<PAGE>
                                                                   Exhibit 10.13

                           FIRST MODIFIED AND RESTATED
                                 LOAN AGREEMENT

                                      Among

                           NEIGHBORHOODS CAPITAL, LLC
               and certain affiliated limited liability companies
                         (collectively, the "OBLIGORS"),

           The Lenders Who Are or May Become a Party To This Agreement
                         (collectively, the "LENDERS"),

                         WACHOVIA CAPITAL MARKETS, LLC,
                                   as Arranger
                                (the "ARRANGER"),

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                   as Agent for the Lenders and Issuing Lender
                                 (the "AGENT"),

                                       and

                        BRANCH BANKING AND TRUST COMPANY,
                               SOUTHTRUST BANK and
                          KEYBANK NATIONAL ASSOCIATION,
                           as Co-Documentation Agents
                         (the "CO-DOCUMENTATION AGENTS")

                          $125,000,000 CREDIT FACILITY

                          Dated as of November 15, 2004

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                   FIRST MODIFIED AND RESTATED LOAN AGREEMENT

     THIS FIRST MODIFIED AND RESTATED LOAN AGREEMENT (this "AGREEMENT") is dated
as of November 15, 2004, by and among NEIGHBORHOODS CAPITAL, LLC, a Virginia
limited liability company ("CAPITAL"), BRAM NEIGHBORHOODS, LLC, a Virginia
limited liability company, GLENKIRK NEIGHBORHOODS, LLC, a Virginia limited
liability company, GLYNN TARRA ESTATES, LLC, a Virginia limited liability
company, NEIGHBORHOODS I, L.L.C., a Virginia limited liability company,
NEIGHBORHOODS II, LLC, a Virginia limited liability company, NEIGHBORHOODS III,
LLC, a Virginia limited liability company, NEIGHBORHOODS IV, LLC, a Virginia
limited liability company, COLES RUN NEIGHBORHOODS, LLC, a Virginia limited
liability company, and ZION NEIGHBORHOODS, LLC, a Virginia limited liability
company (Capital and each of the other entities named, individually, an "INITIAL
BORROWER" and Capital and each of the other entities named, collectively, the
"INITIAL BORROWERS"); WALL NEIGHBORHOODS, LLC, a Virginia limited liability
company, MARUMSCO NEIGHBORHOODS, LLC, a Virginia limited liability company, and
NEIGHBORHOODS VI, LLC, a Virginia limited liability company (each of such
entities named, individually, an "INITIAL ADDITIONAL BORROWER" and each of such
entities named, collectively, the "INITIAL ADDITIONAL BORROWERS"); BEECH GROVE
NEIGHBORHOODS, LLC, a Virginia limited liability company, and NEIGHBORHOODS V,
LLC, a Virginia limited liability company (each of such entities named,
individually, a "BRIDGE LOAN ADDITIONAL BORROWER" and each of such entities
named, collectively, the "BRIDGE LOAN ADDITIONAL BORROWERS") (each of the
Initial Borrowers, the Initial Additional Borrowers and the Bridge Loan
Additional Borrowers, individually, a "BORROWER", each of the Initial Borrowers,
the Initial Additional Borrowers and the Bridge Loan Additional Borrowers,
collectively, the "BORROWERS") jointly and severally; KF NEIGHBORHOODS, L.L.C.,
a Maryland limited liability company and KF II NEIGHBORHOODS, LLC, a Maryland
limited liability company (each of such entities named, individually, a
"GUARANTOR" and each of such entities named, collectively, the "GUARANTORS")
jointly and severally (the Borrowers and Guarantors are hereinafter sometimes
referred to, individually, as an "OBLIGOR" and, collectively, as the
"OBLIGORS"); the Lenders who are or may become a party to this Agreement (each
of such entities, individually, a "LENDER" and each of such entities,
collectively, the "LENDERS"); and WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association (sometimes referred to as "WACHOVIA"), as a Lender,
as Agent for the Lenders and as Issuing Lender.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     Section 1.1 Definitions.

     The following terms shall have the meanings assigned to them below when
used in this Agreement.

     "Actual Costs Incurred" with respect to any Project that is or is to become
a Borrowing Base Asset means the applicable Obligor's actual costs which are
included in the Land Cost, Budgeted Lot Cost, Finished Lot Acquisition Cost or
Appraised Value of the Model Unit, Spec

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Unit or Sold Unit applicable to that Project and which the Obligor has incurred
as of the applicable time of determination.

     "Additional Borrower" means each Person that has executed and delivered an
Additional Borrower Joinder Supplement on or after the Closing Date that has
been accepted and approved by the Agent.

     "Additional Borrower Joinder Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as EXHIBIT "A-1",
with the blanks appropriately completed and executed and delivered by the
Additional Borrower and accepted by Capital on behalf of the Obligors.

     "Additional Guarantor" means each limited liability company which shall
have Capital as its sole member that has executed and delivered an Additional
Guarantor Joinder Supplement on or after the Closing Date that has been accepted
and approved by the Agent.

     "Additional Guarantor Joinder Supplement" means an Additional Guarantor
Joinder Supplement in substantially the form attached hereto as EXHIBIT "A-2",
with the blanks appropriately completed and executed and delivered by the
Additional Guarantor and accepted by Capital on behalf of the Obligors.

     "Adjusted EBITDA" means, as of the last day of any Fiscal Quarter, the sum
of (i) net income plus (ii) state and federal income taxes plus (iii)
amortization and depreciation expense plus (iv) interest expense in cost of
goods sold plus (v) interest expense from operations, determined in each case
for the Obligors on a consolidated basis for the four (4) Fiscal Quarters then
ended.

     "Affiliate" means, with respect to any Person, any individual, corporation,
partnership, association, trust, or other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with such
Person.

     "Agent" means Wachovia in its capacity as Agent hereunder, and any
successor thereto appointed pursuant to Section 10.9.

     "Agent's Office" means the office of the Agent specified in or determined
in accordance with the provisions of Section 11.1(c).

     "Agreement" has the meaning given to it in the preamble of this Agreement
and shall include all future amendments, modifications, substitutions and/or
renewals of this Agreement from time to time.

     "Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder as such amount may be reduced, increased or modified at
any time or from time to time pursuant to the terms of this Agreement. On the
Closing Date, the Aggregate Commitment shall be One Hundred Twenty-Five Million
and No/100 Dollars ($125,000,000.00).

     "Applicable Interest Rate" means (a) the Base Rate or (b) the LIBOR Rate.

     "Applicable Law" means all applicable provisions of the constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.


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     "Applicable Margin" means the applicable rate per annum added, as set forth
below, to the LIBOR Base Rate or LIBOR Market Index Rate. The Applicable Margin
(expressed as basis points) shall vary depending upon the Senior Leverage Ratio,
as follows:

<TABLE>
<CAPTION>
   Senior Leverage Ratio       Applicable Margin
   ---------------------       -----------------
<S>                            <C>
        less than 1.5                  175
1.5 but not greater than 2.0           200
2.0 but not greater than 2.5         212.5
       2.5 or greater                  225
</TABLE>

     The Applicable Margin effective on the Closing Date will be 212.5 basis
points. Thereafter the Applicable Margin shall be adjusted on a quarterly basis
based on the Senior Leverage Ratio, determined by the Agent in the exercise of
its sole and absolute discretion based on the most recent quarterly reports
required by Section 7.1(c) that the Agent has received, with any change to be
effective as of the first day of the first month following receipt by the Agent
of such statement.

     "Application" means an application, in the form specified by the Issuing
Lender from time to time, requesting the Issuing Lender to issue a Letter of
Credit.

     "Appraisal" means an appraisal meeting the requirements of Section 8.7
ordered by the Agent, on behalf of the Lenders, performed by an appraiser
approved by the Agent and prepared in accordance with policies and procedures
for real estate appraisals supporting extensions of credit by banking
institutions subject to regulation by the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System or the Federal Deposit Insurance
Corporation and reviewed and approved by the appraisal department of the Agent.

     "Appraised Value" means for Raw Land, the "as is" appraised value and for
Land Under Development, Finished Lots, Model Units (including, without
limitation, Options) and Spec Units (including, without limitation, Options),
the gross retail value of the applicable Lot or Unit on an "as-completed" basis
without discount to reflect the time value of money.

     "Approved Contract" means a bona-fide agreement of sale that (a) is with an
unrelated third-party purchaser for fair market value, (b) provides for a cash
deposit of at least five percent (5%) of the purchase price (or, in the case of
Units in Prince William County, Virginia, at least three percent (3%) of the
purchase price) which is held either (i) by Walker Title & Escrow or an
independent third party (i.e., a real estate broker) or (ii) in an escrow
account of an Obligor placed with a Lender, or (iii) by an Obligor, (c) is not
subject to, or conditioned upon, the sale or lease by the purchaser of any
existing real property owned by the purchaser, and (d) contains no contingency
other than for a mortgage commitment that is in an amount not in excess of
ninety-five percent (95%) of the gross sales price of the Unit (but any mortgage
contingency for a loan in excess of ninety-five percent (95%) of the sales
price, if permitted by Agent, shall require certification of pre-approval from
an acceptable mortgage lender), and which is not contingent upon the sale or
lease of any other real estate (although if the financing commitment does
include such sale or lease contingency, such contingency must be specifically
excluded in the agreement of sale).


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     "Approved Subdivision(s)" means those single-family residential
developments that are subject to a recorded subdivision plat approved by the
appropriate Governmental Authorities in the jurisdiction in which they are
located, and either (a) contain Lots for which advances have been made under the
Existing Loans, or (b) have been approved in accordance with Section 2.3(c). The
Approved Subdivisions as of the Closing Date are listed on EXHIBIT "B".

     "Arranger" means Wachovia Capital Markets, LLC.

     "As Is Value" or "As Is Appraised Value" of a Lot or Unit means the value
as determined by the most recent Appraisal pertaining to such Lot or Unit.

     "Assignment and Acceptance" shall have the meaning assigned thereto in
Section 11.10(b).

     "Assignment of Contracts" means the Assignment of Contracts, Plans and
Permits dated of even date with the Prior Agreement by the Obligors in favor of
the Agent.

     "Base Rate" means the sum of (a) the Applicable Margin plus (b) the LIBOR
Market Index Rate.

     "Benefited Lender" has the meaning given to it in Section 4.7.

     "Borrower" means each Person defined as a "Borrower" in the preamble of
this Agreement and each Additional Borrower; "Borrowers" means the collective
reference to all Persons defined as "Borrowers" in the preamble to this
Agreement and all Additional Borrowers.

     "Borrowing Base" At the time of determination, the sum of the following
amounts for Projects which are Borrowing Base Assets as shown in the most recent
Borrowing Base Report that has been received by the Agent:

          (a) Raw Land. With respect to Raw Land, the lesser of (i) fifty
percent (50%) of the Land Cost of the Raw Land and (ii) fifty percent (50%) of
the Appraised Value of the Raw Land;

          (b) Land Under Development. With respect to each Project which is Land
Under Development, the lesser of (i) the sum of (A) seventy-five percent (75%)
of the Obligor's actual cost incurred to purchase the Land component of the
Project, plus (B) (1) seventy-five percent (75%) of the Budgeted Lot Cost for
the Project (less the Obligor's actual cost incurred to purchase the subject
Land), multiplied by (2) the Completion Percentage for the Project, and (ii) the
sum of (A) sixty-five percent (65%) of the Appraised Value of the Land component
of the Project, plus (B) (1) sixty-five percent (65%) of the Appraised Value of
the Project (less the Appraised Value of the subject Land), multiplied by (2)
the Completion Percentage for the Project; provided, however, that during any
period in which the aggregate Appraised Value of Raw Land and Land Under
Development exceeds 125% of Tangible Net Worth, 75% shall be reduced to 70% and
65% shall be reduced to 60% in the foregoing formulas with respect to the
portion of Land Under Development in the Borrowing Base in excess of the amount
of Land Under Development that would cause the aggregate Appraised Value of Raw
Land and Land Under Development to equal 125% of Tangible Net Worth;

          (c) Finished Lots. With respect to Finished Lots, the lesser of (i)
eighty percent (80%) of Finished Lot Acquisition Cost for the Finished Lot and
(ii) seventy-five percent (75%) of the Appraised Value of the Finished Lot;


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          (d) Model Units. With respect each Model Unit, the sum of (i)
seventy-five percent (75%) of the Finished Lot Acquisition Cost for the subject
Lot, plus (ii)(A) seventy-five percent (75%) of the Appraised Value of the Model
Unit (less (i) noted above), multiplied by (B) the Completion Percentage for the
Model Unit;

          (e) Spec Units. With respect to each Spec Unit, the sum of (i)
seventy-five percent (75%) of the Finished Lot Acquisition Cost for the subject
Lot plus (ii) (A) seventy-five percent (75%) of the Appraised Value of the Spec
Unit (less (i) noted above), multiplied by (B) the Completion Percentage for the
Spec Unit; and

          (f) Sold Units. With respect to Sold Units, the sum of (i) eighty
percent (80%) of the Finished Lot Acquisition Cost for the subject Lot plus (ii)
(A) eighty percent (80%) of the applicable Contract Price (less the Finished Lot
Acquisition Cost), multiplied by (B) the Completion Percentage for the Sold
Unit;

provided, however, that the Borrowing Base shall be subject to the following
limitations measured in each case as of the time of determination:

               (1) Unsold Units (Spec Units and Model Units) shall not
constitute more than 30% of the portion of the Borrowing Base created by all
Units (Spec Units, Model Units and Sold Units).

               (2) The portion of the Borrowing Base supported by Raw Land shall
not constitute more than 10% of the aggregate Borrowing Base; and

               (3) The portion of the Borrowing Base supported by Raw Land, Land
Under Development and Finished Lots shall not constitute more than 65% of the
aggregate Borrowing Base.

     "Borrowing Base Assets" means those real estate assets of the Obligors
designated as "Borrowing Base Assets" on the most recent Borrowing Base Report
received by the Agent which are Raw Land, Land Under Development, Finished Lots
or Units, eligible for inclusion in the Borrowing Base pursuant to the
requirements of this Agreement and upon which the Agent has a recorded first
priority Mortgage for the benefit of the Lenders.

     "Borrowing Base Deficiency" has the meaning described in Section 2.5(c).

     "Borrowing Base Report" means the report provided by the Obligors to the
Agent pursuant to Section 7.1(a) containing the information shown on EXHIBIT "C"
and such other information concerning the Borrowing Base Assets as the Agent
shall request.

     "Bridge Loan" means the loan from Prior Lender to the Bridge Loan
Additional Borrowers in the principal amount of up to $14,999,000.

     "Bridge Loan Additional Borrower" means each Person defined as a "Bridge
Loan Additional Borrower" in the preamble of this Agreement; "Bridge Loan
Additional Borrowers" means the collective reference to all Persons defined as
"Bridge Loan Additional Borrowers" in the preamble to this Agreement.

     "Budgeted Lot Cost" means, with respect to each Project which is Land Under
Development, the sum of (a) the applicable Obligor's actual cost incurred to
purchase the Land, plus (b) the applicable Obligor's actual cost to obtain all
required Governmental Approvals, plus


                                        6

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(c) the total budgeted hard costs of labor, materials, land improvements,
utility installation and other work to be performed, plus (d) soft costs (survey
cost, permit fees, insurance, impact fees, real estate taxes, recording charges,
loan fees, marketing costs, interest and overhead) to be incurred, in connection
with the construction and completion of the improvements comprising such Project
in substantial compliance with the Plans and Specifications, all as reasonably
approved by the Agent; provided, however, that upon Completion of a Project
which is Land Under Development for an aggregate actual cost which is less than
the foregoing amount, the Budgeted Lot Cost for that Project shall be reduced to
such aggregate actual cost.

     "Budgeted Unit Cost" means, with respect to each Unit, the sum of (a) the
Finished Lot Acquisition Cost for the Lot comprising the subject Unit, plus (b)
the total budgeted hard costs of labor, materials, land improvements, utility
installation and hook-up and other work to be performed, plus (c) soft costs
(survey cost, permit fees, insurance, interest, real estate taxes, recording
charges, loan fees, marketing costs and overhead) to be incurred, in connection
with the construction and completion of the subject Unit in substantial
compliance with the Plans and Specifications, all as reasonably approved by the
Agent; provided, however, that upon Completion of a Unit for an aggregate actual
cost which is less than the foregoing amount, the Budgeted Unit Cost for that
Unit shall be reduced to such aggregate actual cost.

     "Business Day" means any day other than a Saturday, Sunday or legal holiday
on which banks in Charlotte, North Carolina, Tysons Corner, Virginia, New York,
New York, and each jurisdiction where a Lender has its Lending Office are open
for the conduct of their commercial banking business.

     "Capital" has the meaning given to it in the preamble to this Agreement.

     "Closing Date" means the date of this Agreement or if no Revolving Loans
are made on such date, such later Business Day upon which each condition
described in Section 5.1 shall be satisfied or waived in all respects in a
manner acceptable to the Agent, in its sole discretion and the initial Revolving
Loans are made.

     "Collateral" means all property of the Obligors including Borrowing Base
Assets, which is encumbered by a Mortgage or otherwise granted by the Obligors
as security for the Credit Facility under any of the Loan Documents.

     "Commitment" means, as to any Lender, such Lender's Revolving Credit
Commitment or L/C Commitment.

     "Commitment Percentage" means, as to any Lender at any time, the ratio,
stated as a percentage, of (a) the amount of the Commitment of such Lender to
(b) the Aggregate Commitment.

     "Completion" means as to each Project that is a Borrowing Base Asset, the
date as of which the first Borrowing Base Report was prepared upon which the
Completion Percentage for the Project equals or exceeds 95% of the Budgeted Lot
Cost or Budgeted Unit Cost applicable to that Project.

     "Completion Percentage" means, as of the time of determination, (a) for
each Project that is Land Under Development and is not Completed, the quotient,
stated as a percentage, of (i) Actual Costs Incurred (less, as applicable,
Obligor's actual cost incurred to purchase the Land or


                                        7

<PAGE>

the Appraised Value of the Land) divided by (ii) the Budgeted Lot Cost (less, as
applicable, Obligor's actual cost incurred to purchase the Land or the Appraised
Value of the Land), and (b) for each Project that is a Unit and is not
Completed, the quotient, stated as a percentage, of (1) Actual Costs Incurred
(less the Lot Acquisition Cost for the subject Unit) divided by (2) the Budgeted
Unit Cost (less the Lot Acquisition Cost of the subject Unit).

     "Compliance Inspector" means an independent architect or engineer selected
and retained by the Agent at the Obligors' expense, in order from time to time
as required by Agent, (i) to conduct inspections of the Borrowing Base Assets in
connection with requests for Revolving Loans, to determine (a) whether
construction is proceeding on schedule in substantial accordance with the Plans
and Specifications and (b) whether the necessary work has been completed in
order to justify the advance requested, and (ii) to consult on such other
matters as provided for herein or that the Agent may request in its sole
discretion.

     "Consolidated" means, when used with reference to financial statements or
financial statement items of the Obligors, such statements or items on a
consolidated basis in accordance with applicable principles of consolidation
under GAAP.

     "Consolidated Subsidiary(ies)" means any Person whose accounts would be
consolidated with those of the Obligors in their consolidated financial
statements in accordance with GAAP.

     "Contract Price" means the sales price for a Unit which is payable to an
Obligor pursuant to an Approved Contract.

     "Control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract.

     "Covenant Compliance Certificate" means a certificate signed by the chief
financial officer, chief accounting officer or treasurer of Capital certifying
that the Obligors are in compliance with all covenants under the Loan Documents
including the financial covenants and with all financial covenants under all
other debt facilities, demonstrating such compliance with specific computations,
all in reasonable detail and otherwise satisfactory to the Agent. The form of
the Covenant Compliance Certificate is attached to this Agreement as EXHIBIT
"D".

     "Credit Facility" means the Revolving Credit Facility, including the L/C
Facility.

     "Debt Service" means, as to the last day of any Fiscal Quarter the sum of
(a) interest paid (whether expensed or capitalized) plus (b) required principal
payments on any Indebtedness, determined in each case for the four (4) Fiscal
Quarters then ended.

     "Default" means the occurrence of any condition, event, act or omission
that, with the giving of notice or passage of time, or both, would constitute an
Event of Default.

     "Eligible Assignee" means, with respect to any assignment of the rights,
interests and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized under the laws of the United
States or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the type
extended hereunder and that has total assets in excess of $1,000,000,000, (c)
already a Lender hereunder (whether as an original party to this Agreement or as
the assignee of another


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<PAGE>

Lender), (d) the successor (whether by transfer of assets, merger or otherwise)
to all or substantially all of the commercial lending business of the assigning
Lender, or (e) any other Person that has been approved in writing as an Eligible
Assignee by the Agent and, so long as no Default or Event of Default has
occurred and is continuing, Capital, which consents shall not be unreasonably
withheld.

     "Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations, and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.

     "Event of Default" means any event or condition specified as an Event of
Default in Section 9.1.

     "Existing Lenders" means, separately and collectively, Wachovia, Branch
Banking and Trust Company and SouthTrust Bank, as Lenders under the Prior
Agreement.

     "Existing Letters of Credit" means those letters of credit issued and
outstanding under the L/C Facility as of the Closing Date and identified on
EXHIBIT "E-2" not taking into account any Letter of Credit issued or cancelled
on the Closing Date.

     "Existing Loans" means the Revolving Loans outstanding as of the Closing
Date and identified on EXHIBIT "E-1" not taking into account any advance of the
Revolving Credit Facility made by the Lenders pursuant to Article III hereof on
the Closing Date or any payment of amounts outstanding under the Revolving
Credit Facility made by the Obligors on the Closing Date.

     "Extensions of Credit" means (a) with respect to all Lenders, the aggregate
principal amount of all outstanding Revolving Loans and L/C Obligations and (b)
with respect to each Lender, an amount equal to the sum of (a) the aggregate
unpaid principal amount of all Revolving Loans made by such Lender then
outstanding and (b) such Lender's Commitment Percentage of the L/C Obligations
then outstanding.

     "Extension Fee" and "Extension Fees" have the meaning described in Section
4.4(c).

     "Federal Funds Rate" means a rate per day equal to the weighted average of
rates on overnight federal funds transactions with members of the Federal
Reserve System only, arranged by federal funds brokers, as published as of such
day by The Federal Reserve Bank of New York.

     "Fee Letter" means the letter agreement dated September 8, 2004 between the
Capital and the Agent concerning the payment of certain fees in connection with
the Credit Facility, as the Fee Letter may be amended from time to time.

     "Financial Covenants" has the meaning given to it in ARTICLE VIII.

     "Finished Lot" means any Lot with respect to which all off-site and on-site
infrastructure improvements (other than final paving) have been completed
including, without limitation (i) all utilities being installed to the Lot, and
(ii) all conditions to subdivision approval imposed by the applicable
Governmental Authorities being satisfied so that a building permit for a Unit
can be


                                        9

<PAGE>

obtained. To the extent that one or more of the requirements have not been
completed, such requirement shall be deemed to have been completed if such
requirement is fully bonded.

     "Finished Lot Acquisition Cost" means (a) for Finished Lots acquired from
third parties, the applicable Obligor's actual cost incurred to purchase the
Finished Lots or (b) for Finished Lots developed by the Obligor from Land Under
Development, the Budgeted Lot Cost.

     "Fiscal Quarter" means each of the four calendar periods of three months
ending on March 31, June 30, September 30 and December 31 of each year.

     "Fiscal Year" means the calendar period beginning January 1 and ending
December 31 of each year.

     "GAAP" means generally accepted accounting principles as promulgated by the
Financial Accounting Standards Board from time to time.

     "Governmental Approvals" means all authorizations, consents, approvals, or
licenses issued by Governmental Authorities.

     "Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government.

     "Guarantor" means each Person defined as a "Guarantor" in the preamble of
this Agreement and each Additional Guarantor; "Guarantors" means the collective
reference to all Persons defined as "Guarantors" in the preamble to this
Agreement and all Additional Guarantors.

     "Guaranty" means the Guaranty of Payment Agreement of even date herewith
executed and delivered by the Guarantors, as amended, modified, substituted,
extended, renewed and supplemented from time to time.

     "Hazardous Materials" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to pose a health or safety hazard to
persons or neighboring properties, (f) which are materials consisting of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.

     "Hedge Agreement" means any agreement executed by Capital with Wachovia or
any other Lender or any other financial institution approved by the Agent in
writing, and with respect to an interest rate swap, collar, cap, floor or a
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure executed in connection with hedging the


                                       10

<PAGE>

interest rate exposure of the Borrowers under this Agreement, and any confirming
letter executed pursuant to such Hedge Agreement, all as amended, restated or
otherwise modified.

     "Hedge Termination Value" means, in respect of any one or more Hedge
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedge Agreements, (a) for any date on or
after the date such Hedge Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b)
for any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Hedge Agreements, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Hedge Agreements (which may
include a Lender or any Affiliate of a Lender).

     "Horizontal Improvements" means utilities, including water and sewer,
curbs, gutters, stormwater detention structures and dedicated roadways built in
material compliance with and permitted under applicable laws and regulations all
constructed within easements or rights-of-way dedicated or granted to the
applicable Governmental Authority, utility company or created or reserved
pursuant to a declaration of easements or similar instrument.

     "Indemnified Loss or Expense" means Lenders' loss or expense in employing
deposits as a consequence of (a) the Borrowers' failure to make any payment when
due under the Revolving Loans, or (b) any prepayment of the Revolving Loans
bearing interest at the LIBOR Rate on a date other than the last day of an
Interest Period.

