK OF ARIZONA, a national banking association
("LENDER").

                                    RECITALS:

         Borrower has applied to Lender for (i) a revolving line of credit
(borrowing base) for the purpose of financing the development of Lots and the
construction of Spec Units and Presold Units (as such terms are hereinafter
defined) and (ii) a revolving line of credit (warehouse) for the purpose of
warehousing carry back notes and deeds of trust in favor of Borrower from the
purchasers of custom lots in an Approved Subdivision (as such term is
hereinafter defined), subject to the conditions set forth herein.

                                   AGREEMENT:

         For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1 Definitions. In this Agreement, the following capitalized terms
have the following meanings:

                  "ADVANCE" means an advance of Loan proceeds, other than a
         Protective Advance, by the Lender to Borrower hereunder.

                  "ADVANCE REQUEST", as defined in SECTION 2.2(d)(iv).

                  "AFFILIATE" of any Person means any other Person directly or
         indirectly controlling or controlled by or under direct or indirect
         common control with such Person. For the purposes of this definition,
         "control", when used with respect to any Person, means the power to
         direct the management and policies of such Person, directly or
         indirectly, whether through the ownership of voting securities, by
         contract or otherwise; and the terms "controlling" and "controlled"
         have meanings correlative to the foregoing.


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                  "AGREEMENT" means this Master Revolving Line of Credit Loan
         Agreement (Borrowing Base and Warehouse), as it may be amended,
         modified, extended, renewed, restated, or supplemented from time to
         time.

                  "APPRAISAL" means, as the context requires, a Unit Appraisal,
         Eligible Lot Appraisal, or any other appraisal undertaken pursuant to
         the provisions of this Agreement.

                  "APPROVALS AND PERMITS" means each and all approvals,
         authorizations, bonds, consents, certificates, franchises, licenses,
         permits, registrations, qualifications, entitlements and other actions
         and rights granted by or filings with any Person necessary, or
         appropriate for the state of construction of Units, for the sale of
         Units and Eligible Lots, for occupancy, ownership, and use by Borrower
         and other Persons of the Units, or otherwise for the conduct of, or in
         connection with, the business and operations of Borrower.

                  "APPROVED SUBDIVISION" means a Subdivision that has been
         approved as provided in SECTION 4.2.

                  "AVAILABLE BORROWING BASE COMMITMENT" means, at any time, the 
         lesser of:

                           (a) The Borrowing Base Commitment Amount;

                           (b) 50% of the total Unit Collateral Values for all
                  Units plus 50% of the total of the Eligible Lot Collateral
                  Values for all Eligible Lots; or

                           (c) 100% of the total Unit Collateral Values,

         all as reported in the most recent Borrowing Base Reconciliation
Report,

         LESS in any case any remargining payment required pursuant to SECTION
2.9 but not yet paid.

                  "BORROWING BASE" consists of the Eligible Collateral from time
         to time prior to the Maturity Date and as reflected in the most current
         Borrowing Base Reconciliation Report.

                  "BORROWING BASE ADVANCE" means an advance of Borrowing Base
         Loan proceeds by the Lender to Borrower hereunder.

                  "BORROWING BASE COMMITMENT" means the agreement of Lender to
         make Advances on the Borrowing Base Loan pursuant to the terms and
         conditions of this Agreement.

                  "BORROWING BASE COMMITMENT AMOUNT" means the total maximum
         amount that the Lender is obligated to fund, and that is available at
         any particular time under the Borrowing Base Loan, under this
         Agreement. The total Borrowing Base Commitment Amount is
         $25,000,000.00.


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<PAGE>   4



                  "BORROWING BASE LOAN" means the borrowing base credit facility
         made available to Borrower in accordance with this Agreement.

                  "BORROWING BASE NOTE" means the promissory note executed by
         Borrower and payable to Lender in the maximum Borrowing Base Commitment
         Amount, evidencing Borrower's indebtedness hereunder, as such note may
         be amended, modified, extended, renewed, supplemented or restated from
         time to time.

                  "BORROWING BASE RECONCILIATION REPORT" means a report prepared
         by the Lender setting forth, inter alia, the Eligible Collateral then
         constituting the Borrowing Base, the Collateral Value of the Borrowing
         Base, the Cost to Complete relating to the Eligible Collateral, the
         Available Borrowing Base Commitment and certain other information, in
         the format prescribed by the Lender from time to time.

                  "BUSINESS DAY" means a day of the year on which banks are not
         required or authorized to close in Phoenix, Arizona.

                  "CALENDAR MONTH" means any of the 12 calendar months of the
         year.

                  "CC&RS" means and includes restrictive covenants, conditions,
         restrictions, easements, and other rights that exist or are
         contemplated with respect to a Subdivision.

                  "CLUB" means The Desert Mountain Club, currently a fictitious
         business name of Borrower, as owner and operator of the private club
         facilities at Desert Mountain comprised of five golf courses (inclusive
         of the course now under construction), the clubhouses and pro shops
         adjoining such courses, the Sonoran Clubhouse and the swim, tennis,
         fitness and other recreational facilities adjacent thereto. At such
         time as such facilities are transferred to an entity other than
         Borrower, the "Club," as used in this Agreement, shall refer to such
         successor owner. Where the context so requires, "Club" shall also mean
         the association of members enjoying use privileges with respect to such
         facilities.

                  "CODE" means the United States Internal Revenue Code of 1986,
         as amended from time to time.

                  "COLLATERAL" means the property, interests in property, and
         rights to property securing any or all Obligations from time to time.

                  "COLLATERAL CERTIFICATE" means the certificate of Borrower, in
         form and substance satisfactory to the Lender and containing such
         certifications as the Lender may require, setting forth the information
         required by SECTION 3.4.

                  "COLLATERAL DOCUMENTS", as defined in SECTION 2.2(d)(v).



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<PAGE>   5



                  "COLLATERAL INVENTORY REPORT" means the report prepared by 
         Borrower as required by SECTION 3.4.

                  "COLLATERAL VALUE" means, from time to time, the aggregate
         total of the Unit Collateral Values for all Units and the Eligible Lot
         Collateral Values for all Eligible Lots included in Eligible Collateral
         at the time the Collateral Value of the Borrowing Base is determined.

                  "COMMITMENT" shall mean collectively the Borrowing Base 
         Commitment and the Warehouse Commitment.

                  "CONVERSION FEE" means the amount payable to the Club in order
         to convert a non-equity Membership to a Deferred Equity Golf
         Membership, or to upgrade a Deferred Equity Club Membership to a
         Deferred Equity Golf Membership, or to "attach" a Deferred Equity Golf
         Membership to a Lot as to which no Membership was associated at the
         time the related Lot or Mortgage Note was pledged to Lender. EXHIBIT A,
         attached hereto, lists the Conversion Fee payable with respect to the
         Membership associated with each Eligible Mortgage Loan covered by this
         Agreement based on the Membership Contribution of $125,000 in effect as
         of March, 1998 (the Conversion Fee for "Type 2" and "Type 5"
         Memberships are an approximation only). Changes in the Membership
         Contribution over time, at the discretion of the Club, will result in
         changes in the Conversion Fee for each Membership type, as follows:


<TABLE>
<CAPTION>
        Membership Type                  Calculation
        ---------------                  -----------
<S>                              <C>
            20, 25               25% of Membership Contribution

               3                 Membership Contribution less $50,000

             2, 5                Membership Contribution less the sum of
                                 dues actually paid on a given Membership
                                 account through time of conversion, subject
                                 to $50,000 cap on such dues credit

           1, 8, 22              Full Membership Contribution

            41, 44               68% of Membership Contribution

              19                 120% of Membership Contribution
</TABLE>


                  "COST TO COMPLETE" shall mean, as applicable, the total of all
         hard costs and soft costs as reasonably determined by Lender to
         complete an Eligible Lot or a Unit as provided in the Unit Budgets and
         Eligible Lot Budgets provided to Lender.



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<PAGE>   6



                  "CRESCENT" shall mean Crescent Real Estate Equities Limited
         Partnership, a Delaware limited partnership, or as the context
         requires, Crescent Operating, Inc., the general or limited partner of
         Borrower or Affiliates.

                  "CRESCENT DEEDS OF TRUST" shall mean those certain deeds of
         trust executed by Borrower as trustor, in favor of Crescent as
         beneficiary, subordinated to Lender pursuant to the Subordination
         Agreement.

                  "CRESCENT NOTES" shall mean that certain promissory note dated
         August 29, 1997 in the original principal amount of $110,000,000.00 and
         that certain promissory note dated August 29, 1997 in the original
         principal amount of $60,000,000.00, each of which was executed by
         Borrower in favor of Crescent and secured by the Crescent Deeds of
         Trust.

                  "DEED OF TRUST" and "DEEDS OF TRUST" mean each and all deeds
         of trust, mortgages, assignments of leases and rents, fixture filings,
         and security agreements, securing the Note and the Obligations, granted
         from time to time by Borrower, as mortgagor, trustor, or assignor, to
         the Lender, as mortgagee, beneficiary and trustee (unless the Lender
         consents to the transfer to another Person to act as trustee under a
         deed of trust), or assignee, each being substantially in the form
         required by the Lender from time to time, as the same may be amended,
         modified, supplemented, extended, restated, or renewed from time to
         time.

                  "DEFAULT INTEREST RATE" shall mean a rate of interest equal to
         the aggregate of 4% per annum plus the Interest Rate. The Default
         Interest Rate shall change as and when the Prime Rate changes.

                  "DEFERRED EQUITY MEMBERSHIP PLAN" means the Deferred Equity
         Membership Plan dated July 1, 1994, as published by the Club, together
         with all future amendments thereto.

                  "DRAW REQUEST" means a completed, written request in form and
         substance satisfactory to the Lender, from Borrower to the Lender
         requesting a Borrowing Base Advance under the Borrowing Base Loan,
         together with such other documents and information as the Lender may
         require from time to time.

                  "DUE DILIGENCE INFORMATION" means any and all information
         regarding the Mortgage Loans that exists or was developed in connection
         with Borrower's or its agent's generating, servicing or analysis of the
         Mortgage Loans prior to assignment to Lender.

                  "EFFECTIVE DATE" means the date on which all of the conditions
         precedent in SECTION 4.1 have first been satisfied.

                  "ELIGIBLE COLLATERAL" means the Units and the Eligible Lots
         that meet the requirements of this Agreement for inclusion as Eligible
         Collateral and that are included in a Borrowing Base Reconciliation
         Report.


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<PAGE>   7



                  "ELIGIBLE LOT" means a Lot in an Approved Subdivision that has
         satisfied the requirements in SECTION 4.3 for inclusion in Eligible
         Collateral as an Eligible Lot.

                  "ELIGIBLE LOT APPRAISAL" means a FNMA/URAR Appraisal of an 
         Eligible Lot.

                  "ELIGIBLE LOT APPRAISED VALUE" means the market value for an
         Eligible Lot, as if complete, as reasonably determined by the Lender
         after its review of the Eligible Lot Appraisal for an Eligible Lot.

                  "ELIGIBLE LOT BUDGET" means the amount allocated by Borrower
         to the hard and soft costs associated with the development of each
         Eligible Lot included as Eligible Collateral, as set forth in budgets
         and cost breakdowns delivered to Lender. The Eligible Lot Budget will
         specifically set forth the building permit fees, tap fees, impact fees,
         development fees, and other municipal, county, school district, and
         special district fees and assessments required for the development of
         the Eligible Lot. The Eligible Lot Budget will be subject to review and
         reasonable approval by the Lender.

                  "ELIGIBLE LOT COLLATERAL VALUE" means with respect to each
         Eligible Lot, an amount equal to the difference between the Eligible
         Lot Appraised Value and the Cost to Complete, if any, of the Eligible
         Lot.

                  "ELIGIBLE LOT ELIGIBILITY DATE" means, with respect to each
         Eligible Lot, the date on which the Eligible Lot is first included in
         Eligible Collateral as an Eligible Lot pursuant to this Agreement, as
         reflected on the Borrowing Base Reconciliation Report, and regardless
         of whether periods exist during which such Eligible Lot is not included
         as Eligible Collateral.

                  "ELIGIBLE MORTGAGE LOAN" means a Mortgage Loan which is
         secured by a Mortgage constituting a first lien on a Lot located in an
         Approved Subdivision and its corresponding Membership, if any, and
         satisfies the conditions precedent pursuant to SECTION 4.6 of this
         Agreement.

                  "ENVIRONMENTAL AGREEMENT" means each environmental indemnity
         or similar agreement, executed by Borrower for the benefit of the
         Lender, as any such agreement may be amended, modified, extended,
         renewed, restated, or supplemented from time to time.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974 and the regulations and published interpretations thereunder, as
         in effect from time to time.

                  "EVENT OF DEFAULT" means as defined in SECTION 9.1.

                  "FICO", as defined in SECTION 4.6.



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<PAGE>   8



                  "FINANCIAL COVENANT DEFAULT" means any Event of Default that
         occurs by reason of a breach by Borrower with respect to any of the
         Financial Covenants.

                  "FINANCIAL COVENANTS" means the covenants set forth in 
         ARTICLE 7.

                  "GAAP" means generally accepted accounting principles 
         consistently applied.

                  "GOVERNMENTAL AUTHORITY" or "GOVERNMENTAL AUTHORITIES" means
         any and all governments or courts and/or any and all agencies,
         authorities, bodies, bureaus, departments, or instrumentalities of any
         government.

                  "HARD COSTS" shall mean the hard costs for the construction of
         a Unit and/or development of a Lot as provided in the Unit Budget
         and/or Eligible Lot Budget.

                  "IMPOSITIONS" means any and all of the following:

                           (a) Real property taxes and assessments (general and
                  special) assessed against or imposed upon or in respect of any
                  of the Collateral or the Obligations;

                           (b) Personal property taxes assessed against or
                  imposed upon or in respect of any of the Collateral or the
                  Obligations;

                           (c) Other taxes and assessments of any kind or nature
                  that are assessed or imposed upon or in respect of the
                  Collateral or the Obligations or that may result in a Lien or
                  Encumbrance upon any of the Collateral (including, without
                  limitation, non-governmental assessments, levies, maintenance
                  and other charges whether resulting from covenants,
                  conditions, and restrictions or otherwise, water and sewer
                  rents and charges, assessments on any water stock, utility
                  charges and assessments, and owner association dues, fees, and
                  levies);

                           (d) Taxes or assessments on any of the Collateral in 
                  lieu of or in addition to any of the foregoing;

                           (e) Taxes on income, revenues, rents, issues, and 
                  profits, and franchise taxes;

                           (f) Costs, expenses, and fees arising from or related
                  to any of the Approvals and Permits or the Requirements; and

                           (g) Assessment, documentary, indebtedness, license,
                  stamp, and revenue charges, fees, and taxes and any other fees
                  or taxes imposed on the Lender and measured by or based in
                  whole or in part upon ownership of any Deed of Trust,


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<PAGE>   9



                   interest in Collateral, or any promissory note, guaranty, or
                   indebtedness secured by any Deed of Trust or upon the nature
                   or amount of the Obligations,

         EXCLUDING, HOWEVER, from all of the foregoing any estate, excess
         profits, franchise, income, inheritance, or similar tax levied on the
         Lender.

                  "INTEREST RATE" means the rate of interest as provided in the 
         Note.

                  "INVOLUNTARY LIEN" means any Lien or Encumbrance securing the
         payment of money or the performance of any other obligation created
         involuntarily under any law, ordinance, regulation, or rule, or
         otherwise and any claim of any such Lien or Encumbrance. For purposes
         of the Loan Documents and the rights and remedies thereunder, "stop
         notices" or similar notices and demands from Persons performing work or
         supplying materials with respect to any Collateral and who are
         asserting lien rights, shall be considered as Involuntary Liens.

                  "LATE CHARGES" means the charges described in SECTION 2.4(e).

                  "LIEN OR ENCUMBRANCE" and "LIENS AND ENCUMBRANCES" mean, 
         respectively, each and all of the following:

                           (a) Any lease or other right to use;

                           (b) Any assignment as security, conditional sale,
                  grant in trust, lien, mortgage, pledge, security interest,
                  title retention arrangement, other encumbrance, or other
                  interest or right securing the payment of money or the
                  performance of any other liability or obligation, whether
                  voluntarily or involuntarily created (including, without
                  limitation, Involuntary Liens) and whether arising by
                  agreement, document, or instrument, under any law, ordinance,
                  regulation, or rule (federal, state, or local), or otherwise;
                  and

                           (c) Any option, right of first refusal, or other
                  interest or right.

                  "LOAN" means collectively the Borrowing Base Loan and the 
         Warehouse Loan.

                  "LOAN DOCUMENTS" means this Agreement, the Note, the Deeds of
         Trust, the Pledge Agreement, the Environmental Agreements, the
         Subordination Agreement and any other guaranties, agreements,
         documents, or instruments now or hereafter evidencing, guarantying or
         securing the Obligations and any and all Advances and Protective
         Advances made hereunder, as this Agreement, the Note, the Deeds of
         Trust, the Pledge Agreement, the Environmental Agreements, the
         Subordination Agreement and such other agreements, documents, and
         instruments may be amended, modified, extended, renewed, restated, or
         supplemented from time to time.


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<PAGE>   10



                  "LOAN SALE AGREEMENT" shall mean that certain Loan Sale
         Agreement dated March 20, 1998, by and between Borrower as Seller and
         Lender as Buyer as the same may be amended, supplemented and modified
         from time to time.

                  "LOT" means an individual lot designated as such on a final
         subdivision plat or map, subdivision filing, or condominium declaration
         or plan.

                  "MATERIAL ADVERSE CHANGE" means any significant change in the
         assets, liabilities, financial condition, or results of operations of
         Borrower or any other event or condition with respect to Borrower that
         materially and adversely affects the likelihood of performance by
         Borrower of any of the Obligations, the ability of Borrower to perform
         any of the Obligations, the legality, validity, or binding nature of
         any of the Obligations, or any Lien or Encumbrance securing any of the
         Obligations or the priority of any Lien or Encumbrance securing any of
         the Obligations.

                  "MATURITY DATE" means May 14, 1999.

                  "MAXIMUM ALLOWED BORROWING BASE ADVANCE" means with respect to
         Borrowing Base Advances, the following:

                           (a) With respect to each Presold Unit, the lowest of
                  (i) 80% of the Unit Appraised Value for that Unit, or (ii)
                  100% of the Hard Costs of construction of the Unit plus 50% of
                  the Eligible Lot Collateral Value.

                           (b) With respect to each Spec Unit, the lowest of (i)
                  65% of the Unit Appraised Value for that Unit, or (ii) 100% of
                  the Hard Costs of construction of the Unit plus 50% of the
                  Eligible Lot Collateral Value.

                           (c) With respect to each Eligible Lot, 50% of the
                  Eligible Lot Collateral Value.

                  "MAXIMUM ALLOWED WAREHOUSE ADVANCE" means with respect to
         Warehouse Advances, an amount equal to 100% of the face amount of such
         Eligible Mortgage Loan.

                  "MEMBERSHIP" means the particular membership associated with
         each Lot and Mortgage Loan subject to this Agreement which confers upon
         the Designated Member thereunder specific uses and other privileges in
         the Club, pursuant to the terms of the particular Membership Agreement
         related thereto, the Bylaws of The Desert Mountain Club, and, in the
         case of Deferred Equity Memberships, the July 1, 1994 Deferred Equity
         Membership Plan of The Desert Mountain Club. Any such membership could
         be one of various versions of the non-equity "Regular Membership"
         (having full golf and other use privileges), a "Deferred Equity Club
         Membership" (having social, swim/tennis/fitness and limited golf
         privileges) or a "Deferred Equity Golf Membership" (having full golf
         and other


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<PAGE>   11



         privileges). The type of Membership associated with each Eligible
         Mortgage Loan is identified by a "Mem Type" number on EXHIBIT A,
         attached hereto, which numbers correlate with Borrower's membership
         records.

                  "MEMBERSHIP CONTRIBUTION" means the Membership Contribution
         for a Deferred Equity Golf Membership, as defined in the Deferred
         Equity Membership Plan.


                  "MONETARY DEFAULT" means any Event of Default under SECTION
         9.1(a).

                  "MORTGAGE" means a mortgage or deed of trust in the form
         attached hereto as EXHIBIT B-2 securing a Mortgage Note.

                  "MORTGAGE BORROWER" means a borrower or collectively joint
         borrowers under a Mortgage Note.

                  "MORTGAGE LOAN" means a loan made by Borrower to a party who
         is not an Affiliate of Borrower for the purchase of a Lot in an
         Approved Subdivision for the purpose of construction of a custom home
         thereon, evidenced by a Mortgage Note, and secured by a Mortgage.

                  "MORTGAGE NOTE" means a note in the form attached hereto as
         EXHIBIT B-1, which Mortgage Note is secured by a Mortgage.

                  "MORTGAGE NOTE AMOUNT" means the outstanding unpaid principal
         amount of a Mortgage Note at the time such Mortgage Note is pledged to
         Lender.

                  "NET WORTH", as defined in SECTION 7.1.

                  "NET SALES PROCEEDS" means (i) in the case of a Unit, the
         gross sales price of the Unit (including, without limitation, all
         options, upgrades and change orders) set forth in the Purchase Contract
         for such Unit (expressed in U.S. dollars), less the down payment paid
         pursuant to the Purchase Contract to a maximum of twenty percent (20%)
         of the gross sales price of the Unit; customary tax and assessment
         prorations; reasonable and customary real estate brokerage commissions
         paid to third party brokers who are not Affiliates of Borrower (other
         than Desert Mountain Associates, Inc.); reasonable and customary
         closing costs; pool and landscaping funds submitted to escrow (provided
         such funds are directly released to Lender upon their release from
         escrow) and (ii) in the case of an Eligible Lot, the gross sales price
         of the Lot set forth in the Purchase Contract for such Lot (expressed
         in U.S. dollars), less customary tax and assessment prorations;
         reasonable and customary real estate brokerage commissions paid to
         third party brokers who are not Affiliates of Borrower (other than
         Desert Mountain Associates, Inc.) and; reasonable and customary closing
         costs.



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<PAGE>   12



                  "NOTE" means collectively the Borrowing Base Note and the
         Warehouse Note.

                  "OBLIGATIONS" means the obligations of Borrower under the Loan
         Documents.

                  "OFF-SITE IMPROVEMENTS" means offsite improvements which may
         exist or which are to be constructed (including, without limitation,
         curbs, grading, landscape, sprinklers, storm and sanitary sewers,
         paving, sidewalks, and utilities) necessary to make the land suitable
         for the construction of single family homes or condominiums, and any
         common area improvements which may exist or which are to be
         constructed, together with the associated fixtures and other tangible
         personal property located or used in or on land on which such
         improvements are constructed.

                  "OTHER AMOUNTS" means all amounts, other than principal and
         interest, payable by Borrower under any of the Loan Documents to or for
         the benefit of Lender.

                  "OTHER DEFAULT" means any Event of Default under this
         Agreement or any of the other Loan Documents, other than a Monetary
         Default or a Financial Covenant Default.

                  "OUTSTANDING BORROWINGS", at any time, means the aggregate
         amount of then outstanding Advances and Protective Advances.

                  "PERMITTED EXCEPTIONS" means:

                           (a) Involuntary Liens for Impositions that are not 
                  delinquent;

                           (b) Involuntary Liens (other than for Impositions)
                  with respect to which Borrower satisfies each of the following
                  requirements: (i) Borrower contests the validity of such
                  Involuntary Lien in good faith by appropriate legal
                  proceedings; (ii) Borrower gives written notice to the Lender
                  of Borrower's intent to contest or object to the same; (iii)
                  Borrower demonstrates to the Lender's satisfaction that the
                  procedures will conclusively operate to prevent the sale of
                  any part of the property subject to the applicable Deed of
                  Trust to satisfy the Involuntary Lien prior to final
                  determination of such proceedings; (iv) the aggregate amount
                  of such Involuntary Liens does not exceed $50,000.00 (unless
                  otherwise approved by the Lender and excluding any Involuntary
                  Liens for which Borrower has received a bond); and (v)
                  Borrower takes any and all other actions (including, without
                  limitation, obtaining bonds, title insurance endorsements, or
                  other security) as the Lender may deem reasonably necessary or
                  appropriate in order to prevent the sale of any Collateral to
                  satisfy the Involuntary Lien and prevent any impairment of any
                  such Collateral or, if such Collateral is Eligible Collateral,
                  Borrower removes the affected Collateral from the Eligible
                  Collateral;



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<PAGE>   13



                           (c) All items, except Impositions and Liens and
                  Encumbrances (other than Impositions and Liens and
                  Encumbrances referenced in and permitted by the other
                  subsections of this definition), in Schedule B to any Title
                  Policy that have been approved by the Lender; and

                           (d)      The Crescent Deeds of Trust.

                  "PERSON" means a natural person, a partnership, a joint
         venture, an unincorporated association, a limited liability company, a
         corporation, a trust, any other legal entity, or any Governmental
         Authority.

                  "PLEDGE AGREEMENT" shall mean that certain Pledge Agreement of
         even date herewith by and between Lender and Borrower and as accepted
         by the Servicing Agent.

                  "PRESOLD UNIT" means a Unit that is subject to a Purchase
         Contract.

                  "PROTECTIVE ADVANCE" means amounts advanced by the Lender to
         pay the following amounts:

                           (a) All amounts that are necessary to protect the
                  validity, priority and enforceability of the liens,
                  encumbrances and security interests in favor of the Lender
                  arising pursuant to the Loan Documents (such amounts to
                  include, without limitation, taxes, assessments and other
                  Liens and Encumbrances that may have a priority superior to
                  the priority of the Liens and Encumbrances of the Lender on
                  the Collateral); and

                           (b) All insurance premiums that are necessary to
                  insure the Collateral against loss, damage or destruction
                  pursuant to the requirements of the Loan Documents.

                  "PURCHASE CONTRACT" means a bona fide written agreement
         between Borrower and a purchaser who is not an Affiliate of Borrower
         entered into in the ordinary course of Borrower's business and pursuant
         to which such purchaser has agreed to purchase a Unit, which agreement
         calls for a cash earnest money deposit or down payment of at least
         twenty percent (20%) of the purchase price of the Unit, which is
         nonrefundable except in the event of a default by the Borrower, as
         seller under the agreement.

                  "REGULATORY CHANGE" means any change effective after the date
         of this Agreement in United States federal, state, or foreign law,
         regulations, or rules or the adoption or making after such date of any
         interpretation, directive, or request applying to a class of banks,
         including the Lender, of or under any United States federal, state, or
         foreign law, regulation, or rule (whether or not having the force of
         law) by any court or governmental or monetary


                                       12

<PAGE>   14



         authority charged with the interpretation or administration thereof
         which has a material effect on the rights of Lender under the Loan
         Documents.

                  "REQUIREMENTS" means any and all obligations, other terms and
         conditions, requirements, and restrictions in effect now or in the
         future, of a material nature, by which Borrower or any or all of the
         Collateral are bound or which are otherwise applicable to any or all of
         the Collateral, construction of any Units or Off-Site Improvements, or
         occupancy, operation, ownership, or use of Lots, Units, or Off-Site
         Improvements, including without limitation, such obligations; other
         terms and conditions, restrictions, and requirements imposed by any
         law, ordinance, regulation, or rule (federal, state, or local); any
         Approvals and Permits; any Permitted Exceptions; any condition,
         covenant, restriction, easement, right-of-way, or reservation
         applicable to such Collateral; any insurance policies; any other
         agreement, document, or instrument to which Borrower is a party or by
         which Borrower or any of the Collateral or the business or operations
         of Borrower is bound; or any judgment, order, or decree of any
         arbitrator, other private adjudicator, or Governmental Authority to
         which Borrower is a party or by which Borrower or any of the Collateral
         is bound.

                  "RICO RELATED LAW" means the Racketeer Influenced and Corrupt
         Organizations Act of 1970 and any other federal or state law, for which
         forfeiture of assets is a potential penalty.

                  "SERVICING AGENT" means First American Title Insurance
         Company, as servicing agent for the Mortgage Loans.

                  "SERVICING AGREEMENT" shall mean that certain Servicing
         Agreement by and between Borrower and the Servicing Agreement.

                  "SPEC UNIT" means a Unit constructed for the purpose of
         addition to Borrower's inventory of Units and which is not subject to a
         Purchase Contract.

                  "SUBDIVISION" means a group of Lots marketed and sold together
         regardless of whether dwellings in such group of Lots are to be
         constructed at the same time or in phases.

                  "SUBDIVISION DOCUMENTS" means a plat map or similar document
         covering a Subdivision and dividing the Subdivision into lots in
         accordance with the Requirements of the applicable Governmental
         Authorities.

                  "SUBORDINATION AGREEMENT" shall mean that certain
         subordination agreement by and among, Borrower, Lender and Crescent.

                  "TITLE COMPANY" means a title insurance company that issues a
         Title Policy.



                                       13

<PAGE>   15



                  "TITLE POLICY" and "TITLE POLICIES" mean, respectively, each
         and all title insurance policies and endorsements thereto issued
         pursuant to the requirements of this Agreement and any reinsurance or
         co-insurance agreements and endorsements. Each Title Policy shall be an
         extended coverage American Land Title Association loan policy of title
         insurance (1992 form) with the creditor's rights exception and
         arbitration provisions deleted and with a revolving credit endorsement
         and such other endorsements as the Lender may require.

                  "UNIT" means a residential dwelling constructed or to be
         constructed on a Lot, together with the associated Lot.

                  "UNIT APPRAISAL" means a FNMA/URAR base plan type Appraisal of
         a Unit.

                  "UNIT APPRAISED VALUE" means the value of the Unit (including
         the associated Lot) upon completion, as reasonably determined by the
         Lender after its review of the applicable Unit Appraisal.

                  "UNIT BUDGET" means the amount allocated by Borrower to the
         hard and soft costs associated with the construction of each Unit
         included as Eligible Collateral, as set forth in budgets and cost
         breakdowns delivered to Lender. The Unit Budget will specifically set
         forth the building permit fees, tap fees, impact fees, development
         fees, and other municipal, county, school district, and special
         district fees and assessments required prior to the start of
         construction, and the amount of each Unit Budget will be set forth in
         the Borrowing Base Reconciliation Report. The Unit Budget will be
         subject to review and approval by the Lender.

                  "UNIT COLLATERAL VALUE" means with respect to each Unit, an
         amount equal to the difference between the Unit Appraised Value and the
         Cost to Complete, if any, of the Unit, as reasonably determined by
         Lender.

                  "UNIT ELIGIBILITY DATE" means, with respect to each Unit, the
         date on which that Unit is first included in Eligible Collateral as a
         Unit pursuant to this Agreement, as reflected on the Borrowing Base
         Reconciliation Report, and regardless of whether periods exist during
         which such Unit is not included as Eligible Collateral.

                  "UNMATURED EVENT OF DEFAULT" means any failure by Borrower to
         observe or perform any of Borrower's obligations under any of the Loan
         Documents or any other violation by Borrower of any of the terms and
         conditions of any of the Loan Documents that with notice, passage of
         time, or both would be an Event of Default.

                  "WAREHOUSE ADVANCE" means an advance of Warehouse Loan
         proceeds by the Lender to Borrower hereunder.



                                       14

<PAGE>   16



                  "WAREHOUSE ADVANCE" means the agreement of Lender to make
         Advances on the Warehouse Loan pursuant to the terms and conditions of
         this Agreement.

                  "WAREHOUSE COMMITMENT AMOUNT" means the total maximum amount
         that the Lender is obligated to fund, and that is available at any
         particular time under the Warehouse Loan, under this Agreement. The
         total Warehouse Commitment Amount is $10,000,000.00.

                  "WAREHOUSE LOAN" means the warehousing credit facility made
         available to Borrower in accordance with this Agreement.

                  "WAREHOUSE NOTE" means the promissory note executed by
         Borrower and payable to Lender in the maximum Warehouse Commitment
         Amount, evidencing Borrower's indebtedness hereunder, as such note may
         be amended, modified, extended, renewed, supplemented or restated from
         time to time.


                                    ARTICLE 2
                                 LOAN FACILITIES

         2.1      Borrowing Base Loan Facility.

                  (a) Commitment to Make Borrowing Base Advances. Subject to the
         terms and conditions of this Agreement and from time to time prior to
         the Maturity Date, the Lender agrees to make Borrowing Base Advances to
         Borrower up to the current Available Borrowing Base Commitment as
         determined pursuant to the most current Borrowing Base Reconciliation
         Report.

                  (b) Revolving Nature of Loan Facility. Borrowing Base Advances
         repaid may be re-borrowed on a revolving basis through the Maturity
         Date. Although the outstanding principal of the Borrowing Base Note may
         be zero from time to time, the Loan Documents will remain in full force
         and effect until the Borrowing Base Commitment terminates and all
         Obligations are paid and performed in full. Upon the occurrence of an
         Event of Default, the Lender may suspend or terminate the Borrowing
         Base Commitment. The obligation of Borrower to repay Borrowing Base
         Advances will be evidenced by the Borrowing Base Note.

                  (c) Method for Borrowing Base Advances. Borrowing Base
         Advances may be made by the Lender at the written request of the Person
         or Persons designated by Borrower from time to time on the Lender's
         form of signature authorization; PROVIDED, HOWEVER, that the Lender
         shall have acknowledged receipt of any changes in the Person or Persons
         designated by Borrower, and such Person or Persons designated by
         Borrower will have executed a new signature authorization form. Subject
         to this SECTION 2.1 and the other terms and conditions of this
         Agreement (including those hereinafter set forth), such Person or
         Persons are hereby authorized by Borrower to request Borrowing Base
         Advances up to the


                                       15

<PAGE>   17



         amount of the Available Borrowing Base Commitment less Outstanding
         Borrowings at the time the Borrowing Base Advance is requested
         (determined pursuant to the most recent Borrowing Base Reconciliation
         Report) not more frequently than 2 times per Calendar Month, and to
         direct the disposition of the proceeds of Borrowing Base Advances until
         written notice of the revocation of such authority is received from
         Borrower by the Lender and the Lender has had a reasonable time to act
         upon such notice. The Lender has no duty to monitor for Borrower or to
         report to Borrower the use of proceeds of Borrowing Base Advances.
         Subject to the satisfaction of all applicable terms and conditions,
         including the timely giving by Borrower of a Draw Request, the Lender
         will make the requested advance on or before noon on the borrowing date
         specified in the Draw Request.

                  (d) Use of Borrowing Base Advances. Borrowing Base Advances
         may be used for any general working capital purposes of Borrower,
         PROVIDED, HOWEVER, that the provisions of this SECTION 2.1(b) do not
         restrict the Lender from making Protective Advances as otherwise
         permitted by this Agreement (such as pursuant to SECTION 2.6(d)).

         2.2      Warehouse Advances.

                  (a) Commitment to Make Warehouse Advances. Subject to the
         terms and conditions of this Agreement and from time to time prior to
         the Maturity Date, the Lender agrees to make Warehouse Advances to
         Borrower up to the current Warehouse Commitment. Warehouse Advances
         shall be used by Borrower for general working capital purposes.
         Warehouse Advances shall be made at the request of Borrower, in the
         manner hereinafter provided in this SECTION 2.2, against the pledge of
         such Eligible Mortgage Loans as Collateral therefor. No Warehouse
         Advance shall exceed the Maximum Allowed Warehouse Advance.

