<PAGE>

                  SECOND AMENDMENT TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT


     THIS AMENDMENT ("Amendment"), dated July 2, 1999, and effective as of
July 2, 1999, is made by and among (i) SCHULER HOMES, INC., a Delaware
corporation (the "Company"); (ii) SCHULER HOMES OF CALIFORNIA, INC., a
California corporation, SCHULER HOMES OF OREGON, INC., an Oregon corporation,
SCHULER HOMES OF WASHINGTON, INC., a Washington corporation, MELODY HOMES,
INC., a Delaware corporation, SCHULER REALTY/MAUI, INC., a Hawaii
corporation, SCHULER REALTY/OAHU, INC., a Hawaii corporation, LOKELANI
CONSTRUCTION CORPORATION, a Delaware corporation, MELODY MORTGAGE CO., a
Colorado corporation, and SHLR OF WASHINGTON, INC., a Washington corporation
("SHLR/Washington"), SHLR OF UTAH, INC., a Utah corporation, SHLR OF
COLORADO, INC., a Colorado corporation, and SSHI LLC, a Delaware limited
liability company ("SSHI") (collectively referred to as the "Guarantors"),
(iii) the banks from time to time party to this Agreement (collectively
referred to as the "Banks", and individually referred to as a "Bank"), (iv)
FIRST HAWAIIAN BANK, a Hawaii corporation, as administrative and
co-syndication agent for the Banks (the "Administrative Agent"), and (v) BANK
OF AMERICA NT&SA, a national banking association, as documentation and
co-syndication agent for the Banks (the "Documentation Agent", the
Administrative Agent and the Documentation Agent are collectively referred to
as the "Agents").

                          W I T N E S S E T H  T H A T:

     WHEREAS, the Company, the Banks and the Administrative Agent entered
into that certain Credit Agreement dated as of March 29, 1996 (the "Original
Credit Agreement"), relating to the establishment of a revolving credit
facility (the "Credit Facility") in the principal amount of US$110,000,000.00
(the "Original Commitment") made available to the Company by the Banks; and

     WHEREAS, in connection therewith, the Company, the Banks and the
Administrative Agent executed certain Loan Documents (as defined in the
Original Credit Agreement); and

     WHEREAS, the Company, the Banks and the Administrative Agent entered
into that certain Supplement No. 1 to Credit Agreement effective as of
January 8, 1997 (the "Supplement"), relating to the use of certain proceeds
of Advances (as defined in the Original Credit Agreement) during the Waiver
Period (as defined in the Supplement); and

     WHEREAS, the Company, the Guarantors, the Banks and the Agents entered
into that certain Amended and Restated Credit Agreement dated March 27, 1997
(the "Amended Credit Agreement"), which amended the terms of the Original
Credit Agreement by, among other things, increasing the Original Commitment
to US $137,600,000.00; and

     WHEREAS, the Company, the Guarantors, the Banks and the Agents entered
into that certain Second Amendment to Loan Documents dated April 29, 1998,
which among other things, provided for the consent to the Company's issuance
of "Senior Notes", as defined therein, which



<PAGE>

would be PARI PASSU with the Credit Facility and changed the status of the
Guarantors from that of "co-borrowers" to "guarantors" of the Credit
Facility; and

     WHEREAS, the Company, the Banks and the Agents entered into that certain
Second Amended and Restated Credit Agreement dated September 30, 1998 (the
"Second Amended Credit Agreement"), which further amended the terms of the
Original Credit Agreement by, among other things, decreasing the Aggregate
Commitment to $90,000,000.00 and extending the Termination Date to July 1,
2001; and

     WHEREAS, the Company, the Banks and the Agents entered into that certain
First Amendment to Second Amended and Restated Credit Agreement dated January
21, 1999, which permitted the Company, through SHLR/Washington, to acquire
the majority interest in SSHI LLC; and

     WHEREAS, the Company has requested that the Banks and the Agents further
amend the terms of the Second Amended Credit Agreement by (i) increasing the
Aggregate Commitment to $120,000,000.00, (ii) extending the Termination Date
to July 1, 2002, (iii) increasing the sublimit for the issuance of Letters of
Credit from $10,000,000 to $15,000,000, and (iv) permitting the issuance of
"Senior Debt", and "Subordinated Debt", as such terms are defined herein; and

     WHEREAS, the Banks and the Agents are willing to comply with such
request, upon and subject to the terms and conditions hereinafter set forth;
and

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

     1. DEFINITIONS. All capitalized terms used herein, unless otherwise
defined herein, shall have the same meanings as those ascribed to them in the
Second Amended Credit Agreement.

