Exhibit 10.20




                              OPERATING AGREEMENT

                                       OF

                 SOUTHERN HIGHLANDS/CHRISTOPHER HOMES I, L.L.C.,
                       a Nevada Limited Liability Company

                               September 10, 1999

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                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE 1  FORMATION; REPRESENTATIONS ........................................ 2

     1.1   Organization ...................................................... 2
     1.2   Formation ......................................................... 2
     1.3   Name .............................................................. 2
     1.4   Effective Date .................................................... 2
     1.5   Term .............................................................. 2
     1.6   Resident Agent and Registered Office .............................. 2
     1.7   Representations and Warranties of the Manager ..................... 2
     1.8   Representations and Warranties of Stuhmer ......................... 5
     1.9   Representations and Warranties of Southern Highlands .............. 7

ARTICLE 2  NATURE OF BUSINESS ................................................ 9

ARTICLE 3  ACCOUNTING AND RECORDS; AFFILIATE TRANSACTIONS .................... 9

     3.1   Records to be Maintained .......................................... 9
     3.2   Reports to Members; Verification and Inspection ...................10
     3.3   Affiliate Transactions ............................................11
     3.4   Insolvency ........................................................11
     3.5   Assurance of Performance; Undertakings ............................13
     3.6   Replacement of the Manager ........................................14
     3.7   Special Indemnity and Limitation on Stuhmer Personal Liability ....15

ARTICLE 4  TRANSFER OF INTERESTS .............................................15

     4.1   Transfer Restrictions .............................................15
     4.2   Admission of Additional Members ...................................16
     4.3   Intentionally Deleted .............................................16
     4.4   Securities Law Restrictions .......................................16
     4.5   Breach or Default by Manager or Stuhmer ...........................16
     4.6   Breach or Default by Southern Highlands ...........................17
     4.7   Arbitration .......................................................18


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ARTICLE 5  RIGHTS AND DUTIES OF MEMBERS ......................................18

     5.1   Meetings ..........................................................18
     5.2   Notice of Meeting .................................................18
     5.3   Quorum ............................................................19
     5.4   Order of Business .................................................19
     5.5   Proxies ...........................................................19
     5.6   Voting by Certain Members .........................................19
     5.7   Manner of Acting ..................................................20
     5.8   Telephonic Meetings ...............................................20
     5.9   Action by Consent .................................................20
     5.10  Voting Rights of Members ..........................................20
     5.11  Other Rights of Members ...........................................22
     5.12  Conflicts of Interest .............................................22
     5.13  Restrictions on Withdrawal ........................................23
     5.14  Rejection .........................................................24

ARTICLE 6  MANAGER ...........................................................24

     6.1   Appointment and Authority .........................................24
     6.2   Term of Office ....................................................25
     6.3   Authority of Manager to Bind the Company ..........................25
     6.4   Actions of the Manager ............................................26
     6.5   Compensation of Manager ...........................................26
     6.6   Manager's Standard of Care ........................................26
     6.7   Officers ..........................................................26

ARTICLE 7  CONTRIBUTIONS, INTERESTS, AND CAPITAL ACCOUNTS.....................27

     7.1   Initial Contributions .............................................27
     7.2   Enforcement of Commitments ........................................30
     7.3   Maintenance of Capital Accounts ...................................30
     7.4   Distribution of Assets ............................................31
     7.5   Sale or Exchange of Interest ......................................31
     7.6   Compliance with Section 704(b) of the Code ........................31
     7.7   Compliance with Section 704(c) of the Code ........................31

ARTICLE 8  ALLOCATIONS AND DISTRIBUTIONS .....................................31

     8.1   Allocations of Net Profits and Losses from Operations .............31
     8.2   Special Items .....................................................32
     8.3   Distributions .....................................................32

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     8.4   Tax Distribution ..................................................34
     8.5   Limitations on Distributions ......................................34

ARTICLE 9  TAXES .............................................................35

     9.1   Elections .........................................................35
     9.2   Taxes of Taxing Jurisdictions .....................................35
     9.3   Tax Matters Member ................................................35
     9.4   Method of Accounting ..............................................35

ARTICLE 10 DISSOCIATION OF A MEMBER ..........................................35

     10.1  Dissociation ......................................................35
     10.2  Rights of Dissociating Member .....................................36

ARTICLE 11 ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS .....................37

     11.1  Rights of Assignees ...............................................37
     11.2  Admission of Substitute Members ...................................37

ARTICLE 12 DISSOLUTION AND WINDING UP ........................................37

     12.1  Dissolution .......................................................37
     12.2  Effect of Dissolution .............................................38
     12.3  Distribution of Assets on Dissolution .............................38
     12.4  Winding Up and Certificate of Dissolution .........................38

ARTICLE 13 DEVELOPMENT, CONSTRUCTION AND MARKETING OF THE PROJECT ............39

     13.1  Development and Construction of the Project .......................39
     13.2  Marketing and Advertising .........................................39
     13.3  Sales of Residences ...............................................40
     13.4  Southern Highlands Tradename ......................................40
     13.5  Special Fees ......................................................40
     13.6  Commission ........................................................40

ARTICLE 14 AMENDMENT .........................................................40


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ARTICLE 15 MISCELLANEOUS PROVISIONS ..........................................40

     15.1  Entire Agreement ..................................................40
     15.2  No Partnership Intended for Nontax Purposes .......................41
     15.3  Rights of Creditors and Third Parties under Agreement .............41
     15.4  Indemnification by Members and Manager ............................41
     15.5  Indemnification by Company ........................................42
     15.6  Gender and Number .................................................42
     15.7  Articles and Other Headings .......................................42
     15.8  Counterparts ......................................................42
     15.9  Successors ........................................................43
     15.10 Governing Law .....................................................43
     15.11 Separate Representation ...........................................43
     15.12 Notices ...........................................................43