     "Initial Additional Borrower" means each Person defined as an "Initial
Additional Borrower" in the preamble of this Agreement; "Initial Additional
Borrowers" refers to all Persons defined as "Initial Additional Borrowers" in
the preamble to this Agreement.

     "Initial Borrower" means each Person defined as an "Initial Borrower" in
the preamble of this Agreement; "Initial Borrowers" refers to all Persons
defined as "Initial Borrowers" in the preamble to this Agreement.

     "Interest Period" means the period beginning on the first London Business
Day of each month and ending on the first London Business Day of the following
month.

     "Interest Rate Election Notice" means a notice substantially in the form of
EXHIBIT "L" attached to this Agreement and as more particularly described in
Section 4.3(e).

     "Issuing Lender" means Wachovia, in its capacity as issuer of any Letter of
Credit, or any successor thereto.

     "Land Cost" means the Obligors' actual cost incurred to purchase the Raw
Land.

     "Land Under Development" means land acquired by an Obligor which is zoned
for its intended use, has a preliminary plan approved by the appropriate
Governmental Authorities in the jurisdiction in which the land is located, and
is intended to be under development within nine (9) months of inclusion in the
Borrowing Base, as determined by the Agent.

     "Land Under Development Approval Submissions" has the meaning given to it
in Section 2.3(b).

     "L/C Commitment" means Five Million and No/100 Dollars ($5,000,000).


                                       11

<PAGE>

     "L/C Facility" means the letter of credit facility established pursuant to
ARTICLE III hereof.

     "L/C Fee" and "L/C Fees" shall have the meanings assigned thereto in
Section 3.3(a).

     "L/C Maximum Availability" means, for any given Letter of Credit, the
lowest of:

          (a) the L/C Commitment minus the L/C Obligations; or

          (b) the then applicable Revolving Credit Commitment minus the sum of
((i) all outstanding Revolving Loans and (ii) the L/C Obligations).

     "L/C Obligations" means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit that have not
then been reimbursed pursuant to Section 3.5 or converted to Revolving Loans.

     "L/C Participants" means the collective reference to all the Lenders other
than the Issuing Lender.

     "L/C Participation" means, as to any Lender at any time, with respect to
all Letters of Credit, the product of the L/C Obligations and such Lender's
Commitment Percentage and, with respect to any particular Letter of Credit, the
product of the L/C Obligations applicable solely to that particular Letter of
Credit and such Lender's Commitment Percentage.

     "Lender" means each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 11.10(b).

     "Lending Office" means, with respect to any Lender, the office of such
Lender administering such Lender's Commitment.

     "Letter of Credit Agreement" means the Letter of Credit Agreement in the
Issuing Lender's standard form, as such form may be revised from time to time,
entered into by and between a Borrower and the Issuing Lender in connection with
the issuance of each Letter of Credit; provided, however, each Letter of Credit
Agreement shall be modified to include a provision that in the event of any
inconsistency between the terms of the Issuing Lender's standard form Letter of
Credit Agreement and the terms of this Agreement, this Agreement shall control.
The Issuing Lender's current standard form of Letter of Credit Agreement is
attached to this Agreement as EXHIBIT "F".

     "Letters of Credit" shall have the meaning assigned thereto in Section
3.1(a).

     "LIBOR Base Rate" means, with respect to each Interest Period, the rate for
U.S. dollar deposits with a maturity equal to one (1) month, as reported on
Telerate page 3750 as of 11:00 a.m., London time, on the second London business
day before such Interest Period begins (or if not so reported, then as
determined by the Agent from another recognized source or interbank quotation).

     "LIBOR Market Index Rate" for any day, is the rate for 1-month U.S. dollar
deposits as reported on Telerate page 3750 as of 11:00 a.m., London time, on
such day, or if such day is not a London Business Day, then the immediately
preceding London Business Day (or if not so


                                       12

<PAGE>

reported, then as determined by the Agent from another recognized source or
interbank quotation).

     "LIBOR Rate" means the sum of (a) the Applicable Margin plus (b) the LIBOR
Base Rate.

     "Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and the filing of or
agreement to give any financing statement or other similar form of public notice
regarding encumbrances under the laws of any jurisdiction).

     "Loan Documents" means this Agreement and each other document executed and
delivered by the Obligors to the Lenders and/or the Agent to evidence and/or
secure the Revolving Loans, the obligation of the Obligors with respect to each
Letter of Credit and the obligation of the Obligors under each Hedge Agreement
entered into with a Lender in connection with the Obligations, all as amended,
modified, substituted, extended, and renewed from time to time.

     "Loan Fees" means the fees provided for in Section 4.4.

     "London Business Day" means any Business Day on which dealings in United
States Dollar deposits are carried out on the London interbank market and on
which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.

     "Lot" means any lot (i) created pursuant to a duly recorded record plat in
the jurisdiction in which such lot is located or (ii) within an Approved
Subdivision.

     "Mandate Letter" means the letter agreement dated September 8, 2004 between
Capital and the Agent concerning, among other things, the payment of certain
expenses in connection with the Credit Facility, as the Mandate Letter may be
amended from time to time.

     "Material Adverse Change" means any change in the properties, business,
operation or condition (financial or otherwise) of the Obligors or any of their
Subsidiaries that results in a material adverse change in the properties,
business, operation or condition (financial or otherwise) of the Obligors and
their Subsidiaries on a consolidated basis or a material adverse change in the
ability of the Obligors to perform their obligations under the Loan Documents.
For the purpose of determining whether a Material Adverse Change has occurred
that will permit the Agent to require new Appraisals of all or any portion of
the Borrowing Base Assets of a particular Approved Subdivision, Material Adverse
Change shall mean the decline in the sales prices for any Units in such Approved
Subdivision by an amount equal to fifteen percent (15%) or more or the reduction
in pace of sales for such Approved Subdivision by twenty five percent (25%) or
more below the Obligors' pro-forma projections, determined on a calendar quarter
basis.

     "Maximum Time" means, with respect to each Borrowing Base Asset other than
Model Units, the period of time which commences on the applicable Time Period
Commencement Date and continues through and including the date which is as
follows:

          (a) for Raw Land, the date which is 24 months after the applicable
     Time Period Commencement Date;


                                       13

<PAGE>

          (b) for Land Under Development, the date which is 36 months after the
     applicable Time Period Commencement Date;

          (c) for Finished Lots, the date which is 18 months after the
     applicable Time Period Commencement Date;

          (d) for Spec Units, the date which is 15 months after the applicable
     Time Period Commencement Date; and

          (e) for Sold Units, the date which is 15 months after the Applicable
     Time Period Commencement Date.

     "Model Unit" means any Unit which is not a Sold Unit and which is intended
to be used as a model or sales office to conduct the business of marketing and
selling homes.

     "Mortgage" means collectively (a) each mortgage, deed of trust, trust deed,
or deed to secure debt, supplemental mortgage or deed of trust, as the same may
be modified or amended from time to time (by spreader agreement or otherwise),
granted and delivered to the Agent by the Borrowers for the benefit of the
Lenders to secure the indebtedness under the Credit Facility and may include
Mortgages that secure the Bridge Loan provided the same are modified and amended
to secure the Obligations to the Agent's satisfaction and (b) each indemnity
deed of trust or supplemental indemnity deed of trust, as the same may be
modified or amended from time to time (by spreader agreement or otherwise),
granted and delivered to the Agent by the Guarantors for the benefit of the
Lenders to secure the Guaranty.

     "New Lenders" means, separately and collectively, KeyBank National
Association and First Horizon Home Loan Corporation, the Lenders added as such
in this Agreement.

     "Note" shall mean a Revolving Credit Note; "Notes" shall mean all Revolving
Credit Notes.

     "Notice of Account Designation" means a notice, substantially in the form
of EXHIBIT "G" attached to this Agreement, which identifies the deposit account
of the Borrowers to which the Agent is authorized to disburse the proceeds of
each borrowing under this Agreement.

     "Notice of Borrowing" means a notice, substantially in the form of EXHIBIT
"H" attached to this Agreement, which must be submitted to the Agent in
connection with a borrowing pursuant to ARTICLE II with respect to Revolving
Loans specifying the information required by Section 2.2(a).

     "Notice of Prepayment" means a notice, substantially in the form of EXHIBIT
"I" attached to this Agreement, which shall be submitted to the Agent in
connection with a prepayment pursuant to ARTICLE II with respect to Revolving
Loans.

     "Obligations" means any and all obligations (now existing or hereafter
arising) of the Obligors under the Loan Documents.

     "Obligor" means each Person defined as a "Obligor" in the preamble to this
Agreement and each Additional Borrower and Additional Guarantor; "Obligors"
means the collective reference to all Persons defined as "Obligors" in the
preamble to this Agreement and all Additional Borrowers and Additional
Guarantors.


                                       14

<PAGE>

     "Operational Area" means the District of Columbia and those portions of the
Commonwealth of Virginia and the State of Maryland within 100 miles of the
Obligors' offices located at 1881 Campus Commons Drive, Suite 101, Reston,
Virginia 20191.

     "Options" means shall mean options and upgrades to Units which (a) are not
included in the standard Plans and Specifications for the Unit and (c) are paid
for by the purchaser through an addition to the purchase price for the Unit.

     "Other Taxes" has the meaning given to it in Section 4.12(b).

     "Permitted Liabilities" means (a) the Obligations, (b) liabilities arising
in the ordinary course of business, such as trade accounts payable, taxes
payable, operating lease obligations and customer deposits, (c) reimbursement
obligations under surety bonds, (d) monies owed pursuant to the terms of any
Hedge Agreements that are contracted by the Borrowers with respect to the
Obligations, and (e) Permitted Other Liabilities not exceeding the sum of (i)
$25,000,000 and (ii) the potential liability for "breakage" under the terms of
any Hedge Agreement entered into with respect to Permitted Other Liabilities;
provided, however, the foregoing limit on Permitted Other Liabilities shall not
apply from and after any date that the Lenders elect not to extend the Maturity
Date.

     "Permitted Liens" means (i) Liens imposed by law, such as mechanics' liens
that (a) arise in the ordinary course of business and that secure amounts not
yet due and payable, (b) secure amounts due and payable that are in good faith
disputed by the Obligors, or (c) arise out of judgments or awards against the
Obligors with respect to which the Obligors at the time shall currently be
prosecuting an appeal or proceedings for review; provided, however in the case
of (b) and (c) above involving amounts in excess of $250,000 individually or in
the aggregate, the Obligors shall have obtained a bond or stay of execution
satisfactory to the Agent, within ten (10) days after item (b) or (c) becomes a
Lien on all or any portion of the Borrowing Base Assets, for the full amount of
the Lien; (ii) Liens for taxes or assessments or other governmental charges not
yet due and payable; (iii) the UCC-1 financing statements contemplated by each
Mortgage; (iv) each Mortgage; (v) any Spreader Agreement; (vi) Liens or other
encumbrances set forth on the relevant schedules of the title insurance policies
provided to the Agent pursuant to Section 2.8 hereof and approved by the Agent
in its sole discretion, and (vii) Liens to secure Permitted Other Liabilities.

     "Permitted Other Liabilities" means liabilities incurred for the
acquisition, development, improvement and construction of for-sale residential
housing developments not financed by the Credit Facility and not included in the
Borrowing Base Assets or liabilities necessary to the operation of the Obligors'
home building business.

     "Person" means an individual, corporation, partnership, association, trust,
business trust, joint venture, joint stock company, pool, syndicate, sole
proprietorship, unincorporated organization, Governmental Authority or any other
form of entity or group thereof.

     "Plans and Specifications" means the plans and specifications (including
the engineer's and/or architect's final drawings) describing any Project or
other improvements to be constructed within the Borrowing Base Assets.

     "Post-Default Rate" means, in respect of any principal of the Revolving
Loans or any other amount payable by the Obligors under this Agreement, the
Notes or any other Loan


                                       15

<PAGE>

Document, if an Event of Default has occurred and is continuing, or if the Note
is not paid in full when due (whether on demand or at stated maturity, by
acceleration or otherwise), a rate per annum during the period commencing on the
date of the Event of Default or due date, as applicable, until such amount is
paid in full, equal to four percent (4%) above any interest rate or rates then
in effect in respect of the principal of the Revolving Loan or any portion
thereof.

     "Prior Agreement" means the Loan Agreement made as of December 2, 2003 by
and among Capital and certain affiliated limited liability companies, as
Obligors, certain Lenders named therein, Wachovia Capital Markets, LLC, as
Arranger, and Wachovia, as a Lender, as Agent for the Lenders and as Issuing
Lender, as may have been previously amended, modified, substituted, extended
and/or renewed from time to time.

     "Prior Lender" means Wachovia in its capacity as lender under the Bridge
Loan.

     "Project" means, as of the applicable time of determination, separately and
collectively, each of the following categories of Borrowing Base Assets, and
each Borrowing Base Asset within each such category: Raw Land; Land Under
Development, Finished Lots, Model Units, Spec Units and Sold Units, which are
included in the Borrowing Base.

     "Raw Land" means Land acquired for future development that does not meet
the definitions of Land Under Development or Finished Lots.

     "Raw Land Approval Submissions" has the meaning given to it in Section
2.3(a).

     "Register" has the meaning given to it in Section 11.10(d).

     "Reimbursement Obligation" means the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.

     "Required Lenders" means any combination of Lenders holding not less than
sixty-six and two-thirds percent (66 2/3%) of the Extensions of Credit or, if
there are no outstanding Revolving Loans and Letters of Credit, any combination
of Lenders whose aggregate Commitments are not less than sixty-six and
two-thirds percent (66 2/3%) of the Aggregate Commitment; provided, however, so
long as there are only three (3) Lenders, "Required Lenders" shall mean any two
(2) Lenders.

     "Responsible Officer" means any of the following: the chief executive
officer, chief accounting officer, treasurer, or chief financial officer of the
Obligors or any other officer of the Obligors reasonably acceptable to the
Agent.

     "Revolving Credit Commitment" means (a) as to any Lender, the obligation of
such Lender to make Revolving Loans to and to issue or participate in Letters of
Credit issued for the account of the Borrowers hereunder in an aggregate
principal amount or face amount at any time outstanding not to exceed the amount
set forth opposite such Lender's name on SCHEDULE I hereto as such amount may be
reduced, increased or modified at any time and from time to time pursuant to the
terms hereof and (b) as to all Lenders, the Aggregate Commitment.

     "Revolving Credit Commitment Percentage" means, as to the respective
Revolving Credit Commitment of any Lender at any time, the ratio of (a) the
amount of the Revolving Credit Commitment of such Lender to (b) the Revolving
Credit Commitments of all Lenders.


                                       16

<PAGE>

     "Revolving Credit Facility" means the revolving credit facility established
pursuant to ARTICLE II, including the L/C Facility established pursuant to
ARTICLE III.

     "Revolving Credit Maturity Date" means December 1, 2007 or such later date
to which the Revolving Credit Maturity Date may be extended under Section 2.7
hereof (but, if any such date shall not be a Business Day, the next Business Day
thereafter), which date shall constitute the last day of the Revolving Credit
Term.

     "Revolving Credit Notes" means the collective reference to the Revolving
Credit Notes made by the Borrowers payable to the order of each Lender,
substantially in the form of EXHIBIT "J" hereto, evidencing the Revolving Credit
Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extensions thereof, in
whole or in part; "Revolving Credit Note" means any of such Revolving Credit
Notes.

     "Revolving Credit Term" means the period ending on the Revolving Credit
Maturity Date, unless such term is extended from time to time by the Lenders,
pursuant to the terms hereof, in which case the "Revolving Credit Term" for the
Revolving Credit Facility shall be the period ending on the date to which such
Revolving Credit Maturity Date was extended.

     "Revolving Loan" means any advance of the Revolving Credit Facility made by
the Lenders on or after the Closing Date pursuant to ARTICLE II hereof.

     "Revolving Loan Borrowing Limit" means the lesser of (a) the Revolving
Credit Commitment (including the L/C Commitment, if any) or (b) the Borrowing
Base.

     "Revolving Loan Fee" and "Revolving Loan Fees" have the meanings given to
them in Section 4.4(a).

     "Revolving Loan Maximum Availability" means the maximum aggregate amount
that is available to be advanced for any given Revolving Loan. The Revolving
Loan Maximum Availability for any given Revolving Loan is the Revolving Loan
Borrowing Limit minus the sum of all outstanding Revolving Loans and all L/C
Obligations which have not been converted to Revolving Loans.

     "Senior Leverage Ratio" means the ratio of (a) notes and loans payable to
financial institutions to (b) Tangible Net Worth, determined in each case for
the Obligors and their Subsidiaries on a consolidated basis.

     "Spec Unit" means any Unit under construction that is not a Sold Unit or a
Model Unit.

     "Sold Unit" means a Unit that is subject to an Approved Contract.

     "Spreader Agreement" means a spreader agreement or supplemental Mortgage,
duly executed by the Obligors, in substantially the form attached as EXHIBIT "K"
and in content acceptable to the Agent in its sole discretion, which spreads the
lien of the applicable Mortgage to additional property to be included as
Borrowing Base Assets.

     "Subdivision Approval Submissions" has the meaning given to it in Section
2.3(c).

     "Subsidiary" means as to any Person, any corporation, partnership, limited
liability company or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other


                                       17

<PAGE>

entity is at the time, directly or indirectly, owned by or the management is
otherwise controlled by such Person (irrespective of whether, at the time,
capital stock or other ownership interests of any other class or classes of such
corporation, partnership, limited liability company or other entity shall have
or might have voting power by reason of the happening of any contingency).

     "Survey" means a plat which clearly designates at least (i) the location of
the perimeter of the land by courses and distances; (ii) the location of all
easements, rights-of-way, alleys, streams, waters, paths and encroachments;
(iii) the location of all building restriction lines and set-backs, however
established; (iv) the location of any streets or roadways abutting the land; and
(v) the then "as-built" location of any improvements and the relation of the
improvements by courses and distances to the perimeter of the land, building
restriction lines and set-backs, all in conformity with the Minimum Standard
Detail Requirements for Land Title Surveys adopted by the American Congress on
Surveying and Mapping (1999 Edition).

     "Tangible Net Worth" means the amount by which (a) the Total Tangible
Assets of the Obligors exceeds (b) its total consolidated liabilities,
determined in each case on a consolidated basis for the Obligors and their
Subsidiaries.

     "Taxes" has the meaning given to it in Section 4.12(a).

     "Time Period Commencement Date" means the following for each Project:

          (a) for Raw Land, the date as of which the Raw Land is first included
in the Borrowing Base;

          (b) for Land Under Development that is acquired from third parties,
the date included in the calculation of the Borrowing Base and for Land Under
Development that is developed from Raw Land, the date as of which the Land Under
Development is reclassified from Raw Land in calculation of the Borrowing Base;

          (c) for Finished Lots that are acquired from third parties, the date
included in the calculation of the Borrowing Base; and for Finished Lots that
are developed from Land Under Development, the date as of which Finished Lots
are reclassified from Land Under Development in calculation of the Borrowing
Base; and

          (d) for Spec Units and Sold Units, the first to occur of (i) 15 days
after the issuance by the Governmental Authority of a building permit for such
Unit and (ii) the date upon which the applicable Obligor commences construction
of such Unit.

     "Title Confirmation Letter" means a letter from a Title Insurance Company
or attorney handling title matters for the Obligors which confirms (a) the
ownership of the Borrowing Base Asset or Assets that are the subject of the
letter, (b) the recordation of the Mortgage or Spreader Agreement that encumbers
the applicable Borrowing Base Asset or Assets, and (c) the first priority of
such Mortgage or Spreader Agreement. Such letter shall include or have as
attachments the information listed in EXHIBIT "K."

     "Title Insurance Company" means the title insurance company or companies
selected by the Obligors and approved by the Agent, which approval shall not be
unreasonably withheld, to provide title services and insurance, when required,
in connection with the Credit Facility.

     "Total Liabilities" means (a) all liabilities as shown on the consolidated
balance sheet of the Obligors and their Subsidiaries in accordance with GAAP and
Fin 46, (b) all outstanding loan


                                       18

<PAGE>

balances associated with recourse obligations of the Obligors and their
Subsidiaries not shown on the Obligors' balance sheet, (c) the principal amount
of all surety bonds, letters of credit and/or tri-party agreements whether
presented for payment or not but excluding municipal performance bonds, letters
of credit and other performance related liabilities for which payment has not
been demanded by the beneficiary and for which reimbursement by the Obligors or
the applicable Subsidiary has not been made, (d) net liabilities under Hedge
Agreements, (e) any liabilities of partnerships or joint ventures that should be
included in accordance with Fin 46, and (f) any non-option related purchase
agreements for which the Obligors or any of their Subsidiaries is obligated to
pay at a future date.

     "Total Liabilities to Tangible Net Worth Ratio" has the meaning given to it
in Section 8.4.

     "Total Tangible Assets" means the amount by which total consolidated assets
of the Obligors and their Subsidiaries exceed the value of any non-compete
agreement, software rights, acquired customer relationships, order backlog,
goodwill, the amount by which the cost of any acquisition exceeds the book value
thereof and other items customarily treated as intangibles under GAAP.

     "UCC" means the Uniform Commercial Code as adopted by and in effect from
time to time in the Commonwealth of Virginia,

     "Unencumbered and Unrestricted Liquid Assets" means (a) unrestricted cash
plus (b) Revolving Loan Maximum Availability nearest to, but not later than, the
test date minus (c) trade payables.

     "Uniform Customs" means the Uniform Customs and Practice for Documentary
Credits (1994 Revision), International Chamber of Commerce Publication No. 500.

     "Unit" means any single-family residential unit including all appurtenances
and other structures constructed therewith, constructed or to be constructed on
a Lot in an Approved Subdivision in accordance with the Plans and
Specifications.

     "Wachovia" means Wachovia Bank, National Association, a national banking
association, and its successors.

     Section 1.2 General.

     Unless otherwise specified, a reference in this Agreement to a particular
section, subsection, Schedule or Exhibit is a reference to that section,
subsection, Schedule or Exhibit of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.

     Section 1.3 Other Definitions and Provisions.

          (a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Revolving Credit Notes and the other Loan Documents
or any certificate, report or other document made or delivered pursuant to this
Agreement.


                                       19

<PAGE>

          (b) Miscellaneous. The word "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.

                                   ARTICLE II
                            REVOLVING CREDIT FACILITY

     Section 2.1 Revolving Loans.

          (a) Advances. Subject to the terms and conditions hereof, each Lender
severally agrees to make Revolving Loans to the Borrowers from time to time from
the Closing Date until the Revolving Credit Maturity Date as requested by
Borrowers in accordance with the terms of Section 2.2; provided, however, (i) no
Lender's Revolving Credit Commitment Percentage of the sum of the aggregate
amount of all outstanding Revolving Loans and L/C Obligations shall at any time
exceed such Lender's Revolving Credit Commitment and (ii) no borrowing of
Revolving Loans shall be made if the requested Revolving Loan would exceed the
Revolving Loan Maximum Availability.

          (b) Use of Proceeds. Each Revolving Loan made by a Lender shall be in
a principal amount equal to such Lender's Revolving Credit Commitment Percentage
of the aggregate principal amount of Revolving Loans requested on such occasion.
Within such limit and the other limits set forth herein, the Borrowers may
borrow, repay and reborrow Revolving Loans pursuant to this Agreement until the
Revolving Credit Maturity Date. Revolving Loans shall be made only for the
purposes of (i) repaying the outstanding balance of the Existing Loans and the
Bridge Loan; (ii) if approved by the Agent in accordance with this Agreement,
funding the acquisition of Raw Land and Land Under Development to be
simultaneously added to the Borrowing Base Assets; (iii) funding other Actual
Costs Incurred with respect to the Borrowing Base Assets; (iv) making advances
to reimburse the Issuing Lender for L/C Obligations that have been drawn upon;
and (v) general working capital and other home building activities.

     Section 2.2 Procedures for Advances of Revolving Credit.

          (a) Borrowing Base Report and Notice of Borrowing.

               (1) The Lenders shall not be required to fund any Revolving Loan
to the Borrowers during any calendar month until five (5) Business Days after
the Agent's receipt of the Borrowing Base Report for the prior month. Any
Borrowing Base Report delivered after 11:00 a.m. (Virginia time) shall be deemed
to have been delivered on the next Business Day. The Lenders shall not be
required to fund Revolving Loans more than once during any calendar week.

               (2) Each Notice of Borrowing shall (i) be delivered to Agent with
a sufficient number of copies for Agent to deliver a copy to each Lender, which
Agent hereby undertakes to do, not later than 11:00 a.m. (Virginia time), at
least five (5) Business Days before the date upon which a Revolving Loan is
desired; (ii) be irrevocable and constitute a representation by the Borrowers,
to the best of their knowledge, that the conditions applicable to the extension
of credit requested as set forth in ARTICLE V have been satisfied by the
Borrowers in all material respects; and (iii) constitute the Borrowers'
certification that the


                                       20

<PAGE>

representations and warranties set forth in ARTICLE VI are true and correct in
all material respects except as may be otherwise disclosed to the Agent in
writing (it being understood that such disclosure is not intended to constitute
a waiver or approval by the Agent or Lenders of any matter so disclosed), that
the Obligors are in compliance with all covenants contained in ARTICLE VII, and
that no Event of Default has occurred and no Default has occurred and is
continuing on the date of the Notice of Borrowing or will have occurred on the
date any Revolving Loan is made pursuant to such Notice of Borrowing after
giving effect thereto. Notices of Borrowing received after 11:00 a.m. (Virginia
time) shall be deemed received on the next Business Day. The Agent shall deliver
a copy to the Lenders of each Notice of Borrowing not later than 2:00 p.m.
(Virginia time) on the day a Notice of Borrowing is received prior to 11:00 a.m.
(Virginia time) and not later than 10:00 a.m. on the day following receipt of a
Notice of Borrowing received after 11:00 a.m. (Virginia time).