     2. REPRESENTATIONS AND WARRANTIES. As an essential inducement to the
Banks and the Agents to execute this Amendment, the Company hereby repeats,
reaffirms and incorporates herein by reference all of the representations and
warranties contained in Section 5 of the Second Amended Credit Agreement.

     3. AMENDMENT OF LOAN DOCUMENTS. The Loan Documents are hereby amended as
follows:

           (a) As used in the Loan Documents, the term "Aggregate Commitment"
shall mean the combined Revolving Commitments of the Banks, in the amount of
U.S. ONE HUNDRED TWENTY MILLION AND NO/100 DOLLARS (U.S. $120,000,000.00);
provided, however, that the aggregate amount of all Letters of Credit issued
and outstanding at any one time may not exceed Fifteen Million Dollars
($15,000,000.00) and the aggregate amount of all



<PAGE>

Swing-Line Advances outstanding at any one time may not exceed Five Million
Dollars ($5,000,000.00).

           (b) The Schedule "1" attached to the Second Amended Credit
Agreement shall be replaced with the Schedule "1" attached hereto.

           (c) As used in the Loan Documents, the term "Termination Date"
shall mean July 1, 2002, unless extended by the Banks pursuant to Section
2.09.

           (d) As used in the Loan Documents, the term "Senior Debt" shall
mean all monetary obligations, evidenced by bonds, debentures, notes or
similar instruments which are or are intended to be issued pursuant to a
registration statement under the Securities Act of 1933 or an exemption from
the registration requirements thereunder, of the Borrower or its
Subsidiaries, including principal and interest thereon, unless such
obligation, by its terms or by the terms of any agreement or instrument
pursuant to which such obligation is issued, is subordinated in right of
payment to the Obligations of the Borrower hereunder. The term "Senior Debt"
shall include the "Senior Notes".

           (e) As used in the Loan Documents, the term "Permitted
Indebtedness" shall mean:

                  (i)  the Country Club Village Subordinate Mortgage;

                  (ii) the existing Indebtedness and obligations of the
           Borrower as a joint venture partner in Iao Partners (including any
           Indebtedness of Iao Partners for which there is recourse to the
           Borrower); PROVIDED, HOWEVER, that the Borrower shall be
           permitted, after March 31, 1997, (A) to incur additional
           Indebtedness as a joint venture partner of Iao Partners, (B) to
           make additional net investments in Iao Partners, and (C) to make
           additional net advances to Iao Partners, in amounts which shall
           not exceed $5,000,000.00, in the aggregate, for all such
           indebtedness, investments and advances described in (A), (B) and
           (C) above;

                  (iii) Subordinated Debt of the Borrower (including the
           Borrower's existing subordinated convertible debentures);

                  (iv) Indebtedness, not to exceed $10,000,000 in the
           aggregate, created or arising under a conditional sale or other
           title retention agreement, or incurred as purchase money
           financing, with respect to property acquired by the Borrower or
           any of its Subsidiaries; provided that the rights and remedies of
           the seller under such agreement in the event of default are
           limited to repossession or sale of such property;

                  (v) Indebtedness to the extent incurred upon the
           indorsement of an instrument in order to negotiate the same, and



<PAGE>

           for taxes, assessments, governmental charges, or levies to the
           extent that payment thereof shall not at the time be required to
           be made;

                  (vi) in addition to matters permitted in item (ii) above,
           Indebtedness and Guaranty Obligations (except for indemnification
           of sureties issuing bonds in connection with the Borrower's or any
           of its Subsidiaries' real estate development businesses), not to
           exceed $10,000,000 in the aggregate, incurred in the ordinary
           course of the Borrower's and its Subsidiaries' real estate
           development businesses;

                  (vii)  Premium Payments;

                  (viii) Guaranty Obligations (a) incurred in respect of
           indemnification of sureties for the issuance of bonds in
           connection with the Borrower's or any of its Subsidiaries' real
           estate development businesses and (b) associated with the
           acquisition of Melody Homes, Inc. and Melody Mortgage Co. by the
           Borrower;

                  (ix) Senior Debt and any guaranties thereof by any
           Guarantor;

                  (x)  the Guaranty; and

                  (xi) Indebtedness in respect of the Aggregate Commitment
           hereunder.