ARTICLE 16 DEFINITIONS .......................................................44


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                              OPERATING AGREEMENT
                                       OF
                SOUTHERN HIGHLANDS/CHRISTOPHER HOMES I, L.L.C.,
                       a Nevada Limited Liability Company

         This Operating Agreement of Southern Highlands/Christopher Homes I,
L.L.C., Nevada limited liability company (the "Company"), organized pursuant to
the Nevada Limited Liability Company Act, is entered into as of September 10th,
1999 (the "Effective Date"), by and among Southern Highlands Development
Corporation, a Nevada corporation (the "Southern Highlands"), J. Christopher
Stuhmer ("Stuhmer") and Christopher Homes Custom Home Division, Inc., a Nevada
corporation ("Chris Homes" or the "Manager"). Unless otherwise defined herein,
all capitalized terms shall have the meanings which are set forth for such terms
in Article 16.

                                R E C I T A L S:

         This Operating Agreement ("Agreement") is entered into based upon the
following facts and stated purposes:

         A. Southern Highlands is the owner of approximately 42.965 acres of
land ("Parcel 305") located within real property commonly known as the Southern
Highlands Master Planned Community, located in Clark County, Nevada. The legal
description of Parcel 305 is set forth on Exhibit "A" attached hereto and
incorporated by this reference;

         B. Stuhmer, Southern Highlands and the Manager have formed the Company
as a limited liability company pursuant to the provisions of the Nevada Limited
Liability Act, NRS 86.010, et seg. (the "Act"), as the same may be amended from
time to time;

         C. Stuhmer, Southern Highlands and the Manager deem this Agreement to
be necessary, appropriate and advisable in order to specify the terms of their
undertakings and obligations with respect to the conduct of the business and
affairs of the Company; and

         D. After the formation of the Company, Southern Highlands, Stuhmer and
the Manager contemplate forming a second limited liability company named
Southern Highlands/Christopher Homes II, L.L.C. ("SH/CH II") to own, develop and
separately finance approximately 40 additional acres of land currently owned by
Southern Highlands ( "Parcels 306 and 307") in the immediate vicinity of Parcel
305.

         NOW, THEREFORE, the forgoing parties hereby agree as follows:


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                                   ARTICLE 1
                           FORMATION; REPRESENTATIONS

         1.1 Organization. The Company has been organized as a Nevada Limited
Liability Company pursuant to the provisions of the Act. Stuhmer and Southern
Highlands are the sole Members and their membership interests in the Company are
referred to as "Interests."

         1.2 Formation. The Company shall be formed and operated as a limited
liability company under the Nevada Limited Liability Company Act, subject to the
provisions set forth in this Agreement. The Members intended that the Company
shall not be a partnership or joint venture except for federal income tax
purposes.

         1.3 Name. The name of the Company is Southern Highlands/Christopher
Homes I, L.L.C., and all of the Company's business shall be conducted solely
under such name or under any other name which is approved by the Members, but in
any case, only to the extent permitted by applicable law.

         1.4 Effective Date. This Agreement is effective as of the Effective
Date.

         1.5 Term. The Company shall have perpetual life and shall only be
dissolved and its affairs wound up in accordance with this Agreement.

         1.6 Resident Agent and Registered Office. The resident agent and the
registered office shall be that person and location reflected in the Articles.
(The initial resident agent is John Sacco, 808 South Seventh Street, Las Vegas,
Nevada 89101.) The Manager may, from time to time, with the written consent of
both Members, change the resident agent and registered office through
appropriate filings with the Nevada Secretary of State. In the event the
resident agent ceases to act as such for any reason or the registered office
shall change, the Manager shall promptly designate a replacement agent or file a
notice of change of address as the case may be, with the written consent of both
Members. The resident agent shall promptly furnish to each Member and to the
Manager any notice received by the resident agent of any lawsuit or governmental
proceeding commenced against the Company.

         1.7 Representations and Warranties of the Manager. The Manager
represents and warrants to Southern Highlands and the Company that upon
formation of the Company and upon the subsequent closing of the financing for
the Project, in all cases:

                  1.7.1 The Company and the Manager each have the full power,
         authority and legal right to engage in all the transactions
         contemplated by this Agreement;

                  1.7.2 There is no suit, action or proceeding pending or,
         threatened against or affecting the Project or the Manager before or by
         any court, administrative agency

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         or other governmental authority which could affect the validity of the
         transactions contemplated hereby or could interfere with the ability of
         the Manager to comply with the terms hereof;

                  1.7.3 Neither the execution nor delivery of this Agreement nor
         the distributions to be made to Southern Highlands, including any
         distribution to Southern Highlands of any portion of any Deposit made
         by the prospective purchaser of a Lot or Residence, will conflict with
         or result in a breach of any of the provisions of any law, ordinance,
         judgment, order, writ, injunction or decree of any court,
         administrative agency or other governmental authority, or of any
         agreement or other instrument to which the Company, the Manager or any
         of its Affiliates is a party or by which any of them is bound, or
         constitute a default under any thereof, or conflict with or result in a
         breach of any applicable law, rule or regulation of any such
         governmental authority, or result in the creation or imposition of any
         lien, charge or encumbrance upon any property of the Manager or any of
         its Affiliates;

                  1.7.4 No consent, approval or other authorization of or by any
         court, administrative agency or other governmental authority or any
         other entity, including any shareholder of Manager, is required in
         connection with the execution, delivery or compliance with the
         provisions of this Agreement or the consummation of the transactions
         contemplated by this Agreement.