                  (b) Revolving Nature of Loan Facility. Warehouse Advances
         repaid may be re-borrowed on a revolving basis through the Maturity
         Date. Although the outstanding principal of the Warehouse Note may be
         zero from time to time, the Loan Documents will remain in full force
         and effect until the Warehouse Commitment terminates and all
         Obligations are paid and performed in full. Upon the occurrence of an
         Event of Default, the Lender may suspend or terminate the Warehouse
         Commitment. The obligation of Borrower to repay Warehouse Advances will
         be evidenced by the Warehouse Note.

                  (c) Use of Warehouse Advances. Subject to the terms and
         conditions of this Agreement and provided no Unmatured Event of Default
         has occurred and is continuing, Lender agrees, from time to time during
         the period from the Effective Date to and including the Maturity Date,
         to make Warehouse Advances to Borrower for the purpose of warehousing
         carry back Mortgage Notes and Mortgages in favor of Borrower until such
         time as the Mortgage Notes and Mortgages meet eligibility requirements
         for purchase by Lender under the Loan Sale Agreement, provided the
         total aggregate principal amount outstanding at any one time of all
         such Warehouse Advances shall not exceed the


                                       16

<PAGE>   18



         Warehouse Commitment Amount. Notwithstanding the foregoing, the amount
         of the Warehouse Commitment and individual Warehouse Advances
         thereunder is subject to SECTION 2.2(d) and SECTION 4.6 hereof. Within
         the Warehouse Commitment, Borrower may borrow, repay and reborrow.

                  (d) Conditions Precedent. The obligation of Lender to make any
         Warehouse Advances is subject to the satisfaction, in the sole
         discretion of Lender, on or before the date of funding of each
         Warehouse Advance, of the following conditions precedent:

                                    (i) Effective Date. All of the conditions
precedent set forth in SECTIONS 4.1 and 4.6 shall have been satisfied.

                                    (ii) No Defaults. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing.

                                    (iii) Accuracy of Representations and
Warranties. All representations and warranties made herein or in any other Loan
Document shall be true and correct as of the date of each such Warehouse Advance
as if made on and as of such date.

                                    (iv) Advance Request. Borrower shall have
executed and delivered to Lender a properly completed and duly executed request
for Warehouse Advance in such form as Lender may require from time to time (an
"Advance Request"). Each Advance Request shall constitute a representation and
warranty by Borrower that (A) each of the conditions precedent to the requested
Warehouse Advance set forth in this SECTION 2.2(d) have been satisfied, (B) all
the Eligible Mortgage Loans included in such Advance Request have closed and
been funded or will be closed and funded simultaneously with the making of the
requested Warehouse Advance and (C) Borrower is in possession of the originals
of all items listed in EXHIBIT C hereto.

                                    (v) Collateral Documents. Borrower shall
have delivered to Lender the documents required in EXHIBIT C hereto under the
heading "Required Deliveries" and, to the extent requested by Lender, those
documents listed in EXHIBIT C under the heading "Other Deliveries"
(collectively, the "Collateral Documents"). Lender shall have the right, on not
less than three (3) Business Days' prior notice to Borrower, as reasonably
required to include different or additional items than those which are listed on
EXHIBIT C hereto to conform to current legal requirements or Lender's practices
and/or to require that items listed under "Other Deliveries" on EXHIBIT C be
made "Required Deliveries".

                           (e) Timing of Warehouse Advance. So long as all
conditions precedent to a Warehouse Advance have been satisfied prior to (i)
10:00 a.m. Phoenix, Arizona time, on any Business Day, if Lender will be wiring
the Warehouse Advances, or (ii) 1:00 p.m. Phoenix, Arizona time, on any Business
Day that Warehouse Advances are made by any method other than wiring, Lender
shall use reasonable efforts to make the Warehouse Advance prior to 5:00 p.m.,
Phoenix, Arizona time, on the same Business Day, and in any event not later than
5:00 p.m.


                                       17

<PAGE>   19



Phoenix, Arizona time on the second Business Day thereafter. If the conditions
precedent to an Warehouse Advance are satisfied after 10:00 a.m. or 1:00 p.m.,
as applicable, Phoenix, Arizona time, on any Business Day, Lender will use
reasonable efforts to make the Warehouse Advance by 5:00 p.m. Phoenix, Arizona
time on the next Business Day, and in any event not later than 5:00 p.m.
Phoenix, Arizona time on the second (2nd) Business Day thereafter.

                           (f) Single Indebtedness. All Warehouse Advances under
this Agreement shall constitute a single indebtedness and all of the Collateral
Documents shall be security for the Warehouse Note and for the performance of
all obligations of Borrower to Lender.



         2.3      Interest Rate Provisions.

                  (a) Pricing. All Advances will bear interest from the date
         advanced at a per annum interest rate determined in accordance with the
         terms of the Note.

                  (b) Default Interest Rate. Principal will bear interest at the
         Interest Rate from the date of disbursement until the due date thereof,
         whether due by acceleration or otherwise. Principal, interest, and
         Other Amounts not paid when due and any judgment therefor will bear
         interest from the due date or the judgment date, as applicable, until
         paid at the Default Interest Rate, and such interest will be
         immediately due and payable. In addition, from and after the occurrence
         and during the continuance of an Event of Default, all principal,
         interest and Other Amounts shall bear interest at the Default Interest
         Rate.

                  (c) Effective Rate. Borrower agrees to pay an effective rate
         of interest that is the sum of (i) the interest rate provided in this
         Agreement and (ii) any additional rate of interest resulting from any
         other charges or fees paid or to be paid in connection herewith that
         are determined to be interest or in the nature of interest.

         2.4      Payments.

                  (a) Required Payments. Accrued and unpaid interest shall be
         due and payable in accordance with the terms of the Note.

                  (b) Making Payments.

                           (i) With respect to the Borrowing Base Loan, Borrower
                  will make each payment hereunder and under the Borrowing Base
                  Note, whether on account of principal, interest, fees or
                  otherwise, without set-off or counterclaim, not later than
                  1:00 p.m. (Phoenix, Arizona time) on the day when due, and in
                  each case such payments will be in U.S. dollars to the Lender
                  and will be at Lender's main office in Phoenix, Arizona or at
                  such other place as Lender may request from time to time.


                                       18

<PAGE>   20



                  Payments received after the required time on a Business Day
                  will be deemed to have been received on the next succeeding
                  Business Day and will bear interest accordingly.

                           (ii) With respect to the Warehouse Loan, Servicing
                  Agent will make each payment hereunder and under the Warehouse
                  Note, whether on account of principal, interest, fees or
                  otherwise, without set-off or counterclaim, not later than
                  1:00 p.m. (Phoenix, Arizona time) on the day when due, and in
                  each case such payments will be in U.S. dollars to the Lender
                  and will be at Lender's main office in Phoenix., Arizona or at
                  such other place as Lender may request from time to time. If
                  payments for a month collected by the Servicing Agent are
                  insufficient to pay the payment due under the Warehouse Note,
                  Borrower shall remit the difference between the amount
                  remitted by the Servicing Agent and the amount due under the
                  Warehouse Note within ten (10) days after the due date.
                  Payments received after the required time on a Business Day
                  will be deemed to have been received on the next succeeding
                  Business Day and will bear interest accordingly.

                  (c) Payment of Net Sales Proceeds. Within 1 Business Day
         following the closing of a sale of a Unit or an Eligible Lot, or within
         1 Business Day following the closing of any other transaction in which
         Borrower is required to pay a release price to the Lender pursuant to
         SECTION 2.8, Borrower will pay or cause to be paid to the Lender, the
         amount required pursuant to SECTION 2.8. If any Net Sales Proceeds or
         other amounts payable to the Lender pursuant to SECTION 2.8 are held by
         any Title Company, escrow agent, or any other Person, Borrower will
         direct such Title Company, escrow agent and other Persons to pay all
         such amounts directly to the Lender and to take all other action
         required by the Lender to cause such amounts to be paid to the Lender.
         If Borrower collects or receives any such amounts, Borrower will
         forthwith, upon receipt, transmit and deliver to the Lender, in the
         form received, all cash, checks, drafts, chattel paper, and other
         instruments or writings for the payment of money (endorsed without
         recourse, where required, so that such items may be collected by the
         Lender). Any such items which may be so received by Borrower will not
         be commingled with any other of Borrower's funds or property, but will
         be held separate and apart from Borrower's own funds or property and
         upon express trust for the Lender until delivery is made to the Lender.

                  (d) Business Days. Whenever any payment hereunder or under the
         Note is due on a day other than a Business Day, such payment will be
         made on the next succeeding Business Day, and such extension of time
         will in such case be included in the computation of interest or fees,
         as the case may be.

                  (e) Late Charges. If any payment of interest, principal, or
         Other Amount required pursuant to any provision of this Agreement is
         not received by the Lender within 10 days after its due date, then, in
         addition to the other rights and remedies of Lender, a late charge of
         5% of the amount due and unpaid, will be charged to Borrower without
         notice to


                                       19

<PAGE>   21



         Borrower. Such late charge will be immediately due and payable and is
         in addition to any other costs, fees, and expenses that Borrower may
         owe as a result of such late payment.

                  (f) Payment at Maturity. On the Maturity Date, Borrower will
         pay to the Lender the unpaid principal, all accrued and unpaid
         interest, and all Other Amounts that are due and unpaid.

         2.5 Prepayments.

                  (a) Prepayments. Borrower may prepay the outstanding principal
         balance hereof in whole or in part at any time prior to the Maturity
         Date without penalty or premium.

         2.6 Fees. As additional consideration for the Borrowing Base Commitment
and the Warehouse Commitment, Borrower agrees to pay the following fees to the
Lender, which fees are earned by the Lender on the date due under the Loan
Documents, are non-refundable to Borrower, and, in the case of payments with
respect to the fees described in SUBSECTION (b), shall be calculated on a pro
rata basis for the period to which such payment relates, for actual days elapsed
(or to elapse) during such period on the basis of a 360-day year and shall be
paid by Borrower to the Lender within 5 days after the Lender gives notice to
Borrower of the amount of fees due (which notice may be given telephonically to
the chief financial officer or treasurer of Borrower, by facsimile or in
writing):

                  (a) Borrowing Base Commitment Fee. A "commitment fee", payable
         on the Closing Date, in the amount of one-quarter of one percent (.25%)
         per annum of the Borrowing Base Commitment Amount.

                  (b) Unused Borrowing Base Commitment Fee. An "unused
         commitment fee" based on an annual rate of one-quarter of one percent
         (.25%), but calculated on a quarterly basis in arrears as of the first
         day of each January, April, July, and October and on the Maturity Date
         or the date upon which the Borrowing Base Commitment is terminated or
         expires, such unused commitment fee to be payable quarterly. For each
         quarter (or portion thereof), the unused commitment fee is equal to (i)
         the Borrowing Base Commitment Amount as in effect at the beginning of
         such quarter; MINUS (ii) the Average Quarterly Outstanding for such
         quarter (or portion thereof) with respect to which the unused
         commitment fee is being computed; with (iii) the resulting number being
         MULTIPLIED BY 0.000625 (that is, one-quarter of the annual unused
         commitment fee rate). As used herein, "AVERAGE QUARTERLY OUTSTANDING"
         means the sum of the Outstanding Borrowings on each day during the
         quarter (or portion thereof) with respect to which the unused
         commitment fee is being computed, divided by the number of days in that
         quarter (or portion thereof). If the unused commitment fee is being
         computed for less than a full quarter, the percentage used in CLAUSE
         (c) above will be computed on a daily basis for the number of days for
         which the fee is being computed.



                                       20

<PAGE>   22



                  (c) Warehouse Commitment Fee. A "commitment fee", payable on
         the Closing Date, in the amount of one-quarter of one percent (.25%)
         per annum of the Warehouse Commitment Amount.


                  (d) Costs and Expenses.

                           (i) Costs and Expenses--Generally. Borrower agrees to
                  pay on demand all reasonable costs, expenses, and fees of the
                  Lender (including, without limitation, reasonable fees and
                  expenses for outside attorneys, consultants and other
                  professional advisers, paralegals, document clerks and
                  specialists, and costs and expenses of appraisals, appraisal
                  review, title review, title insurance, surveys, environmental
                  assessments, environmental testing, environmental cleanup,
                  other inspection, processing, title, filing, and recording
                  costs, expenses, and fees):

                                    (A) In the negotiation, execution, delivery,
                           administration and modification of the Loan
                           Documents, including this Agreement;

                                    (B) In inspecting the Eligible Collateral; 
                           and

                                    (C) Otherwise in relation to the Loan
                           Documents.

                           (ii) Costs and Expenses--After Default. In addition,
                  after the occurrence and during the continuation of an Event
                  of Default, Borrower agrees to pay on demand all reasonable
                  costs, expenses, and fees of the Lender (including, without
                  limitation, fees and expenses for attorneys, consultants and
                  other professional advisors, paralegals, documents clerks and
                  specialists, the allocated costs of in-house legal counsel and
                  other staff, and costs and expenses of market studies,
                  absorption studies, appraisals, appraisal review, title
                  review, title insurance, surveys, environmental assessments,
                  environmental testing, environmental clean-up, and other
                  inspection, processing, title, filing and recording costs,
                  expenses, and fees):

                                    (A) In enforcement of the Loan Documents and
                           exercise of the rights and remedies of the Lender;

                                    (B) In defense of the legality, validity,
                           binding nature, and enforceability of the Loan
                           Documents and the perfection and priority of the
                           Liens and Encumbrances granted in the Loan Documents;

                                    (C) In gaining possession of, holding,
                           repairing, maintaining, preserving, and protecting
                           any Collateral prior to foreclosure;



                                       21

<PAGE>   23



                                    (D) In selling or otherwise disposing of the
                           Collateral prior to foreclosure;

                                    (E) Otherwise in relation to the Loan
                           Documents, the Collateral, or the rights and remedies
                           of the Lender under the Loan Documents or relating to
                           the Collateral after the occurrence and during the
                           continuation of an Event of Default; and

                                    (F) In preparing for the foregoing, whether
                           or not any legal proceeding is brought or other
                           action is taken.

                  Such costs, expenses, and fees will include, without
                  limitation, all such costs, expenses, and fees incurred in
                  connection with any court proceedings (whether at the trial or
                  appellate level).

                  (e) Failure to Pay. If any reasonable costs, expenses and fees
         from time to time due under the Loan Documents are not paid when due
         (or if no time is specified, then within 10 days after written demand
         by the Lender), Borrower agrees to pay interest on such costs,
         expenses, and fees at the Default Interest Rate from the date incurred
         until paid in full. In addition, if such costs, expenses and fees are
         not paid when due (or within such 10-day period, if applicable), the
         Lender shall, to the extent that such Advance will not cause the
         Available Borrowing Base Commitment or the Available Warehouse
         Commitment to be exceeded, as applicable, cause an Advance to be made
         to pay such costs, expenses and fees, whether or not such Advance has
         been requested by Borrower and whether or not the conditions precedent
         to an Advance have been satisfied. If an Advance is made pursuant to
         the immediately preceding sentence, such costs, expenses and fees shall
         be included in such Advance and shall accrue interest at the rates from
         time to time applicable pursuant to this Agreement.

         2.7 Security. Payment of the Note, all indebtedness and liabilities of
Borrower to the Lender, and performance of all Obligations, due or to become
due, under this Agreement and the other Loan Documents shall be secured by the
following:

                  (a)      The Deeds of Trust;

                  (b) such other assignments and security interests as may be
         required or granted pursuant to the terms of the Loan Documents
         including but not limited to a security interest in the following:

                           (i) the Mortgages, the Mortgage Notes and the 
         Servicing Agreement;



                                       22

<PAGE>   24



                           (ii) All cash, payments and prepayments of principal,
         interest, penalties and other income due or to become due in respect of
         the Mortgages and the Mortgage Notes;

                           (iii) All of the right, title and interest of every
         nature whatsoever of Borrower in and to the following:

                                    (1) All rights, liens and security interests
                  existing with respect to, or as security for, the Mortgages or
                  any part thereof;

                                    (2) All hazard and liability insurance
                  policies, title insurance policies, (or any binders or
                  commitments to issue any of such policies) and all
                  condemnation proceeds with respect to or relating to any of
                  the Mortgages;

                                    (3) All other rights and interests of
                  Borrower in respect of the Mortgages.

                           (iv) All files, surveys, certificates,
         correspondence, appraisals, computer programs, tapes, discs, cards,
         accounting records, and other records, information, and data of
         Borrower relating to the Mortgages, including all information, records,
         data, programs, tapes, discs and cards necessary to administer and
         service such Collateral (provided that Borrower may retain or
         subsequently make copies of the foregoing for its use);

                           (v) All personal property, contract rights, accounts
         and general intangibles of whatsoever kind relating to the Mortgages
         and all other documents or instruments delivered to Lender in respect
         of the Mortgages, including, without limitation, the right to receive
         all insurance proceeds and condemnation awards which may be payable in
         respect of the premises encumbered by any Mortgage; and

                           (vi) All proceeds of any of the foregoing.
 .
                  Lender shall have no duty to Borrower or any other Person as
to the collection or protection of Collateral held hereunder or any income
thereon, nor as to the preservation of any rights pertaining thereto, beyond the
reasonable care thereof. Such care as Lender gives to the safekeeping of its own
property of like kind shall constitute reasonable care of Collateral when in
Lender's possession; but Lender is not required to make presentment, demand or
protest, or give notice, and need not take action to preserve any rights against
prior parties, obligors, account debtors, or others, in connection with any
obligation or evidence of indebtedness held as Collateral or in connection with
Borrower's obligations. Notwithstanding any provision hereof to the contrary,
the transmittal and delivery of any Mortgage Notes, Mortgages, Collateral
Documents and other documents or instruments shall be at the sole risk and
expense of Borrower, and Lender shall not be liable or obligated in any respect
in the event of the loss, damage or destruction of any Collateral Documents,
Mortgage Notes, Mortgages, and other documents or instruments, or any


                                       23

<PAGE>   25



delay in the transmission or delivery thereof, except for Lender's gross
negligence or intentional misconduct with respect thereto.


         2.8      Releases of Collateral.

                  (a) Releases of Units and Eligible Lots. Borrower may request
         releases of Eligible Lots and Units from the lien and encumbrance of a
         Deed of Trust from time to time; PROVIDED, HOWEVER, the Lender has no
         obligation to release any Eligible Lot or Unit unless each of the
         following conditions precedent is satisfied:

                           (i)      Generally.

                                    (A) Notification to the Lender. Borrower or
                           the closing agent handling the sale will have
                           notified the Lender in writing of the requested
                           release;

                                    (B) Remargining Payments Required. Borrower
                           will have made all payments required to be made
                           pursuant to SECTION 2.9 after giving effect to such
                           Release;

                                    (C) No Default. No Event of Default and no
                           Unmatured Event of Default shall have occurred and be
                           continuing;

                                    (D) Endorsements. Borrower shall provide the
                           Lender with such endorsements to the Title Policy as
                           the Lender may reasonably request in connection with
                           each release;

                                    (E) Processing/Release Fees. If required by
                           Lender, Borrower shall pay the standard
                           processing/release fees of the Lender and the trustee
                           under the Deed of Trust, in connection with such
                           release; and

                                    (F) Escrow Arrangements. Each release shall
                           be made by the Lender by delivery of the release
                           documents to a title company or other escrow agent
                           satisfactory to the Lender on such conditions as
                           shall assure the Lender that all conditions precedent
                           to such release have been satisfied and that the
                           applicable transaction will be completed.

                           (ii)     Releases of Units.

                                    (A) Releases in the Ordinary Course of
                           Business. With respect to any release of Units, the
                           requested release is for the purpose of sale in the


                                       24

<PAGE>   26



                           ordinary course of Borrower's business to a non-
                           related third party purchaser; and

                                    (B) Payment of Release Price. In connection
                           with the sale of the Unit, Borrower will have paid to
                           the Lender a release price equal to the Net Sales
                           Proceeds.

                           (iii)    Releases of Eligible Lots.

                                    (A) Releases for Custom Lot Sale. With
                           respect to any release of Eligible Lots, the
                           requested release is for the sale to a party who is
                           not an Affiliate of Borrower; and

                                    (B) Payment of Release Price. In connection
                           with the sale of the Eligible Lot, Borrower will have
                           paid to the Lender a release price equal to the Net
                           Sales Proceeds.

                  (b) Releases for Dedications and Similar Purposes. Upon
         written request of Borrower and so long as no Event of Default or
         Unmatured Event of Default has occurred and is continuing and provided
         the Lender shall have approved the request, in the Lender's reasonable
         discretion, Borrower may release from the lien and encumbrance of a
         Deed of Trust such portions of the Collateral as Borrower (i) is
         required to convey to a Governmental Authority or a bona fide public
         utility in connection with the development of an Approved Subdivision
         (such as roads, drainage easements, and utility easements) and for
         which Borrower receives no monetary compensation; or (ii) proposes to
         convey to a homeowners' association or similar Person in connection
         with the development of an Approved Subdivision (such as common areas)
         and for which Borrower receives no monetary compensation. Releases that
         satisfy the requirements of this Section do not require the payment of
         any release price.

                  (c) Adjustment to Borrowing Base. Any Collateral released
         shall no longer be Eligible Collateral and the Collateral Value of
         Eligible Collateral shall be immediately and automatically adjusted to
         reflect such release. An item of Collateral not included as Eligible
         Collateral shall be released by Lender subject to any remargining
         payments required of Borrower as set forth in SECTION 2.9.

                  (d) Return of Collateral at End of Warehouse Commitment. If
         (i) the Warehouse Commitment shall have expired or been terminated and
         (ii) no Warehouse Advances, interest or other amounts evidenced by the
         Note or due under this Agreement shall be outstanding and unpaid,
         Lender shall deliver or release all Collateral Documents in its
         possession. The receipt by Borrower of any Collateral released or
         delivered to Borrower pursuant to any provision of this Agreement shall
         he a complete and full acquittance for the Collateral so returned, and
         Lender shall thereafter be discharged from any liability or
         responsibility therefor.


                                       25

<PAGE>   27




         2.9 Remargining; Principal Payments; Borrowing Base. Anything in the
Loan Documents to the contrary notwithstanding, the total of Outstanding
Borrowings under the Borrowing Base Loan may not at any time exceed the
Available Borrowing Base Commitment, and Borrower shall not be entitled to any
Borrowing Base Advances if the effect thereof would be to cause the Outstanding
Borrowings to exceed the Available Borrowing Base Commitment. If for any reason
at any time the total of Outstanding Borrowings under the Borrowing Base Loan
exceeds the Available Borrowing Base Commitment (including, without limitation,
by reason of Borrowing Base Commitment Amount reductions, changes in Unit
Appraised Values or Eligible Lot Appraised Values, adjustments to the Borrowing
Base or Collateral Value, or otherwise), Borrower will make a principal payment
to the Lender in an amount equal to such excess amount. Each payment pursuant to
this SECTION 2.9 will be due no later than 11:00 a.m. (Phoenix, Arizona time) on
the 5th Business Day after the day upon which the Lender notifies Borrower in
writing that such payment is required.

         2.10 Repayment of Warehouse Loan. Borrower shall be obligated to pay to
Lender, without the necessity of prior demand or notice from Lender, the amount
of any outstanding Warehouse Advance against a specific Eligible Mortgage Loan
as shown on Lender's records, upon the occurrence of any of the following
events:

                  (a) The Collateral Documents, upon examination by Lender, are
         found not to be in compliance with the requirements of this Agreement;

                  (b) If any of the items required to be delivered pursuant to
         EXHIBIT C after a Warehouse Advance are not delivered as and when
         required or if delivered are not in compliance with this Agreement;

                  (c) Five (5) Business Days have elapsed from the date a
         Collateral Document was delivered to Borrower for correction or
         completion, without being returned to Lender;

                  (d) Such Eligible Mortgage Loan is defaulted and remains in
         default for a period of sixty (60) days;

                  (e) If any of the representations and warranties set forth in
         SECTION 5.1(t) with respect to an Eligible Mortgage Loan are untrue or
         incorrect in any material respect; or

                  (f) Upon the sale of such Eligible Mortgage Loan.

         2.11 Remargining; Principal Payments; Warehouse. Anything in the Loan
Documents to the contrary notwithstanding, Borrower shall, upon demand by
Lender, pay to Lender an amount equal to the amount by which total outstanding
Warehouse Advances exceed the lesser (i) the Warehouse Commitment Amount or (ii)
the aggregate outstanding principal balance of all Eligible Mortgage Loans. Each
payment pursuant to this SECTION 2.11 will be due no later than 11:00 a.m.


                                       26

<PAGE>   28



(Phoenix, Arizona time) on the 5th Business Day after the day upon which the
Lender notifies Borrower in writing that such payment is required.

                                    ARTICLE 3
                                 BORROWING BASE

         3.1 Determination of Eligible Collateral/Borrowing Base. Eligible
Collateral in the Borrowing Base will be determined by the Lender from time to
time as set forth in this ARTICLE 3.

         3.2      Additional Limitations on Eligible Collateral.

                  (a) Limitation on Spec Units. Borrower may not include in
         Eligible Collateral more than thirty (30) Spec Units financed under the
         Borrowing Base Commitment.

                  (b) Classification and Reclassification of Units; Adjustment
         of Borrowing Base. The Lender may classify or reclassify Units as to
         type from time to time, or change Borrower's proposed classification of
         any and all Units, PROVIDED that such reclassified Unit meets the
         requirements set forth herein for that type of Unit.

                  (c) Events Affecting Units and Eligible Lots; Exclusions from
         Eligible Collateral. If any Unit or Eligible Lot included in Eligible
         Collateral is materially damaged, destroyed, or becomes subject to any
         condemnation proceeding, such item may be declared by the Lender to no
         longer be Eligible Collateral. In addition, if any such item does not
         continue to meet all the requirements applicable to Eligible
         Collateral, such item will no longer constitute Eligible Collateral.
         Any determination by the Lender, in the reasonable judgment of the
         Lender, as to whether Units or any Eligible Lot constitutes Eligible
         Collateral will be final, conclusive, binding and effective
         immediately.

         3.3 Limitations on Collateral Values. Once the Maximum Allowed
Borrowing Base Advance is initially established for a particular Eligible Lot,
that Maximum Allowed Borrowing Base Advance is subject to either increase or
decrease based on subsequent events, such as updated Appraisals or change
orders. If any of the limitations on Eligible Collateral, Collateral Value,
Outstanding Borrowings, or outstanding Borrowing Base Advances set forth in this
SECTION 3.3 or elsewhere in this Agreement are exceeded, the Lender may at its
option either delete Units and Eligible Lots from Eligible Collateral until such
requirements are met or require Borrower to make a remargining payment pursuant
to SECTION 2.9.

         3.4 Collateral Inventory Report, Collateral Certificate, and Borrowing 
Base Reconciliation Report.

                  (a) Collateral Inventory Report. On or before the day that is
         the 15th day of each Calendar Month, Borrower will prepare and submit
         to the Lender a Collateral Inventory Report for all of the Collateral,
         including for each Unit and Lot in Eligible Collateral, among


                                       27

<PAGE>   29



         other things that Lender may require from time to time, the following:
         (i) the total number, and a description of, the Presold Units, Spec
         Units and Eligible Lots that constitute Eligible Collateral; (ii) the
         name of the Approved Subdivision; (iii) the Lot number as indicated on
         the recorded plat of the Approved Subdivision; (iv) whether the Unit is
         a Presold Unit, a Spec Unit or ineligible collateral; (v) the Unit
         Budget for each plan; (vi) the Eligible Lot Budget, (vii) percentage of
         completion up to the date of the report; (viii) the Unit Appraised
         Value; (ix) the Eligible Lot Appraised Value, (xi) the listing price of
         the Unit or the amount of the Purchase Contract, as applicable; (xii)
         the date of the first Borrowing Base Advance against the Unit or
         Eligible Lot, as applicable, in Eligible Collateral and the applicable
         Unit Eligibility Date or Eligible Lot Eligibility Date for each Unit or
         Eligible Lot; (xiii) the Unit Collateral Value and the Maximum Allowed
         Borrowing Base Advance for the Unit; (xiv) the Eligible Lot Collateral
         Value and the Maximum Allowed Borrowing Base Advance for the Eligible
         Lot, (xv) the amount of Loan proceeds that are available for Borrowing
         Base Advances against each item of Eligible Collateral based on the
         terms of this Agreement; and (xvi) a list of all Collateral that is not
         Eligible Collateral that may be in the Collateral pool. Borrower shall
         not prepare and submit more than one (1) Collateral Inventory Reports
         per Calendar Month.

                  (b) Collateral Certificate. Each Collateral Inventory Report
         will be accompanied by a Collateral Certificate signed by an executive
         officer of Borrower. As the Lender may from time to time request, each
         Collateral Inventory Report shall also be accompanied by such
         certificates and other evidence as the Lender may require to assist the
         Lender in verifying the information therein. Units and Eligible Lots
         may be added as Eligible Collateral only upon receipt of the Collateral
         Inventory Report and Collateral Certificate and upon satisfaction of
         all other provisions of this Agreement. Each Collateral Certificate
         shall be in form and substance satisfactory to the Lender, shall
         contain such certifications as the Lender may require, and shall set
         forth the following:

                           (i) The Eligible Lot Collateral Value for each
                  Eligible Lot that constitutes Eligible Collateral;

                           (ii) The total Collateral Value for the Borrowing
                  Base;

                           (iii) The calculated amount of Collateral Value and
                  usage for all types of Eligible Collateral and a calculation
                  of all applicable limitations; and

                           (iv) A statement that Borrower is in compliance with
                  the terms and conditions of the Loan Documents.

                  (c) Form of Report and Certificate. The Collateral Inventory
         Report and the Collateral Certificate will be in written form and on
         computer disk formatted to the Lender's specifications.



                                       28

<PAGE>   30



                  (d) Borrowing Base Reconciliation Report. The Lender will
         prepare the Borrowing Base Reconciliation Report and determine the
         Borrowing Base, Eligible Collateral, and the Collateral Value of the
         Borrowing Base (and all other amounts and items relating thereto) based
         upon (i) the Collateral Inventory Report and Collateral Certificate
         most recently submitted by Borrower; (ii) the Lender's inspections made
         pursuant to SECTION 6.12 (as such inspections may result in any
         adjustments to reflect any variance between the Borrowing Base
         Reconciliation Report and/or the Collateral Inventory Report and the
         results of such inspections by the Lender); and (iii) such other
         information as the Lender may reasonably require in order to verify the
         Borrowing Base, Eligible Collateral, the Collateral Value of the
         Borrowing Base, and all other amounts and items relating thereto. The
         Borrowing Base Reconciliation Report will also take into account the
         sale of Units and all other adjustments and limitations permitted or
         required by this Agreement. Each determination by the Lender, in its
         reasonable judgment, of the Borrowing Base, Eligible Collateral and the
         Collateral Value of the Borrowing Base, and each determination by the
         Lender, in its reasonable judgment, as to the amount of any Borrowing
         Base Advance to which Borrower is entitled, based on the information in
         the Borrowing Base Reconciliation Report (and all other amounts and
         items entering into such determinations), will be final, conclusive and
         binding upon Borrower. The Lender will provide a copy of each Borrowing
         Base Reconciliation Report to Borrower within 5 Business Days of
         receipt of the Collateral Inventory Report and accompanying Collateral
         Certificate.

         3.5 General. Anything in this ARTICLE 3 or the Loan Documents to the
contrary notwithstanding, Borrower agrees that no limitation on any Advances
specified herein will limit or otherwise change Borrower's obligations and
liabilities under this Agreement, that Borrower will remain obligated to pay all
costs, expenses, and fees required to be paid by Borrower pursuant to this
Agreement and the other Loan Documents, and that Borrower will remain obligated
to pay all costs, expenses, and fees now or hereafter arising in connection with
acquisition, development, maintenance, occupancy, operation, and use of the
Collateral.

         3.6 Appraisals.

                  (a) Appraisal Requirements. The form and substance of each 
         Appraisal must be reasonably satisfactory to the Lender.

                  (b) Appraiser Engagement. Each Appraisal must be prepared by
         an appraiser selected and engaged by the Lender. Borrower will notify
         the Lender in writing that Borrower desires to obtain approval of a
         Subdivision or include a Unit or an Eligible Lot in Eligible Collateral
         for which no Appraisal then exists and will provide to the Lender all
         information necessary to allow an Appraisal to be ordered by the
         Lender. The Lender will engage an appraiser to perform an Appraisal
         only when it receives all information deemed necessary by the Lender
         and the appraiser for preparation of such Appraisal. Lender will have
         no liability to Borrower or any other Person with respect to delays in
         the Appraisal


                                       29

<PAGE>   31



         process. The Lender may employ a staff appraiser or a fee appraiser and
         Borrower will reimburse the Lender at the Lender's reasonable cost
         therefor.

                  (c) Appraisal Evaluation. Upon receipt of an Appraisal, the
         Lender will review the Appraisal and establish a Unit Appraised Value
         or a Eligible Lot Appraised Value, as applicable. The Lender will
         notify Borrower of such Unit Appraised Value or Eligible Lot Appraised
         Value and deliver to Borrower a copy of each Appraisal upon receipt.

                  (d) Additional Appraisals. Notwithstanding anything in this
         SECTION 3.6 to the contrary, the Lender may order updated Appraisals at
         the sole cost and expense of Borrower (i) if such Appraisals are
         required by any laws, rules, regulations, or generally applicable
         lending procedures; (ii) if the Lender determines in its reasonable
         discretion that there has occurred or is occurring a general
         deterioration in market conditions affecting any Approved Subdivision;
         (iii) upon the failure of Borrower to meet any absorption assumptions
         in an existing Appraisal; or (iv) with respect to Eligible Collateral,
         annually after receipt of the original Appraisal, in the sole and
         absolute discretion of the Lender. Any required adjustments to the Unit
         Collateral Value or the Eligible Lot Collateral Value as a result of
         such updated Appraisals will be made effective upon 30 days written
         notice from the Lender to Borrower setting forth the adjusted Unit
         Appraised Values or Eligible Lot Appraised Values based on the Lender's
         review of such reappraisals or valuations.

                  (e) Expenses. Borrower will reimburse the Lender for all
         reasonable costs and expenses incurred in the appraisal process and in
         establishing and monitoring appraised values. All reimbursement of
         Borrower to the Lender required by this SECTION 3.6 will be paid to the
         Lender within 15 days after notice from the Lender to Borrower.

                                    ARTICLE 4
                              CONDITIONS PRECEDENT

         4.1 Conditions Precedent to Effectiveness of this Agreement. This
Agreement will become effective only upon satisfaction of the following
conditions precedent, in each case as determined by the Lender in its sole and
absolute discretion. If the conditions precedent are not satisfied (or waived by
the Lender) on or before such deadline, the Lender may cancel this Agreement
upon written notice to Borrower. The conditions precedent to be satisfied are as
follows:

                  (a) Representations and Warranties Accurate. The
         representations and warranties by Borrower in the Loan Documents are
         correct on and as of the date of this Agreement and as of the Effective
         Date, as though made on and as of each such date.