           (f) As used in the Loan Documents, the term "Real Estate
Indebtedness"shall mean: the total outstanding amount under: (1) the
Aggregate Commitment; (2) Subordinated Debt of the Borrower (including the
Borrower's existing subordinated convertible debentures); (3) Senior Debt;
and (4) other indebtedness, as may be permitted by the Banks, in connection
with the development of any Real Estate Development Assets.

           (g) Section 2.02 of the Second Amended Credit Agreement is
hereby revised to read in its entirety as follows:

                  "2.02 DETERMINATION OF BORROWING BASE; RESTRICTION ON
           ADVANCES, SWING-LINE ADVANCES AND LETTERS OF CREDIT. The
           Administrative Agent will determine the initial Borrowing Base at
           the Closing Date, calculated as of August 31, 1998, and evidenced
           by a Borrowing Base Certificate delivered by the Borrower, to the
           Administrative Agent no later than September 30, 1998. Such
           determination shall be effective for the first month following the
           Closing Date. Thereafter, the Borrowing Base for each succeeding
           month will be determined by the Administrative Agent, calculated
           as of the end of the preceding month,



<PAGE>

           evidenced by the Borrowing Base Certificate provided to the
           Administrative Agent by the Borrower, pursuant to Section 6.02(c)
           of this Agreement, and verified by the Administrative Agent to its
           satisfaction. The Administrative Agent shall promptly notify the
           Borrower and each Bank of each determination by the Administrative
           Agent of the Borrowing Base. Any determination of the Borrowing
           Base by the Administrative Agent shall be conclusively deemed to
           be correct unless objected to by the Borrower or the Majority
           Banks within five (5) Business Days of the receipt of such
           determination. The aggregate amount of all Advances and Swing-Line
           Advances outstanding hereunder, and all Letters of Credit issued
           and outstanding hereunder, shall not exceed the Borrowing Base, as
           determined by the Administrative Agent for any succeeding month,
           less (i) the outstanding principal amount of Senior Debt, and (ii)
           50% of the outstanding principal amount of new Subordinated Debt
           (i.e., Subordinated Debt incurred after the effective date of this
           Amendment), and shall in no event exceed the amount of the
           Aggregate Commitment. In the event the Borrowing Base, for any
           month, as determined by the Administrative Agent hereunder, less
           (i) the principal amount of Senior Debt, and (ii) 50% of the
           principal amount of new Subordinated Debt, is less than the
           aggregate amount of all outstanding Advances and Swing-Line
           Advances and all issued and outstanding Letters of Credit at the
           date of such determination, the Borrower shall, within fifteen
           (15) Business Days of the receipt of notification by the
           Administrative Agent, repay Advances or Swing-Line Advances and/or
           repay or cash collateralize issued and outstanding Letters of
           Credit, in such amounts as may be necessary to reduce the
           aggregate amount of all outstanding Advances and Swing-Line
           Advances and all issued and outstanding Letters of Credit, to the
           amount of the newly-determined Borrowing Base, less (i) the
           principal amount of Senior Debt, and (ii) 50% of the principal
           amount of new Subordinated Debt."

     4. DELIVERY OF RELATED DOCUMENTS. If requested by the Lender, the
Company shall deliver to the Administrative Agent on or before July 2, 1999
the following documents, all of which shall be in form and substance
satisfactory to the Banks and the Agents:

           (a) Properly certified resolutions of the respective Boards of
Directors or other governing body, as applicable, of the Borrower and the
Guarantors duly authorizing the execution and delivery of this Amendment by
such applicable party.

           (b) An opinion from counsel to the Borrower stating that after the
execution and delivery of this Amendment by the Borrower, the Loan Documents
will continue to be enforceable in accordance with their terms and will
continue to constitute the valid and legally binding obligations of the
Borrower.

     5. FEES.

           (a) ACTIVATION FEE. The Borrower shall pay to the Administrative
Agent on or before July 2, 1999, for the account of each Bank, an activation
fee in the amount of



<PAGE>

$75,000.00, which sum is equal to one-fourth of one percent (0.25%) of the
amount of the increase in the Aggregate Commitment ($30,000,000.00).