                  1.7.5 There is no existing action, suit or proceeding before
         or by any court or governmental agency or body, domestic or foreign or,
         pending or threatened against or affecting the Manager which could
         result in any material and adverse change in its condition (financial
         or otherwise), earnings, business affairs or business prospects, or
         which could materially and adversely affect the legality, validity or
         enforceability of this Agreement or which could have a material and
         adverse effect upon the Company or upon the Manager's ability to
         consummate the transactions and agreements contemplated by this
         Agreement, or to fulfill its obligations hereunder. The aggregate of
         all pending legal or governmental proceedings to which the Manager is a
         party or which affect any of their properties, including ordinary
         routine litigation incidental to their business, if any, would not have
         a material and adverse effect on the Company's condition (financial or
         otherwise), earnings, affairs, business or business prospects;

                  1.7.6 The Project and all Residences constructed as part of
         the Project:

                           1.7.6.1 will conform to all applicable governmental
                  laws, ordinances, codes, regulations and administrative orders
                  so as to permit the intended development of the Project and
                  the intended sale of Lots and Residences; and

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                           1.7.6.2 will conform to and will not violate any
                  private restrictions, agreements, easements, covenants,
                  conditions or servitudes, or any declaration of any of the
                  foregoing, affecting the Project or the Manager.

                  1.7.7 All water, sewer, electric, gas, telephone and other
         utilities and services required to operate the Project and all
         necessary consents, licenses, permits, approvals or variances for the
         development of the Project (including, without limitation, all
         necessary building, zoning and other permits) have been obtained by
         the Company or can be obtained by the Company on reasonable terms and
         within a time period after the formation of the Company that will not
         impede the development of the Project, and there is no legal
         impediment to the development of the Project;

                  1.7.8 The Manager has not assigned, pledged, granted a
         security interest in, or otherwise encumbered its right in or to any
         portion of this Agreement;

                  1.7.9 The Manager is a duly organized Nevada corporation and
         all approvals and consents (including any "internal" or shareholder
         consents) required to be obtained by the Manager to become a party to
         this Agreement and to consummate the transactions contemplated by this
         Agreement have been obtained and are in effect;

                  1.7.10 No representation or warranty by the Manager in this
         Agreement and no exhibit, document, statement, certificate or schedule
         furnished or to be furnished to Southern Highlands pursuant hereto, or
         in connection with the transactions contemplated hereby, contains any
         untrue statement of a material fact, or omits to state a material fact
         necessary to make the statements contained herein or therein not
         misleading;

                  1.7.11 The Manager has inspected Parcel 305, has satisfied
         itself through its own due diligence efforts that Parcel 305 is
         suitable for development, and before the Contribution Date will have
         determined that the Parcel can be developed in accordance with the
         Development Budget;

                  1.7.12 The Manager will prepare and submit to Southern
         Highlands for its approval the Project Projections, the Development
         Budget, the Marketing Budget, the Marketing Material, and the Standard
         Sales Contact, before the Contribution Date;

                  1.7.13 The Project will be completed in a manner that is
         consistent with the Southern Highlands Master Planned Community
         standards, including

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         landscaping standards, improvement standards and design standards, as
         incorporated in the Development Declaration;

                  1.7.14 The Manager shall at all times maintain all licenses,
         permits, insurance and bonds required for the Project, including any
         bonding necessary to enable the Company to distribute the Deposits to
         the Members; and

                  1.7.15 Manager will have reviewed and approved each of the
         Master Planned Criteria Documents before the Contribution Date.

         All of the representations and warranties of the Manager shall survive
the termination of the Company.

         1.8 Representations and Warranties of Stuhmer. Stuhmer represents and
warrants to Southern Highlands and the Company that upon formation of the
Company and upon closing of the financing of the Project, in all cases:

                  1.8.1 The Company and the Manager each have the full power,
         authority and legal right to engage in all the transactions
         contemplated by this Agreement;

                  1.8.2 There is no suit, action or proceeding pending or,
         threatened against or affecting the Project, the Manager or Stuhmer
         before or by any court, administrative agency or other governmental
         authority which could affect the validity of the transactions
         contemplated hereby or could interfere with the ability of Stuhmer or
         the Manager to comply with the terms hereof;

                  1.8.3 Neither the execution nor delivery of this Agreement nor
         the distributions to be made to Southern Highlands will conflict with
         or result in a breach of any of the provisions of any judgment, order,
         writ, injunction or decree of any court, administrative agency or other
         governmental authority, or of any agreement or other instrument to
         which the Manager or Stuhmer or any of its Affiliates is a party or by
         which any of them is bound, or constitute a default under any thereof,
         or, conflict with or result in a breach of any applicable law, rule or
         regulation of any such governmental authority, or result in the
         creation or imposition of any lien, charge or encumbrance upon any
         property of Manager, Stuhmer or any of their respective Affiliates;

                  1.8.4 No consent, approval or other authorization of or by any
         court, administrative agency or other governmental authority or any
         other entity, including any shareholder of Manager, is required in
         connection with the execution, delivery or compliance with the
         provisions of this Agreement or the consummation of the transactions
         contemplated by this Agreement.