               (3) Each Notice of Borrowing shall include the following
information:

                    (A) the amount of the Revolving Loan requested;

                    (B) the date the requested borrowing is to be made, which
     shall be a Business Day;

                    (C) the Borrowers' certification that all representations
     contained in the Loan Documents, including the most recently submitted
     Borrowing Base Report and Covenant Compliance Certificate, (i) are true and
     correct in all material respects as of the date of the Notice of Borrowing
     except as may be otherwise disclosed to the Agent in writing (it being
     understood that such disclosure is not intended to constitute a waiver or
     approval by the Agent or Lenders of any matter so disclosed), and, (ii)
     unless the Borrowers notify the Agent to the contrary in writing before a
     Revolving Loan is made, will continue to be true and correct in all
     material respects from the date of the Notice of Borrowing to the date of
     the Revolving Loan requested in the Notice of Borrowing; and

                    (D) The Borrowers' certification that all applicable
     conditions to a Revolving Loan set forth in ARTICLE V have been satisfied,
     including a certification that the requested Revolving Loan does not exceed
     the then applicable Revolving Loan Maximum Availability.

               (4) If the Obligors fail to deliver a Borrowing Base Report as
required by Section 7.1(a), the Obligors shall have fifteen (15) days from the
date the Borrowing Base Report was due to deliver a new Borrowing Base Report.
This section shall not be subject to any provision of this Agreement which
requires the Agent to provide the Obligors notice of non-compliance or
additional time periods to perform. For so long as the Agent has not received a
current Borrowing Base Report no advance of the Revolving Credit Facility shall
be made, no Letter of Credit will be issued and no Collateral will be released
from the lien of the Mortgage.

          (b) Adjustments in Borrowing Base. The Borrowing Base Report is
subject to adjustment as follows, or as may be determined by the Required
Lenders, in the exercise of their reasonable discretion:


                                       21

<PAGE>

               (1) If the Obligors fail to provide any information required in
its Notice of Borrowing, or fails to provide the supporting documentation that
the Obligors are required to provide in order to determine the collateral
category and the amount to be included in the Borrowing Base with respect to
each Project in the Borrowing Base Assets, the Agent shall advise the Obligors
of the omission and exclude each such Lot or Unit from the calculation of the
Borrowing Base unless and until the information or documentation, as applicable,
is provided.

               (2) The Agent shall exclude from the calculation of the Borrowing
Base any Project that has been a Borrowing Base Asset more than fifteen (15)
months and for which the Agent does not have a policy of title insurance as
required under Section 2.8.

               (3) Borrowing Base Assets that exceed the Maximum Time in the
Borrowing Base will not be included in the Borrowing Base. The Agent will
release such Borrowing Base Assets from the lien of the Mortgage provided no
Event of Default has occurred and no Default has occurred and is continuing and
no Borrowing Base Deficiency will exist upon the release of such Borrowing Base
Assets.

               (4) With respect to the aging of a completed Sold Unit that
becomes a Spec Unit upon cancellation of an Approved Contract, such Spec Unit
may be included as a Borrowing Base Asset for a period of fifteen (15) months
from the date of cancellation of an Approved Contract, regardless of the number
of days that such Unit was properly categorized as a Sold Unit. For the purposes
of the preceding sentence, the date of contract cancellation shall be the date
as of which the Borrowing Base Report first submitted after such contract
cancellation was prepared.

               (5) If the then existing Revolving Credit Maturity Date is not
extended, the Revolving Loan Maximum Availability will be limited as follows:

                    (A) Approved Subdivisions may not be added to the Mortgage
     or as Borrowing Base Assets less than twelve (12) months prior to the
     Revolving Credit Maturity Date as it may be extended pursuant to Section
     2.7;

                    (B) Raw Land and Land Under Development may not be added to
     the Borrowing Base other than as Land and Land Under Development less than
     twelve (12) months prior to the Revolving Credit Maturity Date as it may be
     extended pursuant to Section 2.7;

                    (C) Model Units and/or Spec Units may not be commenced
     within fifteen (15) months prior to the Revolving Credit Maturity Date; and

                    (D) Finished Lots may not be changed to Sold Units if the
     anticipated delivery date of the applicable Approved Contract is beyond the
     Revolving Credit Maturity Date.

          (c) Funding Procedure. Not more frequently than once in any calendar
week, upon receipt of a Notice of Borrowing, the Agent will verify and
recompute, as necessary, the calculations in the Notice of Borrowing and the
most recent Borrowing Base Report until the Agent is satisfied, in its sole
discretion that the Notice of Borrowing and Borrowing Base


                                       22

<PAGE>

Report comply with the terms of this Agreement. On the basis of the Notice of
Borrowing and the most recent Borrowing Base Report, as so modified if
necessary, the Agent will determine the Revolving Loan amount to be advanced.
Not later than 2:00 p.m. (Virginia time) on the proposed borrowing date, each
Lender will make available to the Agent, for the account of the Borrowers, at
the Agent's Office in funds immediately available to the Agent, such Lender's
Revolving Credit Commitment Percentage of the Revolving Loans to be made on such
borrowing date. The failure or refusal of any Lender to make available to the
Agent at the aforesaid time and place on any borrowing date the amount of its
Revolving Credit Commitment Percentage of the requested Revolving Loan shall not
relieve any other Lender from its several obligation hereunder to make available
to the Agent the amount of such other Lender's Revolving Credit Commitment
Percentage of the requested Revolving Loan. Upon receipt from the Lenders of
such amount, and upon the Borrowers' satisfaction of the conditions to funding
set forth in this Agreement, the Agent will make available to the Borrowers the
aggregate amount of such Revolving Loan made available to the Agent by the
Lenders. The Borrowers hereby irrevocably authorize the Agent to disburse the
proceeds of each borrowing requested pursuant to this Section 2.2 in immediately
available funds by crediting or wiring such proceeds to the deposit account of
the Borrowers identified in the most recent Notice of Account Designation
delivered by the Borrowers to the Agent or as may be otherwise agreed upon by
the Borrowers and the Agent from time to time. Subject to Section 4.8 hereof,
the Agent shall not be obligated to disburse the portion of the proceeds of any
Revolving Loan requested pursuant to this Section 2.2 to the extent that any
Lender has not made available to the Agent its Revolving Credit Commitment
Percentage of such Revolving Loan.

     Section 2.3 Addition of Borrowing Base Assets.

               Any Obligor and/or its Subsidiaries may acquire additional
property located in the Operational Area which shall be given as Collateral upon
acquisition provided that (i) the Obligors shall execute and deliver to the
Agent either (A) a Spreader Agreement, which shall be recorded among the land
records in the jurisdiction in which the additional property is located,
spreading the lien of the applicable Mortgage to such additional property or,
(B) if the additional property is located in a jurisdiction where there are no
existing Borrowing Base Assets and, therefore, no Mortgage already of record,
the Obligors shall execute and record a complete Mortgage rather than a Spreader
Agreement in the applicable jurisdiction; and (ii) the Obligors shall have
complied with the applicable provisions of Section 2.8 regarding title matters;
and provided further, that no property shall be acquired by the Obligors unless
and until the following conditions precedent shall have been satisfied, each of
which shall be satisfactory in form and substance to the Agent:

          (a) Approval of Additional Raw Land. Approval of the additional Raw
Land shall be granted by Agent provided the following conditions are satisfied
(the "RAW LAND APPROVAL SUBMISSIONS"):

               (1) The Agent shall have commissioned, received, reviewed, and
approved, at the Obligors' expense, an Appraisal of the Raw Land intended to be
included in the Borrowing Base Assets.


                                       23

<PAGE>

               (2) The Agent shall have received, reviewed, and approved a Phase
I Environmental Site Assessment performed by a firm selected by Obligor and paid
for by Obligors, addressed to the Agent or assigned to the Agent, in all
respects acceptable to the Agent, which indicates that the Raw Land is either
free from Hazardous Materials or affected only by such environmental matters as
may be acceptable to the Agent in its sole discretion.

               (3) The Agent shall have received a copy of the title report
received by the Obligors in connection with the acquisition of the Raw Land to
be included in the Borrowing Base Assets, which must be in form and substance
acceptable to the Agent, indicating that the Raw Land is not subject to any
Liens that, in the Agent's judgment, would adversely affect the applicable
Obligor's ability to develop and sell the improvements to be constructed on the
Raw Land.

               (4) The Agent shall have obtained evidence that the Raw Land
intended to be added to the Borrowing Base Assets (i) is not located in a flood
hazard area requiring flood insurance or is insured by the necessary flood
insurance coverage and (ii) is covered by all insurance described in Section
7.10.

               (5) The Agent shall have received, reviewed and approved the Raw
Land Approval Submissions and such other documents in respect of the Raw Land as
the Agent shall have reasonably requested.

               (6) The Agent shall have received a signed purchase agreement
with a purchase price of less than $14,000,000.

     The Obligors shall submit all of the materials itemized above to the Agent
at least thirty (30) days before the Obligors intend to submit a Notice of
Borrowing with respect to the additional Raw Land. The Agent will provide
written notice of approval or a statement identifying the inadequacies of
Obligors' submission not later than ten (10) Business Days after the Agent's
receipt of the information described above.

          (b) Approval of Additional Land Under Development. Approval of the
additional Land Under Development shall be granted by the Agent provided the
following conditions are satisfied (the "LAND UNDER DEVELOPMENT APPROVAL
SUBMISSIONS"):

               (1) The Agent shall have commissioned, received, reviewed, and
approved, at the Obligors' expense, an Appraisal of the Land Under Development
intended to be added to the Borrowing Base Assets, including the Appraised Value
and the prospective future value to one buyer, or the market value discounted
for time, in compliance with FIREA standards as applicable to any Lender.

               (2) The Agent shall have received, reviewed, and approved a Phase
I Environmental Site Assessment performed by a firm selected by Obligor and paid
for by Obligors, addressed to the Agent or assigned to the Agent, in all
respects acceptable to the Agent, which indicates that the Raw Land is either
free from Hazardous Materials or affected only by such environmental matters as
may be acceptable to the Agent in its sole discretion.

               (3) The Obligors shall have delivered to the Agent a copy of the
title report received by the applicable Obligor in connection with the
acquisition of the Land Under Development to be added as Borrowing Base Assets,
which must be in form and substance


                                       24

<PAGE>

acceptable to the Agent, indicating that the Land Under Development is not
subject to any Liens that, in the Agent's judgment, would adversely affect the
applicable Obligor's ability to develop and sell the improvements to be
constructed on the Land Under Development.

               (4) The Agent shall have obtained evidence that the Land Under
Development intended to be added to the Borrowing Base Assets (i) is not located
in a flood hazard area requiring flood insurance or is insured by the necessary
flood insurance coverage and (ii) is covered by all insurance coverage required
in Section 7.10.

               (5) The Obligors shall have delivered to the Agent the approved
preliminary plan or, if available, the approved final plan for development of
the Land Under Development.

               (6) The Agent shall have received, reviewed and approved the Land
Under Development Approval Submissions and such other documents in respect of
the Land Under Development as the Agent shall have reasonably requested.

     The Obligors shall submit all of the materials itemized above to the Agent
at least thirty (30) days before the Obligors intend to submit a Notice of
Borrowing with respect to the additional Land Under Development. The Agent will
provide written notice of approval or a statement identifying the inadequacies
of Obligor's submissions, not later than ten (10) Business Days after the
Agent's receipt of the information described above.

          (c) Approval of Additional Lots and Subdivisions. Approval of
additional Lots and Subdivisions shall be granted by Agent provided the
following conditions are satisfied (the "ADDITIONAL LOTS APPROVAL SUBMISSIONS")
at least thirty (30) days before the Obligors intend to submit a Notice of
Borrowing with respect to the additional Lots or Units:

               (1) The proposed addition must consist of for-sale residential
housing to be constructed on-site and shall not include any mobile homes or
manufactured housing, and must provide for the maximum base sales price before
options for the Units of less than $950,000.

               (2) The Agent shall have commissioned, received, reviewed, and
approved, at the Obligors' expense, an Appraisal of the Lots in the proposed
subdivision intended to be included in the Borrowing Base Assets.

               (3) The Agent shall have received, reviewed, and approved a Phase
I Environmental Site Assessment performed by a firm selected by Obligor and paid
for by Obligors, addressed to the Agent or assigned to the Agent, in all
respects acceptable to the Agent, which indicates that the Raw Land is either
free from Hazardous Materials or affected only by such environmental matters as
may be acceptable to the Agent in its sole discretion.

               (4) The Obligors shall have delivered to the Agent a copy of the
title report received by the applicable Obligor in connection with the
acquisition of the Lots to be added as Borrowing Base Assets, which must be in
form and substance acceptable to the Agent, indicating that the land to be added
to the Borrowing Base Assets within the proposed subdivision is not subject to
any Liens that, in the Agent's judgment, would adversely affect the applicable
Obligor's ability to develop and sell the improvements to be constructed on the
affected property.


                                       25

<PAGE>

               (5) The Agent shall have received evidence that the Lots in the
proposed subdivision intended to be included in the Borrowing Base Assets (i)
are not located in a flood hazard area requiring flood insurance or are insured
by the necessary flood insurance coverage and (ii) are covered by all insurance
coverage described in Section 7.10.

               (6) The Agent shall have received, reviewed and approved the
Subdivision Approval Submissions and such other real estate documents in respect
of the subdivision as the Agent shall have reasonably requested.

     Section 2.4 Conditions to Revolving Loans for Land Under Development and
          Construction of Units.

               The obligation of the Lenders to make Revolving Loans for Land
Under Development and the construction of Units is further subject to the
receipt by the Agent of the following documents, each of which shall be
satisfactory in form and substance to the Agent:

          (a) Certificate of Compliance Inspector. If required by the Agent, a
certificate by the Compliance Inspector approving in all respects any Notice of
Borrowing. The Agent will not require a certificate from the Compliance
Inspector as a condition to funding unless the Compliance Inspector has
identified discrepancies, unfavorable to the Lenders, between the percentage of
completion represented by the Obligors and that found by the Compliance
Inspector, in five percent (5%) or more of the inspected Lots or Units in two
(2) consecutive quarters. Thereafter, the Agent may require in its sole
discretion a certificate of Compliance Inspector as a condition to Revolving
Loans.

          (b) Notice of Borrowing. A Notice of Borrowing for payment, which
shall set forth each element of the Borrowing Base Report and the amount sought
to be borrowed in respect of each such element. While any Default shall have
occurred and be continuing, if the Agent reasonably deems the Lenders insecure
that any design professional, contractor or subcontractor and other Persons who
may be entitled to a Lien on any Borrowing Base Asset is not being paid when
payments are due from the Obligors, the Agent may request that the Obligors
provide releases and waivers for work performed and materials furnished through
the date of the Notice of Borrowing simultaneously with the requested
disbursement and, in such event, the Lenders shall not be required to make any
advance hereunder prior to the Agent's receipt of such releases and waivers.

          (c) Insurance. In the case of the first advance in respect of any new
Borrowing Base Asset, evidence of title insurance that meets the requirements of
Section 2.8, in form and substance acceptable to the Agent and other insurance
as required by Section 7.10.

     Section 2.5 Repayment of Revolving Loans

          (a) Repayment on Revolving Credit Maturity Date. If not previously
paid, the Borrowers shall repay the outstanding principal amount of all
Revolving Loans in full on the Revolving Credit Maturity Date together with all
accrued but unpaid interest thereon.

          (b) Certain Payments. The Borrowers shall have the obligation to
prepay the Revolving Loans in accordance with Section 2.5(c) herein and shall
have the right to prepay the Revolving Loans in whole or in part in accordance
with Section 2.5(e); however, any prepayment, in whole or in part, shall not
affect the Borrowers' obligation to continue making


                                       26

<PAGE>

payments in connection with any Hedge Agreement, which will remain in full force
and effect in accordance with its terms notwithstanding such prepayment. Except
with respect to Sold Units in connection with a settlement with a purchaser, the
Obligors shall have no right to the release of any Borrowing Base Asset from the
lien of the Mortgages at any time that an Event of Default has occurred or a
Default has occurred and is continuing.

          (c) Borrowing Base Deficiency. If the sum of (i) the aggregate unpaid
principal amount of all Revolving Loans outstanding at any time plus (ii) the
aggregate L/C Obligations outstanding at such time which have not been converted
to Revolving Loans exceeds the Revolving Loan Borrowing Limit determined based
on the most recent Borrowing Base Report that has been received by the Agent (a
"BORROWING BASE DEFICIENCY"), the Obligors shall within fifteen (15) days from
the date such Borrowing Base Report was delivered to the Agent, determined
without regard to any provision of this Agreement which requires the Agent to
provide the Obligors notice of non-compliance or additional time periods to
perform any obligation, either (A) repay an amount equal to such excess by
payment to the Agent for the account of the Lenders or (B) deliver a new
Borrowing Base Report that demonstrates compliance with the current outstanding
Obligations. Except as provided by Section 8.7 (Appraisals), so long as a
Borrowing Base Deficiency exists no additional Revolving Loan shall be made, no
Letter of Credit will be issued and no Collateral will be released from the lien
of the Mortgage, except that liens with respect to Sold Units shall
nevertheless, be released in connection with settlements with purchasers.

          (d) Releases of Units. Upon the Obligors' request, the Agent shall
release Collateral from the lien of the Mortgage without the payment of any
additional consideration provided that (i) no Event of Default exists and is
continuing; (ii) such release would not cause the outstanding unpaid principal
balance of the Revolving Loans plus the aggregate L/C Obligations which have not
been converted to Revolving Loans to exceed the Revolving Loan Borrowing Limit
as determined upon delivery of the next Borrowing Base Report required pursuant
to Section 7.1(a); and (iii) the release of assets does not exceed a value of
$5,000,000. Upon the Obligors' request, the Agent shall release Collateral from
the lien of the Mortgage coincident with its receipt and approval of the
Borrowing Base Report and, if such release would result in a Borrowing Base
Deficiency, the payment an amount sufficient to cure the Borrowing Base
Deficiency. Notwithstanding the foregoing conditions to the release of
Collateral from the lien of the Mortgage, Agent shall release the lien on all
Sold Units at the time of settlement with a purchaser.

          (e) Repayments. Subject to the provisions of Section 4.10, the
Borrowers shall have the right on any Business Day to repay the amount
outstanding under the Revolving Loans in whole or in a minimum amount of
$250,000, provided that repayments shall not be made more frequently than once
during any calendar week.

          (f) Application of Payments. Payments received by the Agent pursuant
to this Section 2.3 shall be applied first to the Revolving Loans and
Reimbursement Obligations that accrue interest at the Base Rate until such
Revolving Loans and Reimbursement Obligations are repaid in full and thereafter
to the Revolving Loans and Reimbursement Obligations accruing interest at the
LIBOR Rate; provided, however, the Borrowers may request that any repayment
amount which exceeds the amount which is required to repay in full the Revolving
Loans and Reimbursement Obligations accruing interest at the Base Rate be


                                       27

<PAGE>

held by the Agent as cash collateral for the Revolving Loans and Reimbursement
Obligations accruing interest at the LIBOR Rate until such time as such
Revolving Loans and Reimbursement Obligations, or portion thereof, can be paid
without incurring any breakage charges.

          (g) Prepayment Procedures.

               (1) Each prepayment shall be made pursuant to a Notice of
Prepayment from the Borrowers to the Agent, which notice shall specify the
principal amount to be prepaid and the date of prepayment (which shall be a
Business Day), be irrevocable, and be effective only if received by the Agent
not later than 1:00 p.m. (Virginia time) on the prepayment date. Upon receipt of
such notice the Agent shall promptly notify each Lender. If a Notice of
Prepayment is given, the amount specified in such notice shall be due and
payable on the date set forth in such Notice.

               (2) If no Event of Default has occurred and no Default has
occurred and is continuing, any prepayment made pursuant to the provisions of
Section 2.5(c), Section 2.5(d) or Section 2.5(e), as applicable, shall be
applied in accordance with the provisions of Section 2.5(f). Any prepayment made
after an Event of Default has occurred or while a Default has occurred and is
continuing shall be applied to accrued and unpaid fees, late charges, interest,
and principal due under the Credit Facility, in any order and in any manner that
the Agent deems desirable in its absolute discretion.

     Section 2.6 Revolving Credit Notes.

     Each Lender's Revolving Loans and the obligation of the Borrowers to repay
such Revolving Loans shall be evidenced by a separate Revolving Credit Note
executed by the Borrowers payable to the order of such Lender at the Agent's
Office representing the obligation of the Borrowers to pay the amount of such
Lender's Revolving Credit Commitment or, if less, the aggregate unpaid principal
amount outstanding from time to time of all Revolving Loans made by such Lender
to the Borrowers hereunder, plus interest and all other fees, charges and other
amounts due thereon. Each Revolving Credit Note shall bear interest on the
unpaid principal amount thereof at the applicable interest rate per annum
specified in Section 4.3.

     Section 2.7 Revolving Credit Maturity Date Extension.

     Upon receipt by the Agent of an application from the Borrowers for an
extension of the Revolving Credit Maturity Date, no earlier than one hundred
twenty (120) days and no later than sixty (60) days prior to any anniversary of
the Closing Date, and provided that no Event of Default has occurred and no
Default has occurred and is continuing, the Lenders will consider a one-year
extension of the Revolving Credit Maturity Date so as to effect a three-year
rolling maturity for the Revolving Credit Facility. Each Lender may grant or
withhold approval of such extension in its sole and unreviewable discretion. The
Agent will advise the Borrowers of the Lenders' decision with respect to renewal
no later than forty five (45) days after the Borrowers have requested an
extension of the then current Revolving Credit Maturity Date. No such extension
shall be made without the prior consent of all of the Lenders.


                                       28

<PAGE>

     Section 2.8 Title Insurance.

          (a) Each title policy required under this Agreement shall be issued by
the Title Insurance Company on the standard ALTA form (1992) in an amount equal
to the amount of the Revolving Loans allocated to such Borrowing Base Asset, as
determined by the Agent in its sole discretion, without exceptions as to
mechanics' liens, with no other exceptions objectionable to the Agent, and with
a "last dollar" endorsement and other endorsements as the Agent shall reasonably
request. If required by the Title Insurance Company in order to delete
mechanics' lien exceptions, the Obligors must agree to provide an
indemnification agreement satisfactory to the Title Insurance Company. Upon the
Agent's request (if the insured amount exceeds the limits from time to time
promulgated by the Agent for the title insurer or insurers providing the title
insurance), the Lenders must receive reinsurance and direct access agreements in
form and substance reasonably satisfactory to the Agent in form and amount and
with companies acceptable to the Agent. The Agent and its counsel must each be
provided with legible record copies of all documents listed as the source of
title or as exceptions in the title binder. The title policy must assure the
Lenders that the roads and ways, upon which the applicable Borrowing Base Asset
bounds and has access, are duly dedicated open and maintained public ways or
that other reasonable vehicular access is available. No subsequent title
bring-to-date reports will be required so long as the Obligors pay all payables
within forty five (45) days of the date rendered and, if required by the
Required Lenders and material in amount, obtains lien waivers at the time of
payment from those contractors who have the right to file mechanic's liens.

          (b) Title insurance will not be required on any Borrowing Base Asset
that is subject to a Mortgage granted by a Borrower and is reasonably expected
to remain a Borrowing Base Asset for less than fifteen (15) months (i.e., Sold
Units, Spec Units, or Model Units) or is not eligible for inclusion in the
Borrowing Base after fifteen (15) months, so long as the Obligors pay all
payables within forty five (45) days of the date rendered and obtain monthly
lien waivers at the time of payment from their contractors who have the right to
file mechanics' liens. Notwithstanding the foregoing, whenever new Projects are
added as Borrowing Base Assets, the applicable Borrower must submit to the Agent
a Title Confirmation Letter for each such Project. In addition, at the Agent's
option, the Agent may from time to time obtain, at Lenders' expense, separate
title reports for such Projects. Such title reports must indicate that the
Borrowers own each Project free and clear of all liens and other encumbrances
reasonably objectionable to the Agent, and that such Project is subject to a
first priority recorded Mortgage. The quarterly Covenant Compliance Certificate
will include a certification by the Obligors that, to the Obligors' knowledge,
no Borrowing Base Asset for which the Lenders do not have title insurance and
which is subject to a Mortgage from a Borrower has been a Borrowing Base Asset
for more than fifteen (15) months. The Agent will reserve the right to inspect
the Obligors' books and records upon reasonable advance notice to the Obligors
during normal business hours to further monitor compliance with this
requirement.

          (c) Title insurance will be required on any Borrowing Base Asset that
is subject to a Mortgage granted by a Guarantor and shall include, without
limitation, a creditor's rights deletion endorsement.


                                       29

<PAGE>

     Section 2.9 Increase in Commitments.