           (b) EXTENSION FEE. The Borrower shall pay to the Administrative
Agent on or before July 2, 1999, for the account of each Bank, an extension
fee in the amount equal of $180,000.00, which sum is equal to fifteen
hundredths of one percent (0.15%) of the Aggregate Commitment.

           (c) AGENCY FEES. The Borrower shall pay to the Administrative
Agent for the Administrative Agent's own account an agency fee in the amount
and at the times set forth in the letter agreements between the Borrower and
the Administrative Agent dated September 30, 1998, and July 2, 1999.

           (d) OTHER FEES. The Borrower will continue to pay all other fees
as required by Section 2.11 of the Second Amended Credit Agreement.

     6. VOLUNTARY REDUCTION IN COMMITMENTS. The Company and the Banks
acknowledge that, in connection with the increase in the Aggregate Commitment
to $120,000,000, as provided in paragraph 3(a) above, the Company shall have
the right and option, as provided in Section 2.07(b) of the Second Amended
Credit Agreement, after the Aggregate Commitment has remained at $120,000,000
for six (6) months, to permanently reduce the Aggregate Commitment by up to
$30,000,000, upon the terms and conditions set forth in said Section 2.07(b).

     7. BANKS' RIGHT AND OPTION TO EXTEND TERMINATION DATE. The Company and
the Banks acknowledge that, in connection with the extension of the
Termination Date to July 1, 2002, as provided in paragraph 3(c) above, the
Banks shall have the right and option, as provided in Section 2.09 of the
Second Amended Credit Agreement, to further extend the Termination Date for a
period of one (1) year, to July 1, 2003, upon the terms and conditions set
forth in said Section 2.09.

     8. CONFORMANCE. The Loan Documents are hereby amended to conform with
this Amendment, but in all other respects such provisions are to be and
continue in full force and effect.

     9. CONTINUANCE OF SECURITY. The performance of the obligations of the
Company under the Loan Documents, as herein amended, shall be fully secured
by and entitled to the benefits of the Guaranty and the other Loan Documents,
and any modifications, extensions, renewals or replacements thereof.

     10. CONTINUING GUARANTY. The Guarantors hereby consent to the foregoing
amendments, reaffirm their obligations under that certain Guaranty dated
January 21, 1999 (the



<PAGE>

"Guaranty") and covenant that the execution and delivery of this Amendment
shall not in any way affect, impair or diminish their obligations under the
Guaranty.

     11. NO OFFSETS. As of the date hereof, the Company has no claims,
defenses or offsets against the Banks or the Agents, or against the Company's
obligations under the "Loan Documents", as herein amended, whether in
connection with the negotiations for or closing of the Credit Facility, of
any prior amendments, of this Amendment, or otherwise, and if any such
claims, defenses or offsets exist, they are hereby irrevocably waived and
released. As of the date hereof, the Guarantors have no claims, defenses or
offsets against the Banks or the Agents, or against the Guarantors'
obligations under the Guaranty, whether in connection with the negotiations
for or closing of the Credit Facility, of any prior amendments, of this
Amendment, or otherwise, and if any such claims, defenses or offsets exist,
they are hereby irrevocably waived and released.

     12. NO WAIVER. This Amendment is made on the express condition that
nothing herein contained shall in any way be construed as affecting,
impairing or waiving any rights of the Banks or the Agents under any of the
Loan Documents, as herein amended.

     13. ENTIRE AGREEMENT. This Amendment incorporates all of the agreements
between the parties relating to the amendment of the Loan Documents and
supersedes all other prior or concurrent oral or written letters, agreements
or understandings relating to such amendment.

     14. HEADINGS. The headings of paragraphs and subparagraphs herein are
inserted only for convenience and reference, and shall in no way define,
limit or describe the scope or intent of any provisions of this Amendment.

     15. GOVERNING LAW; SEVERABILITY. This Amendment is executed and
delivered, and shall be construed and enforced, in accordance with and
governed by the laws of the State of Hawaii. If any provision of this
Amendment is held to be invalid or unenforceable, the validity or
enforceability of the other provisions of this Amendment shall remain
unaffected.