                  (b) No Defaults. As of the date of this Agreement and as of
         the Effective Date, no Event of Default or Unmatured Event of Default
         will have occurred and be continuing, and Borrower will be in
         compliance with the Financial Covenants set forth in this Agreement.


                                       30

<PAGE>   32



                  (c) Borrower's Financial Condition. The Lender will be
         satisfied, in its sole and absolute discretion, with its review and
         analysis of the financial condition of Borrower as of the Effective
         Date.

                  (d) Documents. The Lender will have received the following
         agreements, documents, and instruments, each duly executed by the
         parties thereto and in form and substance satisfactory to the Lender
         and its legal counsel, in their absolute and sole discretion:

                           (i) Loan Documents. This Agreement and such
                  amendments, ratifications, and confirmations of the other Loan
                  Documents as the Lender may require in its sole discretion.

                           (ii) Partnership Documents. A partnership certificate
                  authorizing the general partner of Borrower to execute,
                  deliver, and perform its obligations under this Agreement and
                  the other documents to be executed and delivered by Borrower
                  in connection herewith and ratifying and confirming the Liens
                  and Encumbrances of the Lender on the Collateral.

                           (iii) Contracts. Copies of all construction contracts
                  entered into by Borrower executed in connection with the
                  construction of the Approved Subdivisions and the Lots and
                  Units therein.

                  (e) Other Items or Actions by Borrower. The Lender will have
         received such other agreements, documents, certificates (including
         bring-down certificates), and instruments, and Borrower will have
         performed such other actions, as the Lender may reasonably require.

                  (f) Payment of Costs, Expenses and Fees. All costs, expenses
         and fees to be paid by Borrower under the Loan Documents on or before
         the Effective Date will have been paid in full, including, without
         limitation, the applicable fees set forth or referenced in SECTION 2.6.

         4.2 Approval of Subdivisions. Approved Subdivisions as of the date
hereof are listed on EXHIBIT D attached hereto and incorporated herein by
reference. Borrower may, from time to time, request Lender to approve
Subdivisions pursuant to this SECTION 4.2. Approval of new Subdivisions shall be
at the sole and absolute discretion of the Lender, and the Lender shall have no
obligation to approve such Subdivisions. In any event, the Lender will only
consider approval of Subdivisions located in "Desert Mountain". When requesting
consideration of a new Subdivision, Borrower, at Borrower's sole cost and
expense, shall deliver to the Lender each of the following items, unless
otherwise directed by Lender, and shall satisfy the following conditions
precedent, unless otherwise waived by Lender (each of which items must be
satisfactory to the Lender in its reasonable discretion


                                       31

<PAGE>   33



and each of which conditions precedent must be satisfied, as determined by the
Lender in its reasonable discretion, at all times that such Subdivision is
considered an Approved Subdivision.

                  (a) Request. Borrower shall have submitted to the Lender a
         request in form satisfactory to the Lender for approval of such
         Subdivision.

                  (b) Representations and Warranties Accurate. The
         representations and warranties by Borrower in the Loan Documents are
         correct in all material respects.

                  (c) No Defaults. No Event of Default or Unmatured Event of
         Default shall have occurred and be continuing.

                  (d) Ownership. Borrower shall be the owner of the Subdivision,
         subject only to Permitted Exceptions.

                  (e) Proposed Development. To the extent not included in the
         other items to be provided pursuant to this SECTION 4.2, Borrower shall
         have submitted to the Lender budgets, feasibility studies (if
         available), environmental and engineering reports and studies, proforma
         financial statements, income projections, development schedules and
         other information as the Lender may require to establish that the
         development of Lots and/or the construction and sale of Units on Lots
         in the Subdivision and the estimated costs, expenses and profits
         acceptable to the Lender in its sole and absolute discretion.

                  (f) Plat. Borrower shall have delivered to the Lender a
         preliminary parcel map, preliminary plat or survey of the Subdivision.

                  (g) Zoning Approvals. Borrower shall have provided to the
         Lender evidence that the Subdivision is subject to vested zoning
         consistent with its proposed uses.

                  (h) Preliminary Title Commitment. Borrower shall have provided
         to the Lender a preliminary title commitment for the Subdivision,
         prepared by the Title Company, together with a legible copy of each
         Schedule B item.

                  (i) Environmental Assessment. Borrower shall have delivered to
         the Lender a report of an environmental assessment which includes the
         Subdivision addressed to the Lender by an environmental engineer
         acceptable to the Lender containing such information, results, and
         certifications as are required by the Lender. Depending upon the
         results of the environmental assessment, Borrower will also provide
         such follow up testing, reports, and other actions as may be required
         by the Lender. The contents of the environmental assessment report and
         any follow up must be satisfactory to the Lender, in its sole and
         absolute discretion.



                                       32

<PAGE>   34



                  (j) Soils Tests. Borrower shall have provided the Lender a
         soils compaction test report for the Subdivision prepared by a licensed
         soils engineer reasonably satisfactory to the Lender showing the
         locations of, and containing boring logs for, all borings in the same
         form as those previously delivered to the Lender in connection with
         existing Approved Subdivisions.

                  (k) Marketing Information. Borrower shall have provided the
         Lender marketing information with respect to the Lots and Units to be
         developed in the Subdivision, including, to the extent available, floor
         plans, square footage, anticipated absorption, estimated Unit mix, Unit
         cost breakdowns, subdivision pro formas and anticipated gross margins.

                  (l) Budgets. Borrower shall have provided the Lender a budget
         and pro forma cash flow for the Subdivision and providing detail
         regarding projected sales revenues, hard and soft costs of
         construction, allocated overhead, and projected gross profit margins,
         with the budget, projected sales revenues, profit margins, and other
         financial and economic aspects of the proposed Project.

                  (m) Other. Borrower shall have provided the Lender such other
         documents and information as the Lender may reasonably request.

         4.3 Qualification of Eligible Lots as Eligible Collateral. Eligible
Lots as of the date hereof are listed on the EXHIBIT E attached hereto and
incorporated herein by reference. Borrower may, from time to time, request the
Lender to approve an Eligible Lot as Eligible Collateral. Lender is under no
obligation to accept into Eligible Collateral any Eligible Lot proposed by
Borrower more frequently than twice in each Calendar Month. When requesting
consideration of a new Eligible Lot, Borrower, at Borrower's sole cost and
expense, shall deliver to the Lender each of the following items. Each of the
items required by this Section must be satisfactory to the Lender in its sole
and absolute discretion and each of the conditions precedent required to be
satisfied pursuant to this Section must be satisfied, as determined by the
Lender in its sole and absolute discretion, at all times that such Eligible Lot
is included as Eligible Collateral:

                  (a)      Eligible Lots in General.

                           (i) All of the conditions precedent in SECTION 4.2
                  have been and continue to be satisfied.

                           (ii) Either (A) all Off-Site Improvements in the
                  Subdivision are fully and finally completed, all dedications
                  have occurred, all governmental acceptances and approvals have
                  been obtained and are in full force and effect in order to
                  permit the immediate construction and sale of Units within the
                  Subdivision; or (B) to the extent that such Off-Site
                  Improvements have not been completed within the Subdivision
                  and will have received such assurances as the Lender
                  reasonably requests with


                                       33

<PAGE>   35



                  respect to the completion of such offsite improvements (which
                  may include without limitation, payment and performance bonds
                  covering such completion).

                  (b) Limitations. After giving effect to the addition of such
         Lots to Eligible Collateral as an Eligible Lot, the limitations and
         restrictions on Eligible Collateral in ARTICLE 3 are not violated.

         4.4 Qualification of Units as Eligible Collateral. Borrower may, from
time to time, request the Lender to approve a Unit as Eligible Collateral.
Lender is under no obligation to accept into Eligible Collateral any Units
proposed by Borrower more frequently than twice in each Calendar Month. When
requesting consideration of a new Unit, Borrower, at Borrower's sole cost and
expense, shall deliver to the Lender each of the following items. Each of the
items required by this Section must be satisfactory to the Lender in its
reasonable discretion and each of the conditions precedent required to be
satisfied pursuant to this Section must be satisfied, as determined by the
Lender in its reasonable discretion, at all times that such Unit is included in
Eligible Collateral:

                  (a) Inclusion in an Approved Subdivision. Such Lot is legally
         described as a Lot on a final subdivision plat or map or subdivision
         filing.

                  (b) Documents. Except to the extent already provided in the
         information submitted to and approved by the Lender pursuant to
         SECTIONS 4.2 or 4.3, to the extent applicable (unless there has been a
         material change in such information), Lender shall have received the
         following agreements, documents, and instruments, each duly executed by
         the parties thereto:

                           (i) Approvals. If requested by the Lender, evidence
                  of all approvals of Governmental Authorities and other third
                  parties necessary to permit the construction and sale of the
                  Unit, including, without limitation, all applicable public
                  reports, architectural committee approvals, and any other
                  approvals required under the CC&Rs.

                           (ii) Contracts for Unit Construction. If requested by
                  the Lender, copies of all executed contracts between Borrower
                  and any other Person (including, without limitation, the
                  architect and each contractor or subcontractor for labor,
                  materials, or services) relating to design and construction of
                  Units within the Subdivision.

                           (iii) Final CC&Rs. Copies of the final CC&Rs for the
                  Approved Subdivision.

                           (iv) Purchase Contract. If such Unit is a Presold
                  Unit and if requested by the Lender, a copy of the fully
                  executed Purchase Contract for such Unit.

                           (v) Unit Appraisal. A Unit Appraisal for the Unit in
                  question.


                                       34

<PAGE>   36



                           (vi) Unit Budget. A Unit Budget for the Unit in
                  question.

                           (vii) Unit Plans and Specifications. Unit Plans and
                  Specifications for the Unit in question.

                           (viii) Deed of Trust. If the Lot on which the Unit is
                  to be constructed has not previously been encumbered by a Deed
                  of Trust, a first lien Deed of Trust, subject only to
                  Permitted Exceptions, duly executed, acknowledged, delivered
                  and recorded.

                           (ix) Impositions, Assessments, and Charges. Borrower
                  shall have provided the Lender with evidence that all
                  Impositions and water, sewer, and other charges assessed
                  against the Unit which are then due and payable have been paid
                  in the amount required unless the Lender is able to verify
                  such information from other sources of information reasonably
                  available to the Lender.

                           (x) Completion of Filings and Recordings. Evidence of
                  the completion of all recordings and filings to establish or
                  maintain the perfection and priority of the Liens and
                  Encumbrances on such Unit granted in the Loan Documents.

                           (xi) Title Insurance. If the Unit has not previously
                  been encumbered by a Deed of Trust, (A) a new Title Policy or
                  (B) an endorsement to an existing Title Policy issued by a
                  Title Company and in form satisfactory to the Lender. Such
                  policy or endorsement will provide coverage (including without
                  limitation, mechanic's lien coverage) satisfactory to the
                  Lender and insure the Lender's interest under the applicable
                  Deed of Trust as a valid first lien on the property encumbered
                  by the Deed of Trust, subject only to Permitted Exceptions. If
                  the Unit has previously been encumbered by an insured Deed of
                  Trust, Borrower will have provided an endorsement to such
                  Title Policy, in form satisfactory to the Lender, eliminating
                  any Schedule B items that are not Permitted Exceptions with
                  respect to Units included in Eligible Collateral.

                  (c) Distressed Improvement Districts. Any improvement or
         assessment district in which the Unit is located is not insolvent under
         applicable law or subject to any bankruptcy or similar proceedings if
         such situation, in the reasonable opinion of the Lender, would have a
         material adverse impact on development of Units or directly or
         indirectly cause the Approved Subdivision in which the Unit is to be
         built to be subject to any suspension, disqualification, or disapproval
         by FHA, FNMA, VA, FHLMC, or any similar governmental or
         quasi-governmental agency that originates, purchases, insures or
         guarantees home mortgage loans, if the Approved Subdivision has been
         qualified with any such agency and Units in the Approved Subdivision
         are proposed to be sold with the benefits of such qualification.



                                       35

<PAGE>   37



                  (d) Limitations. After giving effect to the addition of such
         Unit to Eligible Collateral, the limitations and restrictions on
         Eligible Collateral in ARTICLE 3 are not violated.

                  (e) Other Items. Borrower shall have provided to the Lender
         such other agreements, documents, and instruments as the Lender may
         reasonably request.

                  (f) Other Actions. Borrower shall have performed such other
         actions as the Lender may reasonably request.

         4.5 Additional Conditions Precedent to All Borrowing Base Borrowing
Base Advances Against Eligible Collateral. Notwithstanding the other provisions
of this ARTICLE 4, the Lender will only be obligated to make Borrowing Base
Advances against Eligible Collateral if Borrower, at Borrower's sole cost and
expense, shall have delivered to the Lender each of the following items. Each of
the items required by this Section must be satisfactory to the Lender in its
reasonable discretion and each of the conditions precedent required to be
satisfied pursuant to this Section must be satisfied, as determined by the
Lender in its reasonable discretion:

                  (a) Representations and Warranties Accurate. The
         representations and warranties by Borrower to Lender shall be correct
         in all material respects on and as of the date of such Borrowing Base
         Advance, both before and after giving effect to such Borrowing Base
         Advance, other than matters disclosed by Borrower to the Lender and
         approved by all the Lender in its absolute and sole discretion.

                  (b) Defaults. No Event of Default or Unmatured Event of
         Default shall have occurred and be continuing on the date of such
         Borrowing Base Advance, both before and after giving effect thereto.

                  (c) Subordination Agreement. Borrower shall have delivered the
         executed Subordination Agreement in form and substance satisfactory to
         Lender.

                  (d) Other Conditions Precedent. Borrower shall have satisfied
         all conditions precedent in SECTIONS 4.1, 4.2, 4.3, and 4.4, as
         applicable.

                  (e) Inspection Report. The Lender shall not have received
         written evidence from the Lender's inspectors or from the Lender's
         employees performing inspections for the Lender (i) that construction
         of any Unit constituting Eligible Collateral does not comply with the
         respective Unit Plans and Specifications in all material respects; and
         (ii) that Borrower has not completed each such Unit to the stage
         reported on the most recent Borrowing Base Reconciliation Report
         received by the Lender.

                  (f) Lien Waivers. If requested by the Lender, Borrower shall
         have provided the Lender with invoices and vouchers for the work for
         which the Borrowing Base Advance is requested and lien waivers for all
         work covered by prior Borrowing Base Advances. Such


                                       36

<PAGE>   38



         lien waivers may be conditional, so long as the only condition is
         receipt of payment for the work and Borrower includes with the
         conditional lien waiver a copy of the canceled check for payment or
         other evidence of payment.

                  (g) Approvals and Inspections by Governmental Authorities. If
         requested by the Lender, all inspections and approvals by Governmental
         Authorities required for the stage of completion of each Unit shall
         have been obtained and the Lender shall have received satisfactory
         evidence thereof or will have been provided access thereto satisfactory
         to the Lender, or shall have obtained such evidence upon inspection of
         the Approved Subdivision.

                  (h) Payment of Costs, Expenses, and Fees. All costs, expenses,
         and fees due to be paid by Borrower on or before the date of the
         Borrowing Base Advance under the Loan Documents shall have been paid in
         full.

                  (i) Draw Request. Borrower shall have delivered to the Lender
         a Draw Request for such Borrowing Base Advance.

                  (j) Limit on Total Outstanding. After giving effect to the
         requested Borrowing Base Advance, the Outstanding Borrowings shall not
         exceed the Available Borrowing Base Commitment and no remargining
         payment shall be required under SECTION 2.9.

         4.6 Additional Conditions Precedent to All Warehouse Advances Against
Eligible Mortgages. Notwithstanding the other provisions of this ARTICLE 4 and
in addition to the Requirements of SECTION 2.2(d), the Lender will only be
obligated to make Warehouse Advances against Eligible Mortgages if Borrower, at
Borrower's sole cost and expense, shall have delivered to the Lender each of the
following items. Each of the items required by this Section must be satisfactory
to the Lender in its sole and absolute discretion and each of the conditions
precedent required to be satisfied pursuant to this Section must be satisfied,
as determined by the Lender in its sole and absolute discretion:

                  (a) Mortgage Loan Criteria. Each Mortgage Loan must be (i) for
         not more than a ten (10) year term, (ii) with not less than a twenty
         percent (20%) downpayment and(iii) with principal and interest payments
         due not less frequently than quarterly.

                  (b) Credit Application. For each Eligible Mortgage Loan
         applied for after January 1, 1998, Lender must have received a
         substantially completed HUD 1003 application form in all material
         respects, acceptable to Lender.

                  (c) Default under Sale Agreement. There shall be no breach or
         default of a material nature by Borrower under the terms and conditions
         of the Loan Sale Agreement, nor the existence of any event which with
         the giving of notice or the passage of time would give rise to a breach
         and default thereunder.



                                       37

<PAGE>   39



                  (d) Other Conditions Precedent. Borrower shall have satisfied
         all conditions precedent in SECTIONS 4.1, 4.2, 4.3, 4.4 and 4.5, as
         applicable.

                  (e) Lender's Right to Lend. Notwithstanding anything contained
         herein to the contrary, Lender, in its sole and absolute discretion,
         may decide to accept Mortgage Loans as Collateral which do not satisfy
         any of the foregoing conditions precedent set forth in this Article, on
         a case by case basis, and make Warehouse Advances against such Mortgage
         Loans.

         4.7 Verification and Other Matters Relating to Conditions Precedent .
Borrower authorizes the Lender and the Lender reserves the right, in its
absolute and sole discretion, to verify any documents and information submitted
to it in connection with this Agreement. Delay or failure by the Lender to
insist on satisfaction of any condition precedent will not be a waiver of such
condition precedent or any other condition precedent. The making of an Advance
by the Lender will not be deemed a waiver by the Lender of the occurrence of an
Event of Default or an Unmatured Event of Default.

                                    ARTICLE 5
                     BORROWER REPRESENTATIONS AND WARRANTIES

         5.1 Representations and Warranties. Borrower represents and warrants to
the Lender as of the Effective Date and as of the various other dates specified
in this Agreement on which such representations and warranties are to be
accurate, complete, and correct the following:

                  (a) Partnership Authorization. Borrower is a Delaware limited
         partnership validly existing and in good standing under the laws of
         Delaware and qualified to do business in the state of Arizona and each
         other state in which Borrower conducts business, and Borrower has the
         requisite power and authority to execute, deliver, and perform the Loan
         Documents. The execution, delivery, and performance by Borrower of the
         Loan Documents have been duly authorized by all requisite action by
         Borrower and do not conflict with, or result in a violation of or a
         default under the certificate partnership or Partnership Agreement of
         Borrower. Borrower's headquarters and principal place of business is
         presently located in Scottsdale, Arizona. Borrower has all requisite
         power and authority to own its assets and to carry on its business.

                  (b) No Approvals, etc. No approval, authorization, bond,
         consent, certificate, franchise, license, permit, registration,
         qualification, or other action or grant by or filing with any
         Governmental Authority or other Person is required (which has not been
         obtained) in connection with the execution, delivery, or performance
         (other than performance which is not yet due) by Borrower of the Loan
         Documents.

                  (c) No Conflicts. The execution, delivery, and performance by
         Borrower of the Loan Documents will not conflict with, or result in a
         violation of or a default under, (i) any


                                       38

<PAGE>   40



         applicable law, ordinance, regulation, or rule (federal, state, or
         local); (ii) any judgment, order, or decree of any arbitrator, other
         private adjudicator, or Governmental Authority to which Borrower is a
         party or by which Borrower or any of the assets of Borrower is bound;
         (iii) any of the Approvals and Permits; or (iv) any agreement,
         document, or instrument to which Borrower is a party or by which
         Borrower or any of the assets of Borrower is bound.

                  (d) Execution and Delivery and Binding Nature of Borrower Loan
         Documents. The Loan Documents have been duly executed and delivered by
         or on behalf of Borrower. The Loan Documents are legal, valid, and
         binding obligations of Borrower, enforceable in accordance with their
         terms against Borrower, except as such enforceability may be limited by
         bankruptcy, insolvency, moratorium, reorganization, or similar laws and
         by equitable principles of general application.

                  (e) Accurate Information. To the best of Borrower's knowledge,
         all information in any loan application, financial statement (other
         than financial projections), certificate, or other document, and all
         other information delivered by or on behalf of Borrower to the Lender
         in connection with this transaction is correct and complete in all
         material respects as of the date thereof, and there are no omissions
         from any such information that result in any such information being
         materially incomplete, incorrect, or misleading as of the date thereof.
         Borrower has no knowledge of any material change in any such
         information. All financial statements (other than financial
         projections) heretofore delivered to the Lender by Borrower were
         prepared in accordance with the requirements in SECTION 6.4 and
         accurately present the financial conditions and results of operations
         as at the dates thereof and for the periods covered thereby in all
         material respects. All financial projections have been and will be
         prepared in accordance with the requirements of this Agreement, will be
         complete in all material respects as of the date thereof, and will be
         based on Borrower's best good faith estimates, compiled and prepared
         with due diligence, of the matters set forth therein. Since the
         Effective Date, no Material Adverse Change has occurred.

                  (f) Purpose of Advances. The purpose of each Advance is as set
         forth in SECTIONS 2.1(d) and 2.2(c). The purpose of Advances is a
         business purpose and not a personal, family, or household purpose.

                  (g) Legal Proceedings, Hearings, Inquiries, and
         Investigations. Except as disclosed to the Lender in writing:

                           (i) No legal proceeding, individually or in the
                  aggregate with related proceedings, involving a sum of
                  $250,000 or more, is pending or, to best knowledge of
                  Borrower, threatened before any arbitrator, other private
                  adjudicator, or Governmental Authority to which Borrower is a
                  party or by which Borrower or any assets of Borrower may be
                  bound or affected that if resolved adversely to Borrower could
                  result in a Material Adverse Change;



                                       39

<PAGE>   41



                           (ii) No hearing, inquiry, or investigation relating
                  to Borrower or any assets of Borrower is pending or, to the
                  best knowledge of Borrower, threatened by any Governmental
                  Authority that if resolved adversely to Borrower could result
                  in a Material Adverse Change; and

                           (iii) There are no suits, actions or proceedings
                  pending or threatened against Borrower or Affiliates of
                  Borrower under any RICO Related Law that would have a material
                  adverse effect on Borrower.

                  (h) No Event of Default or Unmatured Event of Default;
         Financial Covenant Compliance. No Event of Default and no Unmatured
         Event of Default has occurred and is continuing. Borrower is in
         compliance with each of the Financial Covenants as set forth in this
         Agreement.

                  (i) Approvals and Permits; Assets and Property. Borrower has
         obtained and there are in full force and effect all Approvals and
         Permits presently necessary for the conduct of the business of
         Borrower, and Borrower owns, leases, licenses or otherwise has rights
         to all assets necessary for conduct of the business and operations of
         Borrower, except as otherwise permitted pursuant to this Agreement,
         except for any failure to obtain and maintain in full force and effect
         any Approval or Permit or any failure to own, lease or license such
         assets that would not, individually or in the aggregate, (i) be
         materially adverse to the business, properties, assets, operations or
         condition (financial or otherwise) of Borrower or (ii) materially and
         adversely affect any Units, Lots or other property that is at any time
         included as Eligible Collateral. The assets of Borrower are not subject
         to any Liens and Encumbrances, other than (A) the Liens and
         Encumbrances created pursuant to this Agreement; (B) the Permitted
         Exceptions with respect to property encumbered by a Deed of Trust; and
         (C) with respect to other assets of Borrower that are not encumbered by
         a Deed of Trust, Liens and Encumbrances that have been taken into
         account in the preparation of financial statements and reports of
         Borrower delivered to the Lender. To the extent Borrower makes or
         intends to make sales of Units prior to the issuance of any applicable
         public reports, Borrower has, and will at all times maintain, all
         special exemption orders and other approvals and permits that are
         necessary or appropriate.

                  (j) Impositions. Except as otherwise permitted pursuant to
         SECTION 6.6, Borrower has filed or caused to be filed all tax returns
         (federal, state, and local) required to be filed by Borrower and has
         paid all Impositions and other amounts shown thereon to be due
         (including, without limitation, any interest or penalties) except for
         any failure to so file or to so pay that would not, individually or in
         the aggregate, be materially adverse to the business properties,
         assets, operations or condition (financial or otherwise) of Borrower.



                                       40

<PAGE>   42



                  (k)      ERISA.

                           (i) Neither the execution and delivery of this
                  Agreement by Borrower, the borrowings hereunder, the
                  performance by Borrower of the Obligations nor the
                  consummation of any of the other transactions contemplated by
                  this Agreement constitutes or will constitute a "prohibited
                  transaction" within the meaning of Section 4975 of the Code or
                  Section 406 of ERISA. Borrower has delivered to the Lender a
                  complete and correct list of any "employee benefit plan"
                  (within the meaning of Section 3(3) of ERISA) (a "PLAN").

                           (ii) Each Plan is in compliance in all material
                  respects with applicable provisions of ERISA, the Code and
                  applicable foreign law. The Borrower has made all
                  contributions to the Plans required to be made by it.

                           (iii) Except for liabilities to make contributions
                  and to pay Pension Benefit Guaranty Corporation (or any
                  successor thereto) ("PBGC") premiums and administrative costs,
                  Borrower has not incurred any material liability to or on
                  account of any Plan under applicable provisions of ERISA, the
                  Code or applicable foreign law, and no condition exists which
                  presents a material risk to Borrower of incurring any such
                  liability. No domestic Plan has an "accumulated funding
                  deficiency" (within the meaning of Section 412 of the Code),
                  whether or not waived, and no foreign Plan is in violation of
                  any funding requirements imposed by applicable foreign law.
                  None of Borrower, the PBGC or any other Person has instituted
                  any proceedings or taken any other action to terminate any
                  Plan.

                           (iv) The actuarial present value of all accrued
                  benefit liabilities under each domestic Plan and under each
                  foreign Plan (based on the assumptions used in the funding of
                  such Plan, which assumptions are reasonable, and determined as
                  of the last day of the most recent plan year of such domestic
                  Plan for which an annual report has been filed with the
                  Internal Revenue Service or of such foreign Plan for which
                  year-end actuarial information is available) did not exceed
                  the current fair market value of the assets of such Plan as of
                  such last day.

                           (v) None of the Plans is a "Multiemployer Plan" (as
                  defined in ERISA), and Borrower has not contributed or been
                  obligated to contribute to any Multiemployer Plan at any time
                  within the preceding six years.

                           (vi) Borrower qualifies as an "operating company"
                  within the meaning of United States Department of Labor
                  Regulations ss.2510.3-101(c). Pursuant to such regulations,
                  the assets of Borrower are not "plan assets" of any employee
                  benefit plan subject to the fiduciary responsibility
                  requirements of ERISA. The Loans represented by this Agreement
                  are not prohibited loans or transactions under Section 406 of
                  ERISA.


                                       41

<PAGE>   43



                  (l) Compliance with Law. Other than noncompliance with
         applicable building codes which is not material, is not unusual in the
         ordinary course of business, and is correctable (and is in the process
         of being corrected) by Borrower, none of Borrower, the Approved
         Subdivisions, the Units, the Off-Site Improvements, or the Eligible
         Lots are in material violation of any law, ordinance, regulation, or
         rule (federal, state, or local).

                  (m) Unit Budgets, Unit Plans and Specifications, and
         Construction Contracts. Each Unit Budget (as updated from time to time)
         contains all costs, expenses, and fees anticipated to be incurred by
         Borrower in connection with the respective type of Unit. The Unit Plans
         and Specifications and related working drawings are a substantially
         accurate and complete description of the Unit. The construction
         contracts relating to the construction of the Unit provide for all work
         and materials anticipated to be necessary to construct and all payments
         necessary to pay for the construction of the Unit.

                  (n) Environmental Matters. To the best of Borrower's knowledge
         and except for matters disclosed to the Lender in writing pursuant to
         the questionnaires, information, reports, and certificates delivered
         pursuant to this Agreement, neither Borrower nor any of the Collateral
         is in violation of any Environmental Laws (as defined in the
         Environmental Agreement), or subject to any existing, pending, or to
         Borrower's knowledge, any threatened investigation by any Governmental
         Agency under any Environmental Laws. Borrower hereby acknowledges that
         the Lender has made a written request of Borrower for information
         concerning the environmental condition of the Collateral, including,
         without limitation, (A) the presence, alleged presence or threatened
         presence of Hazardous Substances (as defined in the Environmental
         Agreement) on, under, in, or about any of the Collateral or property
         adjacent to the Collateral other than naturally occurring radon; (B)
         the release, alleged release or threatened release of Hazardous
         Substances on, under, in, from, or about any of the Collateral or
         property adjacent to the Collateral; or (C) the presence of any
         underground storage tank on any real property constituting Collateral.
         Borrower has no actual knowledge or notice of the presence, alleged
         presence, threatened presence, release, alleged release, or threatened
         release of Hazardous Substances on, under, in, from, or about the
         Collateral or property adjacent to any of the Collateral, except as has
         been disclosed to the Lender in writing. As used herein, the term
         "release" means any release (including, without limitation, any
         discharge, disposal, dumping, emitting, emptying, escape, injection,
         leaching, leaking, pouring, pumping, or spilling) in violation of any
         applicable laws, rules, regulations or ordinances of any Governmental
         Authority.

                  (o) Special Representations and Agreements Relating to 
         Collateral.

                           (i) Ownership. Except as permitted pursuant to
                  SECTION 6.3(b), Borrower is and will at all times be the legal
                  and equitable owner of the Collateral, free and clear of all
                  Liens and Encumbrances, except for Deeds of Trust encumbering
                  such Collateral and the Permitted Exceptions.



                                       42

<PAGE>   44



                           (ii) Authority to Encumber. Borrower has, and will
                  continue to have, the full right and authority to encumber all
                  of the Collateral, including each of the Units and Eligible
                  Lots included or to be included in Eligible Collateral.

                           (iii) Validity of the Lien and Encumbrance Created by
                  each Deed of Trust. The Lien and Encumbrance created by each
                  Deed of Trust is (A) legal, valid, binding and enforceable
                  subject to any bankruptcy, insolvency, reorganization,
                  arrangement, moratorium, fraudulent conveyance or transfer or
                  other similar laws relating to or affecting the rights of
                  creditors generally and (B) is first priority except for
                  Permitted Exceptions.

                  (p) Full Disclosure. There is no material fact that Borrower
         has not disclosed to the Lender which could cause a Material Adverse
         Change with respect to Borrower or any subsidiaries of Borrower.
         Neither the financial statements nor any other certificate or document
         delivered herewith or heretofore by Borrower to the Lender in
         connection with negotiations of this Agreement and the Loan Documents
         contains any untrue statement of material fact or omits to state any
         material fact necessary to keep the statements contained herein and
         therein from being untrue or misleading.

                  (q) Use of Proceeds; Margin Stock. The proceeds of the
         Advances will be used by Borrower solely for the purposes specified in
         this Agreement. None of such proceeds will be used for the purpose of
         purchasing or carrying any "margin stock" as defined in Regulation U or
         G of the Board of Governors of the Federal Reserve System (12 C.F.R.
         Part 221 and 207), or for the purpose of reducing or retiring any
         indebtedness which was originally incurred to purchase or carry margin
         stock or for any other purpose which might constitute this transaction
         a "purpose credit" within the meaning of such Regulation U or G.
         Borrower is not engaged in the business of extending credit for the
         purpose of purchasing or carrying margin stock. Neither Borrower nor
         any Person acting on behalf of Borrower has taken or will take any
         action which might cause any Loan Documents to violate Regulation U or
         G or any other regulations of the Board of Governors of the Federal
         Reserve System or to violate Section 7 of the Securities Exchange Act
         of 1934, or any rule or regulation thereunder, in each case as now in
         effect or as the same may hereafter be in effect. Borrower and
         Borrower's subsidiaries own no "margin stock".

                  (r) Governmental Regulation. Borrower is not subject to
         regulation under the Public Utility Holding Company Act of 1935, the
         Federal Power Act, the Investment Company Act of 1940, the Interstate
         Commerce Act (as any of the preceding have been amended), or any other
         law which regulates the incurring by Borrower of indebtedness,
         including but not limited to laws relating to common or contract
         carriers or the sale of electricity, gas, steam, water, or other public
         utility services.

                  (s) Memberships.



                                       43

<PAGE>   45



                                    i. Membership Availability Following
                           Foreclosure. Borrower acknowledges and agrees that
                           Lender would not enter into this Agreement without
                           the express written agreement of Borrower that, in
                           the event of a foreclosure or trustee's sale of a Lot
                           instituted by Lender, or deed in lieu thereof in
                           favor of Lender, Borrower would make adequate
                           arrangements to ensure that a Deferred Equity Golf
                           Membership would be available for the ultimate
                           purchaser of such Lot following such foreclosure,
                           trustee's sale, or deed in lieu thereof. Accordingly,
                           Borrower covenants and agrees that, in the event a
                           Mortgage Borrower defaults on a Mortgage Note subject
                           to this Agreement, resulting in the foreclosure,
                           trustee's sale or deed "in lieu" of the Lot
                           encumbered by the Mortgage securing such Mortgage
                           Note, Borrower shall permit the substitute buyer
                           (i.e., the third-party buyer who takes title through
                           such foreclosure or trustee's sale or upon resale
                           following Lender coming into title to the Lot through
                           such foreclosure, trustee's sale or deed "in lieu")
                           to receive a Deferred Equity Golf Membership, upon
                           payment by Lender or such substitute buyer of (a) any
                           unpaid charges against the defaulting Borrower's
                           terminated Club membership account, (b) any Surrender
                           Value (as hereinafter defined) that the Club actually
                           may have paid to the defaulting Borrower, (c) an
                           amount equal to the then-applicable Conversion Fee,
                           if the affected Membership is a non-equity
                           Membership, plus (d) an amount equal to twenty
                           percent (20%) of the Membership Contribution in its
                           full then-applicable amount. By way of example, but
                           not limitation, if a Mortgage Borrower were in
                           default under a Mortgage Note and Mortgage relating
                           to a Lot with respect to which a 1992 non-equity
                           Regular Membership (having a 75% Surrender Payment
                           Benefit) was associated, and such default ultimately
                           resulted in Lender acquiring title thereto pursuant
                           to a foreclosure, trustee's sale, or deed "in lieu,"
                           and, thereafter, Lender sold the Lot to a third-party
                           purchaser desirous of enjoying membership privileges
                           in the Club, then Borrower would cause a Deferred
                           Equity Golf Membership to be issued to such
                           third-party purchaser upon the payment of any sums
                           required under (a) and (b) above, if applicable,
                           together with an amount equal to the then-applicable
                           Conversion Fee (e.g., $31,250 if the Membership
                           Contribution were then $125,000 and the defaulting
                           Borrower held a "Type 20" Membership), plus an amount
                           equal to twenty percent (20%) of the then-applicable
                           Membership Contribution for a Deferred Equity Golf
                           Membership (i.e., $25,000 if the Membership
                           Contribution in effect at the time of such resale
                           were $125,000).