          (a) After the Closing Date, the Agent may, from time to time upon five
(5) Business Days prior notice by Capital on behalf of the Obligors of a request
to increase the Aggregate Commitment, increase the Aggregate Commitment by (x)
admitting additional Lenders hereunder (each a "Subsequent Lender"), or (y)
increasing the Commitment of any Lender (each an "Increasing Lender"), subject
to the following conditions:

               (i) each Subsequent Lender is an Eligible Assignee;

               (ii) Borrowers execute (A) a new Note payable to the order of a
          Subsequent Lender, if requested by such Subsequent Lender, or (B) a
          replacement Note payable to the order of an Increasing Lender, if
          requested by such Increasing Lender;

               (iii) each Subsequent Lender executes a signature page to this
          Agreement;

               (iv) after giving effect to the admission of any Subsequent
          Lender or the increase in the Commitment of any Increasing Lender, the
          Aggregate Commitment does not exceed $150,000,000;

               (v) each increase in the Aggregate Commitment shall be in the
          minimum amount of $5,000,000 or a greater integral multiple of
          $1,000,000;

               (vi) no admission of any Subsequent Lender shall increase the
          Commitment of any existing Lender without the consent of such existing
          Lender;

               (vii) no Lender shall be an Increasing Lender without the consent
          of such Lender; and

               (viii) no Default or Event of Default exists nor would occur
          after giving effect to such increase.

          (b) After the admission of any Subsequent Lender or the increase in
the Commitment of any Increasing Lender, the Agent shall promptly provide to
each Lender a new Schedule I to this Agreement. In the event that there are any
Revolving Loans and/or Letters of Credit outstanding after giving effect to an
increase in the Aggregate Commitment pursuant to this Section 2.9, upon notice
from the Agent to each Lender, the amount of such Revolving Loans owing to each
Lender and the amount of each Lender's L/C Participation shall be appropriately
adjusted to reflect the new Commitment Percentages of the Lenders (in which case
Obligors shall pay any amounts required under Section 4.10).

          (c) Conflicting Provisions. This Section shall supersede any
provisions in Sections 4.7 or 11.11 (other than Section 11.11(a)(i)) to the
contrary.


                                       30

<PAGE>

                                   ARTICLE III
                                  L/C FACILITY

     Section 3.1 L/C Commitment.

          (a) Issuance. Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Lenders set forth in Section
3.4, agrees to issue one or more standby letters of credit ("LETTERS OF CREDIT")
for the account of the Borrowers on any Business Day from the Closing Date
through but not less than the date prior to the Revolving Credit Maturity Date
(as the same may be extended pursuant to Section 2.7) in such form as may be
approved from time to time by the Issuing Lender; provided, however, the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, the L/C Obligations would exceed the L/C Maximum
Availability.

          (b) Terms. Each Letter of Credit shall (i) be denominated in U.S.
Dollars, (ii) be a standby letter of credit issued to support obligations of the
Borrowers or any of their Subsidiaries, contingent or otherwise, incurred in the
ordinary course of business in connection with the purchase or development of
real estate assets and such other purposes as may be approved by the Agent,
(iii) expire on a date no later than the then applicable Revolving Credit
Maturity Date, and (iv) be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the Commonwealth of Virginia. The Issuing
Lender shall not at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Lender or
any L/C Participant to exceed any limits imposed by any Applicable Law.
References herein to "issue" and derivations thereof with respect to Letters of
Credit shall also include extensions or modifications of any Existing Letters of
Credit or any Letter of Credit previously issued under the provisions of this
Agreement, unless the context otherwise requires.

     Section 3.2 Procedure for Issuance of Letters of Credit.

     The Borrowers may from time to time request that the Issuing Lender issue a
Letter of Credit by delivering to the Issuing Lender at the Agent's Office an
Application therefore, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender shall process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall, subject to Section 3.1 and
ARTICLE V and to closing hereof, and to the execution by the Borrowers of a
Letter of Credit Agreement, promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three (3) Business Days after its receipt of the
Application therefore and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrowers. The Issuing Lender shall furnish to the
Borrowers a copy of such Letter of Credit and notify each Lender of the issuance
of such Letter of Credit and the amount of each Lender's L/C Participation
therein, and upon request by any Lender furnish to such Lender a copy of such
Letter of Credit, all promptly following the issuance of such Letter of Credit.


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<PAGE>

     Section 3.3 L/C Fees.

          (a) In connection with each standby Letter of Credit, the Borrowers
shall pay to the Agent for the ratable benefit of the Lenders a letter of credit
fee (each a "L/C FEE" and collectively the "L/C FEES") in an amount equal to the
greater of (i) $400 or (ii) one percent (1%) of the stated amount of each such
Letter of Credit without regard for provisions contained in the Letters of
Credit which may give rise to a reduction in the stated amount thereof unless
such reduction has actually occurred. The Letter of Credit Fees shall be paid
upon the opening of each Letter of Credit and upon each anniversary thereof, if
any.

          (b) In addition, with respect to each standby Letter of Credit, the
Borrowers shall pay to the Agent upon the opening of each Letter of Credit, for
its own account, an issuance fee equal to the Agent's then customary issuance
fees for commercial letters of credit. In addition, the Borrowers shall pay to
the Agent all other reasonable and customary amendment, negotiation, processing,
transfer or other fees to the extent and as and when required by the provisions
of any Letter of Credit Agreement. All such fees are included in and are a part
of the "Fees" payable by the Borrowers under the provisions of this Agreement
and are for the sole and exclusive benefit of the Agent.

     Section 3.4 L/C Participations.

          (a) Participations. The Issuing Lender irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's Revolving
Credit Commitment Percentage in the Issuing Lender's obligations and rights
under each Letter of Credit issued hereunder and the amount of each draft paid
by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrowers in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Commitment
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed. The obligation of each L/C Participant to pay such amount shall be
unconditional and irrevocable under any and all circumstances and may not be
terminated, suspended or delayed for any reason, including any Default or Event
of Default.

          (b) Payment to Issuing Lender. Upon becoming aware of any amount
required to be paid by any L/C Participant to the Issuing Lender pursuant to
this Section 3.4(b) in respect of any unreimbursed portion of any payment made
by the Issuing Lender under any Letter of Credit, the Issuing Lender shall
promptly notify each L/C Participant of the amount and due date of such required
payment and such L/C Participant shall pay to the Issuing Lender the amount
specified on the applicable due date. If any such amount is paid to the Issuing
Lender after the date such payment is due, such L/C Participant shall pay to the
Issuing Lender on demand, in addition to such amount, the product of (i) such
amount, times (ii) the daily average Federal Funds Rate as determined by the
Agent during the period from and including the date such payment is due to the
date on which such payment is immediately available to the Issuing


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<PAGE>

Lender, times (iii) a fraction the numerator of which is the number of days that
elapse during such period and the denominator of which is 360. A certificate of
the Issuing Lender with respect to any amounts owing under this Section 3.4(b)
shall be conclusive in the absence of manifest error. With respect to payment to
the Issuing Lender of the unreimbursed amounts described in this Section 3.4(b),
if the L/C Participants receive notice (A) prior to 1:00 p.m. (Charlotte time)
on any Business Day, such payment shall be due prior to 5:00 p.m. on that
Business Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such
payment shall be due prior to 5:00 p.m. on the following Business Day.

          (c) Settlement. Whenever, at any time after the Issuing Lender has
made payment under any Letter of Credit and has received from any L/C
Participant its Revolving Credit Commitment Percentage of such payment in
accordance with this Section 3.4(c), the Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the Borrowers or
otherwise), or any payment of interest on account thereof, the Issuing Lender
will distribute to such L/C Participant its pro rata share thereof; provided,
however, in the event that any such payment received by the Issuing Lender shall
be required to be returned by the Issuing Lender, such L/C Participant shall
return to the Issuing Lender the portion thereof previously distributed to it by
the Issuing Lender.

     Section 3.5 Reimbursement Obligation of the Borrowers.

     Unless the Borrowers are entitled to obtain a Revolving Loan in such amount
on such date, the Borrowers agree to reimburse the Issuing Lender on each date
on which the Issuing Lender notifies the Borrowers of the date and amount of a
draft paid under any Letter of Credit for the amount of (a) such draft properly
paid and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. So long as Wachovia is the
Issuing Lender, each such payment shall be made at the Agent's Office. If
Wachovia is not the Issuing Lender, each such payment shall be made to the
Issuing Lender at its address for notices specified herein. In any case, each
such payment shall be made in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrowers under this ARTICLE III from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate that is provided for in the Letter
of Credit Agreement. Unless the Borrowers have otherwise previously reimbursed
the Issuing Lender, then on the date on which the Issuing Lender notifies the
Borrowers of the date and amount of a draft paid under any Letter of Credit, the
Borrowers shall be deemed to have timely given a Notice of Borrowing hereunder
to the Agent requesting the Lenders to make a Revolving Loan on such date in an
amount equal to the amount of such drawing and, regardless of whether the
conditions precedent specified in ARTICLE V have been satisfied, the Lenders
shall make Revolving Loans in such amount, the proceeds of which shall be
applied to reimburse the Issuing Lender for the amount of the related drawing
and costs and expenses.

     Section 3.6 Obligations Absolute.

     The obligations of the Borrowers under this ARTICLE III (including without
limitation the Reimbursement Obligation) shall be absolute and unconditional
under any and all circumstances and irrespective of any set-off, counterclaim or
defense to payment that the Borrowers may have or have had against the Issuing
Lender or any beneficiary of a Letter of


                                       33

<PAGE>

Credit. The Borrowers also agree with the Issuing Lender that, except as
otherwise provided by Applicable Law, the Issuing Lender shall not be
responsible for, and the Reimbursement Obligation of the Borrowers under Section
3.5 shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrowers and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
Borrowers against any beneficiary of such Letter of Credit or any such
transferee. Each L/C Participant agrees that its obligation hereunder with
respect to any Letter of Credit shall not be affected or impaired by any lack or
absence of the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrowers and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrowers against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's negligence or willful misconduct. The
Borrowers agree that any action taken or omitted by the Issuing Lender under or
in connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Customs and, to the extent
not inconsistent therewith, the UCC shall be binding on the Borrowers and shall
not result in any liability of the Issuing Lender to the Borrowers. The
responsibility of the Issuing Lender to the Borrowers in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.

     Section 3.7 Effect of Application and Letter of Credit Agreement.

     To the extent that any provision of any Application related to any Letter
of Credit or the Letter of Credit Agreement executed in connection therewith is
inconsistent with the provisions of this ARTICLE III, the provisions of this
ARTICLE III shall apply.

     Section 3.8 Resignation of the Issuing Lender, Successor Issuing Lender.

     Subject to the appointment and acceptance of a successor as provided below,
the Issuing Lender may resign at any time by giving notice thereof to the Agent,
the L/C Participants and the Borrowers. Upon any such resignation, the Agent,
with the consent of the Required Lenders, shall appoint a successor Issuing
Lender, which successor shall be a Lender and shall have combined capital and
surplus in excess of $1,000,000,000. If no successor Issuing Lender shall have
been so appointed and shall have accepted such appointment within thirty (30)
days after the Issuing Lender's giving of notice of resignation, then the Agent
shall, on behalf of the Lenders, appoint a successor Lender as Issuing Lender,
which successor shall have combined capital and surplus in excess of
$1,000,000,000. Upon the acceptance of any appointment as Issuing Lender
hereunder by a successor Issuing Lender, such successor Issuing Lender shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Issuing Lender, and the retiring Issuing Lender shall be
discharged from all future duties


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<PAGE>

and obligations hereunder as Issuing Lender; provided, however, in no event
shall such appointment of a successor Issuing Lender affect the obligations of
the retiring Issuing Lender and the L/C Participants under any then outstanding
Letters of Credit, including Letters of Credit issued during the thirty (30) day
notice period. After any retiring Issuing Lender's resignation hereunder as
Issuing Lender, the provisions of this Section 3.8 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as Issuing Lender.

                                   ARTICLE IV
                             GENERAL LOAN PROVISIONS

     Section 4.1 Obligors' Representatives.

          (a) The Obligors hereby represent and warrant to the Agent and the
Lenders that each of them will derive benefits, directly and indirectly, from
each Letter of Credit and from each advance of the Revolving Loan, both in their
separate capacity and as a member of the group to which each of the Obligors
belong and because the successful operation of the group is enhanced by the
continued successful performance of the functions of the group as a whole,
because (a) the terms of the consolidated financing provided under this
Agreement are more favorable than would otherwise would be obtainable by the
Obligors individually, and (b) the Obligors' additional administrative and other
costs and reduced flexibility associated with individual financing arrangements
which would otherwise be required if obtainable would substantially reduce the
value to the Obligors of the financing. The Obligors in the discretion of their
respective managements are to agree among themselves as to the allocation of the
benefits of Letters of Credit and the proceeds of Revolving Loan; provided,
however, that the Obligors shall be deemed to have represented and warranted to
the Agent and the Lenders at the time of allocation that each benefit and use of
proceeds is a Permitted Use.

          (b) For administrative convenience, each Obligor hereby irrevocably
appoints Capital as the Obligor's attorney-in-fact, with power of substitution
(with the prior written consent of the Agent in the exercise of its sole and
absolute discretion), in the name of Capital or in the name of the Obligor or
otherwise to take any and all actions with respect to the this Agreement, the
other Loan Documents, the Obligations and/or the Collateral as Capital may so
elect from time to time, including, without limitation, actions to (i) request
advances under the Revolving Loan, apply for and direct the benefits of Letters
of Credits, and direct the Agent to disburse or credit the proceeds of any
advance of the Revolving Loan directly to an account of Capital, any one or more
of the Obligors or otherwise, which direction shall evidence the making of such
advance of the Revolving Loan and shall constitute the acknowledgment by each of
the Obligors of the receipt of the proceeds of such advance of the Revolving
Loan or the benefit of such Letter of Credit, (ii) enter into, execute, deliver,
amend, modify, restate, substitute, extend and/or renew this Agreement, any
Additional Obligor Joinder Supplement, any other Loan Documents, security
agreements, mortgages, deposit account agreements, instruments, certificates,
waivers, letter of credit applications, releases, documents and agreements from
time to time, and (iii) endorse any check or other item of payment in the name
of the Obligor or in the name of Capital. The foregoing appointment is coupled
with an interest, cannot be revoked without the prior written consent of the
Agent, and may be exercised from time to time through


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<PAGE>

Capital's duly authorized officer, officers or other Person or Persons
designated by Capital to act from time to time on behalf of Capital.

          (c) Each of the Obligors hereby irrevocably authorizes each of the
Lenders to make advances of the Revolving Loan to any one or more of the
Obligors, and hereby irrevocably authorizes the Agent to issue or cause to be
issued Letters of Credit for the account of any or all of the Obligors, pursuant
to the provisions of this Agreement upon the written, oral or telephone request
of any one or more of the Persons who is from time to time a Responsible Officer
of a Obligor under the provisions of the most recent certificate of corporate
resolutions and/or incumbency of the Obligors on file with the Agent and also
upon the written, oral or telephone request of any one of the Persons who is
from time to time a Responsible Officer of Capital under the provisions of the
most recent certificate of corporate resolutions and/or incumbency for Capital
on file with the Agent.

          (d) Neither the Agent nor any of the Lenders assumes any
responsibility or liability for any errors, mistakes, and/or discrepancies in
the oral, telephonic, written or other transmissions of any instructions,
orders, requests and confirmations between the Agent and the Obligors or the
Agent and any of the Lenders in connection with the Revolving Loan, any advance
of the Revolving Loan, any Letter of Credit or any other transaction in
connection with the provisions of this Agreement. Without implying any
limitation on the joint and several nature of the Obligations, the Lenders agree
that, notwithstanding any other provision of this Agreement, the Obligors may
create reasonable inter-company indebtedness between or among the Obligors with
respect to the allocation of the benefits and proceeds of the advances and
Revolving Loan under this Agreement. The Obligors agree among themselves, and
the Agent and the Lenders consent to that agreement, that each Obligor shall
have rights of contribution from all of the other Obligors to the extent such
Obligor incurs Obligations in excess of the proceeds of the Revolving Loan
received by, or allocated to purposes for the direct benefit of, such Obligor.
All such indebtedness and rights shall be, and are hereby agreed by the Obligors
to be, subordinate in priority and payment to the indefeasible repayment in full
in cash of the Obligations, and, unless the Agent agrees in writing otherwise,
shall not be exercised or repaid in whole or in part until all of the
Obligations have been indefeasibly paid in full in cash. The Obligors agree that
all of such inter-company indebtedness and rights of contribution are part of
the Collateral and secure the Obligations. Each Obligor hereby waives all rights
of counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. Each Obligor shall not evidence the
inter-company indebtedness or rights of contribution by note or other
instrument, and shall not secure such indebtedness or rights of contribution
with any Lien or security. Notwithstanding anything contained in this Agreement
to the contrary, the amount covered by each Obligor under the Obligations
(including, without limitation, Section 4.2 (Guaranty)) shall be limited to an
aggregate amount (after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Obligor in
respect of the Obligations) which, together with other amounts owing by such
Obligors to the Agent and the Lenders under the Obligations, is equal to the
largest amount that would not be subject to avoidance under the Bankruptcy Code
or any applicable provisions of any applicable, comparable state or other Laws.


                                       36

<PAGE>

     Section 4.2 Guaranty.

          (a) Each Obligor hereby unconditionally and irrevocably, guarantees to
the Agent and the Lenders:

               (1) the due and punctual payment in full (and not merely the
collectibility) by the other Obligors of the Obligations, including unpaid and
accrued interest thereon, in each case when due and payable, all according to
the terms of this Agreement, the Notes and the other Loan Documents;

               (2) the due and punctual payment in full (and not merely the
collectibility) by the other Obligors of all other sums and charges which may at
any time be due and payable in accordance with this Agreement, the Notes or any
of the other Loan Documents;

               (3) the due and punctual performance by the other Obligors of all
of the other terms, covenants and conditions contained in the Loan Documents;
and

               (4) all the other Obligations of the other Obligors.

          (b) The obligations and liabilities of each Obligor as a guarantor
under this Section shall be absolute and unconditional and joint and several,
irrespective of the genuineness, validity, priority, regularity or
enforceability of this Agreement, any of the Notes or any of the Loan Documents
or any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or guarantor. Each Obligor in its capacity as a guarantor
expressly agrees that the Agent and the Lenders may, in their sole and absolute
discretion, without notice to or further assent of such Obligor and without in
any way releasing, affecting or in any way impairing the joint and several
obligations and liabilities of such Obligor as a guarantor hereunder:

               (1) waive compliance with, or any defaults under, or grant any
other indulgences under or with respect to any of the Loan Documents;

               (2) modify, amend, change or terminate any provisions of any of
the Loan Documents;

               (3) grant extensions or renewals of or with respect to the
Revolving Loan, the Notes or any of the other Loan Documents;

               (4) effect any release, subordination, compromise or settlement
in connection with this Agreement, any of the Notes or any of the other Loan
Documents;

               (5) agree to the substitution, exchange, release or other
disposition of the Collateral or any part thereof, or any other collateral for
the Revolving Loan or to the subordination of any lien or security interest
therein;

               (6) make advances for the purpose of performing any term,
provision or covenant contained in this Agreement, any of the Notes or any of
the other Loan Documents with respect to which the Obligors shall then be in
default;

               (7) make future advances pursuant to this Agreement or any of the
other Loan Documents;


                                       37

<PAGE>

               (8) assign, pledge, hypothecate or otherwise transfer the
Commitments, the Obligations, the Notes, any of the other Loan Documents or any
interest therein, all as and to the extent permitted by the provisions of this
Agreement;

               (9) deal in all respects with the other Obligors as if this
Section were not in effect;

               (10) effect any release, compromise or settlement with any of the
other Obligors, whether in their capacity as a Obligor or as a guarantor under
this Section, or any other guarantor; and

               (11) provide debtor-in-possession financing or allow use of cash
collateral in proceedings under the Bankruptcy Code, it being expressly agreed
by all Obligors that any such financing and/or use would be part of the
Obligations.

          (c) The obligations and liabilities of each Obligor, as guarantor
under this Section, shall be primary, direct and immediate, shall not be subject
to any counterclaim, recoupment, set off, reduction or defense based upon any
claim that a Obligor may have against any one or more of the other Obligors, the
Agent, any one or more of the Lenders and/or any other guarantor and shall not
be conditional or contingent upon pursuit or enforcement by the Agent or other
Lenders of any remedies it may have against the Obligors with respect to this
Agreement, the Notes or any of the other Loan Documents, whether pursuant to the
terms thereof or by operation of law. Without limiting the generality of the
foregoing, the Agent and the Lenders shall not be required to make any demand
upon any of the Obligors, or to sell the Collateral or otherwise pursue, enforce
or exhaust its or their remedies against the Obligors or the Collateral either
before, concurrently with or after pursuing or enforcing its rights and remedies
hereunder. Any one or more successive or concurrent actions or proceedings may
be brought against each Obligor under this Section, either in the same action,
if any, brought against any one or more of the Obligors or in separate actions
or proceedings, as often as the Agent may deem expedient or advisable. Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of any of the liabilities or obligations of any one or
more of the Obligors, any other guarantor or any obligor under any of the Loan
Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against any one or more of the Obligors, in their
respective capacities as Obligors and guarantors under this Section, or under
any of the Loan Documents shall not modify, limit, lessen, reduce, impair,
discharge, or otherwise affect the liability of each Obligor under this Section
in any manner whatsoever, and this Section shall remain and continue in full
force and effect. It is the intent and purpose of this Section that each Obligor
shall and does hereby waive all rights and benefits which might accrue to any
other guarantor by reason of any such proceeding, and the Obligors agree that
they shall be liable for the full amount of the obligations and liabilities
under this Section, regardless of, and irrespective to, any modification,
limitation or discharge of the liability of any one or more of the Obligors, any
other guarantor or any obligor under any of the Loan Documents, that may result
from any such proceedings.

          (d) Each Obligor, as guarantor under this Section, hereby
unconditionally, jointly and severally, irrevocably and expressly waives:


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<PAGE>

          (1) presentment and demand for payment of the Obligations and protest
of non-payment;

          (2) notice of acceptance of this Section and of presentment, demand
and protest thereof;

          (3) notice of any default hereunder or under the Notes or any of the
other Loan Documents and notice of all indulgences;

          (4) notice of any increase in the amount of any portion of or all of
the indebtedness guaranteed by this Section;

          (5) demand for observance, performance or enforcement of any of the
terms or provisions of this Section, the Notes or any of the other Loan
Documents;

          (6) all errors and omissions in connection with the Agent's
administration of all indebtedness guaranteed by this Section, except errors and
omissions resulting from acts of bad faith;

          (7) any right or claim of right to cause a marshalling of the assets
of any one or more of the other Obligors;

          (8) any act or omission of the Agent or the Lenders which changes the
scope of the risk as guarantor hereunder; and

          (9) all other notices and demands otherwise required by law which the
Obligor may lawfully waive.

          Within ten (10) days following any request of the Agent so to do, each
Obligor will furnish the Agent and the Lenders and such other persons as the
Agent may direct with a written certificate, duly acknowledged stating in detail
whether or not any credits, offsets or defenses exist with respect to this
Section.

     Section 4.3 Interest.

          (a) Interest on Revolving Loans. Interest shall accrue and be payable
on the outstanding principal balance of the Revolving Loans at the Base Rate,
which shall be subject to daily adjustments based upon daily fluctuations in the
LIBOR Market Index Rate. Interest shall accrue initially on all Revolving Loans
at the Base Rate. At the Borrowers' option as provided in Section 4.3(e) below,
interest shall accrue and be payable on portions of the outstanding principal
balance of the Revolving Loans at a fixed rate per annum equal to the LIBOR
Rate.

          (b) Late Charges; Post-Default Interest. If any regularly scheduled
monthly installment of principal and/or interest is not paid within ten (10)
calendar days after it is due, the Borrowers agree to pay to the Agent for the
ratable account of the Lenders as a late charge, and in addition to the amount
of such payment, a sum equal to five percent (5%) of the amount of such
delinquent payment. Notwithstanding the provisions of Section 4.3(a), the
Borrowers hereby promise to pay to the Lenders interest at the Post-Default Rate
on the full principal amount outstanding of all Revolving Loans, and (to the
fullest extent permitted by law) on any interest or other amount payable by the
Borrowers hereunder or under the Revolving Credit Notes, (i) for any period
during which an Event of Default has occurred and (ii) when any amount payable
under any of the Revolving Credit Notes is not paid in full when due (whether


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<PAGE>

on demand or at stated maturity, by acceleration or otherwise), for the period
commencing on the date such amount is due until the same is paid in full to the
extent permitted by Applicable Law. Interest shall continue to accrue on the
Revolving Credit Notes after the filing by or against the Borrowers of any
petition seeking any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.

          (c) Interest Payment and Computation. The Borrowers shall pay to the
Agent monthly, in arrears, on the 1st day of each month (commencing on the date
hereof) and on the date the Revolving Loans are paid in full and the Aggregate
Commitment is terminated, interest on the unpaid principal amount of the
Revolving Loans at the applicable interest rates set forth in this Section 4.3.
Interest and fees shall be computed on the basis of a 360-day year for the
actual number of days in the applicable period ("ACTUAL/360 COMPUTATION"). The
Actual/360 Computation determines the annual effective yield by taking the
stated (nominal) rate for a year's period and then dividing said rate by 360 to
determine the daily periodic rate to be applied for each day in the applicable
period. Application of the Actual/360 Computation produces an annualized
effective interest rate exceeding the nominal rate.

          (d) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Revolving
Credit Notes charged or collected pursuant to the terms of this Agreement or
pursuant to any of the Revolving Credit Notes exceed the highest rate
permissible under any Applicable Law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that such
a court determines that the Lenders have charged or received interest hereunder
in excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law and the
Lenders shall at the Agent's option (i) promptly refund to the Borrowers any
interest received by the Lenders in excess of the maximum lawful rate or (ii)
shall apply such excess to the principal balance of the Obligations. It is the
intent hereof that the Borrowers not pay or contract to pay, and that neither
the Agent nor any Lender receive or contract to receive, directly or indirectly
in any manner whatsoever, interest in excess of that which may be paid by the
Borrowers under Applicable Law.