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                  1.8.5 There is no existing action, suit or proceeding before
         or by any court or governmental agency or body, domestic or foreign or,
         pending or threatened against or affecting Stuhmer which could result
         in any material and adverse change in their condition (financial or
         otherwise), earnings, business affairs or business prospects, or which
         could materially and adversely affect the legality, validity or
         enforceability of this Agreement or which could have a material and
         adverse effect upon the Company, Stuhmer or upon the Manager's ability
         to consummate the transactions and agreements contemplated by this
         Agreement, or to fulfill its obligations hereunder. The aggregate of
         all pending legal or governmental proceedings to which the Manager is a
         party or which affect any of their properties, including ordinary
         routine litigation incidental to their business, if any, would not have
         a material and adverse effect on the Company's condition (financial or
         otherwise), earnings, affairs, business or business prospects;

                  1.8.6 The Project:

                           1.8.6.1 will conform to all applicable governmental
                  laws, ordinances, codes, regulations and administrative orders
                  so as to permit the intended development of the Project and
                  the intended sale of Lots and Residences; and

                           1.8.6.2 will conform to and will not violate any
                  private restrictions, agreements, easements, covenants,
                  conditions or servitudes, or any declaration of any of the
                  foregoing, affecting the Project, the Manager or Stuhmer.

                  1.8.7 Intentionally deleted.

                  1.8.8 Stuhmer has not assigned, pledged, granted a security
         interest in, or otherwise encumbered all or any portion of his
         Interest.

                  1.8.9 All approvals and consents (including any "internal"
         corporate or shareholder consents) required to be obtained by the
         Manager to become a party to this Agreement and to consummate the
         transactions contemplated by this Agreement have been obtained are in
         effect;

                  1.8.10 No representation or warranty by Stuhmer in this
         Agreement and no exhibit, document, statement, certificate or schedule
         furnished or to be furnished to Southern Highlands pursuant hereto, or
         in connection with the transactions contemplated hereby, contains any
         untrue statement of a material fact, or omits to state a material fact
         necessary to make the statements contained herein or therein not
         misleading; and

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         All of the representations and warranties of Stuhmer shall survive the
termination of the Company.

         1.9 Representations and Warranties of Southern Highlands. Southern
Highlands represents and warrants to Stuhmer and to the Company that on the date
hereof:

                  1.9.1 Southern Highlands has the full power, authority and
         legal right to engage in all the transactions contemplated by this
         Agreement including the conveyance of Parcel 305 to the Company and has
         full power, authority and legal right to execute and deliver, and to
         comply with its obligations under this Agreement;

                  1.9.2 Neither the execution nor delivery of this Agreement
         will conflict with or result in a breach of any of the provisions of
         any judgment, order, writ, injunction or decree of any court,
         administrative agency or other governmental authority, or of any
         agreement or other instrument to which Southern Highlands or any of its
         Affiliates is a party or by which any of them is bound, or constitute a
         default under any thereof, or conflict with or result in a breach of
         any applicable law, rule or regulation of any such governmental
         authority, or result in the creation or imposition of any lien, charge
         or encumbrance upon any property of Southern Highlands;

                  1.9.3 No consent, approval or other authorization of or by
         any court, administrative agency or other governmental authority or any
         other entity is required in connection with the execution, delivery or
         compliance with the provisions, of this Agreement by Southern
         Highlands;

                  1.9.4 There is no suit, action or proceeding pending or
         threatened against or affecting Southern Highlands before or by any
         court, administrative agency or other governmental authority which
         would affect the validity of the transactions contemplated thereby or
         could interfere with the ability of Southern Highlands to comply with
         the terms hereof.

                  1.9.5 There is no existing action, suit or proceeding before
         or by any court or governmental agency or body, domestic or foreign or,
         pending or threatened against or affecting Southern Highlands which
         could result in any material and adverse change in its condition
         (financial or otherwise), earnings, business affairs or business
         prospects, or which could materially and adversely affect the legality,
         validity or enforceability of this Agreement or which could have a
         material and adverse effect upon Southern Highlands' ability to
         consummate the transactions and agreements contemplated by this
         Agreement, or to fulfill Southern Highlands' obligations hereunder.


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                  1.9.6 The final routing plan setting forth the layout of the
         Southern Highlands golf course has been approved by Southern Highlands;
         the operational guidelines, the membership structure and the membership
         guidelines for the golf course have been established by Southern
         Highlands (which structure and guidelines are subject to modification
         without notice to or the approval of the Company, Stuhmer or the
         Manager); the clubhouse for the golf course has been designed and the
         clubhouse is under construction; the layout plans for the general
         locations of the arterial Southern Highlands Master Planned Community
         roadways and wet utilities accessing Parcel 305 have been prepared and
         delivered to Stuhmer; and Southern Highlands has developed a
         construction schedule (a copy of which has been delivered to Stuhmer
         and which is subject to change) that estimates the time to complete
         certain components of the Southern Highlands Master Planned Community
         that would directly affect the development of Parcel 305 (provided;
         however, that none of the foregoing representations or warranties
         regarding the golf course or the other elements of the Southern
         Highlands Master Planned Community shall grant or convey to the
         Company, Stuhmer, the Manager or any purchaser of a Lot or Residence
         from the Company any interest in the golf course, any membership
         rights, privileges or priorities or any interest in any real property
         owned by Southern Highlands (other than Parcel 305)). Southern
         Highlands also shall not wilfully or intentionally impede, or impede
         through Southern Highlands' gross negligence, in its capacity as the
         owner or developer of real property located within the Southern
         Highlands Master Planned Community, the development of the Project by
         the Company in accordance with the Development Budget.