                                    ii. Payment of Surrender Value. By way of
                           continuing covenant and agreement, when a Membership
                           is surrendered, whether voluntarily or otherwise, and
                           should Borrower determine the Dues Repayment Benefits
                           or Surrender Payment Benefit (as those terms are
                           defined in the governing documents of the Club,
                           collectively herein, the


                                       44

<PAGE>   46



                           "Surrender Value") associated with such Membership is
                           payable, and such Membership is associated with Lots
                           encumbered by Mortgages subject to this Agreement,
                           Borrower shall cause the Club to retain and/or pay,
                           with respect to all such Memberships, the Surrender
                           Value to the following recipients in the following
                           order and priority, and, to the extent the amount of
                           the Surrender Value is sufficient to cover such
                           retentions and payments: first, the Club would deduct
                           therefrom, for its own retention, an amount equal to
                           all accrued and unpaid dues, fees, food and beverage
                           charges, merchandise charges, late charges, and all
                           other charges against the terminated Membership
                           account and any outstanding principal and interest on
                           any promissory notes payable to Borrower hereunder in
                           connection with Borrower-financed Membership
                           conversions, reservations or pre-purchased
                           Memberships; second, the Club would pay Lender, or
                           Lender's assignee as successor holder in due course
                           of the related Mortgage Note, a sum equal to the
                           amount of all accrued and unpaid principal, interest,
                           and charges under such Mortgage Note; and third, the
                           Club would pay the individual or entity designated in
                           the applicable Membership Agreement the remaining
                           balance, if any, of such Surrender Value.

                  (t) Representations and Warranties as to the Eligible Mortgage
         Loans. Borrower hereby represents and warrants to Lender that, as of
         the Closing Date:

                  As to each Eligible Mortgage Loan, except as otherwise
disclosed in writing:

                  (i) Borrower is the sole owner and holder of such Mortgage
                  Loan;

                  (ii) Borrower has full right and authority to assign such
                  Mortgage Loan;

                  (iii) Such Mortgage Loan meets, or is exempt from, applicable
                  state or federal laws, regulations and other requirements,
                  pertaining to usury; and any and all other requirements of any
                  federal, state or local law including, without limitation,
                  truth-in-lending, real estate settlement procedures, consumer
                  credit protection, equal credit opportunity or disclosure laws
                  applicable to such Mortgage Loan have been materially complied
                  with;

                  (iv) The Mortgage Note, the Mortgage, and other agreements
                  executed in connection therewith, are genuine, and each is the
                  legal, valid and binding obligation of the maker thereto,
                  enforceable in accordance with its terms, except as such
                  enforcement may be limited by bankruptcy, insolvency,
                  reorganization or other similar laws affecting the enforcement
                  of creditors' rights generally and by general equity
                  principles (regardless of whether such enforcement is
                  considered in a proceeding in equity or at law);



                                       45

<PAGE>   47



                  (v) Borrower is assigning such Mortgage Loan free and clear of
                  any and all liens, pledges, charges or security interests of
                  any nature encumbering such Mortgage Loan;

                  (vi) To the best of Borrower's knowledge and belief, all Due
                  Diligence Information requested by Lender was provided to
                  Lender and was true and correct in all material respects,
                  excluding Due Diligence information prepared by a party other
                  than Borrower;

                  (vii) Each Mortgage is a valid and enforceable first lien on
                  the related real property, which real property is free and
                  clear of any loan having priority over the lien of the
                  Mortgage, except for (i) liens for real estate taxes and
                  special assessments not yet due and payable, (ii) covenants,
                  conditions and restrictions, rights of way, easements and
                  other matters of public record of the date of recording of
                  such Mortgage, such exceptions appearing of record being
                  acceptable to mortgage lending institutions generally or
                  specifically reflected in the appraisal made in connection
                  with the origination of the related Mortgage Loan, and (iii)
                  other matters to which like properties are commonly subject
                  which do not, individually or in the aggregate, materially
                  interfere with the benefits of the security intended to be
                  provided by such Mortgage;

                  (viii) Neither Borrower nor any prior holder of the Mortgage
                  has modified the Mortgage Note or Mortgage in any material
                  respect, or satisfied, canceled or subordinated any Mortgage
                  Note or Mortgage in whole or in part or released all or any
                  material portion of the real property from the lien of any
                  Mortgage, or executed any instrument of release, cancellation
                  or satisfaction;


                  (ix) All Mortgage Loans are covered by a generally acceptable
                  insurance policy issued by, and is the valid and binding
                  obligation of, First American Title Insurance Company,
                  insuring Borrower, its successors and assigns, as to the first
                  priority lien of any Mortgage in the original principal amount
                  of the Mortgage Loan and subject only to (A) the lien of
                  current real property taxes and assessments not yet due and
                  payable, (B) covenants, conditions and restrictions,
                  rights-of-way, easements and other matters of public record as
                  of the date of recording of such Mortgage acceptable to
                  mortgage lending institutions in the area in which the real
                  property is located or specifically referred to in the
                  Appraisal performed in connection with the origination of the
                  related Mortgage Loan and (C) such other matters to which like
                  properties are commonly subject which do not, individually or
                  in the aggregate, materially interfere with the benefits of
                  the security intended to be provided by the Mortgage;

                  (x) There is no default, breach, violation or event of
                  acceleration existing under any Mortgage Note or related
                  Mortgage and no event which, with the passage of time


                                       46

<PAGE>   48



                  or with notice and the expiration of any grace or cure period,
                  would constitute a default, breach, violation or event of
                  acceleration, other than payments less than sixty (60) days
                  past due on any Mortgage Note;

                  (xi) Any Mortgage Note or related Mortgage contains customary
                  and enforceable provisions such as to render the rights and
                  remedies of the holder thereof adequate for the realization
                  against the real property of the benefits of the security,
                  including realization by judicial or, if applicable,
                  non-judicial foreclosure, and there is no homestead or other
                  exemption available to the Mortgage Borrower which would
                  interfere with such right to foreclose;

                  (xii) Each Lot encumbered by an Eligible Mortgage has the
                  Membership attributed thereto, included with such Lot, as
                  listed on EXHIBIT A attached hereto, which membership shall
                  not be sold, transferred or surrendered; and

                  (xiii) Each Mortgage Loan is currently being serviced by the
                  Servicing Agent.

         As to each Eligible Mortgage Loan assigned hereunder, to the best of
Borrower's knowledge and belief:

                  (i) Unless previously disclosed to Lender, all taxes and
                  governmental assessments which, having priority over the lien
                  of any Eligible Mortgage Loan is not more than sixty (60) days
                  delinquent or an escrow of funds in an amount sufficient to
                  cover such payments has been established; and

                  (ii) There is no proceeding pending or threatened for the
                  total or partial condemnation of any related real property.

         5.2 Representations and Warranties Upon Requests for Advances. Each
request for an Advance will be a representation and warranty by Borrower to the
Lender that the representations and warranties of Borrower in this ARTICLE 5 and
elsewhere in the Loan Documents are correct and complete as of the date of the
Advance request and as of the date that the Advance is made, except as otherwise
disclosed to the Lender and approved by Lender, in its sole and absolute
discretion, and that the conditions precedent in ARTICLE 4 are satisfied as of
the date of the Advance.

         5.3 Representations and Warranties Upon Delivery of Financial
Statements, Documents, and Other Information. Each delivery by Borrower of
financial statements, other documents, or information after the date of this
Agreement (including, without limitation, documents and information delivered in
obtaining an Advance) will be a representation and warranty to the Lender that
such financial statements, other documents, or information (other than financial
projections) are correct and complete in all material respects, that there are
no material omissions therefrom that result in such financial statements, other
documents, or information being materially incomplete, incorrect, or misleading
as of the date thereof, and that such financial statements accurately present


                                       47

<PAGE>   49



the financial condition and results of operations of the subject thereof as at
the dates thereof and for the periods covered thereby. Each delivery by Borrower
of financial projections is a representation and warranty to the Lender that
such financial projections have been prepared in accordance with the
requirements in this Agreement, are complete in all material respects as of the
date thereof, and are based on Borrower's best good faith estimates, compiled
and prepared with due diligence, of the matters set forth therein.

         5.4 Representations and Warranties Untrue. The failure of any
representation or warranty of Borrower in this Article 5 to be true with respect
to an Eligible Mortgage Loan shall not constitute and Event of Default under the
Loan, however, any and all Mortgage Loans for which such representations and
warranties have proved to be untrue shall no longer be Eligible Mortgage Loans
and Borrower shall be required to meet the remargining requirements of Section
2.11 based on the new Maximum Allowed Warehouse Advance after excluding the
subject Mortgage Loans.

                                    ARTICLE 6
                         BORROWER AFFIRMATIVE COVENANTS

         Until the Commitment terminates in full and the Obligations are
otherwise paid and performed in full, Borrower agrees to be bound by and to
perform each of the covenants in this ARTICLE 6.

         6.1 Partnership Existence. Borrower will continue to be validly
existing, and in good standing as a limited partnership under the law of the
State of Delaware. Borrower will continue to be qualified to do business in the
State of Arizona and under the laws of each state in which the nature of the
activities of Borrower requires such qualification.

         6.2 Books and Records; Access. Borrower will maintain a standard,
modern system of accounting (including, without limitation, a single, complete,
and accurate set of books and records of its assets, business, financial
condition, operations, prospects, and results of operations) in accordance with
GAAP. Borrower will also maintain complete and accurate records regarding the
acquisition, development and construction of Units and Eligible Lots, including,
without limitation, all construction contracts, architectural contracts,
engineering contracts, field and inspection reports, applications for payment,
estimates and analyses regarding construction costs, names and addresses of all
contractors and subcontractors performing work or providing materials or
supplies with respect to the development and construction of Units and Eligible
Lots, invoices and bills of sale for all costs and expenses incurred by
contractors and subcontractors in connection with the development and
construction of Units and Eligible Lots, payment, performance and other surety
bonds (if applicable), releases and waivers of lien for all such work performed
and materials supplied by those contracting directly with the Borrower, evidence
of completion of all inspections required by any Governmental Authority,
certificates of substantial completion, notices of completion, any surveys, any
as-built plans, Approvals and Permits, Purchase Contracts, escrow instructions,
records regarding all sales of Units and Eligible Lots, and all other documents
and instruments relating to the acquisition, development, construction and/or
sale of Units and of Eligible Lots. Books and records required to


                                       48

<PAGE>   50



be maintained by Borrower pursuant to this Section shall be maintained for a
period of time following payment in full of the Obligations at least equal to
the statute of limitations period within which the Lender would be entitled to
commence an action with respect to the Obligations, except that books and
records with respect to Collateral that has been released need only be retained
for a period of 2 years following the date of release. During business hours
Borrower will give representatives of the Lender access to all assets, property,
books, records, and documents of Borrower and will permit such representatives
to inspect such assets and property and to audit, copy, examine, and make
excerpts from such books, records, and documents. Upon request by the Lender,
Borrower will provide the Lender with copies of the reports, documents,
agreements, and other instruments described in this Section.

         6.3      Special Covenants Relating to Collateral.

                  (a) Defense of Title. Borrower will defend the Collateral, the
         title and interest therein of Borrower represented and warranted in
         each Deed of Trust, and the legality, validity, binding nature, and
         enforceability of each Lien and Encumbrance contained in each Deed of
         Trust and the first priority of each Deed of Trust against all matters,
         including, without limitation, (i) any attachment, levy, or other
         seizure by legal process or otherwise of any or all Collateral; (ii)
         except for Permitted Exceptions, any Lien or Encumbrance or claim
         thereof on any or all Collateral; (iii) any attempt to foreclose,
         conduct a trustee's sale, or otherwise realize upon any or all
         Collateral under any Lien or Encumbrance, regardless of whether a
         Permitted Exception and regardless of whether junior or senior to the
         Deed of Trust; and (iv) any claim questioning the legality, validity,
         binding nature, enforceability, or priority of any Deed of Trust.
         Borrower will notify the Lender promptly in writing of any of the
         foregoing and will provide such information with respect thereto as the
         Lender may from time to time request.

                  (b) No Encumbrances. Borrower will not sell, assign, transfer
         or otherwise dispose of, or grant any option with respect to, or pledge
         or otherwise encumber, any of the Collateral covered by the Deeds of
         Trust or any interest therein or any fixtures thereof or proceeds
         thereof, except for (i) the Permitted Exceptions; (ii) sales and
         transfers in connection with releases permitted pursuant to SECTION
         2.8; and (iii) with respect to Units and Eligible Lots, a transfer of
         legal title to such Units or Eligible Lots to a title company pursuant
         to a single beneficiary trust wherein such title company holds bare
         legal title and Borrower, as sole beneficiary, holds all equitable
         title subject to the Lien and Encumbrance of the applicable Deed of
         Trust.

                  (c) Further Assurances. Borrower will execute and deliver such
         further instruments and will do and perform all matters and things
         necessary or expedient to be done or performed for the purpose of
         effectively creating, maintaining and preserving the Collateral and the
         Liens and Encumbrances of the Lender on such Collateral.



                                       49

<PAGE>   51



                  (d) Utilities. Borrower will provide or cause to be provided
         all telephone service, electric power, storm sewer (if required),
         sanitary sewer (if required) and water facilities for each Eligible Lot
         and each Unit included in Eligible Collateral, and such utilities will
         be adequate to serve such Units and Eligible Lots. No condition will
         exist to affect Borrower's right to connect into and have adequate use
         of such utilities, except for the payment of normal connection charges
         or tap charges, development impact fees and except for the payment of
         subsequent charges for such services to the utility supplier.

                  (e) Contracts. Borrower will perform all of Borrower's
         obligations under any contracts and agreements relating to the
         construction of Units and Off-Site Improvements and will pay all
         amounts thereunder as and when due, except to the extent such amounts
         are contested in accordance with the definition of "Permitted
         Exceptions". Borrower will be the sole owner of all Unit Plans and
         Specifications or, to the extent that Borrower is not the sole owner of
         such Unit Plans and Specifications, Borrower will have the
         unconditional right to use such Unit Plans and Specifications in
         connection with the construction of Units. The Lender will not be
         restricted in any way in use of such Unit Plans and Specifications in
         connection with the construction of any Units, and Borrower will obtain
         all consents and authorizations necessary for the use of such Unit
         Plans and Specifications by the Lender.

                  (f) No Residential Use. Approved Subdivisions and all Units
         from time to time encumbered by a Deed of Trust are held only for
         construction and eventual sale to its first occupant upon or after
         release from the lien of the applicable Deed of Trust. Borrower (i)
         represents and warrants that Borrower has no intent to ever occupy any
         Unit as a residence or to lease or otherwise permit such occupancy of a
         Unit, and (ii) agrees that Borrower will never so occupy, lease or
         permit occupancy of any Unit by Borrower other than for a sales office
         or as a model home.

                  (g) Flood Insurance. Unless insurance in accordance with
         SECTION 6.8(c) will first have been obtained, no Unit in an Approved
         Subdivision will be located in an area that has been identified by the
         Secretary of Housing and Urban Development as an area having special
         flood hazards and in which flood insurance has been made available
         under the National Flood Insurance Act of 1968.

                  (h) Compliance with Permitted Exceptions. Borrower will keep
         and maintain in full force and effect all restrictive covenants,
         development agreements, easements and other agreements with
         Governmental Authorities and other Persons that are necessary or
         desirable for the use and occupancy of each Approved Subdivision and
         the sale of Units and Eligible Lots therein. Borrower will not default
         in any material respect under any such covenants, development
         agreements, easements and other agreements and will diligently enforce
         its rights thereunder.

                  (i) Title Policy Endorsements. If required by the Lender in
         its reasonable discretion, Borrower will have provided (i) such
         continuation endorsements and date down


                                       50

<PAGE>   52



         endorsements to the Title Policies, in form and substance satisfactory
         to the Lender in its absolute and sole discretion, as the Lender
         determines necessary to insure the priority of the Deeds of Trust as
         valid first liens on the Collateral; or (ii) an unconditional and
         irrevocable written commitment by the Title Company to issue such
         endorsements. Borrower agrees to furnish to the Title Company such
         surveys and other documents and information as the Lender or the Title
         Company may require for the Title Company to issue such endorsements.

                  (j) Improvement Districts. Without obtaining the prior written
         consent of the Lender, Borrower will not consent to, or vote in favor
         of, the inclusion of all or any part of the Collateral in any community
         facilities district formed pursuant to the Community Facilities
         District Act, ARS Section 48-701, et seq., as amended from time to
         time, or any other improvement district. Borrower will give immediate
         notice to the Lender of any notification or advice that Borrower may
         receive from any municipality or other third party of any intent or
         proposal to include all or any part of the Collateral in a community
         facilities district or other improvement district. Upon prior written
         notice to Borrower, the Lender shall have the right to file a written
         objection to the inclusion of all or any part of the Collateral in a
         community facilities district or other improvement district, either in
         its own name or in the name of Borrower, and to appear at, and
         participate in, any hearing with respect to the formation of any such
         district.

                  (k) Borrower warrants and will defend the right, title and
         interest of Lender in and to the Mortgages against the claims and
         demands of all persons whomsoever. Borrower shall take all action
         necessary to assure Lender has, and will at all times have, a valid and
         perfected first priority security interest in each Mortgage.

                  (l) Borrower shall execute and deliver to Lender such Uniform
         Commercial Code financing statements with respect to the Collateral as
         Lender may request. Borrower also shall execute and deliver to Lender
         such further instruments of sale, pledge or assignment or transfer, and
         such powers of attorney, as required by Lender, and shall do and
         perform all matters and things necessary or desirable to be done or
         observed, for the purpose of effectively creating, maintaining and
         preserving the security and benefits intended to be afforded Lender
         under this Agreement. Lender shall have all the rights and remedies of
         a secured party under the Uniform Commercial Code of the State of
         Arizona, or any other applicable law, in addition to all rights
         provided for herein.

                  (m) Borrower shall not amend or modify, or waive any of the
         terms and conditions of, or settle or compromise any claim in respect
         of, any Mortgages or any related rights, except upon the written
         consent of Lender.

                  (n) Other than as otherwise provided for herein this
         Agreement, Borrower shall not sell, assign, transfer or otherwise
         dispose of, or grant any option with respect to, or pledge or otherwise
         encumber (except pursuant to this Agreement), any of the Collateral or
         any interest therein.


                                       51

<PAGE>   53



                  (o) Borrower shall perform all of its duties and obligations
         with respect to the Servicing Agreement.


         6.4 Information and Statements.  Borrower will furnish to the Lender:

                  (a) Annual Reports. Within 90 days after the close of each
         fiscal year of Borrower (unless a different time is specified) the
         following:

                           (i) Annual Statements of Borrower. (A) an
                  unqualified, audited financial statement, reasonably
                  acceptable to the Lender, prepared in accordance with GAAP on
                  a consolidated basis, including balance sheets as of the end
                  of such fiscal year and statements of income and retained
                  earnings and a statement of cash flows, and setting forth in
                  comparative form the balance sheet, income statement, retained
                  earnings and cash flow figures for the preceding fiscal year.

                           (ii) Other Reports. Such other annual reports,
                  documents, and schedules as the Lender may reasonably request
                  from time to time.

                  (b) Quarterly Reports. The following quarterly reports, each
         within 45 days after the close of the first 3 quarterly periods of each
         fiscal year, each of which shall be certified true, complete, and
         materially correct to the Lender by an authorized officer of Borrower:

                           (i) Quarterly Financial Statements. Unaudited
                  financial statements for Borrower, including balance sheets as
                  of the end of such period, statements of income and cash flow,
                  in each case for the portion of the fiscal year ending with
                  such fiscal period.

                           (ii) Quarterly Cash Flow Statements. Internally
                  prepared cash flow statements, in form and substance
                  reasonably satisfactory to Lender, in each case for the
                  portion of the fiscal year ending with such fiscal period.

                           (iii) Other Reports. Such other quarterly reports,
                  documents, and schedules as the Lender may reasonably request
                  from time to time.

                  (c) Collateral Reports. The Collateral Inventory Report and 
         the Collateral Certificate when required by this Agreement.

                  (d) Financial Covenant Compliance Information. All annual
         financial reports pursuant to SECTION 6.4(a)(i) and all quarterly
         financial reports pursuant to SECTION 6.4(b)(i) will also be
         accompanied by a compliance certificate signed by the chief financial
         officer of Borrower. Notwithstanding anything in this Agreement to the
         contrary, Borrower will be required to timely deliver such financial
         information as may be necessary to promptly and


                                       52

<PAGE>   54



         accurately calculate any financial ratio or covenant required under
         this Agreement even if such information is not specifically enumerated
         herein. Any review of any financial statements provided by Borrower
         used to test any financial ratio or covenant will not waive the
         Lender's rights to require further review or audit of such information
         or any rights if such further review or audit indicates financial
         information contrary to the financial statements provided by Borrower.

         6.5 Law; Judgments; Material Agreements; Approvals and Permits. Except
for normal construction corrections occasioning temporary noncompliance which
are corrected by Borrower with diligence and without substantial expense,
Borrower will comply with all laws, ordinances, regulations, and rules (federal,
state, and local) and all judgments, orders, and decrees of any arbitrator,
other private adjudicator, or Governmental Authority relating to Borrower, any
Approved Subdivisions, any Eligible Lots, or any Units or the other assets,
business, or operations of Borrower. Borrower will comply in all material
respects with all material agreements, documents, and instruments to which
Borrower is a party or by which Borrower, any Approved Subdivisions, any
Eligible Lots or any Units, or any of the other assets of Borrower are bound or
affected. Borrower will comply with all Requirements (including, without
limitation, as applicable, requirements of the Federal Housing Administration
and the Veterans Administration) and all conditions and requirements of all
Approvals and Permits. Borrower, at Borrower's expense, will obtain and maintain
in effect from time to time all Approvals and Permits required for the business
activities and operations then being conducted by Borrower and as may be
required to enable it to comply with its obligations hereunder and under the
other Loan Documents.

         6.6 Impositions and Other Indebtedness. Except for amounts being
contested as provided in CLAUSE (b) of the definition of Permitted Exceptions,
Borrower will pay and discharge (a) before delinquency all Impositions; (b) when
due all lawful claims (including, without limitation, claims for labor,
materials, and supplies), which, if unpaid, might become a Lien or Encumbrance
upon any of its assets.

         6.7 Assets and Property. Borrower will maintain, keep, and preserve all
of its assets (tangible and intangible) necessary or customary in the proper
conduct of its business and operations in good working order and condition,
ordinary wear and tear excepted.

         6.8 Insurance. Borrower will obtain and maintain the following
insurance and will pay all related premiums as they become due:

                  (a) Property. Insurance of all Collateral against damage or
         loss by fire, lightning, and other perils, on an all-risks basis, such
         coverage to be in an amount not less than the full insurable value of
         such Collateral on a replacement cost basis. Such policy will be
         written on an all-risks basis, with no coinsurance requirement, and
         will contain a provision granting the insured permission to complete
         and/or occupy the Units or Eligible Lots, as applicable.



                                       53

<PAGE>   55



                  (b) Liability. Commercial general liability insurance
         protecting Borrower and the Lender against loss or losses from
         liability imposed by law or assumed in any agreement, document, or
         instrument and arising from bodily injury, death, or property damage
         with a limit of liability of not less than $1,000,000.00 per occurrence
         and $1,000,000.00 general aggregate. Also, "umbrella" excess liability
         insurance in an amount not less than $10,000,000.00 or such greater
         amount as the Lender may reasonably require. Such policies must be
         written on an occurrence basis so as to provide blanket contractual
         liability, broad form property damage coverage, and coverage for
         products and completed operations.

                  (c) Flood. If required by Lender, a policy or policies of
         flood insurance in the maximum amount of not less than $500,000.00 in
         the aggregate with respect to each Unit in an Approved Subdivision
         under the Flood Disaster Protection Act of 1973, as amended. This
         requirement will be waived with respect to Units in an Approved
         Subdivision upon presentation of evidence satisfactory to the Lender
         that no portion of the Unit in question is or will be located within an
         area identified by the U.S. Department of Housing and Urban Development
         as having special flood hazards.

                  (d) Worker's Compensation. Worker's compensation insurance
         disability benefits insurance and such other forms of insurance as
         required by law covering loss resulting from injury, sickness,
         disability, or death of employees of Borrower.

                  (e) Contractors. During the construction of any Unit or any
         Off-Site Improvements, any and all contractors and subcontractors will
         be required to carry liability insurance of the type and providing the
         minimum limits set forth below:

                           (i) Worker's Compensation. Worker's compensation
                  insurance, disability benefits insurance and each other form
                  of insurance which such contractor is required by law to
                  provide, covering loss resulting from injury, sickness,
                  disability or death of employees of the contractor who are
                  located on or assigned to the construction of any Unit or
                  Off-Site Improvements.

                           (ii) Liability. Comprehensive general liability
                  insurance coverage for:

                                    Property and Operations
                                    Products and Completed Operations
                                    Contractual Liability
                                    Personal Injury Liability
                                    Broad Form Property Damage 
                                        (including completed operations)
                                    Explosion Hazard
                                    Collapse Hazard
                                    Underground Property Damage Hazard



                                       54

<PAGE>   56



                  Such policy will have a limit of liability of not less than
                  $1,000,000 (combined single limit for personal injury,
                  including bodily injury or death, and property damage).

                  (f) Additional Insurance. Such other policies of insurance as
         the Lender may reasonably request in writing.

All policies for required insurance will be in form and substance satisfactory
to the Lender in its reasonable discretion. Such insurance may be carried under
blanket policies, so long as such policy provides the coverage for each Unit as
provided in this SECTION 6.8 and otherwise complies with this SECTION 6.8. All
required insurance will be procured and maintained in financially sound and
generally recognized responsible insurance companies selected by Borrower and
reasonably approved by the Lender. Deductibles under insurance policies required
pursuant to this SECTION 6.8 will not exceed the amounts approved from time to
time by the Lender. Such companies must be authorized to write such insurance in
the State of Arizona. Each company will be rated "A" or better by A.M. Best Co.,
in Bests' Key Guide, or such other rating acceptable to the Lender in the
Lender's absolute and sole discretion. All property policies evidencing required
insurance will name the Lender as first mortgagee and loss payee. All liability
policies evidencing required insurance will name the Lender as additional
insured. The policies will not be cancelable as to the interests of the Lender
due to the acts of Borrower. The policies will provide for at least 30 days
prior written notice of the cancellation or modification thereof to be given to
the Lender. A certified copy of each insurance policy or, if acceptable to the
Lender in its reasonable discretion, certificates of insurance evidencing that
such insurance is in full force and effect, will be delivered to the Lender,
together with proof of the payment of the premiums thereof. Prior to the
expiration of each such policy, Borrower will furnish the Lender evidence that
such policy has been renewed or replaced in the form of the original or a
certified copy of the renewal or replacement policy or, if acceptable to the
Lender in its reasonable discretion, a certificate reciting that there is in
full force and effect, with a term covering at least the next succeeding
calendar year, insurance of the types and in the amounts required in this
SECTION 6.8.

         6.9      ERISA.

                  (a) Borrower will take all actions and fulfill all conditions
         necessary to maintain any and all Plans in substantial compliance with
         applicable requirements of ERISA, the Code and applicable foreign law
         until such Plans are terminated, and the liabilities thereof
         discharged, in accordance with applicable law.

                  (b) No Plan will have any "accumulated funding deficiency"
         (within the meaning of Section 412 of the Code), which deficiency could
         materially adversely affect the business, earnings, prospects,
         properties or condition (financial or otherwise) of Borrower.

                  (c) Borrower will take and fulfill all actions and conditions
         necessary to maintain, and will maintain, substantial compliance of any
         and all employee benefit plans established


                                       55

<PAGE>   57



         or maintained, or to which contributions are made, by Borrower with the
         requirements of ERISA and the rules and regulations adopted thereunder,
         in each case as in effect at the time.

                  (d) Borrower shall qualify at all times as an "operating
         company" pursuant to United States Department of Labor Regulation 
         Section 2510.3-101(c). Borrower shall act to ensure that the assets of
         Borrower are not "plan assets" of any employee benefit plan subject to
         the fiduciary responsibility requirements of ERISA, or, subject to
         receipt of prior notice by the Lender and the Lender's consent thereto,
         Borrower shall ensure that an exemption from Section 406 of ERISA is
         available to cover the loan transaction with respect to each portion
         thereof.

         6.10 Commencement and Completion of Units. Borrower will cause
construction of Units to be prosecuted and completed in good faith, with due
diligence and in accordance with industry standards, and without delay subject
to acts of God, labor strikes and other force majeure events beyond the
reasonable control of Borrower. Borrower will cause Units to be constructed in a
good and workmanlike manner; in substantial compliance with all applicable
Requirements; and, unless otherwise consented to by the Lender in advance in
writing in the absolute and sole discretion of the Lender, in substantial
accordance with the respective Unit Plans and Specifications. Upon demand by the
Lender, Borrower will correct any defect in its respective Units or any material
departure from any applicable Requirements or, to the extent not theretofore
approved in writing by the Lender, the respective Unit Plans and Specifications.
Borrower understands and agrees that the inspection of the Units by or on behalf
of the Lender, the review by the Lender or others acting on behalf of the Lender
of Draw Requests and related documents and information, the making of Borrowing
Base Advances by the Lender, any actions by the Lender under SECTION 6.12, and
any other actions by the Lender will not be a waiver of the right to require
compliance with this SECTION 6.10.

         6.11 Title Insurance; Title Insurance Claims. The Lender may determine
from time to time the allocation of title insurance between parcels of
Collateral, and the amount of title insurance coverage that Borrower is required
to provide pursuant to all Title Policies (provided that the aggregate amount of
title insurance shall not be required to exceed the Borrowing Base Commitment
Amount) and the Lender may enter into such agreements with each Title Company as
the Lender reasonably deems appropriate including, without limitation,
aggregation agreements, which shall contain such terms and conditions as the
Lender may reasonably require. The Lender may, from time to time, in its
reasonable discretion, (a) require endorsements to Title Policies including,
without limitation, endorsements insuring against any mechanics', materialmen's,
or other Liens and Encumbrances affecting the Collateral; (b) require
co-insurance with respect to the Title Policies; and/or (c) disapprove title
insurance companies and require that Borrower obtain Title Policies from other
title insurers acceptable to the Lender. The Lender may require separate Title
Policies with respect to each Subdivision or groupings of Subdivisions. Borrower
acknowledges that pursuant to aggregation agreements, Title Policies issued by
the same Title Company may be grouped together to create a single insurance
coverage amount that applies to all collateral covered by such Title Policies.
If a Title Company pays any claims under any Title Policies and if the Lender
advises Borrower that the Lender has determined that the remaining coverage is
insufficient, in the


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<PAGE>   58



reasonable discretion of the Lender, Borrower will take any and all action
necessary to cause the total liability under the Title Policies to remain at or
to be increased to the original liability notwithstanding the payment of such
claim or claims, including without limitation, providing any supplemental Title
Policies or endorsements or reinsurance agreements if requested by the Lender,
the cost of which will be paid by Borrower. Upon payment of any such claims,
Borrower will obtain and provide to the Lender any and all documentation
reasonably requested by the Lender to ensure that the maximum coverage provided
for hereunder will not have been diminished as a result of the payment of such
claims.

         6.12     Rights of Inspection; Correction of Defects.

                  (a) Generally. The Lender and its respective agents,
         employees, and representatives will have the right at any time and from
         time to time to enter upon the Collateral in order to inspect the
         Collateral and all aspects thereof.

                  (b) Inspector(s). Commencing in the first full Calender Month
         of the Loan and continuing every other Calendar Month thereafter, an
         officer of the Lender shall inspect the Collateral pursuant to this
         SECTION 6.12. Commencing in the second full Calendar Month of the Loan
         and continuing every other Calendar Month thereafter, Lender shall
         employ outside inspectors to perform the inspection duties set forth in
         this SECTION 6.12.

                  (c) Miscellaneous. Any inspections or determinations made by
         the Lender or lien waivers, receipts, or other agreements, documents,
         and instruments obtained by the Lender are made or obtained solely for
         the Lender's own benefit and not in any way for the benefit or
         protection of Borrower. The Lender may accept and rely on any
         information from an architect, any other Person providing labor,
         materials, or services for Units or Eligible Lots, Borrower, or any
         other Person as to labor or materials furnished or incorporated in the
         Units or the Eligible Lots and the cost and payment therefor and as to
         all other matters relating to construction of the Units and the
         Off-Site Improvements without the necessity of verifying such
         information. The Lender will not have any obligation to Borrower to
         ensure compliance by contractor, engineer, or any other Person in
         carrying out construction of the Units or Off-Site Improvements.

         6.13 Verification of Costs. The Lender will have the right at any time
and from time to time to review and verify all costs, expenses, and fees in each
Unit Budget and each Eligible Lot Budget. Based on its review and verification
of costs, expenses, and fees in each Unit Budget and each Eligible Lot Budget,
the Lender will have the right to (a) adjust any and all such budgeted amounts
and (b) reduce or increase the applicable Collateral Values; PROVIDED, HOWEVER,
that once the Maximum Allowed Borrowing Base Advance for an item of Eligible
Collateral has been determined, that Maximum Allowed Borrowing Base Advance
amount is not subject to increase, notwithstanding any subsequent Appraisal and
notwithstanding any increase in an Unit Budget; HOWEVER, the Maximum Allowed
Borrowing Base Advance amount is subject to increase or decrease based on
subsequent events, such as updated Appraisals and subsequent change orders.


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<PAGE>   59



         6.14 Use of Proceeds of Advances. Borrower will use proceeds of
Advances only for the purposes described in SECTION 2.1(b) and 2.2.(c).

         6.15 Further Assurances. Borrower will promptly execute, acknowledge,
and deliver such additional agreements, documents, and instruments and do or
cause to be done such other acts as the Lender may reasonably request from time
to time to better assure, preserve, protect, and perfect the interest of the
Lender in the Collateral and the rights and remedies of the Lender under the
Loan Documents. Without limiting the foregoing, to the extent that the Lender
determines from time to time that additional Deeds of Trust, amendments to Deeds
of Trust, financing statements, subordinations, and other documents are required
in order to perfect all Liens and Encumbrances in favor of the Lender, and cause
all Collateral encumbered by any of the Deeds of Trust to be subject only to
Permitted Exceptions, Borrower will execute and deliver such documents,
instruments and other agreements as the Lender may request.

         6.16 Costs and Expenses of Borrower's Performance of Covenants and
Satisfaction of Conditions. Borrower will perform all of its obligations and
satisfy all conditions under the Loan Documents at its sole cost and expense.

                                    ARTICLE 7
                               FINANCIAL COVENANTS

         7.1 Minimum Net Worth Covenant. At all times during the term of this
Commitment, Borrower shall maintain a minimum Net Worth in the amount of
$62,500,000. "NET WORTH" shall be determined in accordance with GAAP and shall
include capital, surplus, retained earnings, plus deferred revenue from Golf
Course Memberships less the sum of all intangible assets (other than intangible
membership costs). If Borrower's Net Worth ever drops below $62,500,000,
Borrower will have 15 days after prior written notice from Lender to comply with
this covenant or a Financial Covenant Default will be deemed to have occurred.