          (e) Election of LIBOR Rate. The Borrowers may convert all or a portion
of the Revolving Loans accruing interest at the Base Rate to the LIBOR Rate, or
convert sums accruing interest at the LIBOR Rate back to the Base Rate by
delivering to the Agent a proper and timely Interest Rate Election substantially
in the form of EXHIBIT "L" attached to this Agreement (an "INTEREST RATE
ELECTION NOTICE"), in accordance with the provisions of this Section 4.3(e). The
Borrowers' election to convert outstanding Revolving Loans to the LIBOR Rate or
to the Base Rate is subject to the following limitations:

               (1) all elections of must be effective as of the first Business
     Day of a month;

               (2) the Borrowers shall not at any time change to the LIBOR Rate
     if the Interest Period shall extend beyond the Revolving Credit Maturity
     Date; and

               (3) except as otherwise provided in Section 4.9, no change from
     the LIBOR Rate to the Base Rate shall become effective on a day other than
     the first Business Day of a month.


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<PAGE>

          (f) Applicable Rate Not Available. If a request for an advance under
the Revolving Loans is not accompanied by an Interest Rate Election Notice or
does not otherwise include a selection of an Applicable Interest Rate, or if,
after having made a selection of an Applicable Interest Rate, the Borrowers fail
or are not otherwise entitled under the provisions of this Agreement to continue
such Applicable Interest Rate, the Borrowers shall be deemed to have selected
the Base Rate as the Applicable Interest Rate until such time as the Borrowers
have selected a different Applicable Interest Rate in accordance with, and
subject to, the provisions of this Section.

          (g) Notice for Conversion of Rate. The Lenders will not be obligated
to convert the Applicable Interest Rate to another Applicable Interest Rate,
unless the Agent shall have received an Interest Rate Election Notice from the
Borrowers specifying the following information:

               (1) the amount to be converted;

               (2) an election of the Base Rate or the LIBOR Rate; and

               (3) the requested date on which such election is to be effective.

          Any telephonic notice must be confirmed in writing within three (3)
Business Days. Each Interest Rate Election Notice must be received by the Agent
not later than 10:00 a.m. (Virginia Time) on the Business Day of any requested
conversion in the case of an election of the Base Rate and not later than 10:00
a.m. (Virginia Time) on the third Business Day before the effective date of any
requested borrowing or conversion in the case of an election of the LIBOR Rate.

     Section 4.4 Loan Fees

          (a) Revolving Loan Fee. The Borrowers shall pay to the Agent for the
ratable benefit of the Lenders a revolving credit facility fee (collectively,
the "REVOLVING LOAN FEES" and individually, a "REVOLVING LOAN FEE") in an amount
equal to 0.20% per annum of the average daily unused and undisbursed portion of
the Revolving Credit Commitment in effect from time to time accruing during each
quarter. The accrued and unpaid portion of the Revolving Loan Fee shall be paid
by the Borrowers to the Agent in arrears on the first day of each quarter, on
the first day of each January, April, July and October of each year during the
Revolving Credit Term, and on the Revolving Credit Maturity Date.

          (b) Agent's Fees. In order to compensate the Agent for structuring and
syndicating the Credit Facility and for its obligations hereunder, the Borrowers
agree to pay to the Agent, for its account, the fees set forth in the Fee
Letter.

          (c) Extension Fees. The Borrowers shall pay to the Agent, for the
ratable benefit of the Lenders, an extension fee (collectively, the "EXTENSION
FEES" and individually, an "EXTENSION FEE") in an amount equal to .125% per
annum of the Revolving Credit Commitment for each extension granted. The
Extension Fees shall be payable at the time of the granting of the extension and
shall be deemed fully earned and non-refundable when paid.

          (d) Commitment Increase Fees. In order to compensate the Agent for
structuring, implementing and/or syndicating each increase, if any, in the
Aggregate Commitment pursuant to Section 2.9, the Borrowers shall pay to the
Agent, for its account and


                                       41

<PAGE>

for the benefit of the Lenders, fees to be established by agreement of the
Borrowers and the Agent at the time of each proposed increase based on then
current market conditions.

     Section 4.5 Manner of Payment.

     Each payment by the Borrowers on account of the principal of or interest on
the Revolving Loans or of any fee or other amounts (including the Reimbursement
Obligation) payable to the Lenders under this Agreement or the Revolving Credit
Notes shall be made not later than 1:00 p.m. (Virginia time) on the date
specified for payment under this Agreement to the Agent at the Agent's Office
for the account of the Lenders (other than as set forth below) ratably in
accordance with their respective Commitment Percentages, in U.S. Dollars, in
immediately available funds and shall be made without any set-off, counterclaim
or deduction whatsoever. Any payment received after such time but before 2:00
p.m. (Virginia time) on such day shall be deemed a payment on such date for the
purposes of Section 9.1(a), but for all other purposes shall be deemed to have
been made on the next succeeding Business Day. Any payment received after 2:00
p.m. (Virginia time) shall be deemed to have been made on the next succeeding
Business Day for all purposes. Upon receipt by the Agent of each such payment,
the Agent shall distribute to each Lender at its address for notices set forth
herein its pro rata share of such payment in accordance with such Lender's
Commitment Percentage and shall wire advice of the amount of such credit to each
Lender. Each payment to the Agent of Agent's fees or expenses shall be made for
the account of the Agent and any amount payable to any Lender hereunder shall be
paid to the Agent for the account of the applicable Lender. If any payment under
this Agreement or any Revolving Credit Note shall be specified to be made upon a
day that is not a Business Day, it shall be made on the next succeeding day that
is a Business Day and such extension of time shall in such case be included in
computing any interest if payable along with such payment.

     Section 4.6 Crediting of Payments and Proceeds.

     If the Borrowers shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 9.2, all payments received
by the Lenders upon the Revolving Credit Notes and the other Obligations and all
net proceeds from the enforcement of the Obligations shall be applied first to
all expenses then due and payable by the Borrowers hereunder, then to all
indemnity obligations then due and payable by the Borrowers hereunder, then to
accrued and unpaid interest on the Revolving Credit Notes and the Reimbursement
Obligation and to amounts arising under Hedge Agreements (pro rata in accordance
with all such amounts due), then to the principal amount of the Revolving Credit
Notes and Reimbursement Obligation, and then to the cash collateral account
described in Section 9.2(b) to the extent of any L/C Obligations then
outstanding.

     Section 4.7 Adjustments.

     If any Lender (a "BENEFITED LENDER") shall at any time receive any payment
of all or part of its Extensions of Credit, or interest thereon, or if any
Lender shall at any time receive any collateral in respect to its Extensions of
Credit (whether voluntarily or involuntarily, by set-off or otherwise) in a
greater proportion (relative to such Lender's Commitment Percentage) than any
such payment to or collateral received by any other Lender or Lenders in respect
of such other Lender's or Lenders' Extensions of Credit, or interest thereon,
such Benefited Lender shall purchase for cash from the other Lender or Lenders
such portion of each such other Lender's


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<PAGE>

Extensions of Credit, or shall provide such other Lender or Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders in accordance with their
respective Commitment Percentages; provided, however, if all or any portion of
such excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned to the extent of such recovery, but without interest. The Borrowers
agree that each Lender so purchasing a portion of another Lender's Extensions of
Credit may exercise all rights of payment (including, without limitation, rights
of set-off) with respect to such portion as fully as if such Lender were the
direct holder of such portion.

     Section 4.8 Nature of Obligations of Lenders Regarding Extensions of
          Credit, Assumption by the Agent.

     The obligations of the Lenders under this Agreement to make the Revolving
Loans and issue or participate in Letters of Credit are several and are not
joint or joint and several. Unless the Agent shall have received notice from a
Lender prior to a proposed borrowing date that such Lender will not make
available to the Agent such Lender's ratable portion of the amount to be
borrowed on such date (which notice shall not release such Lender of its
obligations hereunder), the Agent may assume that such Lender has made such
portion available to the Agent on the proposed borrowing date in accordance with
Section 2.2(c), and the Agent may, in reliance upon such assumption, make
available to the Borrowers on such date a corresponding amount. If such amount
is made available to the Agent on a date after such borrowing date, such Lender
shall pay to the Agent on demand an amount, until paid, equal to the product of
(a) the amount of such Lender's Commitment Percentage of such borrowing, times
(b) the daily average Federal Funds Rate during such period as determined by the
Agent, times (c) a fraction the numerator of which is the number of days that
elapse from and including such borrowing date to the date on which such Lender's
Commitment Percentage of such borrowing shall have become immediately available
to the Agent and the denominator of which is 360. A certificate of the Agent
with respect to any amounts owing under this Section 4.8 shall be conclusive,
absent manifest error. If such Lender's Commitment Percentage of such borrowing
is not made available to the Agent by such Lender within three (3) Business Days
of such borrowing date, the Agent shall be entitled to recover such amount made
available by the Agent with interest thereon at the Base Rate, on demand, from
the Borrowers. The failure of any Lender to make available its Commitment
Percentage of any Revolving Loan shall not relieve it or any other Lender of its
obligation, if any, hereunder to make its Commitment Percentage of such
Revolving Loan available on such borrowing date, but no Lender shall be
responsible for the failure of any other Lender to make its Commitment
Percentage of such Revolving Loan available on the borrowing date, and Borrowers
shall have the right to pursue any claims for loss or damage against such Lender
or Lenders that fail to make available its Commitment Percentage of any
Revolving Loan as otherwise required hereunder.

     Section 4.9 Changed Circumstances.

          (a) Laws Affecting LIBOR Base Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of


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<PAGE>

their respective Lending Offices) with any request or directive (whether or not
having the force of law) of any such Authority, central bank or comparable
agency, shall make it unlawful or impossible for any of the Lenders (or any of
their respective Lending Offices) to honor its obligations hereunder to make or
maintain any Revolving Loan, such Lender shall promptly give notice thereof to
the Agent and the Agent shall promptly give notice to the Borrowers and the
other Lenders. Thereafter, until the Agent notifies the Borrowers that such
circumstances no longer exist, the obligations of such Lender to make Revolving
Loans shall be suspended and thereafter the outstanding balance under the
Revolving Credit Notes shall bear interest at a rate based upon an alternate
index selected by the Agent as reasonably comparable to the LIBOR Base Rate plus
the Applicable Margin.

          (b) Increased Costs. If, after the date hereof, the introduction of,
or any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:

               (1) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any Note,
Letter of Credit or Application (except such taxes, duties or charges that are
imposed as a result of the financial condition of the particular Lender, as
opposed to being imposed on lenders generally) or shall change the basis of
taxation of payments to any of the Lenders (or any of their respective Lending
Offices) of the principal of or interest on any Note, Letter of Credit,
Application or Letter of Credit Agreement or any other amounts due under this
Agreement in respect thereof (except for changes in the rate of tax on the
overall net income or gross receipts of any of the Lenders or any of their
respective Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending Office is
located); or

               (2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note; and the result of any of the foregoing is to increase the costs to any of
the Lenders of maintaining any Revolving Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Revolving
Credit Notes in respect of a Revolving Loan or Letter of Credit or Application,
then such Lender shall promptly notify the Agent, and the Agent shall promptly
notify the Borrowers of such fact and demand compensation therefor and, within
fifteen (15) days after such notice by the Agent, the Borrowers shall pay to
such Lender or Lenders such additional amount or amounts as will compensate such
Lender or Lenders for such increased cost or reduction (except to the extent
such increased cost or reduction is a consequence of the financial condition of
the particular Lender, as opposed to being imposed on Lenders generally). The
Agent will promptly notify the Borrowers of any event of which it has knowledge
which will entitle any Lender to compensation pursuant to this Section 4.9(b);
provided, however, the Agent shall incur no


                                       44

<PAGE>

liability whatsoever to the Lenders or the Borrowers in the event the Agent
fails to do so. The amount of such compensation shall be determined, in the
applicable Lender's sole discretion, based upon the assumption that such Lender
funded its Commitment Percentage of the Revolving Loans in the London interbank
market, and using any reasonable attribution or averaging methods which such
Lender deems appropriate and practical. A certificate of such Lender setting
forth the basis for determining such amount or amounts necessary to compensate
such Lender shall be forwarded to the Borrowers through the Agent and shall be
conclusively presumed to be correct save for manifest error.

     Section 4.10 Indemnity.

     The Borrowers hereby indemnify each of the Lenders against any loss or
expense which may arise or be attributable to any Lender's obtaining,
liquidating or employing deposits or other funds acquired to effect, fund or
maintain any Revolving Loan (a) as a consequence of any failure by the Borrowers
to make any payment when due of any amount due hereunder in connection with a
Revolving Loan or (b) due to any payment or prepayment of a Revolving Loan on a
date other than the last day of the applicable interest period. The amount of
such loss or expense shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the Revolving Loans accruing interest at the LIBOR Rate in the
London interbank market, and using any reasonable attribution or averaging
methods which such Lender deems appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts necessary
to compensate such Lender shall be forwarded to the Borrowers through the Agent
and shall be conclusively presumed to be correct save for manifest error.

     Section 4.11 Capital Requirements.

     If either (a) the introduction of, or any change in, or in the
interpretation of, any Applicable Law or (b) compliance with any guideline or
request from any central bank or comparable agency or other Governmental
Authority (whether or not having the force of law but provided such request is
made to lenders generally and not to a particular Lender by reason of its
financial condition), has or would have the effect of reducing the rate of
return on the capital of, or has affected or would affect the amount of capital
required to be maintained by, any Lender or any corporation controlling such
Lender as a consequence of, or with reference to the Commitments and other
commitments of this type, below the rate that the Lender or such other
corporation could have achieved but for such introduction, change or compliance,
then within five (5) Business Days after written demand by any such Lender, the
Borrowers shall pay to such Lender from time to time as specified by such Lender
additional amounts sufficient to compensate such Lender or other corporation for
such reduction. A certificate as to such amounts submitted to the Borrowers and
the Agent by such Lender, shall, in the absence of manifest error, be presumed
to be correct and binding for all purposes.

     Section 4.12 Taxes.

          (a) Payments Free and Clear. Any and all payments by the Borrowers
hereunder or under the Revolving Credit Notes or the Letters of Credit shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholding, and all liabilities
with respect thereto excluding, (i) in the case of each Lender and the Agent,
income, gross receipts and franchise taxes imposed by the jurisdiction


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<PAGE>

under the laws of which such Lender or the Agent (as the case may be) is
organized or is or should be qualified to do business or any political
subdivision thereof and (ii) in the case of each Lender, income and franchise
taxes imposed by the jurisdiction of such Lender's Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "TAXES"). If the Borrowers shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note or Letter of Credit
to any Lender or the Agent, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 4.12) such Lender or
the Agent (as the case may be) receives an amount equal to the amount such party
would have received had no such deductions been made, (B) the Borrowers shall
make such deductions, (C) the Borrowers shall pay the full amount deducted to
the relevant taxing authority or other authority in accordance with Applicable
Law, and (D) the Borrowers shall deliver to the Agent evidence of such payment
to the relevant taxing authority or other authority in the manner provided in
Section 4.12(d).

          (b) Stamp and Other Taxes. In addition, the Borrowers shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Revolving Loans, the Letters of Credit, the other Loan Documents, or the
perfection of any rights or security interest in respect thereto (hereinafter
referred to as "OTHER TAXES").

          (c) Indemnity. The Borrowers shall indemnify each Lender and the Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this
Section 4.12) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted; provided, however, the Borrowers shall be subrogated to the
rights of such Lender or the Agent with respect to any claim that such Taxes or
Other Taxes were not correctly or legally asserted. Such indemnification shall
be made within thirty (30) days from the date such Lender or the Agent (as the
case may be) makes written demand therefore.

          (d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes required to be deducted from any sum payable
hereunder as provided in Section 4.12(a) above, upon request of any Lender, the
Borrowers shall furnish to the Agent, at its address referred to in Section
11.1, the original or a certified copy of a receipt evidencing payment thereof
or other evidence of payment satisfactory to the Agent. Upon request of the
Agent, the Borrowers shall furnish to the Agent, at its address referred to in
Section 11.1 evidence of the payment of real estate taxes relating to the
Borrowing Base Assets satisfactory to the Agent.

          (e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrowers, with a copy to the Agent, on the Closing Date or concurrently
with the delivery of the relevant Assignment and Acceptance, as applicable, (i)
two United States Internal Revenue Service


                                       46

<PAGE>

Forms 4224 or Forms 1001, as applicable (or successor forms) properly completed
and certifying in each case that such Lender is entitled to a complete exemption
from withholding or deduction for or on account of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding taxes. Each such Lender further agrees to deliver to
the Borrowers, with a copy to the Agent, a Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms or manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders such forms inapplicable or
the exemption to which such forms relate unavailable and such Lender notifies
the Borrowers and the Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.

          (f) Survival. Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 4.12 shall survive the payment in full of the
Obligations and the termination of the Commitments.

     Section 4.13 Security.

     The Obligations of the Borrowers shall be secured as provided in the
Mortgages.

                                    ARTICLE V
                       CONDITIONS OF CLOSING AND BORROWING

     Section 5.1 Conditions to Closing and Initial Extensions of Credit.

     The obligation of the Lenders to make the initial Extensions of Credit
hereunder is subject to each of the following conditions:

          (a) Executed Loan Documents. This Agreement, the Revolving Credit
Notes, the Guaranty, the Mortgages, and each of the other Loan Documents shall
have been duly authorized and executed by the parties thereto, shall be in full
force and effect and no default shall exist thereunder, and the Obligors shall
have delivered original counterparts thereof to the Agent.

          (b) Certificate of Secretary of the Obligors. The Agent shall have
received a certificate of the secretary or assistant secretary of each of the
Obligors certifying as to the incumbency and genuineness of the signature of
each officer of the Obligor executing Loan Documents to which it is a party and
certifying that attached thereto is a true, correct and complete copy of (A) the
organizational and governing documents of the Obligor and all amendments
thereto, (B) resolutions duly adopted by the members of the Obligor authorizing
the borrowings contemplated hereunder and the execution, delivery and
performance of this


                                       47

<PAGE>

Agreement and the other Loan Documents to which it is a party, and (C) each
certificate required to be delivered pursuant to the following subsection.

          (c) Certificates of Good Standing. The Agent shall have received
long-form certificates as of a recent date of the good standing of each of the
Obligors under the laws of its jurisdiction of organization and each other
jurisdiction where the Obligor is qualified to do business.

          (d) Opinions of Counsel. The Agent shall have received favorable
opinions of counsel to the Obligors (including opinions of counsel admitted to
practice in each state where the Borrowing Base Assets are located) addressed to
the Agent and the Lenders with respect to the Obligors, the Loan Documents and
such other matters as the Lenders shall request.

          (e) Tax Forms. The Agent shall have received copies of the United
States Internal Revenue Service form required by Section 4.12(e), if any.

          (f) Borrowing Base Report and Covenant Compliance Certificate. The
Agent shall have received a Borrowing Base Report and Covenant Compliance
Certificate certified as true and correct by a Responsible Officer of Capital.

          (g) Filings and Recordings. The Agent shall have received, ready for
filing or recording, all Loan Documents and all other documents necessary to
perfect the security interests of the Lenders in the collateral described in the
Mortgages.

          (h) UCC Search. The Agent shall have received the results of a UCC
search for the state office filings on the Obligors in the jurisdiction in which
the Obligors are organized.

          (i) Appraisals. The Agent shall have received and approved an
appraisal for each Borrowing Base Asset.

          (j) Title Matters. The Agent shall have received a Title Confirmation
Letter or a title policy as required pursuant to the provisions of Section 2.8.

          (k) Survey. The Agent shall have received a current survey, certified
to the Agent and the Title Insurance Company for all Borrowing Base Assets.

          (l) Hazard and Liability Insurance. The Agent shall have received
evidence satisfactory to it that Obligor has in force all of the insurance
policies required under Section 7.10 (including Flood Insurance) and that such
policies satisfy the requirements of Section 7.10 and are otherwise in form and
substance reasonably satisfactory to the Agent.

          (m) Environmental. The Agent shall have received evidence satisfactory
to it regarding the current and past pollution control practices for each
Borrowing Base Asset in connection with the discharge, emission, handling,
disposal or existence of materials and substances controlled by federal, state
or local laws and regulations including an environmental audit of each Borrowing
Base Asset prepared by a person or firm acceptable to the Lender.

          (n) Record Plats. The Agent shall have received the record plat for
each Borrowing Base Asset other than Raw Land or Land Under Development (to the
extent there is no record plat) showing buildings and other improvements,
location of streets, lot lines, setback lines, easements, encroachments and all
other matters affecting each Approved Subdivision


                                       48

<PAGE>

prepared by a licensed surveyor with a surveyor's certification to the Agent, on
behalf of the Lenders, in a form acceptable to the Agent.

          (o) Payment of Fees at Closing; Fee Letter. The Obligors shall have
paid the Revolving Loan Fee and other fees set forth or referenced in Section
4.4 and any other accrued and unpaid fees due hereunder (including, without
limitation, legal fees and expenses) to the Agent and the Lenders, and to any
other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, and filing of any of the
Loan Documents. The Agent shall have received duly authorized and executed
copies of the Fee Letter and the Mandate Letter.

          (p) Governmental and Third Party Approvals. The Obligors shall have
obtained all necessary approvals, authorizations and consents of any Person and
of all Governmental Authorities and courts having jurisdiction with respect to
the transactions contemplated by this Agreement and the other Loan Documents.

          (q) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect to, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Agent's sole discretion, would
make it inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.

          (r) No Default. No Default or Event of Default shall have occurred and
be continuing.

          (s) Hedge Agreement. The Borrowers shall comply with the requirements
of Section 7.14.

          (t) Notice of Borrowing. The Agent shall have received a Notice of
Borrowing from the Borrowers in accordance with Section 2.2(a), and a Notice of
Account Designation specifying the account or accounts to which the proceeds of
any Revolving Loans made after the Closing Date are to be disbursed.

          (u) Proceedings and Documents. All opinions, certificates and other
instruments and all proceedings in connection with the transactions contemplated
by this Agreement shall be satisfactory in form and substance to the Agent. The
Lenders shall have received copies of all other instruments and other evidence
as the Lenders may reasonably request, in form and substance satisfactory to the
Lenders, with respect to the transactions contemplated by this Agreement and the
taking of all actions in connection therewith.

          (v) Identification Numbers. The Agent shall have received the tax
identification and organizational number of each of the Obligors.

          (w) Due Diligence and Other Documents. The Obligors shall have
delivered to the Agent such other documents, certificates and opinions as the
Agent may reasonably request in connection with the transactions contemplated
hereby.


                                       49

<PAGE>

          (x) Refinancing of Bridge Loan. On the Closing Date, (i) the Bridge
Loan shall be repaid in full and commitments and other obligations and (except
as expressly set forth in the documents evidencing the Bridge Loan) rights of
the Prior Lender (other than any rights specifically provided under this
Agreement) shall be terminated; (ii) the Bridge Loan shall be deemed a Revolving
Loan hereunder and the Agent shall make such transfers of funds as are necessary
in order that the outstanding balance of such Revolving Loan, together with any
Existing Loan and any Existing Letter of Credit (as provided in Section 5.1(y))
and any Revolving Loan funded on the Closing Date, reflect the Commitments of
the Lenders hereunder; (iii) there shall have been paid in cash in full all
accrued but unpaid interest due on the Bridge Loan to but excluding the Closing
Date; and (iv) there shall have been paid in cash in full all accrued but unpaid
fees under the Bridge Loan owing to but excluding the Closing Date and all other
amounts, costs and expenses then owing to the Prior Lender to the satisfaction
of the Prior Lender, as the case may be, regardless of whether such amounts
would otherwise be due and payable at such time pursuant to the terms of the
Bridge Loan.

          (y) Existing Loan and Existing Letter of Credit. On the Closing Date,
(i) all outstanding Existing Loans shall continue to be Revolving Loans
hereunder and each Existing Lender shall be deemed to sell, and each New Lender
shall be deemed to purchase, an interest therein as required to establish
Revolving Loans for each of the Lenders based on such Lender's Revolving Credit
Commitment Percentage, and the Agent shall make such transfers of funds as are
necessary in order that the outstanding balances of such Revolving Loans,
together with the Revolving Loans used to repay the Bridge Loan (as provided in
Section 5.1(x)) and any other Revolving Loans funded on the Closing Date,
reflect the Commitments of the Lenders hereunder; (ii) all Existing Letters of
Credit shall continue to be Letters of Credit hereunder and each Existing Lender
shall be deemed to sell, and each New Lender shall be deemed to purchase, an
interest therein as required to establish L/C Participations therein pursuant to
Section 3.4 for each of the Lenders in accordance with its respective Revolving
Credit Commitment Percentage; (iii) there shall have been credited to the
Existing Lenders all accrued but unpaid interest due on the Existing Loans and
Existing Letters of Credit to but excluding the Closing Date; and (iv) there
shall have been credited to the Existing Lenders all accrued but unpaid fees
under the Existing Loans and Existing Letters of Credit owing to but excluding
the Closing Date and all other amounts, costs and expenses then owing to any of
the Existing Lenders and/or the Agent under the Existing Loans and Existing
Letters of Credit, in each case to the satisfaction of such Existing Lender or
the Agent, as the case may be, regardless of whether such amounts would
otherwise be due and payable at such time pursuant to the terms of the Existing
Loans and Existing Letters of Credit.

     Section 5.2 Conditions to All Extensions of Credit.