     16. SUBMISSION TO JURISDICTION. The Company and the Guarantors hereby
irrevocably and unconditionally submit, but only for the purposes of any
action or proceeding which the Banks and/or the Agents may bring to enforce
any of the Loan Documents, as amended herein, to the jurisdiction of the
courts of the State of Hawaii and the United States District Court for the
District of Hawaii. Such submission to such jurisdiction shall not prevent
the Banks and the Agents from commencing any such action or proceeding in any
other court having jurisdiction.

     17. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the



<PAGE>

same instrument, and in making proof of this Amendment, it shall not be
necessary to produce or account for more than one such counterpart.

     18. EXPENSES. The Company shall pay all reasonable expenses incurred by
the Administrative Agent in negotiations for and documentation of this
Amendment and the satisfaction of the conditions thereof, including, but not
limited to, fees and expenses of legal counsel for the Administrative Agent,
and any other costs incurred by the Administrative Agent in connection with
any of the matters described in this Amendment.

     19. BINDING EFFECT. This Amendment shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that the Company shall not assign this Amendment or any of the
rights, duties or obligations of the Company hereunder without the prior
written consent of the Banks and the Agents.



<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
day and year first above written.

                                     SCHULER HOMES, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance
                                                            "Borrower"

                                     SCHULER HOMES OF CALIFORNIA, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     SCHULER HOMES OF OREGON, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     SCHULER HOMES OF WASHINGTON, INC.

                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     MELODY HOMES, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     SCHULER REALTY/MAUI, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance



<PAGE>

                                     SCHULER REALTY/OAHU, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     LOKELANI CONSTRUCTION CORPORATION


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     MELODY MORTGAGE CO.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     SHLR OF WASHINGTON, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance


                                     SHLR OF UTAH, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance

                                     SHLR OF COLORADO, INC.


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance



<PAGE>


                                     SSHI LLC

                                     By SHLR of Washington, Inc.
                                        Its Managing Member


                                     By /s/ Douglas M. Tonokawa
                                       -------------------------------
                                       Name: Douglas M. Tonokawa
                                       Title: Vice President of Finance
                                                           "Guarantors"

                                     FIRST HAWAIIAN BANK,
                                     as Administrative Agent and
                                     Co-Syndication Agent

                                     By /s/ Russell A. Loo
                                       -------------------------------
                                       Name: Russell A. Loo
                                       Title: Assistant Vice President
                                                 "Administrative Agent"

                                     BANK OF AMERICA NT&SA,
                                     as Documentation Agent and
                                     Co-Syndication Agent

                                     By /s/ Cynthia Hamilton
                                       -------------------------------
                                       Name: Cynthia Hamilton
                                       Title: Vice President
                                                 "Documentation Agent"


                                     FIRST HAWAIIAN BANK, as a Bank

                                     By /s/ Russell A. Loo
                                       -------------------------------
                                       Name: Russell A. Loo
                                       Title: Assistant Vice President


                                     BANK OF AMERICA NT&SA, as a Bank

                                     By /s/ Cynthia Hamilton
                                       -------------------------------
                                       Name: Cynthia Hamilton
                                       Title: Vice President



<PAGE>

                                     BANK ONE, ARIZONA, NA

                                     By /s/ R. Williams
                                       -------------------------------
                                       Name: Rhonda R. Williams
                                       Title: Vice President

                                     BANK BOSTON, NA

                                     By /s/ Nicholas Whiting
                                       -------------------------------
                                       Name: Nicholas Whiting
                                       Title: Vice President

                                     BANK OF HAWAII

                                     By /s/ Joyce Y. Sakai
                                       -------------------------------
                                       Name: Joyce Y. Sakai
                                       Title: Vice President
                                                                "Banks"




<PAGE>


                                   SCHEDULE 1

<TABLE>
<CAPTION>

Bank                               Revolving                   Commitment
----                               Commitment                  Percentage
                                   -----------------------------------------
<S>                                <C>                         <C>
First Hawaiian Bank                $ 33,300,000.00             27.750000000%

Bank of America NT & SA            $ 26,700,000.00             22.250000000%

Bank One, Arizona, NA              $ 20,000,000.00             16.666666667%

Bank Boston, NA                    $ 20,000,000.00             16.666666667%

Bank of Hawaii                     $ 20,000,000.00             16.666666667%

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

                                   $120,000,000.00             100.000000000%

</TABLE>