                                    ARTICLE 8
                           BORROWER NEGATIVE COVENANTS

         Until the Commitment terminates in full and the Obligations are
otherwise paid and performed in full, Borrower agrees to be bound by and to
comply with each of the covenants in this ARTICLE 8:

         8.1 Fundamental Changes. Unless otherwise consented to by Lender in
writing, Borrower will not dissolve or liquidate, or become a party to any
merger or consolidation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any Person; PROVIDED,
HOWEVER, that the foregoing shall not operate to prevent: (a) mergers or
consolidations of any subsidiary of Borrower into Borrower or a sale, transfer
or lease of assets by any such subsidiary to Borrower; or (b) a transaction
otherwise prohibited pursuant to this SECTION 8.1 but that results in the
Obligations being paid and performed in full and the termination of the
Commitment.


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<PAGE>   60



         8.2 Prohibition on Sales of Assets. Except for encumbrances permitted
pursuant to SECTION 8.9, Borrower will not convey, sell, lease, encumber,
transfer or otherwise dispose of to any Person, in one transaction or a series
of transactions, all or substantially all of Borrower's business or property. In
addition, Borrower will not convey, sell, lease, encumber, transfer or otherwise
dispose of to any Affiliate of Borrower, in one transaction or a series of
transactions, any property of Borrower which would violate any covenant of
Borrower set forth herein including, without limitation, the Financial
Covenants. However, the restrictions in this SECTION 8.2 do not preclude the
Liens and Encumbrances created pursuant to the Loan Documents or the sale of
Eligible Lots and Units in the ordinary course of Borrower's business and in
compliance with the requirements of this Agreement.

         8.3 Prohibition on Amendments to Organic Agreements. Borrower will not
amend, modify, restate, supplement, or terminate its certificate of
incorporation or bylaws in any manner that would materially affect the validity
and enforceability of the Obligations or Borrower's ability to borrow hereunder,
or that would materially impair any security for the Obligations.

         8.4 Lines of Business. Borrower (directly or through any subsidiaries
or other Persons) will not engage to any substantial extent in any line or lines
of business activity other than (a) the business of developing residential real
property, and constructing Units and Off-Site Improvements and selling Units and
Eligible Lots; (b) business directly related thereto; (c) the business of
originating home mortgage loans; (d) construction and management of golf courses
and other recreational developments (e) other lines of business actively engaged
in as of the date hereof; and (f) other lines of business related to
homebuilding, construction, real estate development and recreation development
and management. Borrower will not cease to engage in the business of developing
residential real property and constructing and selling Units.

         8.5 No Development Projects Outside the Ordinary Course of Business.
Borrower will not undertake any development project outside the ordinary course
of business without the prior written consent of Lender in its sole and absolute
discretion.

         8.6 Issuance of Additional Securities. Borrower will not issue any new
capital stock or any debt securities that are convertible into, or exchangeable
for, capital stock, except pursuant to normal and customary employee stock
options pursuant to employee stock option plans that have been approved in
advance by the Lender in its reasonable discretion.

         8.7 Loans. Except for loans to Persons in Borrower's ordinary course of
business as a homebuilder, Borrower will not make or allow loans to Borrower's
Affiliates or to any other Person.

         8.8 Other Financing. Borrower will not finance the housing construction
in any Approved Subdivision that contains Eligible Lots or Units that are
included in Eligible Collateral with lenders other than the Lender.



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         8.9 No Further Indebtedness. Borrower will not incur any indebtedness
to any Person other than (a) indebtedness incurred pursuant to this Agreement;
(b) trade payables and accruals incurred in the ordinary course of Borrower's
business as now conducted and other indebtedness incurred in the ordinary course
of Borrower's business as now conducted; (c) indebtedness arising in connection
with payment and performance bonds obtained by Borrower in the ordinary course
of business; (d) indebtedness reasonably approved by Lender including, without
limitation, the financing of subdivisions not approved by Lender hereunder; (e)
loans from Crescent subordinated to the same extent as the Crescent Notes not to
exceed Ten Million and No/100 Dollars ($10,000,000.00) and (e) sales and options
back that, under GAAP, must be treated as indebtedness. Notwithstanding the
foregoing, Borrower may not incur any indebtedness if the effect of incurring
such indebtedness would be to cause or contribute to a breach of the Financial
Covenants set forth in ARTICLE 7 (on a pro forma basis).

         8.10 Transactions with Affiliates. Borrower will not enter into, or
cause, suffer, or permit to exist, any arrangement or contract with any of its
Affiliates, including, without limitation, any management contract, except any
currently existing management contracts which are reflected in the financial
statements of Borrower and any renewals thereof, unless such transaction is on
terms that are no less favorable to Borrower than those that could have been
obtained in a comparable transaction on an arms' length basis from a Person that
is not an Affiliate.

         8.11 Investments. Other than as previously disclosed to Lender and
except as expressly permitted by the Loan Documents, Borrower will not make any
investment in any Person in excess of $100,000 in the aggregate (including,
without limitation, entering into any joint venture, partnership, or similar
arrangement) without prior written approval of Lender in its reasonable
discretion.

         8.12 Negative Pledge. With the exception of Liens and Encumbrances on
collateral (other than the Collateral) granted to a particular lender to secure
indebtedness from that lender permitted pursuant to SECTION 8.9, no asset of
Borrower will be pledged or otherwise become subject to any Lien or Encumbrance
to any Person without the prior written approval of the Lender in its sole and
absolute discretion.

                                    ARTICLE 9
                                EVENTS OF DEFAULT

         9.1 Events of Default. Each of the following will be an event of
default (an "EVENT OF DEFAULT"):

                  (a) Payments. Failure by Borrower (i) to pay any payment of
         interest within the time period required pursuant to SECTION 2.4(a) and
         the expiration of 10 Business Days after written notice from Lender
         (ii) to pay, within 5 Business Days of the due date, any principal,
         including without limitation pursuant to SECTION 2.9 or SECTION 2.11;
         (iii) to pay and perform all of the Obligations on the Maturity Date;
         (iv) to pay when due any other amount pursuant


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<PAGE>   62



         to the Loan Documents and the expiration of 10 Business Days after
         notice of such failure is given by the Lender to Borrower without such
         failure being cured; or (v) to cause Net Sales Proceeds or other
         amounts payable under SECTION 2.4(c) to be paid to the Lender in
         accordance with SECTION 2.4(c) by 11:00 a.m. (Phoenix, Arizona time) on
         the first Business Day after the day the Lender notifies Borrower in
         writing of the failure by the Lender to receive any such amounts.

                  (b) Specified Defaults. Failure of Borrower to comply with any
         of the Financial Covenants and the expiration of 30 Business Days after
         written notice from Lender.

                  (c) Other Defaults. Except as otherwise provided in this
         SECTION 9.1, failure of Borrower to perform any other obligation not
         involving the payment of money, or to comply with any other term or
         condition applicable in any of the Loan Documents, and the expiration
         of 30 days after written notice of such failure is given by the Lender
         to Borrower without such failure being cured to Lender's reasonable
         satisfaction.

                  (d) Representations and Warranties. Any representation or
         warranty made by Borrower in any of the Loan Documents or otherwise
         (other than as otherwise provided in SECTION 5.4 of this Agreement and
         the last paragraph of SECTION 2 of the Pledge Agreement) with respect
         to any information now or hereafter delivered by Borrower to the Lender
         in obtaining the Commitment, in negotiating and entering into this
         Agreement, in obtaining each Advance or otherwise in connection with
         the Obligations is materially incomplete, incorrect, or misleading as
         of the date made or renewed, and the expiration of 30 Business Days
         after written notice from Lender of such failure.

                  (e) Insolvency. Borrower (i) is unable or admits in writing
         Borrower's inability to pay Borrower's monetary obligations as they
         become due; (ii) makes a general assignment for the benefit of
         creditors; or (iii) applies for, consents to, or acquiesces in, the
         appointment of a trustee (other than a trustee under a deed of trust),
         receiver, or other custodian for Borrower or any material portion or
         all of the property of Borrower, or in the absence of such application,
         consent, or acquiescence by Borrower a trustee, receiver, or other
         custodian is appointed for Borrower or any or all of the property of
         Borrower.

                  (f) Bankruptcy. Commencement of any case under the Bankruptcy
         Code (Title 11 of the United States Code) or commencement of any other
         bankruptcy, arrangement, reorganization, receivership, custodianship,
         or similar proceeding under any federal, state, or foreign law by or
         against Borrower.

                  (g) Dissolution, etc. The dissolution, or liquidation of
         Borrower; the consolidation or merger of Borrower with any other Person
         where Borrower is not the surviving entity; or the taking of any action
         by Borrower toward a dissolution, liquidation, consolidation or merger
         where Borrower is not the surviving entity (other than in connection


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<PAGE>   63



         with a transaction that results in the Obligations being paid and
         performed in full and the termination of the Commitment).

                  (h) Claims. Borrower or any other Person on behalf of Borrower
         claims that any Loan Document to which it is a party is not legal,
         valid, binding, and enforceable against Borrower, that any lien,
         security interest, or other encumbrance securing any of the obligations
         under the Loan Documents is not legal, valid, binding, and enforceable,
         or that the priority of any lien, security interest, or other
         encumbrance securing any of the obligations in the Loan Documents is
         different than the priority represented and warranted in the Loan
         Documents.

                  (i) Failure to Maintain Insurance. Any of the insurance
         coverages required pursuant to SECTION 6.8 actually lapses or expires
         without being replaced by other insurance policies that comply with
         SECTION 6.8 prior to such lapse or expiration, and the expiration of
         one (1) Business Day after notice from Lender.

                  (j) Default Under Other Indebtedness. A default occurs in the
         payment when due (after giving effect to any applicable notice and
         grace periods), whether by acceleration or otherwise, of any
         indebtedness of Borrower in an aggregate amount exceeding $250,000, and
         the expiration of 15 Business Days after written notice from Lender of
         such default.

                  (k) Judgments. Any judgment or order for the payment of money
         in excess of $250,000 (not covered by insurance subject to customary
         deductibles) is rendered against Borrower either (i) enforcement
         proceedings are commenced by any creditor upon such judgment or order
         and expiration of 15 Business Days after written notice from Lender of
         such commencement; or (ii) such judgment or order is not vacated,
         stayed, satisfied, discharged or bonded pending appeal within 60 days
         from the entry thereof.

                  (l) Foreclosure Proceedings. Filing of any foreclosure
         proceeding, giving notice of a trustee's sale, or any other action by
         any Person, other than the Lender, to realize upon any of the
         Collateral under any Lien or Encumbrance on any or all of the
         Collateral, regardless of whether such Lien or Encumbrance is a
         Permitted Exception and regardless of whether junior or senior to the
         Deed of Trust, and the expiration of 15 Business Days after written
         notice from Lender.

                  (m) RICO. The filing of formal charges by any Governmental
         Authority, including, without limitation, the issuance of any
         indictment, under any RICO Related Law against Borrower or any
         Affiliate of Borrower that has a material adverse effect on Borrower.

         9.2 Remedies. Upon the occurrence of any Event of Default and at any
time thereafter, for so long as such Event of Default is continuing:



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                  (a) Suspension and Termination of Commitment. Upon the
         occurrence and during the continuance of an Event of Default or an
         Unmatured Event of Default, the Lender shall declare the Commitment of
         the Lender to make Advances to be suspended, whereupon any obligation
         to make further Advances will immediately be suspended.

                  (b) Acceleration. Upon the occurrence of an Event of Default,
         the Lender may declare the Obligations to be immediately due and
         payable in full, whereupon all of the principal, interest and other
         Obligations will forthwith become due and payable in full without
         presentment, demand, protest or notice of any kind, all of which are
         hereby expressly waived.

                  (c) Delivery of Contracts, Etc. Borrower will, upon request of
         the Lender, deliver to the Lender all surveys, plans and
         specifications, building permits, construction contracts and
         subcontracts, plats and other maps, lien releases, subdivision reports,
         annexation documents, declarant's rights, marketing material and other
         documents, permits, licenses and contracts which are necessary to
         complete construction and marketing of the Units and Eligible Lots, and
         Borrower will, on request of the Lender, assign to the Lender such of
         Borrower's rights thereunder as the Lender may request.

                  (d) Enforcement of Rights. The Lender may enforce any and all
         rights and remedies under the Loan Documents, the Deeds of Trust and
         all other documents delivered in connection therewith and against any
         or all Collateral and shall pursue all rights and remedies available at
         law or in equity.

                  (e) Receivers. Without limiting any other rights and remedies
         to which it is entitled, the Lender may, at its option, without notice
         to Borrower or without regard to the adequacy of the Collateral for the
         payment of the Obligations, have appointed one or more receivers of the
         Collateral, and Borrower does hereby irrevocably consent to such
         appointment, with such receivers having all the usual powers and duties
         of receivers in similar cases, including the full power to maintain,
         sell, dispose and otherwise operate the Collateral upon such terms that
         may be approved by a court of competent jurisdiction.

                  (f) Payments. The Lender may direct all escrow companies and
         closing agents to pay over to the Lender directly all moneys to which
         Borrower is entitled and held by such parties in pending escrows.

         9.3 Protective Advances. The Lender, at any time following the
occurrence and during the continuance of an Event of Default or an Unmatured
Event of Default, may, but will not be obligated to, make Protective Advances.
All Protective Advances are an obligation of the Borrower and will be due and
payable by Borrower within 5 days of written demand. The making of a Protective
Advance by the Lender will not be deemed a waiver by the Lender of the
occurrence of an Event of Default or an Unmatured Event of Default.



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         9.4 Completion of Construction. After an Event of Default, the Lender
may take all action necessary to complete the construction of any Off-Site
Improvements or Units and expend all sums necessary therefor including, without
limitation, to cause an independent contractor selected by Lender to enter into
possession of any Approved Subdivision and to perform any and all work and labor
necessary for the completion of the Units and Eligible Lots thereon and to
perform Borrower's obligations under this Agreement. The Lender may, but will
not be obligated to, make Borrowing Base Advances from time to time to pay all
costs and expenses of such completion and such amounts will be due and payable
within 5 days of written demand and will be added to the outstanding principal
amount of all Borrowing Base Advances. The Lender will not have any duty to
account to Borrower for any such expenditures. All amounts advanced by the
Lender, and all other charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by the Lender, in exercising any right, power
or remedy conferred by this Agreement, the Deeds of Trust or any other Loan
Document, or in the enforcement hereof, or in the protection of the Collateral
or the completion of the Collateral, are an obligation of Borrower and shall
bear interest at the Variable Rate, prior to the occurrence of an Event of
Default or Unmatured Event of Default, and at the Default Interest Rate
thereafter, from the date advanced, paid or incurred until repaid by Borrower.
All such amounts so advanced, incurred or paid will be secured by the Deeds of
Trust and the Collateral.

                                   ARTICLE 10
                                  MISCELLANEOUS

         10.1 The Lender's Obligations to Borrower Only and Disclaimer by
Lender. No Person, other than Borrower or Lender, will have any rights hereunder
or be a third-party beneficiary hereof. The Lender is not a joint venturer or a 
partner with Borrower.

         10.2 Survival. The representations, warranties, and covenants of
Borrower in the Loan Documents will survive the execution and delivery of the
Loan Documents and the making of Advances to Borrower.

         10.3 Integration. The Loan Documents contain the complete understanding
and agreement of Borrower and the Lender with respect to the transactions
contemplated by this Agreement and supersede all prior representations,
warranties, agreements, arrangements, understandings, and negotiations. If there
is any conflict between the provisions of this Agreement and the provisions of
any of the other Loan Documents, the provisions of this Agreement will control.

         10.4 Effect of Certain Actions. Delay or failure by the Lender to
insist on performance of any obligation when due or compliance with any other
term or condition in the Loan Documents will not operate as a waiver thereof or
of any other obligation, term or condition or of the time of the essence
provision. Acceptance of late payments will not be a waiver of the time of the
essence provision, the right of the Lender to require that subsequent payments
be made when due, or the right of the Lender to declare an Event of Default if
subsequent payments are not made when due.



                                       64

<PAGE>   66



         10.5 Binding Effect. The Loan Documents will be binding upon and will
inure to the benefit of the Lender and Borrower and their respective successors
and assigns; PROVIDED, HOWEVER, that Borrower may not assign any of its rights
or delegate any of its obligations under the Loan Documents and any purported
assignment or delegation will be void.

         10.6 Severability. If any provision or any part of any provision of the
Loan Documents is unenforceable, the enforceability of the other provisions and
the remainder of the subject provision, respectively, will not be affected and
they will remain in full force and effect.

         10.7 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER WILL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF ARIZONA, WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW RULES OF ARIZONA. EXCEPT WITH RESPECT TO ACTIONS TO REALIZE
UPON SECURITY WHICH MAY BE BROUGHT IN THE STATE IN WHICH SUCH SECURITY IS
LOCATED, ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE STATE COURTS OF ARIZONA OR IN THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE SAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

         10.8 Time of Essence; Time for Performance. Time is of the essence with
regard to each provision of the Loan Documents as to which time is a factor.
Whenever any performance under the Loan Documents is stated to be due on a day
other than a Business Day or whenever the time for taking any action under the
Loan Documents would fall on a day other than a Business Day, then unless
otherwise specifically provided in the Loan Documents the due date for such
performance or the time for taking such action, as the case may be, will be
extended to the next succeeding Business Day, and such extension of time will be
included in the computation of interest or fees, as the case may be.

         10.9 Notices and Demands. Except to the extent otherwise provided
herein, all demands or notices under the Loan Documents will be in writing and
mailed or hand-delivered to the respective party hereto at the address specified
below or such other address as will have been specified in a written notice. Any
demand or notice mailed will be mailed first-class mail, postage-



                                       66
<PAGE>   67

prepaid, return-receipt-requested and will be effective upon the earlier of (a)
actual receipt by the addressee, and (b) the date shown on the return-receipt.
Any demand or notice not mailed will be effective upon actual receipt by the
addressee:

                  To Borrower:    Desert Mountain Properties Limited Partnership
                                  10550 E. Desert Hills Drive
                                  Scottsdale, Arizona 85262
                                  Attention: Jeff L. Fitzgerald and Jim Ekins

                  With Copies to: Fennemore Craig PC
                                  3003 North Central Avenue, Suite 2600
                                  Phoenix, Arizona 85012-2913
                                  Attention:  Ronald L. Ballard, Esq.

                  To Lender:      National Bank of Arizona
                                  3101 North Central Avenue
                                  Phoenix, Arizona 85012
                                  Attention: Marshall D. Wong

                  With Copies to: Snell & Wilmer L.L.P.
                                  One Arizona Center
                                  Phoenix, Arizona 85004-0001
                                  Attention: Craig K. Williams

         10.10 Indemnification of the Lender. Borrower agrees to indemnify, hold
harmless, and on demand defend the Lender and its respective stockholders,
directors, officers, employees, agents, and representatives for, from, and
against any and all damages, losses, liabilities, costs, and expenses
(including, without limitation, costs and expenses of litigation and reasonable
attorneys' fees) arising from any claim or demand in respect of the Loan
Documents, the Collateral, or the transactions described in the Loan Documents
and arising at any time, whether before or after payment and performance of the
Obligations in full, excepting any such matters arising solely from the gross
negligence or willful misconduct of the indemnitee. The obligations of Borrower
and the rights of the Lender under this Section will survive payment and
performance of the Obligations in full and will remain in full force and effect
without termination.

         10.11 Headings; References. The headings at the beginning of each
section of the Loan Documents are solely for convenience and are not part of the
Loan Documents. References in this Agreement to "Sections", "Articles", and
"Exhibits" refer to the Sections and Articles in this Agreement and the Exhibits
to this Agreement, unless otherwise noted.

         10.12 Number and Gender. In the Loan Documents the singular will
include the plural and vice versa and each gender will include the other
genders.



                                       65

<PAGE>   68



         10.13 Waiver of Statute of Limitations. BORROWER WAIVES, TO THE FULL
EXTENT PERMITTED BY LAW, THE RIGHT TO PLEAD ANY STATUTES OF LIMITATIONS AS A
DEFENSE TO PAYMENT OR PERFORMANCE OF ANY OR ALL OF THE OBLIGATIONS.

         10.14 Waivers by Borrower. Borrower (a) waives, to the full extent
permitted by law, presentment, notice of dishonor, protest, notice of protest,
notice of intent to accelerate, notice of acceleration, and all other notices or
demand of any kind (except notices specifically provided for in the Loan
Documents); and (b) agrees that the Lender may enforce the Loan Documents
against Borrower without first having sought enforcement against any Collateral.

         10.15 No Brokers. Except as disclosed by Borrower to the Lender in
writing prior to the date of this Agreement, Borrower represents and warrants
that it knows of no broker's or finder's fee due in respect of the transaction
described in this Agreement and that it has not used the services of a broker or
a finder in connection with this transaction.

         10.16 Counterpart Execution. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same document. Signature pages may be
detached from the counterparts and attached to a single copy of this Agreement
to physically form one document. Telecopied signature pages will be acceptable,
provided originally signed signature pages are provided to each of the other
parties by overnight courier.

         10.17 Duty to Act in Good Faith. To the extent required by applicable
law, each of the parties to this Agreement agrees to act in good faith with
respect to all of its rights, privileges, duties, and obligations under this
Agreement.

         10.18 Jury Waiver. BORROWER AND LENDER HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN
OR AMONG THE UNDERSIGNED AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT OR ANY OTHER RELATED DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT
TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN
DOCUMENTS.

                                   ARTICLE 11
                         LIST OF EXHIBITS AND SCHEDULES

         11.1 List of Exhibits The following Exhibits are incorporated into this
Agreement as if set forth fully in the body of this Agreement:

                           Exhibit A    Schedule of Lots and Memberships for 
                                        Eligible Mortgage Loans


                                                 

                                       67
<PAGE>   69

                           Exhibit B-1  Form of Mortgage Note
                           Exhibit B-2  Form of Mortgage
                           Exhibit C    Collateral Documents
                           Exhibit D    Approved Subdivisions
                           Exhibit E    Eligible Lots



         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

BORROWER:                         DESERT MOUNTAIN PROPERTIES LIMITED
                                  PARTNERSHIP, a Delaware limited partnership

                                  By: Desert Mountain Development Corporation, a
                                      Delaware corporation, General Partner


                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________



LENDER:                           NATIONAL BANK OF ARIZONA, a national
                                  banking association


                                  By: ________________________________________
                                  Name:______________________________________
                                  Title:_______________________________________





                                       68
<PAGE>   70

                                    EXHIBIT A


                          DESCRIPTION OF MORTGAGE LOANS




                                       69
<PAGE>   71

                                   EXHIBIT B-1

                              FORM OF MORTGAGE NOTE





<PAGE>   72



                                   EXHIBIT B-2

                                FORM OF MORTGAGE





<PAGE>   73



                                    EXHIBIT C

                              COLLATERAL DOCUMENTS


1.       REQUIRED DELIVERIES:  Each Warehouse Advance Request shall include the
following:

         A. Mortgage Note. Unless otherwise approved by Lender in its absolute
and sole discretion, Borrower shall deliver to Lender the original Mortgage Note
evidencing the indebtedness secured by the applicable Eligible Mortgage Loan,
duly executed by the mortgagor to Borrower as payee.

         B. Endorsement. A blank endorsement by Borrower of the Mortgage Note,
duly executed by Borrower.

         C. Mortgage. A copy of the Mortgage securing the Mortgage Note
certified by Borrower and by the closing attorney or title company presiding at
the closing to be a true and complete copy of the original which is being
recorded. The certified copy of the Mortgage must be a photocopy which shows due
execution by the individual(s) who has (have) executed the corresponding
Mortgage Note. The Mortgage must accurately describe the Mortgage Note which it
is intended to secure, and the Mortgage must be prepared in accordance with the
local recording requirements.

         D. Assignment. A duly executed assignment to Lender of each Mortgage,
of the indebtedness secured thereby, and of all documents and rights related to
each Mortgage Loan, including the right to any casualty insurance proceeds or
condemnation awards. This instrument must accurately describe the Mortgage which
it is intended to assign, must be in recordable form, and be otherwise
satisfactory to Lender.

2.       OTHER DELIVERIES:  If requested by Lender, each Advance Request shall 
also include the following:

         A. Commitment for Title Insurance. A commitment for the issuance of an
ALTA title insurance loan policy in favor of Borrower and its successors and
assigns, in the amount of the original principal balance of the Mortgage Loan.
The interim title binder or commitment must obligate the title insurance company
to issue a policy insuring that the Mortgage is a valid first lien on the
premises described in the Mortgage, with only exceptions permitted by Lender.
The title binder or commitment must be countersigned by an authorized
representative or agent of the applicable title insurance company.

         B. Appraisal. With respect to each Mortgage Loan, a copy of the
Appraisal.




<PAGE>   74



         C. Insurance. Originals or certified copies of all fire and casualty
insurance policies, in form and issued by companies reasonably satisfactory to
Lender, covering the premises covered by each Mortgage, including, if
applicable, insurance against flood hazards, or a certificate of the insurance
underwriter evidencing the same, certifying that such insurance is in full force
and effect. The policy must stipulate that losses are payable in favor of
Borrower and its assigns.

         D. Disclosure and Settlement Statements. Certified copies of all
settlement statements (including, without limitation, the HUD-1) and any
disclosure statements required under the Federal Truth-in-Lending Act and the
provisions of Regulation Z of the Federal Reserve Board, and any applicable
disclosure statements required under the Real Estate Settlement Procedures Act.
All disclosure statements must include all the necessary signatures of the
involved parties.





<PAGE>   75



                                    EXHIBIT D

                              APPROVED SUBDIVISIONS





<PAGE>   76


                                    EXHIBIT E

                                  ELIGIBLE LOTS







<PAGE>   77
                             MODIFICATION AGREEMENT



DATE:                         December 30, 1998

PARTIES:       Borrower:      DESERT MOUNTAIN PROPERTIES LIMITED
                              PARTNERSHIP, a Delaware limited partnership

               Borrower       10550 E. Desert Hills Drive
               Address:       Scottsdale, Arizona 85262


               Bank:          NATIONAL BANK OF ARIZONA, a national banking
                              association.

               Bank           3101 North Central Avenue
               Address:       Phoenix, Arizona 85012


RECITALS:

         A. Bank has extended to Borrower credit ("Loan"), in the maximum
principal amount of $35,000,000.00, pursuant to that certain Master Revolving
Line of Credit Loan Agreement (Borrowing Base and Warehouse), dated as of May
14, 1998 ("Loan Agreement"), and evidenced by that certain Promissory Note
(Borrowing Base), dated May 14, 1998 ( "Borrowing Base Note") and that certain
Promissory Note (Warehouse), dated May 14, 1998 ("Warehouse Note"). That portion
of the Loan evidenced by the Borrowing Base Note shall hereinafter be referred
to as the "Borrowing Base Loan" and that portion of the Loan evidenced by the
Warehouse Note shall hereinafter be referred to as the "Warehouse Loan".

         B. The Loan is secured by, among other things, that certain Deed of
Trust, Assignment of Rents and Security Agreement and Fixture Filing, dated May
14, 1998 ("Deed of Trust"), by Borrower, as trustor, for the benefit of Bank, as
beneficiary, recorded on June 15, 1998, as Instrument No. 98-0507873, records of
Maricopa County, Arizona, and that certain Pledge Agreement dated May 14, 1998
("Pledge Agreement"). The Deed of Trust, the Pledge Agreement and any and all
other agreements, documents, and instruments securing the Loan and the Note are
referred to individually and collectively as the "Security Documents". The Note,
the Loan Agreement, the Security Documents, any arbitration resolution, any
environmental certification and indemnity agreement, and all other agreements,
documents, and instruments evidencing, securing, or otherwise relating to the
Loan are sometimes referred to individually and collectively as the "Loan
Documents". Capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Loan Agreement.


<PAGE>   78



         C. Borrower from time to time, offers members of The Desert Mountain
Club the opportunity to convert their non-equity Memberships in The Desert
Mountain Club to Deferred Equity Memberships for a Conversion Fee. In order to
facilitate collection of these fees, Borrower sometimes enters into carry back
promissory notes with the applicable Member in order to finance over time a
portion of the Conversion Fee. It is Borrower's request that the Bank modify the
Loan and the Loan Documents to provide for the pledge of these Conversion Notes
as additional collateral for the Loan and for the Bank to allow Borrower to
request Advances against the Conversion Notes under the Warehouse Loan. Bank is
willing to so modify the Loan and the Loan Documents, subject to the terms and
conditions herein.

DEFINITIONS:

In this Agreement, the following capitalized terms have the following meanings:

         "CONVERSION LOAN" means a loan made by Borrower to a party who is not
an Affiliate of Borrower for the financing of a portion of the Conversion Fee to
convert a non-equity Membership into a Deferred Equity Membership, evidenced by
a Conversion Note.

         "CONVERSION LOAN DUE DILIGENCE INFORMATION" means any and all
information regarding the Conversion Loans that exists or was developed in
connection with Borrower's or its agent's generating, servicing or analysis of
the Conversion Loans prior to assignment to Lender.

         "CONVERSION NOTE" means a note in any of the forms attached hereto as
EXHIBIT A.

         "DEFERRED EQUITY MEMBERSHIP" means a Membership in The Desert Mountain
Club issued pursuant to the Deferred Equity Membership Plan dated July 1, 1994,
as published by the Desert Mountain Club, as the same may be amended from time
to time.

         "ELIGIBLE CONVERSION LOAN" means a Conversion Loan that satisfies the
conditions precedent pursuant to SECTION 2.1.4 of this Agreement.

         "MEMBERS" shall mean non-equity members of The Desert Mountain Club who
have elected to convert their Memberships to Deferred Equity Memberships.


AGREEMENT:

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:

1.       ACCURACY OF RECITALS.

Borrower acknowledges the accuracy of the Recitals.


                                        2

<PAGE>   79


2.       MODIFICATION OF LOAN DOCUMENTS.

         2.1 The Loan Documents are modified as follows, by supplementing the
Loan Agreement to add the following terms and conditions relating to the
Conversion Loans:

         2.1.1 Warehouse Advances Against Eligible Conversion Notes .

                  (a) Commitment to Make Warehouse Advances Against Eligible
         Conversion Notes. Subject to the applicable terms and conditions of the
         Loan Agreement and this Agreement and from time to time prior to the
         Maturity Date, Lender agrees to make Warehouse Advances to Borrower up
         to the current Warehouse Commitment. Warehouse Advances shall be used
         by Borrower for general working capital purposes. Warehouse Advances
         shall continue to be made at the request of Borrower, in the manner
         provided in SECTION 2.2 of the Loan Agreement against the pledge of
         such Eligible Conversion Loans and Eligible Mortgage Loans as
         Collateral therefor. The Maximum Allowed Warehouse Advance against any
         Eligible Conversion Loan shall be an amount equal to 100% of the face
         amount of such Eligible Conversion Loan.

                  (b) Use of Warehouse Advances. Subject to the terms and
         conditions of this Agreement and provided no Unmatured Event of Default
         has occurred and is continuing, Lender agrees, from time to time during
         the period from the date hereof to and including the Maturity Date, to
         make Warehouse Advances to Borrower for the purpose of warehousing
         carry back Conversion Notes and Mortgage Notes and Mortgages in favor
         of Borrower, provided the total aggregate principal amount outstanding
         at any one time of all such Warehouse Advances shall not exceed the
         Warehouse Commitment Amount.

                  (c) Conditions Precedent. The obligation of Lender to make any
         Warehouse Advances against Eligible Conversion Notes is subject to the
         satisfaction, on or before the date of funding of each such Warehouse
         Advance, of the following conditions precedent:

                           (i) Effective Date. All of the conditions precedent
         set forth in SECTIONS 4.1 of the Loan Agreement shall have been
         satisfied.

                           (ii) No Defaults. No Unmatured Event of Default or
         Event of Default shall have occurred and be continuing.

                           (iii) Accuracy of Representations and Warranties. All
         representations and warranties made herein or in any other Loan
         Document shall be true and correct as of the date of each such
         Warehouse Advance as if made on and as of such date.


                                        3

<PAGE>   80


                           (iv) Advance Request. Borrower shall have executed
         and delivered to Lender a properly completed and duly executed request
         for Warehouse Advance in such form as Lender may require from time to
         time (an "Advance Request"). Each Advance Request shall constitute a
         representation and warranty by Borrower that (A) each of the conditions
         precedent to the requested Warehouse Advance set forth in this SECTION
         2.1.1(c) have been satisfied, (B) all the Eligible Conversion Loans
         included in such Advance Request have closed and been funded or will be
         closed and funded simultaneously with the making of the requested
         Warehouse Advance and (C) Borrower is in possession of the originals of
         all items listed in SECTION 2.1.1(c)(v) hereto.

                           (v) Collateral Documents. Borrower shall have
         delivered to Lender, (i) unless otherwise approved by Lender in its
         absolute and sole discretion, the original Conversion Note evidencing
         the indebtedness of the applicable Eligible Conversion Loan, duly
         executed by the Member to Borrower as payee and (ii) a blank
         endorsement by Borrower of the Conversion Note, duly executed by
         Borrower. Lender shall have the right, on not less than three (3)
         Business Days' prior notice to Borrower, as reasonably required to
         include different or additional items than those listed above to
         conform to current legal requirements or Lender's practices. The
         documents referenced in this SECTION 2.1.1(c)(v) hereinafter shall be
         included in the definition of "Collateral Documents" as defined in the
         Loan Agreement.

         2.1.2 Repayment of Warehouse Loan. Borrower shall be obligated to pay
         to Lender, without the necessity of prior demand or notice from Lender,
         the amount of any outstanding Warehouse Advance against a specific
         Eligible Conversion Loan as shown on Lender's records, upon the
         occurrence of any of the following events:

                  (a) The Collateral Documents, upon examination by Lender, are
         found not to be in compliance with the requirements of this Agreement;

                  (b) If any of the items required to be delivered pursuant to
         SECTION 2.1.1(c)(v) after a Warehouse Advance are not delivered as and
         when required or if delivered are not in compliance with this
         Agreement;

                  (c) Five (5) Business Days have elapsed from the date a
         Collateral Document was delivered to Borrower for correction or
         completion, without being returned to Lender;

                  (d) Such Eligible Conversion Loan is defaulted and remains in
         default for a period of sixty (60) days; or


                                        4

<PAGE>   81


                  (e) If any of the representations and warranties set forth in
         SECTION 4.6 of this Agreement with respect to an Eligible Conversion
         Loan are untrue or incorrect in any material respect.

         2.1.3. Remargining; Principal Payments; Warehouse. Anything in the Loan
         Documents to the contrary notwithstanding, Borrower shall, upon demand
         by Lender, pay to Lender an amount equal to the amount by which total
         outstanding Warehouse Advances exceed the lesser (i) the Warehouse
         Commitment Amount or (ii) the aggregate outstanding principal balance
         of all Eligible Mortgage Loans and Eligible Conversion Loans. Each
         payment pursuant to this SECTION 2.1.3 will be due no later than 11:00
         a.m. (Phoenix, Arizona time) on the 5th Business Day after the day upon
         which Lender notifies Borrower in writing that such payment is
         required.