     The obligations of the Lenders to make each Revolving Loan and the
obligation of the Issuing Bank to issue each Letter of Credit is subject to the
satisfaction of the following conditions precedent on the relevant borrowing or
issue date, as applicable:

          (a) Continuation of Representations and Warranties. The
representations and warranties made by the Borrowers in each Loan Document shall
be true in all material respects on and as of the date of the proposed Revolving
Loan or issuance and after giving effect to the proposed Revolving Loan or
issuance.


                                       50

<PAGE>

          (b) Title Update. The Agent shall have received a notice of title
continuation or, as to any title insurance policy issued, an endorsement to the
title insurance policy theretofore delivered, indicating that since the last
preceding advance, there has been no change in the status of title and no other
exceptions not theretofore approved by the Agent, which endorsement shall have
the effect of advancing the effective date of the policy to the date of the
advance then being made and increasing the coverage of the policy by an amount
equal to the advance then being made if the policy does not by its terms provide
for such an increase.

          (c) No Existing Default. No Event of Default shall have occurred and
no Default shall have occurred and be continuing (i) on the borrowing date with
respect to a Revolving Loan or after giving effect to the Revolving Loans to be
made on such date or (ii) on the issue date with respect to a Letter of Credit
or after giving effect to such Letter of Credit on such date.

          (d) Inspections. Unless the Agent shall otherwise agree, each
Borrowing Base Asset shall have been inspected by the Compliance Inspector, who
shall have certified that in the Compliance Inspector's opinion, the Borrowing
Base Assets are being developed in compliance with the terms of this Agreement.

          (e) Material Adverse Change. No Material Adverse Change shall have
occurred in the Borrowing Base Assets (other than a Material Adverse Change
giving rise to the Appraisal right described in Section 8.7 (Appraisal)) or the
business, operations, or condition (financial or otherwise) of the Obligors or
their Subsidiaries taken as a whole and no event shall have occurred and no
condition shall have arisen that could reasonably be expected to have such
effect since the Closing Date.

          (f) Contracts of Sale. If requested by the Agent in its sole
discretion, the Agent shall have received conformed copies of the acquisition or
option contracts for all Projects being purchased by the Obligors within
Approved Subdivisions.

          (g) Approved Contracts. If requested by the Agent in its sole
discretion, the Agent shall have received a copy of the Approved Contract for
each Borrowing Base Asset that is identified by the Obligors as a Sold Unit.

          (h) Satisfaction of Funding Requirements. As to any Revolving Loan,
all applicable requirements of ARTICLE II (Revolving Credit Facility) are
satisfied and as to the issuance of any Letter of Credit, all applicable
requirements of ARTICLE III (L/C Facility) are satisfied.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

     Each of the Obligors represents and warrants to the Lenders, as of the date
hereof and as of the date of each Revolving Loan and at each other time that the
Obligors are deemed by the terms hereof to make such representations and
warranties, that:

     Section 6.1 Existence, Etc.

     Each of the Obligors is a limited liability company that: (a) is duly
organized and validly existing under the laws of the Commonwealth of Virginia or
the State of Maryland; (b) has all


                                       51

<PAGE>

requisite power and has all material governmental licenses, authorizations,
consents and approvals necessary (at the time the representation is made) to own
its assets and carry on its business as now being conducted and as contemplated
hereby (except any such licenses, authorizations, consents or approvals as are
being renewed); and (c) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure to so qualify would have a Materially Adverse
Effect.

     Section 6.2 Financial Condition.

     Except as otherwise disclosed to the Agent in writing, the consolidated
financial statements of the Obligors and their Subsidiaries heretofore furnished
to the Agent in connection with the transactions contemplated hereby, fairly
present the financial condition of such entities as at said dates all in
accordance with GAAP applied on a consistent basis. Since the dates of said
financial statements there has been no Material Adverse Change (other than a
Material Adverse Change giving rise to the Appraisal right described in Section
8.7 (Appraisal) which, if such a Material Adverse Change has occurred and is
continuing, is described in the Compliance Certificate delivered as of the date
hereof and as of the date of each Revolving Loan and at each other time that the
Obligors are deemed by the terms hereof to make such representations and
warranties) in the financial condition, operations, or the business, of the
Obligors and their Subsidiaries from that set forth therein.

     Section 6.3 Litigation.

     There are no legal or arbitral proceedings or any proceedings by or before
any governmental or regulatory authority or agency now pending or, to the
knowledge of the Obligor, threatened against the Obligors in which there is a
reasonable probability of an adverse decision that could cause a Material
Adverse Change.

     Section 6.4 No Breach.

     None of the execution and delivery of the Loan Documents, the consummation
of the transactions therein contemplated and compliance with the terms and
provisions thereof will conflict with or result in a breach of, or require any
consent (not theretofore obtained at the time the representation is made) under
any Applicable Law or regulation, or any order, writ, injunction, judgment or
decree of any court or Governmental Authority, or any agreement or instrument to
which the Obligor is a party or by which it is bound or to which it is subject,
or constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Obligor pursuant to the terms of any such agreement or instrument other than the
Lien created by the Loan Documents.

     Section 6.5 Authority.

     The Loan Documents, when executed and delivered, have been duly and validly
executed and delivered by the parties named therein other than the Agent, the
Arranger and the Lenders, and constitute the legal, valid and binding
obligations of the parties named therein other than the Agent, the Arranger and
the Lenders, enforceable in accordance with their terms except as enforceability
may be limited by bankruptcy, insolvency and other similar laws affecting
creditor's rights generally, and the application of equitable principles.


                                       52

<PAGE>

     Section 6.6 Approval.

     No authorizations, approvals or consents of, and no filings or
registrations with (other than the recording of the Mortgages in the appropriate
recording offices in the jurisdictions in which the Borrowing Base Assets are
located and the filing of the Financing Statement referred to in the Mortgages
in the applicable financing statement records office of such jurisdictions) any
Governmental Authority are necessary for the execution, delivery or performance
by the Obligor of the Loan Documents or for the validity or enforceability of
any thereof, or for the Obligor to consummate the transactions contemplated
hereby.

     Section 6.7 Employee Benefit Plans.

     The Obligor does not maintain any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974.

     Section 6.8 Taxes, Etc.

     The Obligor has filed all federal and state tax returns and all other
material tax returns that are required to be filed by it and has paid all taxes
due pursuant to such returns or pursuant to any assessment received by the
Obligor, except such taxes, the payment of which is not yet due, or which, if
due, is not yet delinquent or is being contested in good faith or which has not
been finally determined. The charges, accruals and reserves on the books of the
Obligor in respect of taxes and other governmental charges are, in the
reasonable opinion of the Obligor, adequate in all material respects.

     Section 6.9 Ownership of Collateral.

     Through one or more of the Obligors, the Obligors are the fee simple owners
of record and in fact of all Collateral. With respect to new Borrowing Base
Assets acquired with Revolving Loans, the Spreader Agreement perfecting the
Lenders' first priority security interest in each such Borrowing Base Asset has
been recorded prior to the disbursement of the Revolving Loan for acquisition.

     Section 6.10 Bridge Loan Documents.

     The loan documents evidencing and securing the Bridge Loan, as amended and
restated hereby, are in full force and effect, valid, binding and enforceable in
accordance with their respective terms (subject to applicable bankruptcy,
insolvency and similar laws, and the application of equitable principles whether
by a court of law or equity). To the knowledge of the Obligor, there exists no
default by the Prior Lender thereunder nor any defense to payment of amounts
payable pursuant to such loan documents.

     Section 6.11 Existing Loan Documents.

     The Loan Documents evidencing and securing the Existing Loans, as amended
and/or restated hereby or in connection herewith, are in full force and effect,
valid, binding and enforceable in accordance with their respective terms
(subject to applicable bankruptcy, insolvency and similar laws, and the
application of equitable principles whether by a court of law or equity). To the
knowledge of the Obligor, there exists no default by the Existing Lenders or the
Agent thereunder nor any defense to payment of amounts payable pursuant to such
Loan Documents. The Obligor hereby ratifies and reaffirms for the benefit of the
Lenders all of its


                                       53

<PAGE>

indebtedness, duties and obligations under such Loan Documents, as amended
and/or restated hereby or in connection herewith.

     Section 6.12 Survival.

     All representations and warranties made by the Obligors herein or made in
any certificate delivered pursuant hereto shall survive the making of the
Revolving Loans hereunder and the execution and delivery to the Agent of the
Revolving Credit Notes evidencing such Revolving Loans.

                                   ARTICLE VII
                            COVENANTS OF THE OBLIGORS

     The Obligors agree that from the date hereof, so long as the Borrowers may
borrow hereunder or obtain any Letters of Credit hereunder and until payment in
full of the Obligations, all interest thereon and all other amounts payable by
the Borrowers under the Loan Documents and all Letters of Credit:

     Section 7.1 Borrowing Base Reports, Financial Statements, Etc.

     The Obligors (for purposes of this Section 7.1 unless otherwise specified,
actions that the Obligors are required to take will be taken by Capital) shall
deliver to the Agent, with a sufficient number of copies for Agent to deliver a
copy to each Lender, which Agent hereby undertakes to do:

          (a) not later than the tenth (10th) day of each calendar month a
Borrowing Base Report signed by Capital's Chief Financial Officer. Such
Borrowing Base Report shall be prepared as of the last day of the preceding
month.

          (b) within one hundred twenty (120) days of the end of each Fiscal
Year, (i) a copy of the annual financial statement in reasonable detail
satisfactory to the Agent relating to the Obligors and their Subsidiaries,
prepared in accordance with GAAP and examined and certified by independent
certified public accountants reasonably satisfactory to the Agent, which
financial statement shall include a consolidated and consolidating balance sheet
of the Obligors and their Subsidiaries as of the end of such fiscal year and
consolidated and consolidating statements of income, cash flows and changes in
equity of the Obligors and their Subsidiaries for such fiscal year, (ii) a
Compliance Certificate, in substantially the form attached to this Agreement as
EXHIBIT "D", as may be amended by the Agent from time to time, and (iii) a copy
of the federal income tax return filed by the Obligors;

          (c) within forty five (45) days of the end of each Fiscal Quarter
(other than the final Fiscal Quarter of each Fiscal Year) of Obligors and their
Subsidiaries, consolidated and consolidating balance sheets of the Obligors and
their Subsidiaries as of the close of such period, consolidated and
consolidating income, and changes in equity statements for such period, and a
Compliance Certificate, in substantially the form attached to this Agreement as
EXHIBIT "D", each certified by a Responsible Officer in accordance with GAAP,
consistently applied, without exception, to fairly present the financial
condition of the Person to which it relates;

          (d) within thirty (30) days of the end of each Fiscal Quarter, a
Project Sales Report for the quarter most recently ended, in form satisfactory
to the Agent;


                                       54

<PAGE>

          (e) within ten (10) days of the end of each Fiscal Quarter, an update
of Actual Costs Incurred for Finished Lots and Land Under Construction;

          (f) within ten (10) days after the end of each month, an update of the
Actual Costs Incurred for Model Units, Spec Units and Sold Units;

          (g) promptly after the Obligors know or have reason to know that any
Default has occurred, a notice of such Default, describing the same in
reasonable detail and the steps the Obligors or their affiliates proposes to
take to cure such Default;

          (h) upon request of the Agent, an accounts payable aging report, which
report shall include the amount and age of each payable, the name of each payee,
and such other information as the Agent may request;

          (i) as soon as available, but in no event later than the thirty (30)
days prior to the end of each Fiscal Year, a consolidated and consolidating
budget and business plan on a month-to-month basis for the following Fiscal Year
and as soon as available, but in no event later than forty five (45) days after
the end of each Fiscal Quarter, actual results as compared to business plan
consistent with the Obligors' practices as of the Closing Date, and

          (j) from time to time such other information regarding the business,
affairs or financial condition of the Obligors as the Agent may reasonably
request.

     The Obligors will furnish to the Agent, at the time they furnish each set
of financial statements and other documents pursuant to clauses (a) and (b)
above, a certificate of the Obligors to the effect that to the best of the
Obligors' knowledge, no Default has occurred and is continuing (or, if any
Default has occurred and is continuing, describing the same in reasonable detail
and describing the action the Obligors propose to take to cure the same).

     Section 7.2 Disposition of Assets.

     The Obligors will not sell or otherwise transfer (in a single transaction
or series of related transactions) its assets, including the Borrowing Base
Assets or any contractual or other interest therein, except the sale of Units
(and Lots without Units, in the ordinary course of business), unless the net
proceeds of such bulk sale are used solely to acquire substantially similar
assets or to repay corporate debt and the sale or other disposition of equipment
that is obsolete or otherwise no longer used or useful in the Obligors'
business.

     Section 7.3 Existence, Etc.

     Each of the Obligors shall: (a) preserve and maintain its existence and all
of its material rights and privileges (as long as it owns and develops assets);
(b) comply with the requirements of all Applicable Laws, rules, regulations and
orders of governmental or regulatory authorities if failure to comply with such
requirements could result in a Material Adverse Change; (c) pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or its
income or profits or any of its property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by proper proceedings (and with
security to the extent required by this Agreement); and (d) not suffer to occur
any material amendment to the organizational documents without the Agent's
consent, which shall not be unreasonably withheld, and without at least ten (10)
days notice to the Agent before such amendment is made and supplying the Agent
with a copy of the proposed


                                       55

<PAGE>

amendment. Without limiting the generality of the foregoing, if the Obligor has
conveyed the last of the Borrowing Base Assets owned by it and has no intent to
own or develop additional Borrowing Base Assets, the Obligor shall provide
written notice of such fact to the Agent, together with the proposed merger or
other applicable documents to effect the merger or dissolution of the Obligor.

     Section 7.4 Liens.

     The Obligors will not create or suffer to be created or to exist any Lien
upon any part of the Borrowing Base Assets other than the Permitted Liens. The
Obligors shall obtain lien waivers from each contractor and subcontractor that
has a right to obtain a Lien on any Borrowing Base Asset (upon payment to such
Person).

     Section 7.5 Use of the Credit Facility.

     The Borrowers shall use the Revolving Loans only for the purposes stated in
Section 2.1. The Borrowers shall use Letters of Credit only for the purposes
stated in Section 3.1(b).

     Section 7.6 Access.

     The Obligors will permit any representative authorized by the Agent
(including, but not limited to, appraisers and the Compliance Inspector), upon
reasonable notice and during business hours, to visit and inspect the Collateral
and the Obligors' books and records and to make extracts and copies therefrom,
and to discuss its affairs, finances and accounts with the officers, managers
and employees of the Obligors, as often as may be reasonably requested, but
without unreasonably interfering with the Obligors' business operations. Each
inspection is solely for the benefit of the Lenders and may not be relied upon
by the Obligors or by any third party. The Agent intends to cause the Compliance
Inspector to inspect each Project which is Land Under Development on a monthly
basis and thirty percent (30%) of all Units on a quarterly basis, all at the
Obligors' expense. If discrepancies, unfavorable to the Lenders, between the
percentage of completion represented by the Obligors and that found by the
Compliance Inspector are identified in five percent (5%) or more of the
inspected Borrowing Base Assets in two (2) consecutive quarters, the Agent shall
have the right to require monthly inspections at Obligors' expense for as long
as the Agent deems necessary thereafter. Notwithstanding any of the above, the
Agent reserves the right to increase or decrease the frequency of inspections at
any time that the Agent deems necessary or appropriate, in the Agent's sole
discretion and at the Agent's expense, except as otherwise provided above.

     Section 7.7 Leases.

     The Obligors shall send to the Agent any and all leases for any portion of
the Borrowing Base Assets which exceed six (6) months in length. All such leases
for the Borrowing Base Assets must be subordinate to and subject to the relevant
Mortgage and shall contain a clause to that effect.

     Section 7.8 Quality of Work: Changes; Etc.

     All work on the Lots and Units shall conform substantially to the Plans and
Specifications and shall be of good quality and workmanship. Any work, material
or equipment not so conforming that would in any way affect the structural
soundness, utility, or value of the


                                       56

<PAGE>

Lots and Units may be disapproved by the Agent and shall be replaced or revised
as may be required to bring about conformity promptly thereafter, at the sole
expense of the Obligors.

     Section 7.9 Delivery of Original Recorded Documents.

     The Obligors shall use all commercially reasonable efforts to deliver or
cause to be delivered each original recorded Spreader Agreement or Mortgage, as
applicable, to the Agent promptly after receipt from the record office. If the
Agent does not receive such original documents, or in the absence of the
original documents a certified copy of the recorded documents, within sixty (60)
days after recordation and if thereafter the Obligors do not deliver the
originals or certified copies within fifteen (15) days after notice from the
Agent, the Borrowing Base Assets that are encumbered by such Spreader Agreement
or Mortgage shall not be included in the Borrowing Base nor be the subject of
further Revolving Loans unless and until the Agent receives the originals or
certified copies, unless such failure to deliver certified copies or originals
is not within the reasonable control of the Obligor.

     Section 7.10 Insurance.

          (a) Types of Insurance. The Obligors shall maintain and keep in force,
or cause to be maintained and kept in force, the following policies of
insurance:

               (1) During the course of any construction of or repairs to any
building or improvement on the Borrowing Base Assets, builder's completed value
risk insurance against "all risks of physical loss," including (i) collapse and
transit coverage, with deductibles not to exceed Twenty-Five Thousand Dollars
($25,000), in non-reporting form, covering the total value of work performed and
equipment (to be installed in a Borrowing Base Asset), supplies, and materials
furnished; and (ii) a full installation floater to insure all materials stored
on and off a Borrowing Base Asset but not yet part of the permanent
installation.

               (2) Commercial general liability insurance, including coverage
against claims for personal injury, including bodily injury, death, or property
damage occurring on, in, or about the Collateral and adjoining streets and
sidewalks, which insurance shall be in an amount reasonably satisfactory to the
Agent.

               (3) During the course of any construction or repair of any
improvement in a Borrowing Base Asset, the Obligors shall use commercially
reasonable efforts to require that its contractors and subcontractors provide
worker's compensation insurance (including employer's liability insurance if
requested by the Agent) for all employees of such contractors and subcontractors
engaged in work on or with respect to the applicable Borrowing Base Asset, in
such amount as is satisfactory to the Agent or, if such amount is established by
law, in such lawfully required amount.

               (4) Flood insurance in the aggregate maximum amount of the
Revolving Credit Notes or the maximum amount obtainable, whichever is less, with
respect to any Lots within the Collateral if any such Lots are located within a
Flood Zone A or V as designated on NFIP or FEMA maps or if any such Lots within
the Collateral are otherwise located within a flood prone area from and after
the date construction has commenced on such Lots.


                                       57

<PAGE>

               (5) Such other insurance, and in such amounts, as may from time
to time be reasonably required by the Agent.

          (b) Policy Requirements. All builder's risk and other property damage
policies of insurance shall have attached thereto a Standard Mortgagee
Endorsement for the benefit of the Agent, on behalf of the Lenders, in form
satisfactory to the Agent. All liability policies shall name the Agent, on
behalf of the Lenders, as an additional insured as its interest may appear. All
such policies shall contain a provision that such policies will not be cancelled
or materially amended, which term shall include any reduction in the scope or
limits of coverage, without at least thirty (30) days' prior written notice to
the Agent. All policies of insurance required hereunder shall be issued by
companies having a rating by A.M. Best Company of at least A-/XII, and shall be
in amounts carried by Obligors as the date hereof. All insurance obtained by the
Obligors shall be primary and non-contributory. The Obligors shall furnish the
Agent with an original copy of all policies of required insurance. At least ten
(10) days prior to the expiration date of each such policy, the Obligors shall
furnish the Agent with evidence satisfactory to the Agent of the payment of the
premium thereon and the reissuance of a policy conforming to the requirements
set forth in this Agreement.

          (c) Failure to Maintain Insurance. In the event the Obligors fail to
provide, maintain, keep in force, or deliver and furnish to the Agent the
policies of insurance required hereunder, the Agent may procure such insurance
or single-interest insurance for such risks covering the Agent's interest (on
behalf of the Lenders), and the Obligors will reimburse the Agent for all
premiums paid by the Agent, together with interest thereon from the date paid at
the Base Rate, promptly upon demand by the Agent. Until such payment is made by
the Obligors, the amount of all such premiums, together with interest thereon,
shall be secured by the Mortgages.

          (d) Casualty Loss and Application of Insurance Proceeds. After the
occurrence of any material casualty or damage to a Borrowing Base Asset, or any
part thereof, the Obligors shall give prompt written notice thereof to the
Agent. The Agent agrees to make available to the Obligors all insurance proceeds
on account of any damage or destruction to a Borrowing Base Asset as long as no
Event of Default has occurred and no Default has occurred and is continuing. The
Obligors shall have the option, in their reasonable discretion, of applying all
or part of the insurance proceeds resulting from casualty or property damage (i)
to the Revolving Loans in accordance with the terms of the Revolving Credit
Notes and this Agreement, or (ii) to the repair and restoration of the affected
Borrowing Base Asset upon such terms and conditions as the Obligors may
determine. Unless an Event of Default has occurred or a Default has occurred and
is continuing, repairing or maintaining the affected Borrowing Base Asset or
restoring all damage or destruction to such Borrowing Base Asset after such
occurrence shall be at the reasonable discretion of the Obligors, regardless of
whether or not the insurance proceeds are made available for such purpose or
whether or not any such proceeds are sufficient for such purpose; provided,
however, failure to restore may result in Borrowing Base Deficiency subject to
the provisions of Section 2.5(c) (Borrowing Base Deficiency). The application by
the Obligors of any insurance proceeds to the indebtedness secured hereby shall
not cure nor shall the Agent be deemed to have waived any Event of Default under
this Agreement or any other Loan Document.


                                       58

<PAGE>

          (e) Application of Insurance Proceeds After Event of Default or During
Default. Notwithstanding the preceding subparagraph, after the occurrence of an
Event of Default and if a Default has occurred and is continuing, the Agent
shall apply casualty insurance proceeds to restoration of the damaged Borrowing
Base Assets or to repayment of the Revolving Loans pursuant to the direction of
the Required Lenders. If the Agent shall make said proceeds available to the
Obligors, such proceeds shall be made available in a manner consistent with
Agent's standard procedures for construction loan funding; further, no insurer
shall claim any rights of participation and/or assignment of rights with respect
to the indebtedness secured by the Mortgages. If such proceeds are made
available by the Agent to the Obligors, any surplus that may remain out of said
insurance proceeds after payment of all costs and expenses of such repairs and
restoration shall, at the option of the Agent, be applied on account of the
Obligations in such order as the Agent may determine.

          (f) Insurance After Foreclosure. In the event one or more Mortgages
are foreclosed, or title to any portion of the Collateral is transferred in
extinguishment, in whole or in part, of the Obligations, all right, title, and
interest of the Obligors in and to all policies of insurance required hereunder
(with respect to acts or events prior to foreclosure or other title transfer)
shall inure to the benefit of and pass to the successor in interest of the
Obligors or the purchaser or grantee of the Collateral; provided, however, the
Agent shall have the right, but not the obligation, to cancel any or all of the
above-described policies of insurance, and any unearned premium or premiums
returned shall be applied to payment of the Obligations.

     Section 7.11 Other Documents.

     The Obligors shall furnish to the Agent such other documents relating to
the Obligors or the Borrowing Base Assets as the Agent shall from time to time
reasonably request.

     Section 7.12 Notice of Changes in Registration Statements.

     The Obligors will promptly forward to the Agent copies of all filings made
with any Governmental Authority and required of publicly traded companies.

     Section 7.13 Amendments to Charters.

     The Obligors will not amend their organizational or governing documents
without the Agent's consent, if the same would have a material and adverse
effect on the Borrowing Base Assets, the financial condition of the Obligors and
their Subsidiaries or the Revolving Loans.

     Section 7.14 Hedge Agreements.

     The Borrowers may enter into one or more Hedge Agreements, with the
Borrowers making fixed rate payments and receiving floating rate payments to
offset changes in the variable interest expense of the Revolving Loans, all upon
terms and subject to such conditions as shall be acceptable to Agent in its sole
discretion.

     Section 7.15 Additional Debt.

     Other than trade payables, capital leases, and bonds posted for work
completion incurred in the ordinary course of business, the Obligors shall not
be permitted to incur debt in addition to the Obligations and the Permitted
Liabilities without the prior written consent of the Required Lenders.


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                                  ARTICLE VIII
                               FINANCIAL COVENANTS

     So long as the Borrowers may borrow hereunder or obtain any Letters of
Credit hereunder and until payment in full of the Obligations, all interest
thereon and all other amounts payable by the Borrowers under the Loan Documents
and all Letters of Credit, the Obligors shall comply with the following
financial covenants (collectively, the "FINANCIAL COVENANTS"):

     Section 8.1 Liquidity.

     The Obligors shall maintain as of the end of each Fiscal Quarter
Unencumbered and Unrestricted Liquid Assets in an amount not less than
$5,000,000.

     Section 8.2 Adjusted EBITDA to Debt Service.

     The Obligors shall maintain a ratio of Adjusted EBITDA to Debt Service of
not less than 2.50 to 1.00 calculated quarterly on a rolling four (4) quarter
basis.

     Section 8.3 Tangible Net Worth.

     The Obligors shall maintain a minimum Tangible Net Worth equal to
$32,000,000 from the date of Closing through and including December 31, 2003.
Each December 31st thereafter, the minimum Tangible Net Worth (for such date and
the following Fiscal Year through and including December 31st) will increase by
twenty-five percent (25%) of the Obligors' net income for the most recently
ended Fiscal Year. Notwithstanding the above, quarterly testing of minimum
Tangible Net Worth on March 31st, June 30th and September 30th of each Fiscal
Year shall allow for a ten percent (10%) reduction of Tangible Net Worth as it
may apply solely to the payment of federal and state income taxes.