                  1.9.7 Southern Highlands shall provide to the Company for the
         purpose of developing Parcel 305 not later than the Contribution Date:
         (i) temporary construction electrical services access (to be metered to
         and paid by the Company) for a period of time sufficient to permit the
         development of the Project and in a capacity sufficient to allow the
         Company to commence the construction by the Company of basic
         infrastructure for the Project, (ii) within ninety (90) days after the
         Contribution Date, access at the boundary of Parcel 305 to water
         service infrastructure and sewer service infrastructure sufficient in
         capacity to support the development of the Project (with such water and
         sewer services to be metered to and paid by the Company), and (iii)
         temporary construction access to Parcel 305 across the other real
         property owned by Southern Highlands. Southern Highlands also shall not
         wilfully or intentionally impede, or impede through Southern Highlands'
         gross negligence, in its capacity as the owner or developer of real
         property located within the Southern Highlands Master Planned
         Community, the development of the Project by the Company in accordance
         with the Development Budget. Southern Highlands shall cause the
         "parent" final map creating legal Parcel 305 to be recorded prior to
         the Contribution Date, to the extent any Lender

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         to the Company requires such recording as a condition precedent to
         funding any Loan to the Company.

                  1.9.8 No representation or warranty by Southern Highlands in
         this Agreement and no exhibit, document, statement, certificate or
         schedule furnished or to be furnished by Southern Highlands pursuant
         hereto, or in connection with the transactions contemplated hereby,
         contains any untrue statement of a material fact, or omits to state a
         material fact necessary to make the statements contained herein or
         therein not misleading.

         All of the representations and warranties of Southern Highlands shall
survive the termination of the Company.

                                   ARTICLE 2
                               NATURE OF BUSINESS

         The Company is formed for the sole purpose of owning, developing,
constructing, marketing, and selling Residences on Parcel 305 (the "Project") at
a profit in accordance with the Development Budget. The Company shall be
authorized to do any lawful act now and hereafter permitted by the laws of the
State of Nevada in furtherance of, or convenient to, accomplishing its stated
purpose. The Company shall not engage in any other business activities without
the express written consent of both Members.

         The Company is a single purpose entity. The Manager shall not permit
the funds of the Company to be commingled with the funds of any other Person,
including the funds of SH/CH II. The Company will maintain its own bank
accounts. The Manager will cause the Company to maintain and utilize separate
stationery, invoices and checks, and shall cause the business of the Company to
be conducted in its own name and shall promptly correct any third party
misunderstanding known to the Manager regarding the ownership of the business of
the Company.

                                   ARTICLE 3
                 ACCOUNTING AND RECORDS; AFFILIATE TRANSACTIONS

         3.1 Records to be Maintained. The Company shall maintain the following
records at the offices of the Manager:

                  3.1.1 A current list of the full name and last known business
         address of each Member and the Manager;

                  3.1.2 A copy of the filed Articles and all amendments thereto,
         together with executed copies of any powers of attorney pursuant to
         which any Articles have been executed;

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                  3.1.3 A copy of this Agreement, including all amendments
         thereto;

                  3.1.4 A copy of each Affiliate Agreement; and

                  3.1.5 A copy of each financial statement, record, budget or
         report contemplated by this Agreement.

All of the financial statements and business records of the Company shall be
available for inspection and copying during normal business hours by any Member
and its representatives and agents upon not less than 48 hours written notice to
the Manager.

         3.2 Reports to Members; Verification and Inspection.

                  3.2.1 The Manager shall provide monthly and annual written
         reports to the Members that shall include a balance sheet, an income
         statement, a statement of cash receipts and disbursements, a schedule
         of all Fees and other amounts paid or accrued to be paid to the Manager
         or any Affiliate of the Manager, a schedule of all Lots and Residences
         sold within the reporting period, a schedule of all draws under the
         Loan, a statement that discloses how actual expenditures vary from
         budgeted items, a schedule that shows how actual construction and sale
         activity at the Project varies from budgeted items, a statement
         disclosing the proceeds of each sale, a copy of the final escrow
         settlements for such sale, a schedule of any distributions made to the
         Members, and a report of the accrued Preferred Return and the amount of
         Unpaid Prorata Land Basis. Each report shall be prepared and
         distributed within thirty (30) days after the end of each reporting
         period.

                  3.2.2 The Manager shall provide each Member with information
         returns required by the Code or the Act.

                  3.2.3 The Manager shall maintain a record of the Capital
         Account for each Member in accordance with Article 7.

                  3.2.4 The Manager shall promptly notify each Member in writing
         of the occurrence of any circumstance or event that may materially
         affect the Project, including any claim or demand by a purchaser of a
         Lot or Residence in excess of $30,000 in amount, the occurrence of any
         material or uninsured casualty to any property of the Company, any
         governmental claim where the dollar amount at issue may exceed $30,000.

                  3.2.5 At any time during normal business hours and upon not
         less than 48 hours advance notice to the Manager, any Member and its
         authorized agents and employees may review and copy (at such Member's
         expense) any records or reports relating to the Project.

                  3.2.6 At the request of any Member, the financial statements
         and reports for the Company for any period shall be audited by an
         independent firm of certified public accountants

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chosen by the Member requesting the audit. If the results of such audit disclose
a material discrepancy (more than five percent (5%) in the amount distributable
to a Member requesting such audit (i.e., if the amount for any calendar month or
greater period of time actually distributed to a Member by the Company is 95% or
less than the amount that should have been distributed to such Member for the
same period, if distributions had been made in accordance with this Agreement),
such discrepancy in distributions shall be promptly remedied by the Manager, and
the full cost and expense of such audit shall be borne by the Manager. In all
other circumstances, the full cost and expense of such audit shall be borne by
the Member requesting the audit, and any non-material discrepancy in
distributions to be paid to any Member shall be promptly remedied by the
Manager.