         2.1.4 Additional Conditions Precedent to All Warehouse Advances Against
         Eligible Conversion Loans. In addition to the Requirements of SECTION
         2.1.1(c) of this Agreement, Lender will only be obligated to make
         Warehouse Advances against Eligible Conversion Loans if Borrower, at
         Borrower's sole cost and expense, shall have delivered to Lender each
         of the following items. Each of the items required by this SECTION
         2.1.4 must be satisfactory to Lender and each of the conditions
         precedent referenced in this SECTION 2.1.4 must be satisfied:

                  (a) Conversion Loan Criteria. If the Conversion Loan has been
         used to finance not more than 80% of the Conversion Fee, then the term
         shall be not greater than five (5) years (15 year amortization). If the
         Conversion Loan has been used to finance greater than 80% but not more
         than 90% of the Conversion Fee, then the term shall be not greater than
         five (5) years (5 year amortization). For all Conversion Loans,
         interest payments shall be due not less frequently than quarterly and
         the maximum principal amount financed shall not exceed 90% of the
         Conversion Fee .

                  (b) Other Conditions Precedent. Borrower shall have satisfied
         all conditions precedent in SECTIONS 4.1 and 4.5 of the Loan Agreement,
         as applicable.

                  (c) Conversion Loan Reports. On or before the day that is the
         15th day of each Calendar Month, Borrower will prepare and submit to
         Lender a report relating to the Conversion Loans ("Conversion Loan
         Report"), in form and substance satisfactory to Lender, including for
         each Conversion Loan pledged as Collateral on the Loan, among other
         things that Lender may require from time to time, the following: (i)
         the Member's name; (ii) the original principal balance; (iii) the
         outstanding principal balance; (iv) the last payment date; (v) the next
         payment due date; (vi) the number of days past due (if any) and (vii)
         the maturity date. Borrower shall not prepare and submit more than one
         (1) Conversion Loan Report per Calendar Month.


                                        5

<PAGE>   82



                  (d) Lender's Right to Lend. Notwithstanding anything contained
         herein to the contrary, Lender, in its sole and absolute discretion,
         may decide to accept Conversion Loans as Collateral which do not
         satisfy any of the foregoing conditions precedent set forth in this
         SECTION 2.1.4, on a case by case basis, and make Warehouse Advances
         against such Conversion Loans.

         2.2 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantor(s) is materially incomplete, incorrect, or misleading as
of the date hereof.

         2.3 Each reference in the Loan Documents to any of the Loan Documents
shall be a reference to such document as modified herein.

3.       RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.

The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.

4.       BORROWER REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Bank:

         4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.

         4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Bank in connection with the Loan from the most recent financial
statement received by Bank.

         4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.

         4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.

         4.5 The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.


                                        6

<PAGE>   83


         4.6 Borrower hereby represents and warrants to Lender that, as of the
date hereof, as to each Eligible Conversion Loan, except as otherwise disclosed
in writing:

                  (i) Borrower is the sole owner and holder of such Conversion
                  Loan;

                  (ii) Borrower has full right and authority to assign such
                  Conversion Loan;

                  (iii) Such Conversion Loan meets, or is exempt from,
                  applicable state or federal laws, regulations and other
                  requirements, pertaining to usury; and any and all other
                  requirements of any federal, state or local law including,
                  without limitation, truth-in-lending, consumer credit
                  protection, equal credit opportunity or disclosure laws
                  applicable to such Conversion Loan have been materially
                  complied with;

                  (iv) The Conversion Note and other agreements executed in
                  connection therewith, are genuine, and each is the legal,
                  valid and binding obligation of the maker thereto, enforceable
                  in accordance with its terms, except as such enforcement may
                  be limited by bankruptcy, insolvency, reorganization or other
                  similar laws affecting the enforcement of creditors' rights
                  generally and by general equity principles (regardless of
                  whether such enforcement is considered in a proceeding in
                  equity or at law);

                  (v) Borrower is assigning such Conversion Loan free and clear
                  of any and all liens, pledges, charges or security interests
                  of any nature encumbering such Conversion Loan;

                  (vi) To the best of Borrower's knowledge and belief, all
                  Conversion Loan Due Diligence Information requested by Lender
                  was provided to Lender and was true and correct in all
                  material respects, excluding Conversion Loan Due Diligence
                  information prepared by a party other than Borrower;

                  (vii) Borrower has not modified the Conversion Note in any
                  material respect, or satisfied, canceled or subordinated any
                  Conversion Note in whole or in part, or executed any
                  instrument of release, cancellation or satisfaction;

                  (viii) There is no default, breach, violation or event of
                  acceleration existing under any Conversion Note and no event
                  which, with the passage of time or with notice and the
                  expiration of any grace or cure period, would constitute a
                  default, breach, violation or event of acceleration, other
                  than payments less than sixty (60) days past due on any
                  Conversion Note;

                  (ix) Any Conversion Note contains customary and enforceable
                  provisions such as to render the rights and remedies of the
                  holder thereof adequate for the realization of the amount due
                  under the Conversion Note;


                                        7

<PAGE>   84


                  (xiii) Each Conversion Loan is currently being serviced by the
                  Borrower.

         The failure of any representation or warranty of Borrower in this
SECTION 4.6 to be true with respect to an Eligible Conversion Loan shall not
constitute and Event of Default under the Loan, however, any and all Conversion
Loans for which such representations and warranties have proved to be untrue
shall no longer be Eligible Conversion Loans and Borrower shall be required to
meet the remargining requirements of SECTION 2.1.3 of this Agreement based on
the new Maximum Allowed Warehouse Advance after excluding the subject Conversion
Loans.

         4.7 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.

5.       BORROWER COVENANTS.

Borrower covenants with Bank:

         5.1 Borrower shall execute, deliver, and provide to Bank such
additional agreements, documents, and instruments as reasonably required by Bank
to effectuate the intent of this Agreement.

         5.2 Borrower fully, finally, and forever releases and discharges Bank
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity, that Borrower has or in the future may have, whether known or
unknown, (i) in respect of the Loan, the Loan Documents, or the actions or
omissions of Bank in respect of the Loan or the Loan Documents and (ii) arising
from events occurring prior to the date of this Agreement.

         5.3 Contemporaneously with the execution and delivery of this
Agreement, Borrower has paid to Bank:

                  5.3.1 All accrued and unpaid interest under the Note and all
amounts, other than interest and principal, due and payable by Borrower under
the Loan Documents as of the date hereof.

                  5.3.2 All of the internal and external costs and expenses
incurred by Bank in connection with this Agreement (including, without
limitation, outside attorneys fees).


                                        8

<PAGE>   85


6.       EXECUTION AND DELIVERY OF AGREEMENT BY BANK.

Bank shall not be bound by this Agreement until each of the following shall have
occurred: (i) Bank has executed and delivered this Agreement and (ii) Borrower
has performed all of the obligations of Borrower under this Agreement to be
performed contemporaneously with the execution and delivery of this Agreement.

7.       ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.

The Loan Documents as modified herein contain the entire understanding and
agreement of Borrower and Bank in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, and understandings. No
provision of the Loan Documents as modified herein may be changed, discharged,
supplemented, terminated, or waived except in a writing signed by Bank and
Borrower.

8.       BINDING EFFECT.

The Loan Documents as modified herein shall be binding upon, and inure to the
benefit of, Borrower and Bank and their respective successors and assigns.

9.       CHOICE OF LAW.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.

10.      COUNTERPART EXECUTION.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.


                                        9


<PAGE>   86
DATED as of the date first above stated.


                               DESERT MOUNTAIN PROPERTIES LIMITED
                               PARTNERSHIP, a Delaware limited partnership

                               By:  Desert Mountain Development Corporation, a
                                    Delaware corporation, General Partner

                                    By: 
                                       -----------------------------------------
                                    Name: 
                                         ---------------------------------------
                                    Title: 
                                          --------------------------------------


                                    NATIONAL BANK OF ARIZONA, a national banking
                                    association

  
                                    By: 
                                       -----------------------------------------
                                    Name: 
                                         ---------------------------------------
                                    Title: 
                                          --------------------------------------


                                       10

<PAGE>   87
                          SECOND MODIFICATION AGREEMENT



DATE:                              March 31, 1999

PARTIES:       Borrower:           DESERT MOUNTAIN PROPERTIES LIMITED
                                   PARTNERSHIP, a Delaware limited partnership

               Borrower            10550 E. Desert Hills Drive
               Address:            Scottsdale, Arizona 85262


               Lender:             NATIONAL BANK OF ARIZONA, a national banking
                                   association.

               Lender              3101 North Central Avenue
               Address:            Phoenix, Arizona 85012


RECITALS:

                  A. Lender has extended to Borrower credit ("Loan"), in the
maximum principal amount of $35,000,000.00, pursuant to that certain Master
Revolving Line of Credit Loan Agreement (Borrowing Base and Warehouse), dated as
of May 14, 1998 ("Loan Agreement"), and evidenced by that certain Promissory
Note (Borrowing Base), dated May 14, 1998 ( "Borrowing Base Note") and that
certain Promissory Note (Warehouse), dated May 14, 1998 ("Warehouse Note"). That
portion of the Loan evidenced by the Borrowing Base Note shall hereinafter be
referred to as the "Borrowing Base Loan" and that portion of the Loan evidenced
by the Warehouse Note shall hereinafter be referred to as the "Warehouse Loan".

                  B. The Loan is secured by, among other things, that certain
Deed of Trust, Assignment of Rents and Security Agreement and Fixture Filing,
dated May 14, 1998 ("Deed of Trust"), by Borrower, as trustor, for the benefit
of Lender, as beneficiary, recorded on June 15, 1998, as Instrument No.
98-0507873, records of Maricopa County, Arizona, and that certain Pledge
Agreement dated May 14, 1998 ("Pledge Agreement"). The Deed of Trust, the Pledge
Agreement and any and all other agreements, documents, and instruments securing
the Loan and the Note are referred to individually and collectively as the
"Security Documents". Capitalized terms not otherwise defined herein shall have
the same meaning as set forth in the Loan Agreement.

                  C. Lender and Borrower have executed and delivered previously
that certain Modification Agreement dated December 31, 1998 (the
"Modification"), modifying the terms of the Loan, the Note, the Credit
Agreement, and/or the Security Documents (The Note, the Credit Agreement, the
Security Documents, any arbitration resolution, any environmental certification
and


                                        1

<PAGE>   88

indemnity agreement, and all other agreements, documents, and instruments
evidencing, securing, or otherwise relating to the Loan, as modified in the
Modification, are sometimes referred to individually and collectively as the
"Loan Documents". Hereinafter, "Note", "Credit Agreement", "Deed of Trust",
Pledge Agreement, and "Security Documents" shall mean such documents as modified
in the Modification.)

                  D. Borrower has requested that Lender (i) increase the
Borrowing Base Commitment Amount; (ii) add certain Lots within the "Village of
Lookout Ridge" (as more particularly described in Exhibit A attached hereto, the
"Additional Real Property"), as Collateral under the Borrowing Base; (iii) allow
for Warehouse Advances against loans other than Conversion Loans and Mortgage
Loans; and (iv) modify the Loan Documents as further provided in this Agreement.
Lender is willing to so modify the Loan and the Loan Documents, subject to the
terms and conditions herein.

DEFINITIONS:

In this Agreement, the following capitalized terms have the following meanings:

               "ELIGIBLE MISCELLANEOUS LOANS" means a Miscellaneous Loan which
Borrower would like to include as Collateral under the Loan for purposes of
obtaining Warehouse Advances and Lender has agreed, IN ITS SOLE AND ABSOLUTE
DISCRETION, to include as an Eligible Miscellaneous Loan subject further to the
terms and conditions of this Agreement and the Loan Agreement.

               "MISCELLANEOUS LOAN" means a loan made by Borrower to a party who
is not an Affiliate of Borrower (or in the alternative made by Lender to a party
who is not an Affiliate of Borrower, with full recourse to Borrower), which is
neither a Mortgage Loan nor a Conversion Loan but which Lender may make
Warehouse Advances against, pursuant to the terms and conditions of SECTION
2.1.3 of this Agreement.

               "MISCELLANEOUS LOAN DUE DILIGENCE INFORMATION" means any and all
information regarding the Miscellaneous Loans that exists or was developed in
connection with Borrower's or its agent's generating, servicing or analysis of
the Miscellaneous Loans prior to assignment to Lender.

               "MISCELLANEOUS LOAN SUBLIMIT" means a sublimit under the
Warehouse Commitment Amount for Warehouse Advances against Eligible
Miscellaneous Loans, which sublimit shall not exceed Three Million and No/100
Dollars ($3,000,000.00). The Miscellaneous Loan Sublimit relates solely to
Borrower's ability to obtain Warehouse Advances against Miscellaneous Loans and
shall not impact Borrower's ability to obtain Warehouse Advances against
Eligible Conversion Loans and Eligible Mortgage Loans up to the Warehouse
Commitment Amount, subject to the terms and conditions of the Loan Agreement.


                                        2

<PAGE>   89



               "MISCELLANEOUS NOTE" means a promissory note which evidences a 
Miscellaneous Loan.

               "MISCELLANEOUS NOTE AMOUNT" means the outstanding unpaid
principal amount of a Miscellaneous Note at the time such Miscellaneous Note is
pledged to Lender.


AGREEMENT:

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Lender agree as follows:


1.             ACCURACY OF RECITALS.

Borrower acknowledges the accuracy of the Recitals.


2.             MODIFICATION OF LOAN DOCUMENTS.

              2.1     The Loan Documents are modified as follows:

                   2.1.1 The Maturity Date of the Loan and the Note is changed
from MAY 14, 1999 to JUNE 1, 2000. On the Maturity Date Borrower shall pay to
Lender the unpaid principal, accrued and unpaid interest, and all other amounts
payable by Borrower under the Loan Documents as modified herein.

                   2.1.2 The maximum Borrowing Base Commitment Amount available
for Borrowing Base Advances under the Borrowing Base Loan and the Borrowing Base
Note is hereby amended to THIRTY-FIVE MILLION AND NO/100 DOLLARS
($35,000,000.00), subject to the terms and conditions of the Loan Documents
applicable to Borrowing Base Advances.

                   2.1.3 The Loan Documents are modified as follows, by
supplementing the Loan Agreement to add the following terms and conditions
relating to the Miscellaneous Loans:

                      2.1.3.1 Warehouse Advances Against Eligible Miscellaneous 
               Loans.

                      (a) Commitment to Make Warehouse Advances Against Eligible
               Miscellaneous Loans. Lender may allow Borrower Warehouse Advances
               not to exceed the Miscellaneous Loan Sublimit, under the
               Warehouse Commitment Amount against Eligible Miscellaneous Loans,
               subject to the applicable terms and conditions of the Loan
               Agreement and this Agreement and from time to time prior to the
               Maturity Date. Warehouse Advances hereunder shall be used by
               Borrower for general working capital


                                        3

<PAGE>   90



               purposes. Warehouse Advances shall continue to be made at the
               request of Borrower, in the manner provided in SECTION 2.2 of the
               Loan Agreement against the pledge of such Eligible Miscellaneous
               Loans as well as Eligible Conversion Loans and Eligible Mortgage
               Loans as Collateral therefor. The Maximum Allowed Warehouse
               Advance against any Eligible Miscellaneous Loan shall be an
               amount equal to 100% of the face amount of such Eligible
               Miscellaneous Loan.

                      (b) Use of Warehouse Advances. Subject to the terms and
               conditions of the Loan Agreement and this Agreement and provided
               no Unmatured Event of Default has occurred and is continuing,
               Lender agrees, from time to time during the period from the date
               hereof to and including the Maturity Date, to make Warehouse
               Advances to Borrower for the purpose of warehousing Miscellaneous
               Notes, Eligible Conversion Notes and Mortgage Notes and Mortgages
               in favor of Borrower, provided the total aggregate principal
               amount outstanding at any one time of all such Warehouse Advances
               shall not exceed the Warehouse Commitment Amount and the total
               aggregate principal amount outstanding at any one time of all
               such Warehouse Advances made against Eligible Miscellaneous Loans
               shall not exceed the Miscellaneous Loan Sublimit.

                      (c) Conditions Precedent. Notwithstanding the fact that
               Lender's agreement to include a Miscellaneous Loan as an Eligible
               Loan is at Lender's sole and absolute discretion, the obligation
               of Lender to make any Warehouse Advances against Eligible
               Miscellaneous Loans is subject further to the satisfaction, on or
               before the date of funding of each such Warehouse Advance, of the
               following conditions precedent:

                                                (i) Approval. Borrower shall
               have obtained Lender's approval of the inclusion the applicable
               Miscellaneous Loan as an Eligible Miscellaneous Loan.

                                                (ii) Effective Date. All of the
               conditions precedent set forth in SECTIONS 4.1 of the Loan
               Agreement shall have been satisfied.

                                                (iii) No Defaults. No Unmatured
               Event of Default or Event of Default shall have occurred and be
               continuing.

                                                (iv) Accuracy of Representations
               and Warranties. All representations and warranties made herein or
               in any other Loan Document shall be true and correct as of the
               date of each such Warehouse Advance as if made on and as of such
               date.

                                                (v) Advance Request. Borrower
               shall have executed and delivered to Lender a properly completed
               and duly executed request for Warehouse Advance in such form as
               Lender may require from time to time (an


                                        4

<PAGE>   91



               "Advance Request"). Each Advance Request shall constitute a
               representation and warranty by Borrower that (A) each of the
               conditions precedent to the requested Warehouse Advance set forth
               in this SECTION 2.1.3.1(c) have been satisfied, (B) all the
               Eligible Miscellaneous Loans included in such Advance Request
               have closed and been funded or will be closed and funded
               simultaneously with the making of the requested Warehouse Advance
               and (C) Borrower is in possession of the originals of all items
               listed in SECTION 2.1.3.1(c)(VI) hereto.

                                                (vi) Collateral Documents.
               Borrower shall have delivered to Lender, (i) unless otherwise
               approved by Lender in its absolute and sole discretion, the
               original Miscellaneous Note evidencing the indebtedness of the
               applicable Eligible Miscellaneous Loan, duly executed by the
               maker thereunder to Borrower as payee; (ii) a blank endorsement
               by Borrower of the Miscellaneous Note, duly executed by Borrower;
               and (iii) any other security agreements, documents, instruments
               or other agreements related to the Miscellaneous Loan with any
               applicable assignments or endorsements to Lender thereof, which
               may be requested by Lender in its sole and absolute discretion.
               Lender shall have the right, on not less than three (3) Business
               Days' prior notice to Borrower, as reasonably required to include
               different or additional items than those listed above to conform
               to current legal requirements or Lender's practices. The
               documents referenced in this SECTION 2.1.3.1(c)(vi) hereinafter
               shall be included in the definition of "Collateral Documents" as
               defined in the Loan Agreement.

                      2.1.3.2 Repayment of Warehouse Loan. Borrower shall be
               obligated to pay to Lender, without the necessity of prior demand
               or notice from Lender, the amount of any outstanding Warehouse
               Advance against a specific Eligible Miscellaneous Loan as shown
               on Lender's records, upon the occurrence of any of the following
               events:

                      (a) The Collateral Documents, upon examination by Lender,
               are found not to be in compliance with the requirements of this
               Agreement;

                      (b) If any of the items required to be delivered pursuant
               to SECTION 2.1.3.1(c)(vi) after a Warehouse Advance are not
               delivered as and when required or if delivered are not in
               compliance with this Agreement;

                      (c) Five (5) Business Days have elapsed from the date a
               Collateral Document was delivered to Borrower for correction or
               completion, without being returned to Lender;

                      (d) Such Eligible Miscellaneous Loan is defaulted and
               remains in default for a period of sixty (60) days; or



                                        5

<PAGE>   92



                      (e) If any of the representations and warranties set forth
               in SECTION 4.6 of this Agreement with respect to an Eligible
               Miscellaneous Loan are untrue or incorrect in any material
               respect.

                      2.1.3.3 Remargining; Principal Payments; Warehouse.
               Anything in the Loan Documents to the contrary notwithstanding,
               Borrower shall, upon demand by Lender, pay to Lender an amount
               equal to the amount by which total outstanding Warehouse Advances
               exceed the lesser of (i) the Warehouse Commitment Amount or (ii)
               the aggregate outstanding principal balance of all Eligible
               Conversion Loans, Eligible Mortgage Loans and Eligible
               Miscellaneous Loans and in addition, Borrower shall, upon demand
               by Lender, pay to Lender an amount equal to the amount by which
               total outstanding Warehouse Advances against Eligible
               Miscellaneous Loans exceed the lesser of (i) the Miscellaneous
               Loan Sublimit or (ii) the aggregate outstanding principal balance
               of all Eligible Miscellaneous Loans. Each payment pursuant to
               this SECTION 2.1.3.3 will be due no later than 11:00 a.m.
               (Phoenix, Arizona time) on the 5th Business Day after the day
               upon which Lender notifies Borrower in writing that such payment
               is required.

                      2.1.3.4 Additional Conditions Precedent to All Warehouse
               Advances Against Eligible Miscellaneous Loans. In addition to the
               Requirements of SECTION 2.1.3.1(c) of this Agreement, Lender will
               only be obligated to make Warehouse Advances against Eligible
               Miscellaneous Loans if Borrower, at Borrower's sole cost and
               expense, shall have delivered to Lender each of the following
               items. Each of the items required by this SECTION 2.1.3.4 must be
               satisfactory to Lender and each of the conditions precedent
               referenced in this SECTION 2.1.3.4 must be satisfied:

                      (a) Other Conditions Precedent. Borrower shall have
               satisfied all conditions precedent in SECTIONS 4.1 and 4.6 of the
               Loan Agreement, as applicable.

                      (b) Miscellaneous Loan Reports. On or before the day that
               is the 15th day of each Calendar Month, Borrower will prepare and
               submit to Lender a report relating to the Miscellaneous Loans
               ("Miscellaneous Loan Report"), in form and substance satisfactory
               to Lender, including for each Miscellaneous Loan pledged as
               Collateral on the Loan, among other things that Lender may
               require from time to time, the following: (i) the maker's name;
               (ii) the original principal balance; (iii) the outstanding
               principal balance; (iv) the last payment date; (v) the next
               payment due date; (vi) the number of days past due (if any) and
               (vii) the maturity date. Borrower shall not prepare and submit
               more than one (1) Miscellaneous Loan Report per Calendar Month.

                   2.1.4 SECTION 3.2(a) of the Loan Agreement is hereby deleted
in its entirety and the following is inserted in place thereof:



                                        6

<PAGE>   93



                      (a) Limitation on Spec Units. Borrower may not include in
               Eligible Collateral more than thirty (30) Spec Units financed
               under the Borrowing Base Commitment. In the event a Unit is
               subject to a Purchase Agreement which calls for a cash earnest
               money deposit or down payment of less than twenty percent (20%)
               of the purchase price of the Unit, such Unit shall be treated as
               a Spec Unit for purposes of determining the Maximum Allowed
               Borrowing Base Advance for said Unit, however, said Unit shall
               not be included when determining the limitation on Spec Units
               pursuant to this SECTION 3.2(a).

                   2.1.5 A new SECTION 6.12(d) is hereby added to the Loan
               Agreement as follows:

                      (d) Vertical Construction Inspection. In addition,
               periodically, as may be determined by Lender in its sole and
               absolute discretion, an officer of Lender or in the alternative,
               an outside inspector chosen by Lender, shall inspect and verify
               the percentage of completion of Units under construction and
               shall prepare a report in form and substance satisfactory to
               Lender, regarding the percentage of completion of the Units under
               construction.

              2.2 Each of the Loan Documents is modified to provide that it
shall be a default or an event of default thereunder if Borrower shall fail to
comply with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantor(s) is materially incomplete, incorrect, or misleading as
of the date hereof.

              2.3 Each reference in the Loan Documents to any of the Loan
Documents shall be a reference to such document as modified herein.

3.             RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.

The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.

4.             BORROWER REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Lender:

              4.1 No default or event of default under any of the Loan Documents
as modified herein, nor any event, that, with the giving of notice or the
passage of time or both, would be a default or an event of default under the
Loan Documents as modified herein has occurred and is continuing.



                                        7

<PAGE>   94



              4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Lender in connection with the Loan from the most recent financial
statement received by Lender.

              4.3 Each and all representations and warranties of Borrower in the
Loan Documents are accurate on the date hereof.

              4.4 Borrower has no claims, counterclaims, defenses, or set-offs
with respect to the Loan or the Loan Documents as modified herein.

              4.5 The Loan Documents as modified herein are the legal, valid,
and binding obligation of Borrower, enforceable against Borrower in accordance
with their terms.

              4.6 Borrower hereby represents and warrants to Lender that, with
respect to any Miscellaneous Loan presented by Borrower to Lender for inclusion
as an Eligible Miscellaneous Loan hereunder, unless as otherwise disclosed in
writing:

                      (i) Borrower shall be the sole owner and holder of such 
                      Miscellaneous Loan;

                      (ii) Borrower shall have full right and authority to
                      assign such Miscellaneous Loan;

                      (iii) Such Miscellaneous Loan shall meet, or be exempt
                      from, applicable state or federal laws, regulations and
                      other requirements, pertaining to usury; and any and all
                      other requirements of any federal, state or local law
                      including, without limitation, truth-in-lending, consumer
                      credit protection, equal credit opportunity or disclosure
                      laws applicable to such Miscellaneous Loan shall have been
                      materially complied with;

                      (iv) The Miscellaneous Note and other agreements executed
                      in connection therewith, shall genuine, and each shall be
                      the legal, valid and binding obligation of the maker
                      thereto, enforceable in accordance with its terms, except
                      as such enforcement may be limited by bankruptcy,
                      insolvency, reorganization or other similar laws affecting
                      the enforcement of creditors' rights generally and by
                      general equity principles (regardless of whether such
                      enforcement is considered in a proceeding in equity or at
                      law);

                      (v) Borrower shall be assigning such Miscellaneous Loan
                      free and clear of any and all liens, pledges, charges or
                      security interests of any nature encumbering such
                      Miscellaneous Loan;

                      (vi) To the best of Borrower's knowledge and belief, all
                      Miscellaneous Loan Due Diligence Information requested by
                      Lender shall be provided to Lender and


                                        8

<PAGE>   95



                      shall be true and correct in all material respects,
                      excluding Miscellaneous Loan Due Diligence information
                      prepared by a party other than Borrower;

                      (vii) Borrower shall not have modified the Miscellaneous
                      Note in any material respect, or satisfied, canceled or
                      subordinated any Miscellaneous Note in whole or in part,
                      or executed any instrument of release, cancellation or
                      satisfaction;

                      (viii) There shall have been no default, breach, violation
                      or event of acceleration existing under any Miscellaneous
                      Note and no event which, with the passage of time or with
                      notice and the expiration of any grace or cure period,
                      would constitute a default, breach, violation or event of
                      acceleration, other than payments less than sixty (60)
                      days past due on any Miscellaneous Note;

                      (ix) Any Miscellaneous Note shall contain customary and
                      enforceable provisions such as to render the rights and
                      remedies of the holder thereof adequate for the
                      realization of the amount due under the Miscellaneous
                      Note;

                      (xiii) Each Miscellaneous Loan shall be currently serviced
                      by the Borrower or the Servicing Agent.

               The failure of any representation or warranty of Borrower in this
SECTION 4.6 to be true with respect to an Eligible Miscellaneous Loan shall not
constitute and Event of Default under the Loan, however, any and all
Miscellaneous Loans for which such representations and warranties have proved to
be untrue shall no longer be Eligible Miscellaneous Loans and Borrower shall be
required to meet the remargining requirements of SECTION 2.1.3.3 of this
Agreement based on the new Maximum Allowed Warehouse Advance after excluding the
subject Miscellaneous Loans.

              4.7 Borrower is validly existing under the laws of the State of
its formation or organization and has the requisite power and authority to
execute and deliver this Agreement and to perform the Loan Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Loan Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.

5.             BORROWER COVENANTS.

Borrower covenants with Lender:

              5.1 Borrower shall execute, deliver, and provide to Lender such
additional agreements, documents, and instruments as reasonably required by
Lender to effectuate the intent of this Agreement.

              5.2 Borrower fully, finally, and forever releases and discharges
Lender and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all


                                        9

<PAGE>   96



actions, causes of action, claims, debts, demands, liabilities, obligations, and
suits, of whatever kind or nature, in law or equity, that Borrower has or in the
future may have, whether known or unknown, (i) in respect of the Loan, the Loan
Documents, or the actions or omissions of Lender in respect of the Loan or the
Loan Documents and (ii) arising from events occurring prior to the date of this
Agreement.

              5.3 Contemporaneously with the execution and delivery of this
Agreement, Borrower has paid to Lender:

                   5.3.1 All accrued and unpaid interest under the Note and all
amounts, other than interest and principal, due and payable by Borrower under
the Loan Documents as of March 31, 1999.

                   5.3.2 All of the internal and external costs and expenses
incurred by Lender in connection with this Agreement (including, without
limitation, outside attorneys fees).

              5.4 Contemporaneously with the execution and delivery of this
Agreement, Borrower has executed and delivered, or caused to be executed and
delivered, to Lender, an Amendment to the Deed of Trust, dated of even date
herewith ("Amendment") to be recorded in the Office of the County Clerk of
Maricopa County, Arizona and UCC-2 financing statements ("UCC-2s"), to be filed
with the Arizona Secretary of State and recorded with the Maricopa County
recorder's office. As used in this Agreement, "Loan Documents" shall include the
Deed of Trust as amended by the Amendment and the financing statements executed
in connection with the Loan as amended by the UCC-2.

              5.5 Contemporaneously with the execution and delivery of this
Agreement, Borrower, Lender and Crescent have executed and delivered, or caused
to be executed and delivered, to Lender, a Subordination Agreement, dated of
even date herewith, in form and substance satisfactory to Lender, to be recorded
in the Office of the County Clerk of Maricopa County, Arizona.

              5.6 Contemporaneously with the execution and delivery of this
Agreement, Borrower has caused to be delivered to Lender, at Borrower's sole
cost and expense, such endorsements to the Title Insurance Policy as Lender
shall require, in its sole and absolute discretion, recognizing the modification
of the Loan Documents herein, including the increase to the Borrowing Base
Commitment Amount and the inclusion as additional Collateral of the Additional
Real Property and subject only to the exceptions in Schedule B, Part I, of the
commitment for title insurance as Lender may approve.

6.             EXECUTION AND DELIVERY OF AGREEMENT BY LENDER.

Lender shall not be bound by this Agreement until each of the following shall
have occurred: (i) Lender has executed and delivered this Agreement and (ii)
Borrower has performed all of the obligations of Borrower under this Agreement
to be performed contemporaneously with the execution and delivery of this
Agreement.


                                       10

<PAGE>   97



7.             ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.

The Loan Documents as modified herein contain the entire understanding and
agreement of Borrower and Lender in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, and understandings. No
provision of the Loan Documents as modified herein may be changed, discharged,
supplemented, terminated, or waived except in a writing signed by Lender and
Borrower.

8.             BINDING EFFECT.

The Loan Documents as modified herein shall be binding upon, and inure to the
benefit of, Borrower and Lender and their respective successors and assigns.

9.             CHOICE OF LAW.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.

10.            COUNTERPART EXECUTION.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.

DATED as of the date first above stated.


                                DESERT MOUNTAIN PROPERTIES LIMITED
                                PARTNERSHIP, a Delaware limited partnership

                                By:   Desert Mountain Development Corporation, a
                                      Delaware corporation, General Partner


                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------




                                     11

<PAGE>   98




                                NATIONAL BANK OF ARIZONA, a national banking
                                association


                                By:
                                   ---------------------------------------------
                                Name:
                                     -------------------------------------------
                                Title:
                                      ------------------------------------------



                                       12

<PAGE>   99


                                    EXHIBIT A

                        LEGAL DESCRIPTION - LOOKOUT RIDGE


                                        1

<PAGE>   100
                                                         Account No. ___________


                                 PROMISSORY NOTE
                                (Borrowing Base)

$25,000,000.00                   Phoenix, Arizona                   May 14, 1998


         1.       Promise to Pay.

         FOR VALUE RECEIVED, DESERT MOUNTAIN PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership ("Borrower"), promises to pay on or
before the May 14, 1999 (the "Maturity Date") to NATIONAL BANK OF ARIZONA, a
national banking association ("Bank"), or order, the aggregate principal amount
outstanding as shown on Bank's records which shall at all times be conclusive
and govern, with interest (payable on the first day of each calendar month after
the date of the first advance) on the unpaid balance outstanding from time to
time at an annual rate equal to the "Prime Rate" published from time to time in
The Western Edition of The Wall Street Journal, as such rate shall change from
time to time during the term hereof ("Agreed Rate").

         3.       Calculation of Interest.

         Interest shall be calculated on a 360-day year for all advances, but,
in any case, shall be computed for the actual number of days in the period for
which interest is charged, which period shall consist of a 365-day period on an
annual basis.

         4.       Place of Payment.

         Principal and interest shall be payable at the 3101 North Central
Avenue office of Bank in Phoenix, Arizona, or at such other place as the holder
hereof may designate. All amounts payable hereunder shall be paid in lawful
money of the United States.

         5.       Maximum Amount of Advances.

         Bank and Borrower have established specific instructions and procedures
by which Advances on the Loan will be disbursed pursuant to the terms and
conditions of that certain Master Revolving Line of Credit Loan Agreement of
even date herewith (the "Loan Agreement"), but nothing contained herein shall
create a duty on the part of Bank to make any Advance if an Event of Default or
Unmatured Event of Default has occurred. This Note evidences a revolving line of
credit and amounts hereunder may be re-borrowed by Maker in accordance with the
terms of the Loan Agreement. Prior to the Maturity Date, the Loan may be drawn,
repaid and drawn again in unlimited repetition so long as the sum of (a) the
amounts outstanding on the Loan, and (b) the amounts that are committed but not
yet advanced on the Loan never exceed the maximum principal amount of


<PAGE>   101


Twenty-Five Million and No/100 Dollars ($25,000,000.00). Capitalized terms used
in this Note and not otherwise defined are used with the meanings set forth in
the Loan Agreement and other Loan Documents.

         6.       Application of Payments.

         Absent an Event of Default or Unmatured Event of Default, any payments
received by the holder hereof shall be applied first, to sums other than
principal and interest due the holder hereof, second, to the payment of all
interest accrued to the date of such payment, and the balance, if any, to the
payment of principal. Any payments received by the holder hereof after any
default shall be applied to the amounts specified in this paragraph in such
order as the holder hereof may, in its sole discretion, elect.

         7.       Late Charge and Default Interest.

         If any payment of interest and/or principal is not received by the
holder hereof when such payment is due, then, as additional remedies, (a) a late
charge of five percent (5%) of the amount due and unpaid will be added to the
delinquent amount for any payment past due in excess of ten (10) days, and (b)
all past due payments of principal and/or interest shall bear interest from
their due date until paid at an annual rate equal to four percent (4%) in excess
of the Agreed Rate, payable on demand.

         8.       Default.

         Borrower will be in default under this Note upon the occurrence of an
Event of Default as defined pursuant to Article 8 of the Loan Agreement. Time is
of the essence with regard to all payment obligations in this Note. Upon an
Event of Default, this Note shall become immediately due and payable at the
option of the holder hereof without presentment or demand or any notice to
Borrower or any other person obligated hereon.