     Section 8.4 Total Liabilities to Tangible Net Worth Ratio.

     The ratio of Total Liabilities to Tangible Net Worth shall not be more than
3.0:1.0 at the end of each fiscal quarter (the "TOTAL LIABILITIES TO TANGIBLE
NET WORTH RATIO").

     Section 8.5 Residential Units.

     The aggregate number of Spec Units and Model Units in the Borrowing Base at
any time shall not exceed twenty percent (20%) of the total of all Unit closings
during the preceding twelve (12) month period at any time. For 2004, the parties
agree that the total Spec Units and Model Units in the Borrowing Base at any
time shall not exceed sixty (60) Units.

     Section 8.6 Land to Tangible Net Worth Covenant.

     The aggregate Appraised Value of Raw Land and Land Under Development at any
time shall not exceed 160% of Tangible Net Worth.

     Section 8.7 Appraisals.

     The Agent shall require Appraisals of all Borrowing Base Assets, which
Appraisals shall be ordered by the Agent and reviewed and approved by the
appraisal department of the Agent. Agent, in the exercise of its discretion and
after giving notice to the Obligors, shall have the right to obtain
re-Appraisals of all or any portion of the Borrowing Base Assets (a) after an
Event of Default has occurred or is continuing (b) as required by the then
current regulatory requirements generally applicable to real estate loans of the
categories made under this Agreement as


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reasonably interpreted by the Agent; (c) at any time following a condemnation of
more than an immaterial portion, as determined by the Agent, of an Approved
Subdivision, and (d) upon any Material Adverse Change with respect to an
Approved Subdivision as determined by the Agent (which in the case of (c) and
(d), only the Borrowing Base Assets of that Approved Subdivision shall be
re-appraised).

     Subject to the following, the Obligors acknowledge that the Agent may make
changes or adjustments to the values set forth in any Appraisals as may be
required by the Agent's appraisal department in the exercise of its good faith
business judgment, and that the Agent is not bound by the value set forth in any
Appraisal performed pursuant to this Agreement and does not make any
representations or warranties with respect to any Appraisal. The Obligors
further agree that the Lenders shall have no liability as a result of or in
connection with any such Appraisal for statements contained in such Appraisal,
including without limitation, the accuracy and completeness of information,
estimates, conclusions and opinions contained in such Appraisal, or variance of
such Appraisal from the fair value. The Obligors shall pay all costs and
expenses related to the Appraisals and re-Appraisals performed pursuant to this
Section within thirty (30) days of demand by the Agent.

     The Revolving Loan Maximum Availability may be decreased by reason of any
new Appraisal or re-Appraisal upon the exercise of the sole discretion of the
Required Lenders. Conversely, the Revolving Loan Maximum Availability may be
increased by reason of any new Appraisal or re-Appraisal upon approval of the
Required Lenders, but in no event shall Revolving Loan Maximum Availability be
increased by reason of any Appraisal that is obtained when an Event of Default
exists and is continuing.

     At any time the sum of (i) the aggregate principal amount of all Revolving
Loans outstanding at such time plus (ii) the aggregate L/C Obligations
outstanding at such time exceeds the Revolving Loan Borrowing Limit by reason of
any new Appraisal or re-Appraisal, but the Obligors are in compliance with all
Financial Covenants, the Obligors shall be granted one hundred-eighty (180) days
from the date of notice from the Agent to either (A) make a principal payment in
an amount that restores compliance or (B) provide additional Collateral
satisfactory to the Agent in amount and kind that restores compliance. In
addition, in the event that the value of the Borrowing Base Assets is reduced as
a result of a re-Appraisal, the Obligors may continue to receive advances of the
Credit Facility to the extent of the Collateral in the Borrowing Base which has
not been reduced in value as the result of a re-Appraisal. Furthermore, the
Obligors may continue to receive advances of the Credit Facility on the
re-Appraised Collateral that has been reduced in value as the result of a
re-Appraisal during the one hundred-eighty (180) day grace period identified
above, provided, (i) there is availability in the Borrowing Base Assets when
advance rates are calculated against Actual Costs Incurred and no other value
impairment exists other than by re-Appraisal, (ii) the Obligors restore overall
Collateral compliance within one hundred-eighty (180) days by repaying sums
outstanding under the Credit Facility, providing sufficient acceptable
additional Collateral, or a combination of both, (iii) the advances will be for
the purpose of completing Sold Units or completing Land Under Development, (iv)
the Obligors are in compliance with all Financial Covenants and no Event of
Default has occurred and no Default has occurred and is continuing, and (v) the
Obligors are continuing operations, selling homes, taking sales to settlement,
and repaying debt.


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     This section shall not be subject to any provision of this Agreement or any
of the other Loan Documents which requires the Agent to provide the Obligors
notice of non-compliance or additional time periods to perform. The grace
periods provided above, and any notice that the Agent is obligated to provide as
stated above shall be the sole grace periods and notice that the Obligors shall
receive.

                                   ARTICLE IX
                         EVENTS OF DEFAULT AND REMEDIES

     Section 9.1 Events of Default.

     Each of the following events or conditions that occurs and is continuing
shall constitute an event of default hereunder (each, an "EVENT OF DEFAULT") and
under each Letter of Credit Agreement:

          (a) Default in Payment of Obligations. (i) Default shall have occurred
in the payment when due of the Reimbursement Obligations (unless such
obligations have been satisfied by the making of a Revolving Loan) or of any
principal of or interest on the Revolving Loans or (ii) default shall have
occurred in the payment of any other amount payable by it under this Agreement,
the Revolving Credit Notes or any of the other Loan Documents and such default
shall continue for three (3) days after notice by the Agent to the Borrowers.

          (b) Default in Specific Sections. Default shall have occurred in
compliance with the provisions of Section 2.5(c), Section 7.1, Section 7.2,
Section 7.4, Section 7.5, Section 7.15 or ARTICLE VIII.

          (c) Default in Payment of Other Debts. The Obligors shall default
beyond any applicable notice and cure period under any debt facility or
facilities (other than the Credit Facility), secured or unsecured, in excess of
$1,000,000.00 in the aggregate.

          (d) Misrepresentation. Any representation, warranty or certification
made in any of the Loan Documents or in any document furnished in connection
herewith or therewith (including any representation or warranty made in
connection with the Obligors' application for the Credit Facility) by the
Obligors proves to have been false or misleading in any materially adverse
respect as of the time made or furnished.

          (e) Default in Performance of Covenants. The Obligors shall default in
the performance of any of their other obligations or covenants set forth in this
Agreement or any other Loan Document (and not otherwise addressed in this
Section 9.1) and such default remains uncured for thirty (30) days after written
notice of default to the Obligors.

          (f) Voluntary Bankruptcy Proceeding. Any Obligor shall (i) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property; (ii) make a general assignment for the benefit of its creditors;
(iii) commence a voluntary case under the Bankruptcy Code (as now or hereafter
in effect); (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or readjustment of debts; (v) fail to controvert within ninety (90) days or such
lesser period as may be provided in the Bankruptcy Code, or acquiesce in writing
to, any petition filed against


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it in an involuntary case under the Bankruptcy Code; or (vi) admit in writing
its inability to, or be generally unable to, pay its debts as such debts become
due.

          (g) Involuntary Bankruptcy Proceeding. A proceeding or case shall be
commenced, without the application or consent of any Obligor in any court of
competent jurisdiction, seeking (i) liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of debts of the Obligor; (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
Obligor of all or any substantial part of its assets; or (iii) similar relief in
respect of the Obligor under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue without dismissal, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of ninety (90) days, or an order for relief
against the Obligor shall be entered in an involuntary case under the Bankruptcy
Code.

          (h) Dissolution. Any Obligor shall dissolve or otherwise terminate its
existence except in accordance with Section 7.3.

          (i) Default Under Other Liens or Encumbrances Affecting Borrowing Base
Assets. Any Obligor defaults in the performance of any of its obligations under
any Permitted Lien affecting any Borrowing Base Asset, irrespective of whether
such Lien is subordinate to the lien of the Mortgages, and such default
continues beyond the notice or grace period provided in the documents evidencing
such Lien; provided, however, the Obligors may cure such default by excluding
the affected Borrowing Base Asset(s) from the Borrowing Base pursuant to Section
9.4.

          (j) Debt in Breach of Financial Covenants. The incurring of any
liability for any debt, whether primary or secondary, and whether fixed or
contingent, if immediately following the incurring of such liability the
Obligors would fail as a result thereof, to comply with the Financial Covenants
on a pro-forma basis.

     Section 9.2 Remedies.

     Upon the occurrence and during the continuation of an Event of Default,
with the consent of the Required Lenders, the Agent may, or upon the request of
the Required Lenders, the Agent shall, by notice to the Obligors:

          (a) Acceleration; Termination of Facilities. Declare the principal of
and interest on the Revolving Loans, the Revolving Credit Notes and the
Reimbursement Obligations at the time outstanding, and all other amounts owed to
the Lenders and to the Agent under this Agreement or any of the other Loan
Documents (other than Hedge Agreements) (including, without limitation, all L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and all other
Obligations, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, further demand, protest
or other notice of any kind, all of which are expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facility and any right of the Borrowers to request
borrowings or Letters of Credit thereunder; provided, however, upon the
occurrence of an event specified in Section 9.1(f) or Section


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9.1(g), the Credit Facility shall be automatically terminated and all
Obligations shall automatically become due and payable.

          (b) Letters of Credit. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, require the Borrowers at such
time to deposit in a cash collateral account opened by the Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
The Borrowers hereby assign to the Agent, on behalf of the Issuing Lender, and
grants a security interest in all amounts so held in any cash collateral account
as cash collateral for the Obligations. Amounts held in such cash collateral
account shall be applied by the Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay the other Obligations. After all such Letters of Credit shall have expired
or been fully drawn upon, the Reimbursement Obligation has been satisfied and
all other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrowers.

          (c) Rights of Collection. Exercise on behalf of the Lenders all of the
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Obligations of the Obligors,
including, but not limited to, the reimbursement to any Lender with whom the
Borrowers have entered into a Hedge Agreement in connection with the
Obligations, the payment of the Hedge Termination Value related to such Hedge
Agreement on a pari passu basis with payment of all accrued and unpaid interest
on the Obligations.

     Section 9.3 Rights and Remedies Cumulative; Non-Waiver; etc.

     The enumeration of the rights and remedies of the Agent and the Lenders set
forth in this Agreement is not intended to be exhaustive and the exercise by the
Agent and the Lenders of any right or remedy shall not preclude the exercise of
any other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder or under the Loan
Documents or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of any Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of Default. No course of dealing between the Obligors, the Agent and the
Lenders or their respective agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or any of the other Loan
Documents or to constitute a waiver of any Event of Default.

     Section 9.4 Defaults Affecting Borrowing Base Assets.

     Notwithstanding anything in this Agreement to the contrary, if (a) a
Default arises from a condition or event affecting one or more Borrowing Base
Assets; (b) the Obligors cannot or elect not to cure such Default within the
applicable cure period, if any; (c) before the Default becomes an Event of
Default, the Obligors notify the Agent of the Obligors' intent to exclude the
affected Borrowing Base Asset from the Borrowing Base; (d) the Obligors effect
such exclusion by submission of a revised Borrowing Base Report to the Agent not
later than ten (10) Business


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Days after the Obligors notify the Agent of the proposed exclusion; and (e)
following the exclusion of the affected Borrowing Base Asset(s), the aggregate
outstanding Revolving Loans shall not exceed the then applicable Revolving Loan
Borrowing Limit, as determined from the revised Borrowing Base Report, and no
Event of Default shall then exist, the Lenders shall permit the exclusion of a
Borrowing Base Asset to cure a default. If the exclusion of one or more
Borrowing Base Assets would cause the aggregate outstanding Revolving Loans to
exceed the then applicable Revolving Loan Borrowing Limit, the Obligors may also
cure the default (i) by making a principal prepayment of the Revolving Loans in
an amount equal to or greater than the difference between the Revolving Loan
Borrowing Limit and the aggregate outstanding Revolving Loans or (ii) by
subjecting sufficient additional property that would qualify as a Borrowing Base
Asset to the lien of a Mortgage so that the Revolving Loan Borrowing Limit is
increased to an amount greater than the aggregate outstanding Revolving Loans.

                                    ARTICLE X
                                    THE AGENT

     Section 10.1 Appointment.

     Each of the Lenders hereby irrevocably designates and appoints Wachovia as
Agent of such Lender under this Agreement and the other Loan Documents, and each
such Lender irrevocably authorizes Wachovia as Agent for such Lender, to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and such other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, Agent shall not have any duties or
responsibilities except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
Agent hereby agrees to deliver to Lenders copies of appraisals on any Borrowing
Base Asset (except sold houses, unless specifically requested), title policies
and title reports, and, upon request of a Lender, evidence of insurance or any
other documents delivered to the Agent by the Obligors.

     Section 10.2 Delegation of Duties.

     The Agent may execute any of its duties under this Agreement and the other
Loan Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Agent with reasonable care.

     Section 10.3 Exculpatory Provisions.

     Neither the Agent nor any of the Agent's officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for
any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for
actions occasioned solely by its or such Person's own gross negligence or
willful misconduct), or (b) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Obligors or
any of their


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Subsidiaries or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Obligors or any of their
Subsidiaries to perform its obligations hereunder or thereunder. The Agent shall
have no obligation to any Lender to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Obligors or any
of their Subsidiaries.

     Section 10.4 Reliance by the Agent.

     The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Obligors), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless such Note shall have been transferred in
accordance with Section 11.10 hereof. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Lenders (or, when expressly required hereby or by the relevant other
Loan Document, all the Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action except for its own gross negligence or willful misconduct. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the Revolving Credit Notes in accordance with a request
of the Required Lenders (or, when expressly required hereby, all the Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Revolving Credit
Notes.

     Section 10.5 Notice of Default.

     The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless it has received notice from
a Lender or the Obligors referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." In the
event that the Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, however, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

     Section 10.6 Non-Reliance on the Agent and Other Lenders.

     Each Lender expressly acknowledges that neither the Agent nor any of the
Agent's officers, directors, employees, agents, attorneys-in-fact, Subsidiaries
or Affiliates has made any


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<PAGE>

representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Obligors or any of their
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Lender; provided, however, each Lender may rely on the Agent's
determination of Loan amounts and Letter of Credit amounts after the Agent's
review and, as applicable, adjustment of the Borrowing Base Report and
determination of the Obligors' satisfaction of the applicable advance
conditions. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Obligors and their Subsidiaries and made
its own decision to make its Revolving Loans and issue or participate in Letters
of Credit hereunder and enter into this Agreement. Each Lender represents that
it has independently reviewed the terms of this Agreement and the form of each
Mortgage, and has not relied on the Agent with respect to the terms hereof or
thereof. Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Obligors and their
Subsidiaries. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder or by the other Loan
Documents, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Obligors or
any of their Subsidiaries which may come into the possession of any Agent or any
of the Agent's respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates.

     Section 10.7 Indemnification.

     The Lenders agree to indemnify the Agent in its capacity as such and (to
the extent not reimbursed by the Obligors and without limiting the obligation of
the Obligors to do so), ratably according to the respective amounts of their
Commitment Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Revolving Credit Notes or
any Reimbursement Obligation) be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement or the other Loan
Documents, or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided,
however, no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's bad faith,
gross negligence or willful misconduct. The agreements in this Section 10.7
shall survive the payment of the Revolving Credit Notes, any Reimbursement
Obligations and all other amounts payable hereunder and the termination of this
Agreement.


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     Section 10.8 The Agent in Its Individual Capacity.

     The Agent and its Subsidiaries and Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Obligors as
though the Agent were not the Agent hereunder. With respect to any Revolving
Loans made or renewed by it and any Revolving Note issued to it and with respect
to any Letter of Credit issued by it or participated in by it, the Agent shall
have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Agent, and the terms "Lender" and "Lenders" shall include the Agent in its
individual capacity, if applicable.

     Section 10.9 Resignation of the Agent, Successor Agent.

     Subject to the appointment and acceptance of a successor as provided below,
the Agent may resign at any time by giving notice thereof to the Lenders and the
Obligors. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Agent, which successor shall be a Lender and shall have
combined capital and surplus in excess of $1,000,000,000. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty (30) days after the Agent's giving of notice of
resignation, then the Agent may, on behalf of the Lenders, appoint a successor
Agent, which successor shall have combined capital and surplus in excess of
$1,000,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from all future duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10.9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.

     Section 10.10 Effect of Article on Obligors.

     This ARTICLE X governs certain rights and obligations between the Agent and
the Lenders. The provisions of this Article are not intended to limit or expand
in any way the rights or obligations of the Obligors with respect to the Credit
Facility, the Agent, or the Lenders.

                                   ARTICLE XI
                                  MISCELLANEOUS

     Section 11.1 Notices.

          (a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (and deemed effective) (i) on the date of delivery if
delivered by hand, (ii) on the next Business Day if sent by recognized overnight
courier service, (iii) upon receipt of acknowledgment, if sent by telecopy, and
(iv) on the third Business Day following the date sent by certified mail, return
receipt requested. A telephonic notice to Agent as understood by the Agent will
be deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.


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          (b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.

     If to the Obligors: Neighborhoods Capital, LLC
                         1881 Campus Commons Drive
                         Reston, Virginia 20191
                         Attention: Martin K. Alloy
                         Telephone No.: (703) 715-7800
                         Telecopy No.: (703) 715-8078

     With a copy to:     Stuart M. Ginsberg
                         Vice President and General Counsel
                         Stanley Martin Companies, Inc.
                         1881 Campus Commons Drive
                         Suite 101
                         Reston, Virginia 21091
                         Telephone No.: (703) 715-5811
                         Telecopy No.: (703) 715-8078

     If to the Agent:    Wachovia Bank, National Association
                         1753 Pinnacle Drive, 5th Floor
                         McLean, Virginia 22102-4099
                         Attention: Meg Dunsmore
                         Telephone No.(703) 760-6068
                         Telecopy No. (703) 760-6134

     If to any Lender:   To the Address set forth on Schedule 1 hereto

          (c) Agent's Office. The Agent hereby designates its office located at
the address set forth above, or any subsequent office that shall have been
specified for such purpose by written notice to the Obligors and Lenders, as the
Agent's Office referred to herein, to which payments due are to be made and at
which Revolving Loans will be disbursed and Letters of Credit issued.

     Section 11.2 Expenses, Indemnity.

     The Obligors will (a) pay expenses set forth in the Mandate Letter and all
reasonable out-of-pocket expenses of the Agent in connection with: (i) the
preparation, execution and delivery of this Agreement and each other Loan
Document, whenever the same shall be executed and delivered, including without
limitation all reasonable fees and disbursements of counsel for the Agent, (ii)
the preparation, execution and delivery of any waiver, amendment or consent by
the Agent or the Lenders relating to this Agreement or any other Loan Document,
including without limitation reasonable fees and disbursements of counsel for
the Agent, and (iii) after the occurrence of an Event of Default, enforcement of
any rights and remedies of the Agent and Lenders under this Agreement and the
other Loan Documents, including consulting with appraisers, accountants,
engineers, attorneys and other Persons concerning the nature, scope or value of
any right or remedy of the Agent or any Lender hereunder or under any other Loan


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Document or any factual matters in connection therewith, which expenses shall
include without limitation the reasonable fees and disbursements of such
Persons; and (b) defend, indemnify and hold harmless the Agent and the Lenders,
and their respective parents, Subsidiaries, Affiliates, employees, agents,
officers and directors, from and against any losses, penalties, fines,
liabilities, settlements, damages, costs and expenses, suffered by any such
Person in connection with any claim, investigation, litigation or other
proceeding (whether or not the Agent or any Lender is a party thereto) and the
prosecution and defense thereof, arising out of or in any way connected with
this Agreement, any other Loan Document or the Credit Facility, including
without limitation reasonable attorney's and consultant's fees, except to the
extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.

     Section 11.3 Set-off.

     In addition to any rights now or hereafter granted under Applicable Law and
not by way of limitation of any such rights, upon and after the occurrence of
any Event of Default and during the continuance thereof, the Lenders and any
assignee or participant of a Lender in accordance with Section 11.10 are hereby
authorized by the Obligors at any time or from time to time, to the extent
permitted by Applicable Law, without notice to the Obligors or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by the Lenders, or any such assignee or participant to or for the
credit or the account of the Obligors against and on account of any unpaid
Obligations irrespective of whether or not (a) the Lenders shall have made any
demand under this Agreement or any of the other Loan Documents or (b) the Agent
shall have declared any or all of the Obligations to be due and payable as
permitted by Section 9.2 and although such Obligations shall be contingent or
unmatured. The Agent and Lenders acknowledge that the rights of the Lenders
under this Section 11.3 are subject to the rights of residential contract
purchasers of Borrowing Base Assets in any contract deposits held in an account
with any Lender or Agent.

     Section 11.4 Governing Law.

     This Agreement, the Revolving Credit Notes and the other Loan Documents,
unless otherwise expressly set forth therein, shall be governed by, construed
and enforced in accordance with the laws of the Commonwealth of Virginia,
without reference to the conflicts or choice of law principles thereof.

     Section 11.5 Consent to Jurisdiction.

     Each of the Obligors hereby irrevocably consents to the personal
jurisdiction of the state and federal courts located in Fairfax County,
Virginia, in any action, claim or other proceeding arising out of any dispute in
connection with this Agreement, the Revolving Credit Notes and the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations. Nothing in this Section 11.5 shall affect the
right of the Agent or any Lender to serve legal process in any other manner
permitted by Applicable Law or affect the right of the Agent or any Lender to
bring any action or proceeding against the Obligors or their properties in the
courts of any other jurisdictions.


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     Section 11.6 Binding Arbitration.

          (a) Binding Arbitration. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Revolving Credit
Notes or any other Loan Documents ("DISPUTES"), between or among parties to the
Revolving Credit Notes or any other Loan Document shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder. Disputes
may include, without limitation, tort claims, counterclaims, claims brought as
class actions, claims arising from Loan Documents executed in the future, or
claims concerning any aspect of the past, present or future relationships
arising out of or connected with the Loan Documents. Arbitration shall be
conducted under and governed by the Commercial Financial Disputes Arbitration
Rules (the "ARBITRATION RULES") of the American Arbitration Association and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in Fairfax
County, Virginia. The expedited procedures set forth in Rule 51, et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted.

          (b) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and to the other Loan
Documents preserve, without diminution, certain remedies that such Persons may
employ or exercise freely, either alone, in conjunction with or during a
Dispute. Each such Person shall have and hereby reserves the right to proceed in
any court of proper jurisdiction or by self help to exercise or prosecute the
following remedies to the extent available: (i) cease making advances of the
Revolving Credit Facility or issuing Letters of Credit under the L/C Commitment,
(ii) all rights to foreclose against any real or personal property or other
security by exercising a power of sale or assent to decree granted in the Loan
Documents or under Applicable Law or by judicial foreclosure and sale, (iii) all
rights of self help including peaceful occupation of property and collection of
rents, set off, and peaceful possession of property, and (iv) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and in filing an involuntary
bankruptcy proceeding. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.

     Section 11.7 Reversal of Payments; Continuing Enforcement..

     If, after receipt of any payment to the Agent for the ratable benefit of
the Lenders or the Agent of all or any part of the Obligations, Agent is
compelled or agrees, for settlement purposes, to surrender such payment to any
person or entity because such payment is or may be void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, a diversion of
trust funds or other impermissible or improper act under any bankruptcy law,
state or federal law, common law or equitable cause, then the Loan Documents
shall continue in full force and effect or be reinstated, as the case may be,
and Obligors shall be liable for, and shall indemnify, defend and hold harmless
Agent with respect to, the full amount so surrendered. The provisions


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of this Section shall survive the cancellation or termination of any of the Loan
Documents and shall remain effective notwithstanding the payment of the
Obligations, the release of any security interest, lien or encumbrance securing
the Obligations or any other action which Agent may have taken in reliance upon
its receipt of such payment. Any cancellation, release or other such action
shall be deemed to have been conditioned upon any payment of the obligations
evidenced hereby having become final and irrevocable.

     Section 11.8 Injunctive Relief; Punitive Damages.

          (a) The Obligors recognize that, in the event the Obligors fail to
perform, observe or discharge any of their obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, the Obligors agree that the Lenders, at the Lenders' option, shall be
entitled to seek and pursue all available equitable relief, including, but not
limited to, temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.

          (b) The Agent, Lenders and the Obligors hereby agree that no such
Person shall have a remedy of punitive or exemplary damages against any other
party to a Loan Document and each such Person hereby waives any right or claim
to punitive or exemplary damages that they may now have or may arise in the
future in connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.

          (c) The parties agree that they shall not have a remedy of punitive or
exemplary damages against any other party in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.

     Section 11.9 Accounting Matters.

     All financial and accounting calculations, measurements and computations
made for any purpose relating to this Agreement, including, without limitation,
all computations utilized by the Obligors or any Subsidiary thereof to determine
compliance with any covenant contained herein, shall, except as otherwise
expressly contemplated hereby or unless there is an express written direction by
the Agent to the contrary agreed to by the Obligors, be performed in accordance
with GAAP as in effect on the Closing Date. In the event that changes in GAAP
shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the Obligors'
certified public accountants, to the extent that such changes would modify such
accounting terms or the interpretation or computation thereof, such changes
shall be followed in defining such accounting terms only from and after the date
the Obligors and the Lenders shall have amended this Agreement to the extent
necessary to reflect any such changes in the Financial Covenants and other terms
and conditions of this Agreement.