         3.3 Affiliate Transactions. The Manager is authorized to cause the
Company to enter into agreements on behalf of the Company with Affiliates of
Stuhmer or the Manager relating to the Project or Parcel 305, provided (i) that
Southern Highlands is given prior written notice of each Affiliate Agreement and
a reasonable opportunity to review such agreement, (ii) any such agreement is
made on terms which the Manager hereby represents are reasonable and in the best
interests of the Company and consistent with the Development Budget and
Marketing Budget approved by the Members, and (iii) the terms of each agreement
are no less favorable than those which the Company would have obtained in an
arm's length transaction with an unrelated third party. No provision of this
Agreement, including this Section 3.3, shall be construed to authorize Southern
Highlands to review or approve any employment, directorship agreement,
consulting agreement, shareholder agreement, or ownership agreement between
Stuhmer and Chris Home and/or Fortress.

         3.4 Insolvency.

                  (a) If the Manager commences a voluntary case under the
         federal bankruptcy laws or under any other applicable federal or state
         law relating to insolvency, if an order for relief or similar
         determination is entered in an involuntary case under the federal
         bankruptcy laws or any other federal or state law relating to
         insolvency, or if a receiver, liquidator, assignee, trustee, custodian
         or other similar person is appointed, voluntarily or involuntarily, for
         the assets of the Manager, then the Manager, (the "Insolvent Party"),
         automatically shall cease to have the right to direct the management of
         the Company and the Company shall be solely managed by a successor
         Manager appointed in accordance with Section 3.6. Such suspension of
         the Insolvent Party's management rights shall not affect the Insolvent
         Party's interest in Fees earned before the commencement of such
         insolvency proceeding, if any. The Manager acknowledges that if it
         becomes an Insolvent Party, the Manager would have a conflict of
         interest in representing the best interests of the Company and its
         Members and simultaneously protecting the interests of creditors of the
         Manager under the federal bankruptcy laws, if the Manager retained such
         management rights. The Insolvent Party shall regain its voting and any
         rights to manage the Company upon the effective date of a plan of
         reorganization under federal bankruptcy laws, provided the Insolvent
         Party is not

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                                                                        9/10//99

         otherwise in breach of this Agreement and has assumed all of its
         obligations hereunder and not assigned any of such obligations.

                  (b) If Stuhmer commences a voluntary case under the federal
         bankruptcy laws or under any other applicable federal or state law
         relating to insolvency, if an order for relief or similar determination
         is entered in an involuntary case under the federal bankruptcy laws or
         any other federal or state law relating to insolvency, or if a
         receiver, liquidator, assignee, trustee, custodian or other similar
         person is appointed, voluntarily or involuntarily, for the assets of
         Stuhmer, then Stuhmer (the "Insolvent Party"), automatically shall
         cease to have any right to participate in the management of the
         Company. Such suspension of the Insolvent Party's management rights
         shall not affect the Insolvent Party's interest in the Profits, Losses,
         or capital of the Company. Stuhmer acknowledges that if he becomes an
         Insolvent Party, he would have a conflict of interest in representing
         the best interests of the Company and its Members and simultaneously
         protecting the interests of his creditors under the federal bankruptcy
         laws, if he retained such management rights. The Insolvent Party shall
         regain its voting and any rights to participate in the management of
         the Company upon the effective date of a plan of reorganization under
         federal bankruptcy laws, provided the Insolvent Party is not otherwise
         in breach of this Agreement and has assumed all of its obligations
         hereunder and not assigned any of such obligations.

                  (c) If Southern Highlands commences a voluntary case under the
         federal bankruptcy laws or under any other applicable federal or state
         law relating to insolvency, if an order for relief or similar
         determination is entered in an involuntary case under the federal
         bankruptcy laws or any other federal or state law relating to
         insolvency, or if a receiver, liquidator, assignee, trustee, custodian
         or other similar person is appointed, voluntarily or involuntarily, for
         the assets of Southern Highlands (the "Insolvent Party"), Southern
         Highlands automatically shall cease to have the right to participate in
         the management of the Company. Such suspension of the Insolvent Party's
         management rights shall not affect the Insolvent Party's interest in
         the Profits, Losses, or capital of the Company. Southern Highlands
         acknowledges that if it becomes an Insolvent Party, Southern Highlands
         would have a conflict of interest in representing the best interests of
         the Company and its Members and simultaneously protecting the interests
         of its creditors under the federal bankruptcy laws. The Insolvent Party
         shall regain its voting and any rights to manage the Company upon the
         effective date of a plan of reorganization under federal bankruptcy
         laws, provided the Insolvent Party is not otherwise in breach of this
         Agreement and has assumed all of its obligations hereunder and not
         assigned any of such obligations.

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         3.5 Assurance of Performance: Undertakings.

                  3.5.1 The Manager represents and warrants to the Company and
to each Member that all of the work and services performed by the Manager and/or
its Affiliates in connection with the development of Parcel 305, the sale of
Lots and Residences, and the construction and marketing of Residences shall be
performed promptly, within the parameters of the Development Budget and
Marketing Budget, in full compliance with all applicable laws and contractual
limitations including any restrictions imposed by any lender to the Company, and
the Manager shall indemnify the Company for any claims brought by purchasers of
Lots or Residences from the Company.

                  3.5.2 The Manager hereby represents and warrants for the
benefit of Southern Highlands that it and each of the Affiliates will perform
their respective duties hereunder and under any Affiliate Agreement in
accordance with such agreements.

                  3.5.3 The Manager shall use its best efforts to cause the
Company (i) to comply with the requirements of any Loan financing secured for
the Project, (ii) to comply with all governmental requirements and restrictions
affecting the Project and sale of Lots and Residences, and (iii) to comply with
any request made by Southern Highlands for information on the status of the
Project, including Lot and Residence sales.

                  3.5.4 The Manager represents and warrants for the benefit of
Southern Highlands that it will use its best efforts in the development,
profitable operation and management of the Project.