         9.       Exercise of Rights.

         Failure to exercise any remedy or right hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default.

         10.      Costs of Collection.

         In the event any holder hereof utilizes the services of an attorney in
attempting to collect the amounts due hereunder or to enforce the terms hereof
or of any agreements related to this indebtedness, or if any holder hereof
becomes party plaintiff or defendant in any legal proceeding in relation to the
property described in any instrument securing this Note or for the recovery or
protection of the indebtedness evidenced hereby, Borrower, its successors and
assigns, shall repay to such holder hereof, on demand, all costs and expenses so
incurred, including reasonable attorney's


                                        2

<PAGE>   102


fees, including those costs, expenses and attorney's fees incurred after the
filing by or against the Borrower of any proceeding under any chapter of the
Bankruptcy Code, or similar federal or state statute, and whether incurred in
connection with the involvement of any holder hereof as creditor in such
proceedings or otherwise.

         11.      Waivers.

         Borrower and all sureties, endorsers and guarantors of this Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note or the release of any part primarily or secondarily liable hereon and
further agree that it will not be necessary for any holder hereof, in order to
enforce payment of this Note by any of them, to first institute suit or exhaust
its remedies against any maker or others liable herefor, and consent to any
extension or postponement of time or payment of this Note or any other
indulgence with respect hereto without notice thereof to any of them.

         12.      Joint and Several Obligations.

         Should this Note be signed by more than one person and/or entity, all
of the obligations herein contained shall be considered joint and several
obligations of each signer hereof.

         13.      Agreed Rate.

         Notwithstanding any provision contained herein to the contrary, the
Agreed Rate shall include the applicable interest rate described herein plus any
compensating balance requirement and any additional charges, costs and fees
incident to the Loan to the extent they are deemed to be interest under
applicable Arizona law. Should the Agreed Rate as calculated under this Note at
any time exceed that allowed by law, the Agreed Rate will be the maximum rate of
interest allowed by applicable Arizona law.

         14.      Prepayment.

         Borrower shall have the right to prepay the Note, at any time, without
premium or penalty.


                                 DESERT MOUNTAIN PROPERTIES LIMITED
                                 PARTNERSHIP, a Delaware limited partnership

                                 By:  Desert Mountain Development Corporation, a
                                      Delaware corporation, General Partner

                                      By: 
                                         ---------------------------------------
                                      Name: 
                                           -------------------------------------
                                      Title: 
                                            ------------------------------------
                                                                      "Borrower"


                                        3
<PAGE>   103
                                                        Account No. ___________


                                 PROMISSORY NOTE
                                   (Warehouse)

$10,000,000.00                   Phoenix, Arizona                   May 14, 1998


         1.       Promise to Pay.

         FOR VALUE RECEIVED, DESERT MOUNTAIN PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership ("Borrower"), promises to pay on or
before the May 14, 1999 (the "Maturity Date") to NATIONAL BANK OF ARIZONA, a
national banking association ("Bank"), or order, the aggregate principal amount
outstanding as shown on Bank's records which shall at all times be conclusive
and govern, with interest (payable on the first day of each calendar month after
the date of the first advance) on the unpaid balance outstanding from time to
time at an annual rate equal to one percent (1.0%) in excess of the "Prime Rate"
published from time to time in The Western Edition of The Wall Street Journal,
as such rate shall change from time to time during the term hereof ("Agreed
Rate").

         3.       Calculation of Interest.

         Interest shall be calculated on a 360-day year for all advances, but,
in any case, shall be computed for the actual number of days in the period for
which interest is charged, which period shall consist of a 365-day period on an
annual basis.

         4.       Place of Payment.

         Principal and interest shall be payable at the 3101 North Central
Avenue office of Bank in Phoenix, Arizona, or at such other place as the holder
hereof may designate. All amounts payable hereunder shall be paid in lawful
money of the United States.

         5.       Maximum Amount of Advances.

         Bank and Borrower have established specific instructions and procedures
by which Advances on the Loan will be disbursed pursuant to the terms and
conditions of that certain Master Revolving Line of Credit Loan Agreement of
even date herewith (the "Loan Agreement"), but nothing contained herein shall
create a duty on the part of Bank to make any Advance if an Event of Default or
Unmatured Event of Default has occurred. This Note evidences a revolving line of
credit and amounts hereunder may be re-borrowed by Maker in accordance with the
terms of the Loan Agreement. Prior to the Maturity Date, the Loan may be drawn,
repaid and drawn again in unlimited repetition so long as the sum of (a) the
amounts outstanding on the Loan, and (b) the amounts that are committed but not
yet advanced on the Loan never exceed the maximum principal amount of Ten



<PAGE>   104


Million and No/100 Dollars ($10,000,000.00). Capitalized terms used in this Note
and not otherwise defined are used with the meanings set forth in the Loan
Agreement and other Loan Documents.

         6.       Application of Payments.

         Absent an Event of Default or Unmatured Event of Default, any payments
received by the holder hereof shall be applied first, to sums other than
principal and interest due the holder hereof, second, to the payment of all
interest accrued to the date of such payment, and the balance, if any, to the
payment of principal. Any payments received by the holder hereof after any
default shall be applied to the amounts specified in this paragraph in such
order as the holder hereof may, in its sole discretion, elect.

         7.       Late Charge and Default Interest.

         If any payment of interest and/or principal is not received by the
holder hereof when such payment is due, then, as additional remedies, (a) a late
charge of five percent (5%) of the amount due and unpaid will be added to the
delinquent amount for any payment past due in excess of ten (10) days, and (b)
all past due payments of principal and/or interest shall bear interest from
their due date until paid at an annual rate equal to four percent (4%) in excess
of the Agreed Rate, payable on demand.

         8.       Default.

         Borrower will be in default under this Note upon the occurrence of an
Event of Default as defined pursuant to Article 8 of the Loan Agreement. Time is
of the essence with regard to all payment obligations in this Note. Upon an
Event of Default, this Note shall become immediately due and payable at the
option of the holder hereof without presentment or demand or any notice to
Borrower or any other person obligated hereon.

         9.       Exercise of Rights.

         Failure to exercise any remedy or right hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default.

         10.      Costs of Collection.

         In the event any holder hereof utilizes the services of an attorney in
attempting to collect the amounts due hereunder or to enforce the terms hereof
or of any agreements related to this indebtedness, or if any holder hereof
becomes party plaintiff or defendant in any legal proceeding in relation to the
property described in any instrument securing this Note or for the recovery or
protection of the indebtedness evidenced hereby, Borrower, its successors and
assigns, shall repay to such holder hereof, on demand, all costs and expenses so
incurred, including reasonable attorney's fees, including those costs, expenses
and attorney's fees incurred after the filing by or against the


                                        2

<PAGE>   105


Borrower of any proceeding under any chapter of the Bankruptcy Code, or similar
federal or state statute, and whether incurred in connection with the
involvement of any holder hereof as creditor in such proceedings or otherwise.

         11.      Waivers.

         Borrower and all sureties, endorsers and guarantors of this Note waive
demand, presentment for payment, notice of nonpayment, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note or the release of any part primarily or secondarily liable hereon and
further agree that it will not be necessary for any holder hereof, in order to
enforce payment of this Note by any of them, to first institute suit or exhaust
its remedies against any maker or others liable herefor, and consent to any
extension or postponement of time or payment of this Note or any other
indulgence with respect hereto without notice thereof to any of them.

         12.      Joint and Several Obligations.

         Should this Note be signed by more than one person and/or entity, all
of the obligations herein contained shall be considered joint and several
obligations of each signer hereof.

         13.      Agreed Rate.

         Notwithstanding any provision contained herein to the contrary, the
Agreed Rate shall include the applicable interest rate described herein plus any
compensating balance requirement and any additional charges, costs and fees
incident to the Loan to the extent they are deemed to be interest under
applicable Arizona law. Should the Agreed Rate as calculated under this Note at
any time exceed that allowed by law, the Agreed Rate will be the maximum rate of
interest allowed by applicable Arizona law.

         14.      Prepayment.

         Borrower shall have the right to prepay the Note, at any time, without
premium or penalty.

                                 DESERT MOUNTAIN PROPERTIES LIMITED
                                 PARTNERSHIP, a Delaware limited partnership

                                 By:  Desert Mountain Development Corporation, a
                                      Delaware corporation, General Partner

                                      By: 
                                         ---------------------------------------
                                      Name: 
                                           -------------------------------------
                                      Title: 
                                            ------------------------------------

                                                                      "Borrower"


                                        3
<PAGE>   106
                                PLEDGE AGREEMENT


DATE:       May 14, 1998

PARTIES:    BORROWER:   DESERT MOUNTAIN PROPERTIES LIMITED
                        PARTNERSHIP, a Delaware limited partnership

            BANK:       NATIONAL BANK OF ARIZONA, a national banking association

         FOR VALUE RECEIVED, Borrower, in accordance with this Pledge Agreement,
pledges, assigns, transfers and grants to Bank a continuing security interest in
and lien upon all of its right, title and interest in and to the Pledged
Collateral (as defined below).

         A.       THIS PLEDGE AGREEMENT IS MADE FOR THE PURPOSE OF SECURING:

                  (1) The payment of all indebtedness evidenced by (i) that
certain Secured Promissory Note (Borrowing Base) of even date herewith in the
principal amount of up to Twenty- Five Million Dollars ($25,000,000.00) with
interest thereon, executed by Borrower and delivered to Bank and (ii) that
certain Secured Promissory Note (Warehouse) of even date herewith in the
principal amount of up to Ten Million Dollars ($10,000,000.00) with interest
thereon, executed by Borrower and delivered to Bank (as they may be amended,
modified, executed, and renewed from time to time, collectively the "NOTE").

                  (2) The performance of and compliance with all of the terms,
covenants and conditions set forth herein, in that certain Master Revolving Line
of Credit Loan Agreement of even date herewith, executed by Borrower and Bank
(the "LOAN AGREEMENT"), in the Note, in the Deeds of Trust, or in any other Loan
Document (all as defined in the Loan Agreement), and in any other loan
agreement, promissory note or other agreement now or hereafter executed by
Borrower which recites that performance of the obligations thereunder is secured
hereby (collectively, the "OBLIGATIONS"). All capitalized terms used herein and
not otherwise defined shall have the meanings given to such terms in the Loan
Agreement.

         B.       THE PARTIES HEREBY AGREE:

         SECTION 1. GRANT OF SECURITY INTEREST. In addition to and not in
substitution for or in lieu of any other assignment, security interest, pledge
or lien granted by Borrower to Bank, Borrower hereby pledges, assigns, and
grants to Bank a continuing security interest in and lien upon, all right, title
and interest of Borrower (but not its duties and obligations), whether now
existing or hereafter arising or acquired, in, to and under the following
(herein collectively called the "PLEDGED COLLATERAL"):


                                        1

<PAGE>   107



                (i) the Mortgage Notes described in EXHIBIT A hereto and all
         other Mortgage Notes from time to time pledged to Bank pursuant to the
         terms of the Loan Agreement, and the indebtedness evidenced thereby,
         together with all cash and noncash payments and any other property
         received or to be received with respect thereto;

               (ii) all deeds of trust, mortgages and security agreements which
         secure payment to Borrower of the Mortgage Notes (the "MORTGAGES");

              (iii) all other documents, instruments, rights, interests and
         agreements relating to or executed in connection with the Mortgage
         Notes, whether now existing or hereinafter arising, including, without
         limitation, all title insurance policies with respect to the Mortgages,
         any and all "contingent interest" or similar agreements, any and all
         other extension, modification, or "workout" agreements now or hereafter
         executed in connection with any of the Mortgage Notes, and any other
         documents and instruments described in EXHIBIT A hereto;

               (iv) any and all extensions, renewals, replacements or
         substitutions of or for any of the items described in the foregoing
         clauses (i)-(iii);

                (v) any and all other property at any time delivered, pledged,
         assigned or transferred by Borrower to Bank, including, without
         limitation, any additional promissory notes, deeds of trust, mortgages,
         security agreements, chattel paper and contract rights pledged, or in
         which a security interest is granted, pursuant to the Loan Agreement,
         and any other property of every kind or description of Borrower, now or
         hereafter, for any reason or purpose whatsoever, in the possession or
         control of, or in transit to, Bank or any agent of Bank, or in which
         Bank now or hereafter has a security interest securing payment and
         performance of any of the Obligations pursuant to the provisions of any
         written agreement or instrument other than this Pledge Agreement,
         including all distributions or other rights with respect to any
         property hereinabove referred to; and

               (vi) any and all proceeds with respect to any of the items
         described in the foregoing clauses (i)-(v).

TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, titles,
interests, privileges and preferences appertaining or incidental thereto, unto
Bank, their successors and assigns, forever, subject, however, to the terms,
covenants and conditions hereinafter set forth.

         SECTION 2.  REPRESENTATIONS AND WARRANTIES.  Borrower represents and
warrants to Bank that:

                  (a) Borrower is and will be the lawful owner of all the
         Pledged Collateral, free of all liens and claims whatsoever, other than
         the security interest hereunder, and no presently effective Uniform
         Commercial Code financing statement covering any of the


                                        2

<PAGE>   108



         Pledged Collateral is on file in any public office (other than
         financing statements pursuant to which the makers of the Mortgage Notes
         are debtors and Borrower is the secured party);

                  (b) The execution and delivery of this Pledge Agreement and
         the performance by Borrower of its obligations hereunder are within
         Borrower's powers, have been duly authorized by all necessary action,
         have received all necessary governmental approval (if any shall be
         required), and do not and will not contravene or conflict with any
         provision of law or of the partnership agreement of Borrower or of any
         agreement binding upon Borrower, and this Pledge Agreement is a legal,
         valid and binding obligation of Borrower, enforceable in accordance
         with its terms;

                  (c) Borrower has furnished to the Servicing Agent (i) the
         true, executed originals of the Mortgage Notes, properly endorsed to
         the order of Bank or otherwise as directed by Bank, (ii) true, executed
         originals of the Mortgages, properly assigned to Bank and (iii) true,
         executed originals of any other documents giving Borrower security for
         the Mortgage Notes properly assigned to Bank; and none of the above
         have been amended, modified or altered, except as disclosed to Bank in
         writing, and each of the above remains in full force and effect in
         accordance with its terms;

                  (d) Borrower has delivered to Bank from Servicing Agent, the
         attached Acceptance, which shall provide that all future payments under
         the Mortgage Notes after the date hereof shall be remitted to Bank by
         Servicing Agent;

                  (e) The Mortgage Notes are genuine, legal, valid, binding and
         enforceable obligations of the makers thereof subject to any
         bankruptcy, insolvency, reorganization, arrangement, moratorium,
         fraudulent conveyance or transfer or other similar laws relating to or
         affecting the rights of creditors generally. There have been no
         prepayments of principal or interest with respect to the Mortgage Notes
         except as disclosed in EXHIBIT A hereto, to the best knowledge of
         Borrower, no defaults exist with respect to the Mortgage Notes (except
         as disclosed in writing to Bank), and none of the Mortgage Notes are
         presently subject to any credits, claims, defenses or offsets;

                  (f) All information with respect to the Pledged Collateral set
         forth in any schedule, certificate or other writing at any time
         heretofore or hereafter furnished by Borrower to Bank, including,
         without limitation, EXHIBIT A hereto, and all other written information
         heretofore or hereafter furnished by Borrower to Bank, is and will be
         true and correct in all material respects as of the date furnished;

                  (g) So long as any of the Obligations shall remain
         outstanding, the Borrower shall not, without the express prior written
         consent of Bank, which may be withheld in the sole and absolute
         discretion of Bank, sell, assign, exchange, pledge or otherwise
         transfer, encumber, modify, waive, release, diminish or otherwise
         impair any of its rights in, to or under any of the Pledged Collateral;
         and


                                        3

<PAGE>   109



                  (h) All of the Pledged Collateral complies with and was
         originated in compliance with all applicable laws, rules, and
         regulations, including, without limitation, the Equal Credit
         Opportunity Act, the Real Estate Settlement Procedures, Act, and the
         Truth-in- Lending Act.

         The failure of any representation or warranty of Borrower in this
SECTION 2 with respect to the Pledged Collateral to be true shall not constitute
and Event of Default hereunder, however, any and all Pledged Collateral for
which such representations and warranties have proved to be untrue shall no
longer be Eligible Mortgage Loans and Borrower shall be required to meet the
remargining requirements of Section 2.11 of the Loan Agreement based on the new
Maximum Allowed Warehouse Advance after excluding the subject Pledged
Collateral.

         SECTION 3. CARE OF THE PLEDGED COLLATERAL. Bank shall be deemed to have
exercised reasonable care with respect to the interest of Borrower in the
custody and preservation of the Pledged Collateral if it takes such action for
that purpose as Borrower shall request in writing, but failure of Bank to comply
with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure of Bank to preserve or protect any rights with
respect to the Pledged Collateral against prior parties, or to do any act with
respect to preservation of the Pledged Collateral not so requested by Borrower,
shall be deemed a failure to exercise reasonable care in custody or preservation
of the Pledged Collateral.

         SECTION 4.  COLLECTION OF PAYMENTS DUE UNDER PLEDGED COLLATERAL.

                  (a) Bank will, at Borrower's expense, be entitled to receive
         and collect, as and when due, all amounts due with respect to any of
         the Pledged Collateral, including all payments of interest and
         principal on the Mortgage Notes and all other amounts received in
         respect of the Mortgage Notes (including, without limitation, insurance
         proceeds, condemnation awards and proceeds of any security).

                  (b) If and to the extent received by Borrower, Borrower will
         forthwith, upon receipt, transmit and deliver to Bank, in the form
         received, all cash, checks, drafts, chattel paper and other instruments
         or writings for the payment of money (endorsed, where required, so that
         such items may be collected by Bank) which may be received by Borrower
         at any time in full or partial payment or otherwise as proceeds of any
         of the Pledged Collateral. Any such items which may be received by
         Borrower will not be commingled with any other of its funds or
         property, but will be held separate and apart from its own funds or
         property and upon express trust for Bank until delivery is made to
         Bank.

                  (c) Except as otherwise provided in the Loan Agreement, any
         amounts which are delivered to Bank on account of partial or full
         payment or otherwise as proceeds of any of the Pledged Collateral shall
         be applied to the Advances on the date received if actually received by
         Bank prior to 1:00 p.m. (Arizona time) on a Business Day (as defined in
         the Loan Agreement) and in the event received after 1:00 p.m. (Arizona
         time) on any Business Day, on the next succeeding Business Day.


                                        4

<PAGE>   110


         SECTION 5.  UNDERTAKINGS AND AGREEMENTS OF THE DEBTOR.

                  (a) Borrower (i) will execute such Uniform Commercial Code
         financing statements and other documents (and pay the costs of filing
         and recording or refiling and rerecording the same in all public
         offices required by law or deemed necessary or appropriate by Bank) and
         do such other acts and things, all as may be necessary or as Bank may
         from time to time request, to establish and maintain a valid, perfected
         security interest in the Pledged Collateral (free of all other liens,
         claims and rights of third parties whatsoever) to secure the
         performance and payment of the Obligations; (ii) will keep, at the
         address indicated in SECTION 9 below, all its records concerning the
         Pledged Collateral, which records will be of such character as will
         enable Bank or its designees to determine at any time the status
         thereof; (iii) will furnish Bank such information concerning the
         Pledged Collateral as Bank may from time to time reasonably request,
         and will permit Bank and its designees, from time to time, to inspect,
         audit and make copies of and extracts from all records and all other
         papers in the possession of Borrower which pertain to the Pledged
         Collateral, and will, upon request of Bank, deliver to Bank all of such
         records and papers; (iv) will not, without the prior written consent of
         Bank, enter into any modification, amendment or supplement, or execute
         any waiver, extension, renewal or other agreement, with respect to any
         of the Mortgage Notes, the Mortgages or any other of the Pledged
         Collateral, except as specifically permitted pursuant to the Loan
         Agreement; (v) will furnish to Bank, as soon as possible and in any
         event within five (5) days after the occurrence from time to time of
         any change in the address of Borrower, notice in writing of such
         change; and (vi) will reimburse Bank for all costs and expenses,
         including reasonable attorneys' fees and legal expenses, incurred by
         Bank in seeking to collect or enforce any rights under the Pledged
         Collateral and, in case of an Event of Default, incurred by Bank in
         seeking to collect the Obligations and to enforce Bank's rights
         hereunder.

                  (b) In addition, Borrower will not commence any action to
         collect indebtedness under the Pledged Collateral, commence any
         judicial or non-judicial foreclosure, or accept any transfer in lieu of
         such foreclosure, without the written consent of Bank in its sole
         discretion; provided, however, that the foregoing shall not prohibit
         Borrower from sending customary demand letters and/or collection
         notices with respect to delinquencies or other defaults under the
         Mortgage Notes. If Borrower commences any such collection action,
         foreclosure or other action, such action shall be conducted in a manner
         satisfactory to Bank in its sole discretion, all costs and expense
         thereof shall be borne solely by the Borrower and Borrower will
         indemnify Bank from all claims, liability, losses, damages, judgments,
         costs, and expenses arising therefrom or relating thereto. Any
         proceeds, property or other rights or interests obtained as a result of
         any such judicial or non-judicial foreclosure or action in lieu thereof
         shall immediately be mortgaged, pledged and assigned to the Bank as
         further security for the Obligations on such terms and conditions as
         Bank may require.

                  (c) Upon the inclusion of any Mortgage Notes or other property
         in the Pledged Collateral pursuant to the Loan Agreement, such Mortgage
         Notes and other property shall be subject to all of the terms and
         conditions of this Pledge Agreement, and Borrower shall


                                        5

<PAGE>   111



         be deemed to have made and restated all representations and warranties
         set forth herein and in the other Loan Documents with respect to such
         additional Mortgage Notes and other property.

                  (d) From time to time upon request of Bank, Borrower shall
         deliver such endorsements, assignments, and other documents of transfer
         with respect to the Mortgage Notes as shall be requested by Bank in
         order to evidence and secure Bank's rights pursuant to the Loan
         Documents, together with resolutions, authorizations and other
         documents to evidence the authority of those signing on behalf of
         Borrower.

         SECTION 6. EVENTS OF DEFAULT. The following shall constitute an Event
of Default hereunder: (i) the failure of Borrower to pay any amount when due
hereunder and the expiration of ten (10) days after notice thereof from Bank to
Borrower without such failure being cured; (ii) the failure of Borrower to
comply with SECTION 5 hereof; (iii) the sale, assignment, exchange, pledge,
transfer, encumbrance, diminishment or impairment of any of the Pledged
Collateral by Borrower in violation hereof; (iv) the amendment, modification,
renewal of any of the Pledged Collateral without the written consent of Bank;
(v) the failure to Borrower to comply with SECTION 4 hereof; (vi) the failure of
Borrower to comply with any other term or condition hereof and the expiration of
thirty (30) days after notice thereof from Bank to Borrower without such failure
being cured; (vii) the breach of any representation and warranty hereunder
(except as otherwise provided in SECTION 2 hereof; and (viii) the occurrence of
an Event of Default under the terms of the Loan Agreement. Whenever an Event of
Default shall be existing, Bank may (i) without demand or notice of any kind,
appropriate and apply toward the payment of the Obligations any and all
balances, credits, deposits, accounts or moneys of or in the name of Borrower
then or thereafter with such party and (ii) exercise from time to time any
rights and remedies available to it under the Uniform Commercial Code as in
effect in the applicable jurisdictions or otherwise available to it under
applicable law. Without limiting the foregoing, upon the occurrence and during
the continuance of an Event of Default, Bank may, to the fullest extent
permitted by applicable law, without notice, advertisement, hearing or process
of law of any kind, (a) sell any or all of the Pledged Collateral, free of all
rights and claims of the Borrower therein and thereto at any public or private
sale or broker's board, and (b) bid for and purchase any or all of the Pledged
Collateral at any such public or private sale or broker's board. Any
notification of intended disposition of any of the Pledged Collateral required
by law shall be deemed reasonably and properly given if given pursuant to
SECTION 9 hereof at least twenty (20) days before such disposition. Borrower
agrees that in any sale of any of the Pledged Collateral after an Event of
Default (where such Pledged Collateral may be deemed to constitute a security),
Bank is hereby authorized to comply with any limitation or restriction in
connection with such sale as it may be advised by counsel is necessary in order
to avoid any violation of applicable law or in order to obtain any required
approval of the purchaser by any governmental or regulatory authority or
officer, and Borrower further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall Bank be liable or accountable to Borrower for any
discount allowed by the reason of the fact that such Pledged Collateral is sold
in compliance with any such limitation or restriction. Any proceeds of any
disposition by Bank of, or other recovery under, any of the Pledged Collateral
may be applied by


                                        6

<PAGE>   112


Bank to the payment of costs and expenses in connection with the Pledged
Collateral, including reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by Bank toward the payment of the
Obligations, as determined by Bank. In the event that such proceeds shall fail
to pay the Obligations in full, Borrower shall remain liable for the amount of
any deficiency. No delay on the part of Bank in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
Bank of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy, but all rights and remedies of Bank
hereunder shall be cumulative, and may be exercised concurrently if Bank so
elects.

         SECTION 7. AUTHORITY OF BANK. Bank shall have and be entitled to
exercise all such powers hereunder as are specifically delegated to Bank by the
terms hereof, together with such powers as are incidental thereto. In addition
to all of Bank's other rights and remedies, Borrower hereby appoints Bank as
Borrower's agent and attorney-in-fact, which appointment is coupled with an
interest and irrevocable, to take all actions as shall be necessary after the
occurrence of an Event of Default to transfer the Mortgage Notes to the name of
the Bank or any other person in connection with the exercise by the Bank of its
rights and remedies, which authority shall include, without limitation, the
right and power to complete all endorsements to any evidence of indebtedness for
the Mortgage Notes, to attach such endorsements to all such evidences of
indebtedness, and to make all deliveries, record all notices in any public
offices and otherwise take all action necessary to complete such transfer. Bank
is also authorized at any time and from time to time to give notice to the
obligors under any of the Pledged Collateral of its rights and interests
hereunder and to request information and confirmation from such obligors
regarding the Pledged Collateral and require that all such obligors make
payments on the Pledged Collateral directly to Bank (provided that prior to a
Default, Bank shall notify Borrower of such communications and cooperate with
Borrower in preparing the form of such communications and the manner of delivery
thereof). This authority may be exercised without any further consent of or
notice to Borrower and each such obligor and any other person dealing with Bank
may rely exclusively on the authorizations contained in this Pledge Agreement,
including, without limitation, this SECTION 7. Bank may execute any of its
rights and duties hereunder by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties hereunder. Neither Bank,
nor any director, officer or employee of Bank, shall be liable for any action
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct. Borrower
hereby agrees to reimburse Bank on demand, for all reasonable costs and expenses
incurred by Bank in connection with the administration of this Pledge Agreement
(including costs and expenses incurred by any agent employed by Bank) and agrees
to indemnify and hold harmless Bank and/or any such agent from and against any
and all liability incurred by Bank (or such agent) hereunder or in connection
herewith, unless such liability shall be due to gross negligence or willful
misconduct on the part of Bank or such agent.

         SECTION 8. TERMINATION. This Pledge Agreement shall terminate when all
the Obligations have been fully paid and Bank shall have no further obligation
to make any loans or advances to Borrower pursuant to the Loan Agreement or
otherwise, at which time Bank shall, at the cost and expense of Borrower,
reassign and redeliver (or cause to be reassigned and redelivered) to Borrower,
or to such person or persons as Borrower shall designate, against receipt, such
of the Pledged


                                        7

<PAGE>   113


Collateral (if any) as shall not have been sold or otherwise applied by Bank
pursuant to the terms hereof and shall still be held by it hereunder, together
with appropriate instruments of reassignment and release. Any such reassignment
shall be without recourse upon or representation or warranty by Bank.

         SECTION 9. PROVISIONS IN OTHER LOAN DOCUMENTS GOVERN THIS AGREEMENT.
This Pledge Agreement is subject to certain terms and provisions in the other
Loan Documents (including, without limitation, provisions regarding limited
partner liability in the Note), to which reference is made for a statement of
such terms and provisions.

         SECTION 10. COUNTERPARTS. This Pledge Agreement may be executed and
acknowledged in counterparts, all of which executed and acknowledged
counterparts shall together constitute a single document. Signature and
acknowledgment pages may be detached from the counterparts and attached to a
single copy of this Pledge Agreement to physically form one document.

         SECTION 11. FILING AS A FINANCING STATEMENT. At the option of Bank,
this Pledge Agreement, or a carbon, photographic or other reproduction of this
Pledge Agreement or of any Uniform Commercial Code financing statement covering
the Pledged Collateral (or any portion thereof) shall be sufficient as a Uniform
Commercial Code financing statement and may be filed as such.

                               DESERT MOUNTAIN PROPERTIES LIMITED
                               PARTNERSHIP, a Delaware limited partnership

                               By:  Desert Mountain Development Corporation, a
                                    Delaware corporation, General Partner

                                    By: 
                                       -----------------------------------------
                                    Name: 
                                         ---------------------------------------
                                    Title: 
                                          --------------------------------------


                                    NATIONAL BANK OF ARIZONA, a national banking
                                    association

  
                                    By: 
                                       -----------------------------------------
                                    Name: 
                                         ---------------------------------------
                                    Title: 
                                          --------------------------------------


                                        8

<PAGE>   114


                                   ACCEPTANCE

      The undersigned acknowledges that it is Servicing Agent of the Pledged
Collateral (as such term is defined in the foregoing Pledge Agreement) pursuant
to that certain Servicing Agreement by and between the undersigned and DESERT
MOUNTAIN PROPERTIES LIMITED PARTNERSHIP ("Debtor"). From and after the date of
the foregoing Pledge Agreement and for so long as National Bank of Arizona
("Bank") holds a security interest in the Pledged Collateral, the undersigned
will hold the same as agent for possession for Bank for the purpose of thereby
permitting Bank to perfect its possessory pledge lien in the Pledged Collateral
through means of such possession-by-agent.

      Further, the foregoing Pledge Agreement is hereby accepted only as notice
to the undersigned and the undersigned agrees to pay or perform to Bank all
moneys or obligations with respect to the indebtedness herein assigned, which,
but for this Pledge Agreement, would have been paid or performed to Debtor, with
the understanding, however, that the acceptance of this Pledge Agreement places
no greater burden upon the undersigned than if this Pledge Agreement had not
been accepted, other than to pay such moneys or to perform those obligations to
Bank rather than to Debtor. By this acceptance, no representations are held out
as to title insurance, responsibility of the undersigned, or the sufficiency of
this Pledge Agreement.

                                    DATED this     day of                , 19  
                                              ----       ----------------    --

                                    First American Title Insurance Company, 
                                    a California corporation
  
                                    By: 
                                       -----------------------------------------
                                    Name: 
                                         ---------------------------------------
                                    Title: 
                                          --------------------------------------


                                        9
<PAGE>   115
When recorded return to:

NATIONAL BANK OF ARIZONA
3101 North Central Avenue
Phoenix, Arizona  85012
Attn: Randall Pappas


                                                              FOR RECORDER'S USE
--------------------------------------------------------------------------------

                       DEED OF TRUST, ASSIGNMENT OF RENTS
                    AND SECURITY AGREEMENT AND FIXTURE FILING
                                (No Impoundments)

     THIS DEED OF TRUST SECURES A VARIABLE RATE PROMISSORY NOTE WHICH VARIES
     IN ACCORDANCE WITH THE TERMS OF SAID NOTE.

TRUSTOR:               DESERT MOUNTAIN PROPERTIES LIMITED PARTNERSHIP, a
                       Delaware limited partnership
                       10550 East Desert Hills Drive
                       Scottsdale, Arizona 85262

BENEFICIARY:           NATIONAL BANK OF ARIZONA, a national banking association
                       3101 North Central Avenue
                       Phoenix, Arizona 85012

TRUSTEE:               NATIONAL BANK OF ARIZONA, a national banking association
                       3101 North Central Avenue
                       Phoenix, Arizona 85012

PROPERTY in Maricopa County, State of Arizona, described as:

         See Exhibit "A" attached hereto and incorporated herein.

This Deed of Trust made between the Trustor, Trustee and Beneficiary above
named,

         WITNESSETH: That Trustor IRREVOCABLY GRANTS, BARGAINS, SELLS, CONVEYS,
TRANSFERS and ASSIGNS to TRUSTEE, IN TRUST WITH POWER OF SALE, the above
described real property and all improvements, all fixtures, and all equipment,
machinery, and apparatus of every kind and nature now located on said property
or hereafter attached to or used in connection with the property described
above, all of which Trustor represents are and shall be and are intended to be a
part of the realty, together with all permits, licenses, grazing and range
rights relating to or pertaining to said property, if any, together with all and
singular the tenements,


<PAGE>   116


hereditaments, and appurtenances, and all of the rents, issues and profits
thereof, and the reversion and reversions, remainder and remainders, and
together with all water rights thereunto belonging, to have and hold unto
Trustee, its successors and assigns forever (hereinafter called "Trust
Property").

         FOR THE PURPOSE OF SECURING:

         (1) To secure performance of the covenants and agreements herein set
forth and payment of (i) that certain Secured Promissory Note (Borrowing Base)
dated the 13th day of May, 1998, in the sum of Twenty-Five Million and No/100
Dollars ($25,000,000.00) and interest as specified therein and (ii) that certain
Secured Promissory Note (Warehouse) dated the 13th day of May, 1998, in the sum
of Ten Million and No/100 Dollars ($10,000,000.00) and interest as specified
therein (collectively, the "Note"). The Note contains a variable rate interest
rate;

         (2) The obligations set forth in that certain Master Revolving Line of
Credit Loan Agreement, dated May 14, 1998 (the "Agreement") between Trustor and
Beneficiary, pursuant to which Beneficiary may from time to time make loans
provided the sum of (a) the outstanding principal balance of all obligations
under the Agreement, and (b) the amounts committed but not yet advanced pursuant
to the Agreement shall not exceed the aggregate principal amount of
$35,000,000.00 at any one time, and any and all extensions, revisions or
renewals of the Note or the Agreement, in whole or in part;

         (3) Performance of each covenant, promise and agreement of Trustor
contained herein or incorporated herein by reference; and

         (4) Payment of all sums required to be made by Trustor pursuant to the
terms hereof.

         This Deed of Trust secures a revolving line of credit, and shall
continue as a valid lien with continued priority, regardless of the outstanding
balance of the Note or the repayment or advance of any loan funds.

         TO PROTECT THE TRUST PROPERTY AND SECURITY GRANTED BY THIS TRUST DEED,
IT IS AGREED:

                  1. Trustor warrants that it is seized of good and merchantable
fee simple title to the Trust Property, subject only to reservations in the
patent, water right application, obligations arising in favor of water use or
irrigation associations or companies (none of the assessments of which are
delinquent), current taxes not delinquent, easements and restrictions of record,
and none other.

Trustor acknowledges that all legal descriptions of real estate listed herein
were provided by Trustor, warrants the correctness of such descriptions, and
agrees that, in the event there does exist an error or defect in such legal
descriptions, Trustor authorizes Trustee to do all acts and things and execute



                                       2
<PAGE>   117


all documents deemed necessary by Beneficiary, proper and convenient for the
perfection, protection, preservation or enforcement of Beneficiary's rights
hereunder.