     Section 11.10 Successors and Assigns; Participations.

          (a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Obligors, the Agent and the Lenders, all future
holders of the Revolving Credit Notes, and their respective successors and
assigns. Notwithstanding the foregoing, the


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Obligors shall not assign or transfer any of their rights or obligations under
this Agreement without the prior written consent of each Lender.

          (b) Assignment by Lenders. Each Lender may, with the consent of the
Borrowers (so long as no Default or Event of Default has occurred and is
continuing) and the consent of the Agent, which consents shall not be
unreasonably withheld, assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Agreement (including,
without limitation, all or a portion of the Extensions of Credit at the time
owing to it and the Revolving Credit Notes held by it); provided, however:

               (1) the assigning Lender shall send notice to the Agent and the
Obligors not less than fifteen (15) days prior to the proposed sale of the
Lender's Commitment;

               (2) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and obligations under
this Agreement;

               (3) if less than all of the assigning Lender's Commitment is to
be assigned, the Commitment so assigned shall not be less than $5,000,000 and
integral multiples of $1,000,000;

               (4) if less than all of the assigning Lender's Commitment is to
be assigned, the assigning Lender shall hold not less than $5,000,000 and
integral multiples of $1,000,000;

               (5) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance in the form of EXHIBIT "N" attached hereto (an "ASSIGNMENT AND
ACCEPTANCE"), together with any Revolving Credit Note or Revolving Credit Notes
subject to such assignment;

               (6) such assignment shall not, without the consent of the
Borrowers, require the Borrowers to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Revolving Loans or
the Revolving Credit Notes under the blue sky laws of any state;

               (7) the assigning Lender shall pay to the Agent an assignment fee
of $3,500 upon the execution by such Lender of the Assignment and Acceptance;
provided, however, no such fee shall be payable upon any assignment by a Lender
to an Affiliate thereof or by a Lender to another Lender hereunder; and

               (8) at all times the Agent shall hold a Commitment Percentage
that is equal to or greater than the next highest Commitment Percentage held by
any other Lender.

Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from obligations thereafter arising under this Agreement.

          (c) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder


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<PAGE>

confirm to and agree with each other and the other parties hereto as set forth
in such Assignment and Acceptance.

          (d) Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders and the amount of the Extensions of Credit with respect
to each Lender from time to time (the "REGISTER"). The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrowers, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

          (e) Issuance of New Revolving Credit Notes. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an Eligible
Assignee together with any Revolving Credit Note or Revolving Credit Notes
subject to such assignment and the written consent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is substantially
in the form of EXHIBIT "N":

               (1)  accept such Assignment and Acceptance;

               (2)  record the information contained therein in the Register;

               (3)  give prompt notice thereof to the Lenders and the Obligors;
                    and

               (4)  promptly deliver a copy of such Assignment and Acceptance to
                    the Borrowers.

Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Agent, in exchange for the surrendered Revolving
Credit Note or Revolving Credit Notes, a new Revolving Credit Note or Revolving
Credit Notes to the order of such Eligible Assignee in amounts equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and a new
Revolving Credit Note or Revolving Credit Notes to the order of the assigning
Lender in an amount equal to the Commitment retained by it hereunder, if any.
Such new Revolving Credit Note or Revolving Credit Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Revolving Credit Note or Revolving Credit Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the assigned Revolving Credit Notes delivered to the
assigning Lender. Each surrendered Revolving Credit Note or Revolving Credit
Notes shall be canceled and returned to the Borrowers.

          (f) Participations. Each Lender may, without the consent of the
Obligors or the Agent, sell a participation to one or more Eligible Assignees
all or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Revolving Credit Notes held by it); provided,
however:

               (1) the selling Lender shall send notice to the Agent and the
Obligors not less than fifteen (15) days prior to the proposed sale of the
Participation;

               (2) each such sale shall be of a constant, and not a varying,
percentage of all the selling Lender's rights and obligations under this
Agreement;


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               (3) if less than all of the selling Lender's Commitment is to be
sold, the Commitment so sold shall not be less than $5,000,000 and integral
multiples of $1,000,000;

               (4) if less than all of the selling Lender's Commitment is to be
sold, the selling Lender shall hold not be less than $5,000,000 and integral
multiples of $1,000,000;

               (5) the Participant shall have voting rights hereunder solely in
instances requiring the approval of one hundred percent (100%) of the Lenders;

               (6) the selling Lender shall remain solely responsible to the
other parties hereto (including the Obligor) for the performance of the
obligations hereunder and the other parties shall continue to deal directly and
solely with such selling Lender in connection with such Lenders rights and
obligations under the Loan Documents.

          (g) Disclosure of Information, Confidentially. The Agent and the
Lenders shall hold all non-public information with respect to the Obligors
obtained pursuant to the Loan Documents in accordance with Applicable Law and
their customary procedures for handling confidential information. Any Lender
may, in connection with any assignment or proposed assignment pursuant to this
Section 11.10, disclose to an Eligible Assignee, any information relating to the
Obligors furnished to such Lender by or on behalf of the Obligors; provided,
however, prior to any such disclosure, each such assignee or proposed assignee
shall agree with the Obligors or such Lender to preserve the confidentiality of
any confidential information relating to the Obligors received from such Lender.

          (h) Certain Pledges or Assignment. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.

     Section 11.11 Amendments, Waivers and Consents.

     Except as set forth below, any term, covenant, agreement or condition of
this Agreement or any of the other Loan Documents may be amended or waived by
the Lenders, and any consent given by the Lenders, if, but only if, such
amendment, waiver or consent is in writing signed by the Required Lenders (or by
the Agent with the consent of the Required Lenders) and delivered to the Agent
and, in the case of an amendment, signed by the Obligors; provided, however,
without the prior written consent of each Lender, no amendment, waiver or
consent shall:

          (a) (i) increase or decrease the Revolving Credit Commitment of any
Lender, (ii) reduce the rate of, or forgive any, interest or fees payable on any
Revolving Loan or Reimbursement Obligation, (iii) reduce or forgive the
principal amount of any Revolving Loan or Reimbursement Obligation, (iv) extend
the originally scheduled time or times of payment of the principal or interest
of any Revolving Loan or Reimbursement Obligation or any fee or commission with
respect thereto except in accordance with this Agreement, or (v) permit any
subordination of the principal or interest on, or any Lien securing, any
Revolving Loan or Reimbursement Obligation; or

          (b) release or subordinate any material portion of the Borrowing Base
Assets, release or subordinate any Mortgage (other than as specifically
permitted in this Agreement or the applicable Mortgage) or release any Obligor;
amend the definition of Revolving Loan Borrowing Limit or any constituent
definitions therein; amend the list of Events of Default in


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Section 9.1; amend the Financial Covenants; amend the provisions of this Section
11.11 or amend the definition of Required Lenders.

     Section 11.12 Performance of Duties.

     The obligations of the Obligors under this Agreement and each of the Loan
Documents shall be performed by the Obligors at their sole cost and expense
except as expressly provided otherwise in this Agreement.

     Section 11.13 All Powers Coupled with Interest.

     All powers of attorney and other authorizations granted to the Lenders, the
Agent and any Persons designated by any Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.

     Section 11.14 Survival of Indemnities.

     Notwithstanding any termination of this Agreement, the indemnities to which
the Agent and the Lenders are entitled under the provisions of this Agreement
and the Loan Documents shall continue in full force and effect and shall protect
the Agent and the Lenders against events arising after such termination as well
as before except to the extent expressly provided otherwise herein or therein or
limited by Applicable Law.

     Section 11.15 Titles and Captions.

     Titles and captions of Articles, Sections and subsections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.

     Section 11.16 Severability of Provisions.

     Any provision of this Agreement or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining provisions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

     Section 11.17 Counterparts.

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

     Section 11.18 Term of Agreement.

     This Agreement shall remain in effect from the Closing Date through and
including the date upon which all Obligations shall have been indefeasibly and
irrevocably paid and satisfied in full. The Agent is hereby permitted to
partially release Liens as expressly provided in this Agreement and in the
Mortgages and to release fully all Liens on the Collateral in favor of the
Agent, for the ratable benefit of the Agent and the Lenders, upon repayment of
the outstanding principal of and all accrued interest on the Revolving Loans,
payment of all outstanding fees and


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expenses hereunder and the termination of the Lenders' Commitments. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.

     Section 11.19 Time is of the Essence.

     The parties to this Agreement agree that time is of the essence to the
performance of the Obligors' obligations described herein.

     Section 11.20 Brokerage.

     No Lender shall be required to pay any brokerage fees, finder's fees or
commissions arising from the Credit Facility as a result of the Obligors'
actions, and the Obligors agree to indemnify and hold the Lenders harmless
against any and all expenses, damages, liabilities and costs resulting from
claims in connection therewith arising by reason of the Obligors' actions,
including payment of the Lenders' attorneys' fees and expenses.

     Section 11.21 Public Notice.

     The Agent may, at its expense publish a notice setting forth the Lenders'
financing of the Borrowing Base Assets.

     Section 11.22 Entire Agreement.

     This Agreement together with the other Loan Documents constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes and replaces in their entirety all prior agreements between the
parties with respect to the subject matter hereof.

     Section 11.23 Inconsistencies with Other Documents; Covenants.

     In the event there is a conflict or inconsistency between this Agreement
and any other Loan Document, the terms of this Agreement shall control;
provided, however, any provision of the Mortgages that imposes additional
burdens on the Obligors or further restricts the rights of the Obligors or gives
the Agent or Lenders additional rights shall not be deemed to be in conflict or
inconsistent with this Agreement and shall be given full force and effect.

     Section 11.24 Joint and Several Liability.

     The obligations of the Borrowers under this Agreement are joint and
several. Reference in this Agreement to the "Borrower", the "Borrowers", "each
Borrower" or otherwise with respect to any one or more of the Borrowers shall
mean each and every Borrower and any one or more of the Borrowers, jointly and
severally, unless a specific Borrower is expressly identified. The obligations
of the Obligors under this Agreement are joint and several, with the exception
of the payment obligations which are indirect obligations of the Guarantors,
jointly and severally. Reference in this Agreement to the "Obligor", the
"Obligors", "each Obligor" or otherwise with respect to any one or more of the
Obligors shall mean each and every Obligor and any one or more of the Obligors,
jointly and severally, unless a specific Obligor is expressly identified. The
obligations of the Guarantors under this Agreement are joint and several.
Reference in this Agreement to the "Guarantor", the "Guarantors", "each
Guarantor" or otherwise with respect to any one or more of the Guarantors shall
mean each and every Guarantor and any one or more of the Guarantors, jointly and
severally, unless a specific Guarantor is expressly identified.

     Section 11.25 Joinder of New Lenders.


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     Each new Lender shall be a party to this Agreement and the other Loan
Documents as a Lender on and after the Closing Date. Each New Lender is hereby
granted, and hereby assumes, all of the rights and obligations of a Lender under
this Agreement and the other Loan Documents arising on and after the Closing
Date.

     Section 11.26 Joinder of Bridge Loan Additional Borrowers.

     (a) Each Bridge Loan Additional Borrower shall be a party to this Agreement
and the other Loan Documents as a Borrower on and after the Closing Date, and,
along with the Initial Borrowers and the Initial Additional Borrowers, shall be
included in the definition of "Borrower" under this Agreement and the other Loan
Documents for all purposes thereof, and as such shall be jointly and severally
liable, as provided in the Loan Documents, for all Obligations thereunder
(whether incurred or arising prior to, on, or subsequent to the date hereof) and
otherwise bound by all of the terms, provisions and conditions thereof.

     (b) Without in any way implying any limitation on any of the provisions of
this Agreement, the each Bridge Loan Additional Borrower hereby represents and
warrants that all of the representations and warranties contained in this
Agreement and the other Loan Documents are true and correct on and as of the
date hereof as if made on and as of such date, both before and after giving
effect to this Section 11.26, and that no Event of Default or Default has
occurred and is continuing or exists or would occur or exist after giving effect
to this Section 11.26.

     (c) Each Bridge Loan Additional Borrower hereby assigns unto the Agent, and
grants to the Agent a security interest in, all right, title and interest of
such Bridge Loan Additional Borrower, and all power and authority of the Bridge
Loan Additional Borrower to act thereunder and to use the same, in, to and under
any and all Contracts, Plans and Permits (each term as defined in the Assignment
of Contracts), whether now or hereafter existing, including, without limitation,
the right to modify, amend, extend, cancel or terminate the same, but not the
indebtedness, duties and obligations of such Bridge Loan Additional Borrower
thereunder. Each Bridge Loan Borrower Additional hereby irrevocably appoints the
Agent its attorney-in-fact, which appointment shall not terminate upon such
Bridge Loan Additional Borrower's disability, dissolution or similar event, for
the purpose of taking after the occurrence of an Event of Default under this
Agreement any action or exercising any right on such Bridge Loan Additional
Borrower's behalf with respect to the Contracts, Plans and Permits. Such
appointment is coupled with an interest and shall terminate only as provided in
Section 8 of the Assignment of Contracts.

     Section 11.27 Modified and Restated Agreement.

     This Agreement shall modify the Prior Agreement in part and restate the
Prior Agreement in its entirety. Without limiting the generality of the
foregoing, (a) the Prior Agreement is merged and incorporated into this
Agreement and (b) this Agreement shall supercede and control any inconsistent
provision in the Prior Agreement. All references in the Loan Documents to the
Prior Agreement are hereby modified and shall now be deemed to refer to this
Agreement. All references in the Loan Documents to the Obligations, the Notes,
the Loan Documents and other terms defined herein are hereby modified and shall
now be deemed to refer to such terms and items as defined or described in this
Agreement. All Collateral shall secure, and the Guaranty shall guaranty, the
Notes and the Obligations as defined and described in this Agreement. Without
limiting the foregoing and in confirmation of the Liens intended to be granted
pursuant to the Loan Documents, each Obligor grants, conveys, and assigns to the
Agent, as agent for the


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Lenders, a lien against and security interest in all Collateral described in
such Loan Documents as security for the Credit Facility. Without limiting the
foregoing and in confirmation of the Guaranty, the Guarantors, jointly and
severally, guarantee to Agent for the ratable benefit of each Lender the full,
prompt and unconditional payment of the Notes and the Obligations. This
Agreement shall not, however, constitute a novation of the Obligors'
indebtedness, duties and obligations under or with respect to the Existing
Loans, the Existing Letters of Credit or the Bridge Loan.

                       [EXECUTIONS BEGIN ON THE NEXT PAGE]


                                       79

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                        BORROWERS:

WITNESS:                                NEIGHBORHOODS CAPITAL, LLC


                                        By:                               (SEAL)
-------------------------------------       ------------------------------
                                        Name: Martin K. Alloy
                                        Title: Chairman


WITNESS:                                BRAM NEIGHBORHOODS, LLC,
                                        GLENKIRK NEIGHBORHOODS, LLC,
                                        GLYNN TARRA ESTATES, LLC,
                                        NEIGHBORHOODS I, L.L.C.,
                                        NEIGHBORHOODS II, LLC,
                                        NEIGHBORHOODS III, LLC,
                                        NEIGHBORHOODS IV, LLC,
                                        COLES RUN NEIGHBORHOODS, LLC,
                                        ZION NEIGHBORHOODS, LLC,
                                        WALL NEIGHBORHOODS, LLC,
                                        MARUMSCO NEIGHBORHOODS, LLC,
                                        NEIGHBORHOODS VI, LLC,
                                        BEECH GROVE NEIGHBORHOODS, LLC, and
                                        NEIGHBORHOODS V, LLC

                                        By: NEIGHBORHOODS CAPITAL, LLC,
-------------------------------------       its Sole Member


                                        By:                               (SEAL)
                                            ------------------------------
                                        Name: Martin K. Alloy
                                        Title: Chairman


                                        GUARANTORS:

WITNESS:                                KF NEIGHBORHOODS, L.L.C. and
                                        KF II NEIGHBORHOODS, LLC

                                        By: NEIGHBORHOODS CAPITAL, LLC,
-------------------------------------       its Sole Member


                                        By:                               (SEAL)
                                            ------------------------------
                                        Name: Martin K. Alloy
                                        Title: Chairman


                                       80

<PAGE>

                                        AGENT AND LENDER:

WITNESS:                                WACHOVIA BANK, NATIONAL ASSOCIATION


                                        By:                               (SEAL)
-------------------------------------       ------------------------------
                                        Name: Margaret J. Dunsmore
                                        Title: Vice President


                                       81

<PAGE>

                                        LENDER:

WITNESS:                                BRANCH BANKING AND TRUST COMPANY


                                        By:                               (SEAL)
-------------------------------------       ------------------------------
                                        Name:
                                              ----------------------------------
                                        Title
                                              ----------------------------------


                                       82

<PAGE>

                                        LENDER:

WITNESS:                                SOUTHTRUST BANK


                                        By:                               (SEAL)
-------------------------------------       ------------------------------
                                        Name:
                                              ----------------------------------
                                        Title
                                              ----------------------------------


                                       83

<PAGE>

                                        LENDER:

WITNESS:                                KEYBANK NATIONAL ASSOCIATION


                                        By:                               (SEAL)
-------------------------------------       ------------------------------
                                        Name:
                                              ----------------------------------
                                        Title
                                              ----------------------------------


                                       84

<PAGE>

                                        LENDER:

WITNESS:                                FIRST HORIZON HOME LOAN CORPORATION


                                        By:                               (SEAL)
-------------------------------------       ------------------------------
                                        Name:
                                              ----------------------------------
                                        Title
                                              ----------------------------------


                                       85

<PAGE>

                                TABLE OF EXHIBITS

EXHIBIT "A-1"   Additional Borrower Joinder Supplement
EXHIBIT "A-2"   Additional Guarantor Joinder Supplement
EXHIBIT "B"     Approved Subdivisions
EXHIBIT "C"     Borrowing Base Report
EXHIBIT "D"     Covenant Compliance Certificate
EXHIBIT "E-1"   Existing Loans
EXHIBIT "E-2"   Existing Letters of Credit
EXHIBIT "F"     Form Letter of Credit Agreement
EXHIBIT "G"     Notice of Account Designation
EXHIBIT "H"     Notice of Borrowing
EXHIBIT "I"     Notice of Prepayment
EXHIBIT "J"     Revolving Credit Note
EXHIBIT "K"     Spreader Agreement
EXHIBIT "L"     Interest Rate Election Notice
EXHIBIT "M"     INTENTIONALLY DELETED
EXHIBIT "N"     Assignment and Acceptance

SCHEDULE I      Lenders' Commitments

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
FIRST MODIFIED AND RESTATED LOAN AGREEMENT                                     1

ARTICLE I DEFINITIONS                                                          1
Section 1.1    Definitions                                                     2
Section 1.2    General                                                        19
Section 1.3    Other Definitions and Provisions                               19

ARTICLE II REVOLVING CREDIT FACILITY                                          20
Section 2.1    Revolving Loans                                                20
Section 2.2    Procedures for Advances of Revolving Credit                    20
Section 2.3    Addition of Borrowing Base Assets                              23
Section 2.4    Conditions to Revolving Loans for Land Under Development and
               Construction of Units                                          26
Section 2.5    Repayment of Revolving Loans                                   26
Section 2.6    Revolving Credit Notes                                         28
Section 2.7    Revolving Credit Maturity Date Extension                       28
Section 2.8    Title Insurance                                                29
Section 2.9    Increase in Commitments                                        29

ARTICLE III L/C FACILITY                                                      31
Section 3.1    L/C Commitment                                                 31
Section 3.2    Procedure for Issuance of Letters of Credit                    31
Section 3.3    L/C Fees                                                       32
Section 3.4    L/C Participations                                             32
Section 3.5    Reimbursement Obligation of the Borrowers                      33
Section 3.6    Obligations Absolute                                           33
Section 3.7    Effect of Application and Letter of Credit Agreement           34
Section 3.8    Resignation of the Issuing Lender, Successor Issuing Lender    34

ARTICLE IV GENERAL LOAN PROVISIONS                                            35
Section 4.1    Obligors' Representatives                                      35
Section 4.2    Guaranty                                                       37
Section 4.3    Interest                                                       39
Section 4.4    Loan Fees                                                      41
Section 4.5    Manner of Payment                                              42
Section 4.6    Crediting of Payments and Proceeds                             42
Section 4.7    Adjustments                                                    42
Section 4.8    Nature of Obligations of Lenders Regarding Extensions of
               Credit, Assumption by the Agent.                               43
Section 4.9    Changed Circumstances                                          43
Section 4.10   Indemnity                                                      45
Section 4.11   Capital Requirements                                           45
Section 4.12   Taxes                                                          45
Section 4.13   Security                                                       47
</TABLE>

<PAGE>

<TABLE>
<S>                                                                           <C>
ARTICLE V CONDITIONS OF CLOSING AND BORROWING                                 47
Section 5.1    Conditions to Closing and Initial Extensions of Credit         47
Section 5.2    Conditions to All Extensions of Credit                         50

ARTICLE VI REPRESENTATIONS AND WARRANTIES                                     51
Section 6.1    Existence, Etc.                                                51
Section 6.2    Financial Condition                                            52
Section 6.3    Litigation                                                     52
Section 6.4    No Breach                                                      52
Section 6.5    Authority                                                      52
Section 6.6    Approval                                                       53
Section 6.7    Employee Benefit Plans                                         53
Section 6.8    Taxes, Etc.                                                    53
Section 6.9    Ownership of Collateral                                        53
Section 6.10   Bridge Loan Documents                                          53
Section 6.11   Existing Loan Documents                                        53
Section 6.12   Survival                                                       54

ARTICLE VII COVENANTS OF THE OBLIGORS                                         54
Section 7.1    Borrowing Base Reports, Financial Statements, Etc.             54
Section 7.2    Disposition of Assets                                          55
Section 7.3    Existence, Etc.                                                55
Section 7.4    Liens                                                          56
Section 7.5    Use of the Credit Facility                                     56
Section 7.6    Access                                                         56
Section 7.7    Leases                                                         56
Section 7.8    Quality of Work: Changes; Etc.                                 56
Section 7.9    Delivery of Original Recorded Documents                        57
Section 7.10   Insurance                                                      57
Section 7.11   Other Documents                                                59
Section 7.12   Notice of Changes in Registration Statements                   59
Section 7.13   Amendments to Charters                                         59
Section 7.14   Hedge Agreements                                               59
Section 7.15   Additional Debt                                                59

ARTICLE VIII FINANCIAL COVENANTS                                              60
Section 8.1    Liquidity                                                      60
Section 8.2    Adjusted EBITDA to Debt Service                                60
Section 8.3    Tangible Net Worth                                             60
Section 8.4    Total Liabilities to Tangible Net Worth Ratio                  60
Section 8.5    Residential Units                                              60
Section 8.6    Land to Tangible Net Worth Covenant                            60
Section 8.7    Appraisals                                                     60

ARTICLE IX EVENTS OF DEFAULT AND REMEDIES                                     62
Section 9.1    Events of Default                                              62
</TABLE>


                                       ii

<PAGE>

<TABLE>
<S>                                                                           <C>
Section 9.2     Remedies                                                      63
Section 9.3     Rights and Remedies Cumulative; Non-Waiver; Etc.              64
Section 9.4     Defaults Affecting Borrowing Base Assets                      64

ARTICLE X THE AGENT                                                           65
Section 10.1    Appointment                                                   65
Section 10.2    Delegation of Duties                                          65
Section 10.3    Exculpatory Provisions                                        65
Section 10.4    Reliance by the Agent                                         66
Section 10.5    Notice of Default                                             66
Section 10.6    Non-Reliance on the Agent and Other Lenders                   66
Section 10.7    Indemnification                                               67
Section 10.8    The Agent in Its Individual Capacity                          68
Section 10.9    Resignation of the Agent, Successor Agent                     68
Section 10.10   Effect of Article on Obligors                                 68

ARTICLE XI MISCELLANEOUS                                                      68
Section 11.1    Notices                                                       68
Section 11.2    Expenses, Indemnity                                           69
Section 11.3    Set-off                                                       70
Section 11.4    Governing Law                                                 70
Section 11.5    Consent to Jurisdiction                                       70
Section 11.6    Binding Arbitration                                           71
Section 11.7    Reversal of Payments; Continuing Enforcement                  71
Section 11.8    Injunctive Relief; Punitive Damages                           72
Section 11.9    Accounting Matters                                            72
Section 11.10   Successors and Assigns; Participations                        72
Section 11.11   Amendments, Waivers and Consents                              75
Section 11.12   Performance of Duties                                         76
Section 11.13   All Powers Coupled with Interest                              76
Section 11.14   Survival of Indemnities                                       76
Section 11.15   Titles and Captions                                           76
Section 11.16   Severability of Provisions                                    76
Section 11.17   Counterparts                                                  76
Section 11.18   Term of Agreement                                             76
Section 11.19   Time is of the Essence                                        77
Section 11.20   Brokerage                                                     77
Section 11.21   Public Notice                                                 77
Section 11.22   Entire Agreement                                              77
Section 11.23   Inconsistencies with Other Documents; Covenants               77
Section 11.24   Joint and Several Liability                                   77
Section 11.25   Joinder of New Lenders                                        77
Section 11.26   Joinder of Bridge Loan Additional Borrowers                   77
Section 11.27   Modified and Restated Agreement                               77

TABLE OF EXHIBITS                                                              I
</TABLE>


                                       iii

<PAGE>

<TABLE>
<S>                                                                           <C>
TABLE OF CONTENTS                                                              I
</TABLE>


                                       iv