                  3.5.5 The Manager represents and warrants for the benefit of
Southern Highlands that Marketing Material for the Project shall not suggest in
any way that any purchaser of a Lot or Residence has any rights or privileges
with respect of the Southern Highlands golf course or any of the other amenities
in the Southern Highlands Master Planned Community.

                  3.5.6 Southern Highlands represents and warrants for the
benefit of the Company that it will timely satisfy its obligations under this
Agreement, including Sections 1.9.6 and 1.9.7, in a manner so as to not wilfully
or intentionally impede, or impede through the gross negligence of Southern
Highlands, the development of the Project.

                  3.5.7 Southern Highlands further agrees that in the event
Southern Highlands does not provide construction grade water and sewer access
for the Project within the first 90-days after the Contribution Date, Southern
Highlands shall promptly reimburse the Company for any interest expense incurred
under any Loan then outstanding to the Company for the Project from and after
such ninetieth day until such access is made available by Southern Highlands.


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         3.6 Replacement of the Manager.

                  3.6.1 Upon the occurrence of a Manager Default, Southern
Highlands shall have the unilateral right to remove Chris Homes and any
successor Stuhmer-Controlled Manager by notice to Stuhmer and the Manager. Such
removal shall be effective on the date specified in such notice, not to be
earlier than forty-five (45) days following the date of such notice and not
before the time has expired to cure such Manager Default, as specified by this
Agreement. Upon receipt of such notice of removal by Southern Highlands, Stuhmer
shall have fifteen (15) days within which to irrevocably elect to appoint a new
Stuhmer-Controlled Manager, which Stuhmer-Controlled Manager shall be required
to assume the obligations of successor Manager not later than the expiration of
the foregoing 45 day period. If Stuhmer fails or refuses for any reason to
appoint a successor Stuhmer-Controlled Manager within the time allowed, Southern
Highlands shall be authorized to unilaterally appoint a successor Manager. The
only qualification for any successor Manager appointed by Southern Highlands is
that such successor Manager must be approved by the Lender.

                  3.6.2 At any time and upon not less than 45 days advance
notice to Chris Homes, Stuhmer may require that Chris Homes be removed as
Manager, with or without cause, and replaced with a Stuhmer-Controlled Manager.

                  3.6.3 Stuhmer shall have the right to appoint a
Stuhmer-Controlled Manager only once under this Agreement.

                  3.6.4 Any successor Manager must agree to assume all of the
obligations and duties of the original Manager and to promptly cure any Manager
Default of the removed Manager. Any removed Manager shall not be entitled to
earn any more Fees after such removal. Upon removal, the removed Manager shall
cooperate with the Company and successor Manager, shall promptly provide all of
the books and records of the Company to the successor Manager, and shall make
available to the Company all of the plans, designs and specifications required
to complete the construction of Residences that were under construction at the
time of the removal.

                  3.6.5 All parties, acting reasonably, promptly and in good
faith, shall execute and deliver an amendment to this Agreement and the Articles
which implements the changes described in this Section.

                  3.6.6 In addition to having the right to remove the Manager
upon the occurrence of a Manager Default, Southern Highlands shall have all
other rights and remedies available to it at law, in equity or otherwise as a
result of a Manager Default under this Agreement, including, without limitation,
the right to bring suit against the Manager and Stuhmer for damages.


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                  3.6.7 In the event Chris Homes is removed as Manager, the
Company shall be permitted to continue to use the tradename "Christopher Homes"
in connection with the sale of any Residence the construction of which had began
before such removal.

         3.7 Special Indemnity and Limitation on Stuhmer Personal Liability.
Stuhmer represents and warrants that during any period that he is acting as, or
has the title of, president or chief executive or operating officer of Chris
Homes, and Chris Homes is the Manager, Stuhmer will use his best efforts to
cause Chris Homes to promptly and fully satisfy each of its contractual
obligations under this Agreement. In the event Stuhmer exercises his right to
replace Chris Homes, as the initial Manager, with any Stuhmer-Controlled
Manager, Stuhmer will use his best efforts to cause any such Stuhmer-Controlled
Manager to promptly and fully satisfy each of its contractual obligations under
this Agreement. Stuhmer also shall indemnify and hold Southern Highlands
harmless from any loss or expense (including any delay in the Project)
attributable to any claim by Chris Homes or its shareholder that: (i) its
removal as Manager is not authorized or (ii) this Agreement or the transactions
contemplated by this Agreement did not receive all required corporate or
shareholder approvals (a "Chris Homes Claim"). The foregoing representations and
warranties of Stuhmer are a personal obligation of Stuhmer that shall survive
the termination of the Company. The foregoing representations and warranties of
Stuhmer do not constitute a guarantee of the accuracy of any Project Projections
or a guarantee that the Project will be profitable. Stuhmer shall not be liable
under this Section 3.7 for any act or omission of Chris Homes or a
Stuhmer-Controlled Manager that represents only negligence or a reasonable
mistake in business judgment; however, Stuhmer shall be personally liable under
this Section 3.7 for any Chris Homes Claim and any act or omission of Chris
Homes or a Stuhmer-Controlled Manager that constitutes gross negligence or a
wilful or intentional act or omission.