                  2. Trustor agrees to pay all indebtedness secured hereby
including principal, interest, costs and attorney's fees in accordance with the
terms of each evidence of indebtedness.

                  3. Trustor agrees to pay, before the same becomes delinquent,
all taxes, assessments, water and other charges levied or assessed upon or
against the Trust Property, and in addition all charges for gas, electricity and
other items furnished to or charged against the Trust Property.

                    Trustor agrees to pay, prior to delinquency, any and all
ground rents and amounts payable under any lease, trust deed, mortgage or other
instrument which may be an encumbrance on the Trust Property.

                  4. Trustor agrees to keep the Trust Property insured against
loss by fire and other hazards and casualties in such amounts and for such
periods as may be required from time to time by Beneficiary and as required
pursuant to the Agreement. Trustor also agrees to maintain and keep in force
during the term hereof flood hazard insurance as may be or may have been
required by Beneficiary, by law or regulation and as required pursuant to the
Agreement. Trustor agrees to pay the premiums on such insurance, when due and
prior to delinquency, and furnish proof of such payment to Beneficiary. All
insurance shall be carried in responsible insurance companies approved by
Beneficiary. The policies shall be held by Beneficiary and shall have, at all
times, loss payable clauses attached thereto in favor of and approved by
Beneficiary. Notwithstanding the foregoing, Beneficiary shall allow Trustor to
apply such proceeds to repair, rebuilding or restoration, provided that either:
(A) (i) at the time the loss, damage or destruction occurs and at the time the
proceeds are to be paid on account thereof, no default exists; (ii) an
independent architect acceptable to the Beneficiary and engaged by the Trustor
certifies to the Beneficiary that such repair, rebuilding or restoration can be
substantially completed by not later than the Maturity Date (as defined in the
Agreement) and (iii) that the insurance proceeds, together with other funds
deposited by Trustor for such purpose, will be sufficient to effect such repair,
rebuilding or restoration or (B) at the time that the loss, damage or
destruction occurs, the Trust Property affected thereby is subject to a Purchase
Agreement (as such term is defined in the Loan Agreement), in which case the
application of the insurance proceeds shall be governed by the terms thereof.

                    In the event of any loss or damage to the Trust Property,
Trustor will give immediate notice by mail to Beneficiary and make proper proof
of loss (and if not made by Trustor, Beneficiary may make the same). Beneficiary
may require that the payment for such loss be paid directly to Beneficiary only
and not jointly to Trustor and Beneficiary. Beneficiary may, at its option,
apply the payment to the reduction of the indebtedness secured hereby or may
apply the same to the restoration or repair of the property damaged. Trustor
hereby assigns to Beneficiary all such policies and the payments to be made
thereunder.



                                       3
<PAGE>   118


                    In the event of foreclosure of this Trust Deed, or exercise
of the power of sale given to Trustee, or acquisition of the title to the Trust
Property by Beneficiary or its assigns, all right, title, and interest of
Trustor in and to the policies and proceeds thereof and sums payable thereunder
shall forthwith pass automatically to the purchaser of said Trust Property.

                  5. Trustor agrees to keep the Trust Property at all times in
good condition and repair. All apparatus and machinery shall be kept in good
working order and properly serviced and repaired. Trustor will not allow nor
commit any waste, and will not demolish nor structurally alter the Trust
Property, and will do no act to injure or depreciate the value of such Trust
Property. Any portion of said Trust Property used for the growing of crops and
ditches, shall be kept free of noxious weeds and Johnson grass, and kept in a
good farmer-like manner. The Trust Property shall be kept in a reasonably clean,
safe and sanitary condition and shall not be allowed to become dilapidated or
rundown.

                    Trustor agrees that it will not remove or allow to be
removed any fixture or fixtures from the Trust Property without the prior
written consent of Beneficiary. Trustor further agrees that in adding any new
fixtures or in substituting fixtures on the Trust Property, prior proof will be
furnished Beneficiary that no security exists therein.

                  6. In the event Trustor fails to make any payment required to
be made by it hereunder, or fails to keep the Trust Property so insured, or
fails to keep the Trust Property so repaired, or fails to perform any of its
other obligations hereunder, Beneficiary may make any such payment, obtain any
such insurance, make any such repairs (Trustor hereby grants Beneficiary the
right to go upon the premises for such purpose), or remedy any other default of
Trustor. All expenditures made by Beneficiary shall be prima facie evidence of
the necessity therefor and reasonableness thereof. Such expenditures, together
with all incidental costs of Beneficiary, including reasonable attorney's fees
if incurred, shall be immediately due and payable by Trustor to Beneficiary,
shall bear interest until paid at a rate four percent (4%) more than the
non-default rate of interest applicable under the Note, and shall be secured by
this trust deed.

                  7. Trustee and Beneficiary and their officers, employees, and
agents may enter upon and inspect the Trust Property at any reasonable time or
times.

                  8. The proceeds of any judgment, award or settlement in any
condemnation or eminent domain proceeding or on account of injury to the Trust
Property by reason of public use, or by reason of private trespass, or other
injury to the Trust Property, shall be paid to Beneficiary, who may at its
option, either reapply the proceeds to reduce the indebtedness secured hereby
(whether matured or to mature in the future) or be released to Trustor. Trustor
hereby assigns and transfers to Beneficiary all such amounts and proceeds and
agrees that Beneficiary may receipt for the same on behalf of Trustor.

                  9. Trustor by execution of this Deed of Trust assigns and
transfers to Beneficiary all of Trustor's right, title and interest in and to
all leases, rents, profits or income from the Trust Property and each and every
part thereof, including all present and future leases or rental agreements,


                                       4
<PAGE>   119


which assignment and transfer may be enforced by Beneficiary only upon any
default by Trustor, existing under this Deed of Trust, by any one or more of the
following methods: (1) appointment of a receiver; (2) Beneficiary taking
possession of the Trust Property; (3) Beneficiary collecting any moneys payable
under leases or rental agreements directly from the parties obligated for
payment; (4) injunction; or (5) any other method permitted by law.

                    Unless and until Beneficiary shall elect to collect said
rents and rentals, the same shall be collected by Trustor, but Beneficiary may
at any time, after Trustor's default, collect all such rents and rentals and
Trustor agrees not to hinder or delay Beneficiary in collecting the same.

                    Any rents or rentals received by Beneficiary shall be
applied first to the cost of collection, second to any expenses Beneficiary may
expend in making the Trust Property ready for or satisfactory to any lessee or
tenant, and the remainder shall be applied on the indebtedness secured hereby
(whether matured or unmatured) as Beneficiary may elect.

                    Trustor shall not consent to the cancellation or surrender
of any lease on the Trust Property, or any portion thereof, having an unexpired
term of two (2) years or more, or decrease the rental payable under any lease,
or receive or collect more than two (2) month's rent in advance, and Trustor
agrees not to default in performing its obligations under all leases on the
Trust Property.

                  10. Time is of the essence of this Trust Deed. No failure on
the part of Beneficiary to exercise any of its rights hereunder shall be
construed as a waiver of or prejudice its rights in the event of any other
subsequent default or breach. No delay on the part of Beneficiary in exercising
any of its rights hereunder shall preclude it from the exercise thereof at any
time during the continuance of any such default. The acceptance of late payments
shall not waive the "time is of the essence" provision. All rights and remedies
of Beneficiary are cumulative and concurrent, and may be exercised singly,
severally or concurrently as Beneficiary may elect.

                  11. In the event the indebtednesses secured hereby or this
Trust Deed is placed in the hands of attorneys for collection or foreclosure,
then Trustor agrees to pay reasonable attorney's fees to Beneficiary, in
addition to the amount due thereon, together with all costs and expenses
incurred by Beneficiary in the collection and foreclosure thereof, and together
with the cost of a title search, the payment of which sums are secured by this
Trust Deed.

                  12. In the event that any of the following shall occur:

                           (i) Failure by Trustor (i) to pay any payment of
                  interest within the time period required pursuant to SECTION
                  2.4(a) of the Agreement and the expiration of 10 Business Days
                  after written notice from Beneficiary (ii) to pay, within 5
                  Business Day of the due date, any principal, including without
                  limitation pursuant to SECTION 2.9 or SECTION 2.11 of the
                  Agreement; (iii) to pay and perform all of the Obligations on
                  the Maturity Date; (iv) to pay when due any other amount
                  pursuant to the Loan Documents (as such term is defined in the
                  Agreement) and the expiration of 10 Business Days after notice
                  of such failure is given by the Beneficiary to Trustor



                                       5
<PAGE>   120


                  without such failure being cured; or (v) to cause Net Sales
                  Proceeds (as such term is defined in the Agreement) or other
                  amounts payable under SECTION 2.4(c) of the Loan Agreement to
                  be paid to the Beneficiary in accordance with SECTION 2.4(c)
                  of the Loan Agreement by 11:00 a.m. (Phoenix, Arizona time) on
                  the first Business Day after the day the Beneficiary notifies
                  Trustor in writing of the failure by the Beneficiary to
                  receive any such amounts.

                           (ii) Failure of Trustor to comply with any of the
                  Financial Covenants in the Agreement and the expiration of 30
                  Business Days after written notice from Beneficiary.

                           (iii) Except as otherwise provided in this Section 12
                  of the Deed of Trust, failure of Trustor to perform any other
                  obligation not involving the payment of money, or to comply
                  with any other term or condition applicable in any of the Loan
                  Documents, and the expiration of 30 days after written notice
                  of such failure is given by the Beneficiary to Trustor without
                  such failure being cured to Beneficiary's reasonable
                  satisfaction.

                           (iv) Any representation or warranty made by Trustor
                  in any of the Loan Documents or otherwise with respect to any
                  information now or hereafter delivered by Trustor to the
                  Beneficiary in obtaining the Commitment (as such term is
                  defined in the Agreement) (other than as otherwise provided in
                  SECTION 5.4 of the Agreement and the last paragraph of SECTION
                  2 of that certain Pledge Agreement dated as of the date
                  hereof), in negotiating and entering into the Agreement, in
                  obtaining each Advance (as such term is defined in the
                  Agreement) or otherwise in connection with the Obligations (as
                  such term is defined in the Agreement) is materially
                  incomplete, incorrect, or misleading as of the date made or
                  renewed, and the expiration of 30 Business Days after written
                  notice from Beneficiary of such failure.

                           (v) Trustor (i) is unable or admits in writing
                  Trustor's inability to pay Trustor's monetary obligations as
                  they become due; (ii) makes a general assignment for the
                  benefit of creditors; or (iii) applies for, consents to, or
                  acquiesces in, the appointment of a trustee (other than a
                  trustee under a deed of trust), receiver, or other custodian
                  for Trustor or any material portion or all of the property of
                  Trustor, or in the absence of such application, consent, or
                  acquiescence by Trustor a trustee, receiver, or other
                  custodian is appointed for Trustor or any or all of the
                  property of Trustor.

                           (vi) Commencement of any case under the Bankruptcy
                  Code (Title 11 of the United States Code) or commencement of
                  any other bankruptcy, arrangement, reorganization,
                  receivership, custodianship, or similar proceeding under any
                  federal, state, or foreign law by or against Trustor.


                                       6
<PAGE>   121


                           (vii) The dissolution, or liquidation of Trustor; the
                  consolidation or merger of Trustor with any other Person (as
                  such term is defined in the Agreement) where Trustor is not
                  the surviving entity; or the taking of any action by Trustor
                  toward a dissolution, liquidation, consolidation or merger
                  where Trustor is not the surviving entity (other than in
                  connection with a transaction that results in the Obligations
                  being paid and performed in full and the termination of the
                  Commitment).

                           (viii) Trustor or any other Person on behalf of
                  Trustor claims that any Loan Document to which it is a party
                  is not legal, valid, binding, and enforceable against Trustor,
                  that any lien, security interest, or other encumbrance
                  securing any of the obligations under the Loan Documents is
                  not legal, valid, binding, and enforceable, or that the
                  priority of any lien, security interest, or other encumbrance
                  securing any of the obligations in the Loan Documents is
                  different than the priority represented and warranted in the
                  Loan Documents.

                           (ix) Any of the insurance coverages required pursuant
                  to SECTION 6.8 of the Agreement actually lapses or expires
                  without being replaced by other insurance policies that comply
                  with SECTION 6.8 of the Agreement prior to such lapse or
                  expiration, and the expiration of one (1) Business Day after
                  notice from Beneficiary.

                           (x) A default occurs in the payment when due (after
                  giving effect to any applicable notice and grace periods),
                  whether by acceleration or otherwise, of any indebtedness of
                  Trustor in an aggregate amount exceeding $250,000, and the
                  expiration of 15 Business Days after written notice from
                  Beneficiary of such default.

                           (xi) Any judgment or order for the payment of money
                  in excess of $250,000 (not covered by insurance subject to
                  customary deductibles) is rendered against Trustor either (i)
                  enforcement proceedings are commenced by any creditor upon
                  such judgment or order and expiration of 15 Business Days
                  after written notice from Beneficiary of such commencement; or
                  (ii) such judgment or order is not vacated, stayed, satisfied,
                  discharged or bonded pending appeal within 60 days from the
                  entry thereof.

                           (xii) Filing of any foreclosure proceeding, giving
                  notice of a trustee's sale, or any other action by any Person,
                  other than the Beneficiary, to realize upon any of the
                  Collateral under any Lien or Encumbrance on any or all of the
                  Collateral, regardless of whether such Lien or Encumbrance is
                  a Permitted Exception and regardless of whether junior or
                  senior to the Deed of Trust, and the expiration of 15 Business
                  Days after written notice from Beneficiary.

                           (xiii) The filing of formal charges by any
                  Governmental Authority, including, without limitation, the
                  issuance of any indictment, under any RICO


                                       7
<PAGE>   122


                  Related Law against Trustor or any Affiliate (as such term is
                  defined in the Agreement) of Trustor that has a material
                  adverse effect on Trustor.

then and in any such event Beneficiary may declare the entire debt and all
indebtedness of Trustor to Beneficiary to be immediately due and payable without
notice to Trustor. Beneficiary may thereupon, at its option, and without prior
notice and without affecting the lien of this Trust Deed, do any one or more of
the following: enter upon the Trust Property and inspect, repair, improve and
maintain the same, rent or lease the Trust Property or portions thereof as
Beneficiary shall see fit, and perform such other acts thereon as Beneficiary
may deem necessary or advisable; sue for all or part of the indebtedness owing
from Trustor to Beneficiary without affecting or without losing the security of
this Trust Deed; foreclose this Trust Deed as a mortgage in the manner provided
by law; cause the exercise of the power of sale granted herein; bring an action
for damages, or exercise such other remedies or combination of remedies
Beneficiary may have under law and equity.

                  13. Upon payment in full of all sums secured hereby and
performance of all obligations of Trustor hereunder, the lien of this Trust Deed
upon the Trust Property shall be released by reconveyance by Deed of Release,
which said reconveyance and release shall be without warranty and shall operate
to reconvey the estate vested in Trustee hereby.

                    Beneficiary may, at any time, without notice, release any
person liable for payment of any indebtedness secured hereby, release portions
of the Trust Property from this Trust Deed, or extend or modify the time for
payment of the indebtedness secured hereby by agreement with Trustor or by
agreement with subsequent owners of the Trust Property, and any such release,
extension or modification shall not affect the personal liability of any person
for the payment of said indebtedness or the lien of this Trust Deed upon the
portion of the Trust Property not released herefrom.

                    At any time, without liability therefore and without notice,
and without affecting the personal liability of Trustor of any other person for
payment of the indebtedness secured hereby, Trustee may, with the consent of
Beneficiary: (1) release and reconvey by Deed of Release any part of the Trust
Property from the lien hereof; (2) consent to the making and recording of any
maps or plats of the Trust Property; (3) join in granting any easement on the
Trust Property; or (4) join in any extension agreement or any agreement
subordinating or modifying the lien or charge hereof. If Trustee shall perform
any such acts or execute complete or partial reconveyances it shall be paid a
fee in accordance the its established fees and charges therefor.

                    If reconveyance by Deed of Release is to be made by Trustee,
Beneficiary shall deliver the original of this Trust Deed and the note secured
hereby to Trustee with a request for reconveyance by Deed of Release.

                    The Grantee in any Deed of Release executed pursuant to this
Trust Deed may be described as "the person or persons legally entitled thereto"
and the recitals therein of any matters or facts shall be conclusive proof of
the truthfulness thereof.



                                       8
<PAGE>   123


                  14. In the event of default hereunder, Beneficiary, if it
desires Trustee to exercise the power of sale granted hereby, shall execute and
deliver to Trustee a written declaration of default and demand for sale and
shall surrender to Trustee this Trust Deed, the note secured hereby and all
documents evidencing any expenditures hereunder, together with such other
documents as Trustee may require. Beneficiary shall also execute and deliver to
Trustee all notices to Trustor that must be signed by Beneficiary. Upon receipt
thereof, Trustee shall sell the Trust Property as provided by law. Trustee may
postpone the sale as provided by law. After sale of the Trust Property, Trustee
shall deliver its deed to the purchaser conveying the Trust Property or any
portions thereof so sold but without any covenant or warranty, express or
implied. The recital in any such deed of any matters or facts, stated either
specifically or in general terms, or as conclusions of law or facts, shall be
conclusive proof of the truthfulness thereof.

                  15. Beneficiary may, at any time, request cancellation of
Trustee's Notice of Sale, whereupon Trustee shall execute and record, or cause
to be recorded, a Cancellation of Notice of Sale in the same county in which the
Notice of Sale was recorded. The exercise by Beneficiary of this right shall not
constitute a waiver of any default then existing or subsequently occurring.

                    In the event this Trust Deed and the indebtedness and
obligations secured hereby are reinstated in the manner provided by law,
Beneficiary shall forthwith notify Trustee thereof as provided by law. Upon such
notification, Trustee shall record, or cause to be recorded, a Cancellation of
Notice of Sale in the same county in which the Notice of Sale was recorded
within the period then required by law.

                  16. In the event of default hereunder, at any time before the
Trust Property has been sold pursuant to the power of sale granted hereby, this
Trust Deed may be foreclosed in the manner provided by law for the foreclosure
of mortgages on real property.

                  17. In the event of default hereunder, Beneficiary shall be
entitled to the appointment of a Receiver to take charge of the Trust Property,
collect the rents, issues and profits therefrom, care for and repair the same,
improve the same when necessary or desirable, lease and rent the Trust Property
or portions thereof (including leases existing beyond the term of receivership),
plant, cultivate and harvest crops thereon, and otherwise use and utilize the
Trust Property and to have such other duties as may be fixed by the Court.

                    Trustor specifically agrees that the Receiver may be
appointed without any notice to Trustor whatsoever, and the Court may appoint a
Receiver without reference to matters normally taken into account by Courts in
the discretionary appointment of Receivers, it being the intention of Trustor to
hereby authorize the appointment of a Receiver when Trustor is in default and
Beneficiary has requested the appointment of a Receiver. Trustor hereby agrees
and consents to the appointment of the particular person or firm (including an
officer or employee of Beneficiary) designated by Beneficiary as Receiver and
hereby waives its rights to suggest or nominate any person or firm as Receiver
in opposition to that designated by Beneficiary.




                                       9
<PAGE>   124


                  18. Beneficiary may substitute another Trustee herein named to
exercise the rights, powers and duties granted by law and contained herein. Upon
such appointment, and without the necessity of a conveyance to the successor
Trustee, the latter shall be vested with all the title, powers and duties
conferred upon the Trustee herein named.

                  19. Beneficiary or any purchaser at Trustee's sale or at any
foreclosure sale may, if it so elects, be subrogated to and succeed to all the
rights of Trustor under any or all leases on the Trust Property or portions
thereof. Beneficiary may, if it so elects, subordinate its rights hereunder to
any lease on the Trust Property, or a portion thereof, and keep the lease in
effect through and after any foreclosure action or Trustee's sale.

                  20. Beneficiary shall be subrogated to the lien,
notwithstanding its release of record, of any prior mortgage, trust deed or
other encumbrance paid or discharged from the proceeds of the note secured
hereby, or from any advance made by Beneficiary.

                  21. Any payments made after the due date will accrue interest
at the default rate specified in the Note secured by this Deed of Trust.

                  22. In the event of the passage after the date of this Trust
Deed of any law levying any tax upon this Trust Deed or the debt secured hereby,
which Beneficiary is obliged to pay, then Trustor agrees to pay said tax or
reimburse Beneficiary for the payment of the same, provided that Trustor shall
not be obligated to pay any amount which would be considered as interest at a
rate higher than allowed by law, and provided further that in the event of the
enactment of any such law Beneficiary shall have the right, at its option, to
declare the indebtedness secured hereby to be immediately due and payable.

                  23. Trustor will not, except as otherwise provided in the
Agreement, sell, convey, transfer, dispose of or further encumber the Trust
Property or any part thereof or any interest therein or enter into a lease
covering all or any portion thereof or an undivided interest therein, either
voluntarily, involuntarily or otherwise, without the prior written consent of
Beneficiary being first had and obtained, which consent may be withheld or
conditioned in the sole and absolute discretion of Beneficiary. Notwithstanding
the foregoing, Trustor may enter into contracts to sell Lots (as defined in the
Agreement) in the ordinary course of Trustor's business in connection with sales
contemplated to result in releases pursuant to Section 2.8 of the Agreement. Any
transfer or encumbrance of the controlling interest of the shares of stock of
Trustor, shall be deemed a transfer requiring Beneficiary's prior written
consent. All easements, declarations of covenants, conditions and restrictions
and private and public dedications affecting the Trust Property shall be
submitted to Beneficiary for its approval and such approval shall be obtained
prior to the execution or granting of any thereof by Trustor, accompanied by a
drawing or survey showing the precise location of each thereof.

                  24. Trustee may, but shall be under no obligation or duty to,
appear in or defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee. If Trustee shall take
such action at the request of Beneficiary, it shall be paid



                                       10
<PAGE>   125

therefor in accordance with its established fees and charges and shall be
reimbursed for its costs and expenses actually incurred, including attorney's
fees.

                  25. The Trust created hereby is irrevocable by Trustor.
Trustee accepts the Trust when this Trust Deed, duly executed and acknowledged,
is made a public record as provided by law, but acceptance is not required as a
condition to the validity hereof, and this Trust Deed is effective upon
delivery. Trustee shall not be obligated to notify any party hereto of pending
sale under any other trust deed, or any action or proceeding in which Trustor,
Beneficiary or Trustee shall be a party, except as required by law.

                  26. The word "Trustor" and the language of this instrument
shall, where there is more than one Trustor, be construed as plural and be
binding equally on Trustors. The obligations of Trustors hereunder and under the
note secured hereby shall be joint and several. This Trust Deed applies to, is
binding upon, and inures to the benefit of all parties hereto, their heirs,
executors, administrators, successors and assigns. The term "Beneficiary" shall
include not only the original Beneficiary hereunder, but also any future owner
and holder of the note secured hereby.

                  27. If any provision hereof should be held unenforceable or
invalid, in whole or in part, then such unenforceable or void provision or part
shall be deemed separable from the remaining provisions hereof and shall in no
way affect the validity of this Trust Deed.

                  28. Notwithstanding any provisions herein, or in the Note,
notes or other evidences of indebtedness, secured hereby, or in any related
agreement between Trustor and Beneficiary, the total liability of Trustor for
payments in the nature of interest shall not exceed the limits now imposed by
the laws of the State of Arizona.

                  29. Trustor requests that a copy of any Notice of Sale
hereunder be mailed to him at his mailing address set forth above. Any notices
required to be given to Trustor by mailing shall be effective and complete when
mailed and shall be mailed to the address set forth above. Lack of receipt
thereof shall in no way invalidate the notice or any sale by Trustee hereunder,
unless otherwise provided by law. If Trustor desires to change the address to
which notices shall be mailed, such change shall be accomplished by a request as
provided by law.

                  30. Trustee shall be paid for all acts performed by it
hereunder or in connection herewith in accordance with its established fees and
charges. All such fees and charges shall be paid by Trustor, and if Beneficiary
shall advance any such fees or charges, Trustor shall reimburse Beneficiary for
same on demand. Payment thereof is secured by this Trust Deed.

                  31. This is a Construction Deed of Trust and is entitled to
the priorities of Arizona Revised Statutes, Section 47-9313(F).

                  32. To the extent that any of the Trust Property constitutes
personal property or fixtures under applicable law, Trustor hereby grants to
Beneficiary a security interest in such property and agrees that in addition to
all other rights and remedies, Beneficiary shall have the rights



                                       11
<PAGE>   126

and remedies of a secured party under Article 9 of the Uniform Commercial Code
as in effect in Arizona in the event of a default hereunder.

                  33. Upon its recording in the real property records, this Deed
of Trust shall be effective as a financing statement filed as a fixture filing.
In addition, a carbon, photographic or other reproduced copy of this Deed of
Trust and/or any financing statement relating hereto shall be sufficient for
filing and/or recording as a financing statement. The filing of any other
financing statement relating to any personal property, rights or interests
described herein shall not be construed to diminish any right or priority
hereunder.

                  34. Section 2.8 of the Agreement states in part as follows:

         "2.8 Releases of Collateral.

                  (a) Releases of Units and Eligible Lots. Borrower may request
         releases of Eligible Lots and Units from the lien and encumbrance of a
         Deed of Trust from time to time; PROVIDED, HOWEVER, the Beneficiary has
         no obligation to release any Eligible Lot or Unit unless each of the
         following conditions precedent is satisfied:

                           (i) Generally.

                                    (A) Notification to the Lender. Borrower or
                           the closing agent handling the sale will have
                           notified the Lender in writing of the requested
                           release;

                                    (B) Remargining Payments Required. Borrower
                           will have made all payments required to be made
                           pursuant to SECTION 2.9 after giving effect to such
                           Release;

                                    (C) No Default. No Event of Default and no
                           Unmatured Event of Default shall have occurred and be
                           continuing;

                                    (D) Endorsements. Borrower shall provide the
                           Lender with such endorsements to the Title Policy as
                           the Lender may reasonably request in connection with
                           each release;

                                    (E) Processing/Release Fees. If required by
                           Lender, Borrower shall pay the standard
                           processing/release fees of the Lender and the trustee
                           under the Deed of Trust, in connection with such
                           release; and

                                    (F) Escrow Arrangements. Each release shall
                           be made by the Lender by delivery of the release
                           documents to a title company or other escrow agent
                           satisfactory to the Lender on such conditions as


                                       12
<PAGE>   127

                           shall assure the Lender that all conditions precedent
                           to such release have been satisfied and that the
                           applicable transaction will be completed.

                           (ii) Releases of Units.

                                    (A) Releases in the Ordinary Course of
                           Business. With respect to any release of Units, the
                           requested release is for the purpose of sale in the
                           ordinary course of Borrower's business pursuant to a
                           Purchase Contract; and

                                    (B) Payment of Release Price. In connection
                           with the sale of the Unit, Borrower will have paid to
                           the Lender a release price equal to the Net Sales
                           Proceeds.

                           (iii) Releases of Eligible Lots.

                                    (A) Releases for Custom Lot Sale. With
                           respect to any release of Eligible Lots, the
                           requested release is for the sale to a party who is
                           not an Affiliate of Borrower for the construction of
                           a custom home thereon; and

                                    (B) Payment of Release Price. In connection
                           with the sale of the Eligible Lot, Borrower will have
                           paid to the Lender a release price equal to the Net
                           Sales Proceeds.

                  (b) Releases for Dedications and Similar Purposes. Upon
         written request of Borrower and so long as no Event of Default or
         Unmatured Event of Default has occurred and is continuing and provided
         the Lender shall have approved the request, in the Lender's reasonable
         discretion, Borrower may release from the lien and encumbrance of a
         Deed of Trust such portions of the Collateral as Borrower (i) is
         required to convey to a Governmental Authority or a bona fide public
         utility in connection with the development of an Approved Subdivision
         (such as roads, drainage easements, and utility easements) and for
         which Borrower receives no monetary compensation; or (ii) proposes to
         convey to a homeowners' association or similar Person in connection
         with the development of an Approved Subdivision (such as common areas)
         and for which Borrower receives no monetary compensation. Releases that
         satisfy the requirements of this Section do not require the payment of
         any release price.

                  (c) Adjustment to Borrowing Base. Any Collateral released
         shall no longer be Eligible Collateral and the Collateral Value of
         Eligible Collateral shall be immediately and automatically adjusted to
         reflect such release. An item of Collateral


                                       13
<PAGE>   128

         not included as Eligible Collateral shall be released by Lender subject
         to any remargining payments required of Borrower as set forth in
         SECTION 2.9."

                  IN WITNESS WHEREOF, Trustor has executed this Deed of Trust
this 14th day of May, 1998.

                              DESERT MOUNTAIN PROPERTIES LIMITED
                              PARTNERSHIP, a Delaware limited partnership

                              By:    Desert Mountain Development Corporation, a
                                     Delaware corporation, General Partner


                                     By:
                                        ----------------------------------------
                                     Name:
                                          --------------------------------------
                                     Title:
                                           -------------------------------------


STATE OF                                )
        --------------------            )        ss.
County of                               )
         -------------------

                  The foregoing instrument was acknowledged before me this day
of ________________, 1998, by , the of DESERT MOUNTAIN DEVELOPMENT CORPORATION,
a Delaware corporation, as General Partner of DESERT MOUNTAIN PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership, on behalf of the corporation.

My commission expires:                  ----------------------------------------
                                        Notary Public
--------------------------



                                       14
<PAGE>   129
When Recorded Return To:

Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona  85004-0001
Attn: David J. Carroll, Esquire


                                                                  Recorder's Use
--------------------------------------------------------------------------------
                       AMENDMENT TO DEED OF TRUST


DATE:                  March 31, 1999

PARTIES:

Trustor:               DESERT MOUNTAIN PROPERTIES LIMITED PARTNERSHIP, a
                       Delaware limited partnership

Trustor's
Address:               10550 East Desert Hills Drive
                       Scottsdale, Arizona 85262

Trustee:               NATIONAL BANK OF ARIZONA, a national banking association

Trustee's
Address:               3101 North Central Avenue
                       Phoenix, Arizona 85012

Beneficiary:           NATIONAL BANK OF ARIZONA, a national banking association

Beneficiary's
Address:               3101 North Central Avenue
                       Phoenix, Arizona 85012

RECITALS:

         A. Beneficiary has extended to Trustor credit (the "Loan") in the
original principal amount of Thirty-Five Million and No/100 Dollars
($35,000,000.00) pursuant to that certain Master Revolving Line of Credit Loan
Agreement (Borrowing Base) between Trustor and Beneficiary dated May 14, 1998,
evidenced by (i) that certain Promissory Note (Borrowing Base) dated May 14,
1998, in the original principal amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00) (the ""Borrowing Base Note) and (ii) that certain Promissory
Note (Warehouse) dated May 14, 1998, in


<PAGE>   130


the original principal amount of Ten Million and No/100 Dollars
($10,000,000.00), both made by Trustor in favor of Beneficiary.

         B. The Loan is secured by, among other things, that certain Deed of
Trust, Assignment of Rent and Security Agreement and Fixture Filing executed by
Borrower, as trustor in favor of Bank, as Beneficiary, dated May 14, 1998,
recorded on June 15, 1998, as Instrument No. 98- 0507873, Official Records of
Maricopa County, Arizona (the "Deed of Trust").

         C. Trustor and Beneficiary are parties to that certain Second
Modification Agreement dated of even date herewith, pursuant to which, inter
alia, Trustor has requested and Beneficiary has agreed (i) to increase the
principal amount available for advance under the Borrowing Base Note from
Twenty-Five Million and No/100 Dollars ($25,000,000.00) to Thirty-Five Million
and No/100 Dollars ($35,000,000.00) and (ii) to add additional real property as
collateral under the Deed of Trust.

         D. Trustor and Beneficiary desire to amend the Deed of Trust for the
purpose of increasing the maximum principal amount secured by the Deed of Trust
and adding additional property to the lien and encumbrance thereof.

         NOW, THEREFORE, in consideration of the premises and promises hereafter
set forth, the parties hereto agree as follows:

AGREEMENTS:

         1. Accuracy of Recitals. Trustor hereby acknowledges the accuracy of
the foregoing Recitals.

         2. Amendment to Deed of Trust.

                  (a) Paragraph (1) of the Securing Clause on Page 2 of the Deed
of Trust is hereby deleted in its entirety and the following in inserted in
place thereof:

         (1) To secure performance of the covenants and agreements herein set
forth and payment of (i) that certain Secured Promissory Note (Borrowing Base)
dated the 13th day of May, 1998, as amended by that certain Second Modification
Agreement dated March 31, 1999, in the sum of Thirty-Five Million and No/100
Dollars ($35,000,000.00) and interest as specified therein and (ii) that certain
Secured Promissory Note (Warehouse) dated the 13th day of May, 1998, in the sum
of Ten Million and No/100 Dollars ($10,000,000.00) and interest as specified
therein (collectively, the "Note"). The Note contains a variable rate interest
rate;

                  (b) Exhibit A to the Deed of Trust is hereby amended to add
thereto, and Trustor hereby irrevocably grants, transfers, conveys and assigns
to Trustee, IN TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for
the benefit and security of Beneficiary,



                                       2
<PAGE>   131

the real property more particularly described on Exhibit A attached hereto and
incorporated herein by this reference.

         3. Miscellaneous. Except for the amendment above stated, all of the
remaining conditions and covenants of the Deed of Trust shall remain in full
force effect, unchanged, and the Deed of Trust is in all respects ratified,
confirmed and approved.

         4. Counterparts. This Amendment to Deed of Trust may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.





              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       3
<PAGE>   132




         IN WITNESS WHEREOF, the parties have executed this Amendment to Deed of
Trust as of the day and year first above written.


                       DESERT MOUNTAIN PROPERTIES LIMITED PARTNERSHIP

                          By: Desert Mountain Development Corporation, General
                              Partner


                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                       NATIONAL BANK OF ARIZONA, a national banking association


                       By:
                          ------------------------------------------------------
                       Name:
                            ----------------------------------------------------
                       Title:
                             ---------------------------------------------------

STATE OF                                )
        --------------------            )        ss
County of                               )
         -------------------

         The foregoing instrument was acknowledged before me this ___ day of
_______________, 1999, by __________________________, the
_______________________ of Desert Mountain Development Corporation, on behalf of
the corporation, as General Partner of Desert Mountain Properties Limited 
Partnership, on behalf of the partnership.


My Commission Expires:                                   
                                                         -----------------------
----------------------                                   NOTARY PUBLIC


                                       4
<PAGE>   133


STATE OF                                )
        --------------------            )        ss
County of                               )
         -------------------

         The foregoing instrument was acknowledged before me this ___ day of
_______________, 1999, by __________________________, the
_______________________ of National Bank of Arizona, a national banking
association, on behalf of the association.


My Commission Expires:                                   
                                                         -----------------------
----------------------                                   NOTARY PUBLIC



                                       5
<PAGE>   134


                                    EXHIBIT A

                        LEGAL DESCRIPTION - LOOKOUT RIDGE



                                       6