                                   ARTICLE 4
                             TRANSFER OF INTERESTS

         4.1 Transfer Restrictions.

                  (a) The Interests are not transferrable in whole or in part
         during the Project. The Members have formed the Company for the express
         purpose of completing the Project over the course of approximately
         sixty (60) months commencing on the Contribution Date. The full and
         complete commitment of both Members and the Manager to the Company and
         the Project is required. Both Members agree that the restrictions on
         transfers of Interests are fair and reasonable given the limited
         purpose and short duration of the Project. In the event of the death of
         Stuhmer, his Interest shall be held by the personal representative of
         his estate, as an Assignee, provided his estate or other transferee may
         be admitted as a Member with the written consent of Southern Highlands,
         which will not be unreasonably withheld. With the advance written
         consent of Southern Highlands, which will not be unreasonably withheld,
         Stuhmer may transfer all or part of his

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                                                                        9/10//99

         Interest to a family trust or family limited partnership, provided such
         transfer is approved by each Lender and provided, further, that
         Stuhmer shall retain all voting and approval rights with respect of
         such Interest and shall remain obligated personally under this
         Agreement for all of his undertakings, contribution obligations,
         representations, warranties and indemnification obligations.

                  (b) In the event of the death of Stuhmer or dissolution of his
         marriage of Stuhmer, and if his spouse acquires an Interest in the
         Company, she agrees that she will engage (at her expense) an
         experienced residential real estate developer to advise her on all
         matters arising hereunder that would have required the approval of
         Stuhmer.

         4.2 Admission of Additional Members. With the written consent of both
Members, Additional Members may be admitted to the Company subject to the
contribution of such consideration to the Company as may be determined by the
Members and the execution of an agreement that such Additional Member agrees to
be bound by the terms of this Agreement.

         4.3 Intentionally Deleted.

         4.4 Securities Law Restrictions. In addition to any restrictions an the
transferability of any Interest, each of the Members expressly acknowledges that
the Interests have not been registered under the Securities Act of 1933 (the
"1933 Act"), or applicable state securities laws. Each Member understands that
the Interests have been issued in reliance on an applicable exemption from
registration under the 1933 Act. Each Member represents and warrants that (i)
its Interest is being acquired solely for its own account, for investment
purposes only, and is not for distribution, subdivision, or fractionalization
thereof: and (ii) other than as disclosed herein, it has no agreement or other
arrangement, formal or informal, with any person to sell, transfer or pledge any
part of the Interest, or which would guarantee to it any profit, or protect it
against any loss, with respect to the Interest and it has no plans to enter into
any such agreement or arrangement. Each Member further understands that it must
bear the economic risk of the investment in the Interest for an indefinite
period of time.

         4.5 Breach or Default by Manager or Stuhmer.

                  4.5.1 Notwithstanding anything to the contrary contained in
this Agreement:

                           (a) so long as a Manager Default shall be outstanding
                  hereunder; or

                           (b) Stuhmer, the Manager or any of their respective
                  Affiliates shall be in default under this Agreement or any
                  Affiliate Agreement; or

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                           (c) there shall be a Monetary Default (as defined
                  below) under any Loan related to the Project;

all distributions or payments of Fees which, but for this Section 4.5 would be
payable to Stuhmer or the Manager shall be deposited with a title insurance
company or another escrow agent located in Clark County, Nevada selected by
Southern Highlands ("Escrow Agent") pursuant to an escrow agreement approved by
Southern Highlands ("Escrow Agreement") (but credited as distributed to Stuhmer
or paid to the Manager for record keeping purposes) and shall be retained by the
Escrow Agent in an interest bearing account pending a prompt determination, in
accordance with this Agreement, of any damages incurred by the Company or
Southern Highlands, whereupon such escrowed distributions shall be applied to
satisfy and pay such damages and the balance, if any, shall be paid promptly to
Stuhmer or the Manager. Stuhmer, the Manager and Southern Highlands shall
cooperate to promptly determine the amount of the damages recoverable by
Southern Highlands or the Company, if any, pursuant to an arbitration proceeding
conducted in accordance with Section 4.7 hereof.

                  4.5.2 Notwithstanding anything to the contrary contained in
this Agreement, Southern Highlands shall not exercise any of its rights or
remedies under this Agreement in connection with any breach by Stuhmer, the
Manager or the Affiliates of either of them, unless and until Southern Highlands
shall have given Stuhmer or the Manager written notice of said breach or default
and Stuhmer, the Manager or its Affiliates, as the case may be, shall have
received the notice and have had an opportunity to cure such breach or default
to the extent specified in the definition of Manager Default set forth in this
Agreement.

                  4.5.3 As used herein, "Monetary Default" shall mean a failure
to pay any sum or funds due and payable under any agreement or obligation,
including any Loan agreement to which the Company is a party, after the
expiration of any cure period provided in such agreement.

         4.6 Breach or Default by Southern Highlands.

                  4.6.1 Notwithstanding anything to the contrary contained in
this Agreement:

                           (a) if there is a breach or default by Southern
                  Highlands under this Agreement, and

                           (b) Southern Highlands fails to cure such breach or
                  default within thirty (30) days after written notice of such
                  breach or default from Stuhmer or the Manager, or to begin to
                  cure such breach or default under circumstances where more
                  than thirty (30) days are reasonably required to cure such
                  breach or default;

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                                                                        9/10//99

all distributions which, but for this Section 4.6 would be payable to Southern
Highlands shall be deposited with a title insurance company or another escrow
agent located in Clark County, Nevada selected by Stuhmer ("Escrow Agent")
pursuant to an escrow agreement approved by Stuhmer ("Escrow Agreement") (but
credited as distributed to Southern Highlands for record keeping purposes) and
shall be retained by the Escrow Agent in an interest bearing account pending a
prompt determination, in accordance with this Agreement, of any damages incurred
by the Company, whereupon such escrowed distributions shall be applied to
satisfy and pay such damages and the balance, if any, shall be paid promptly to
Southern Highlands. Stuhmer, the Manager and Southern Highlands shall cooperate
to promptly determine the amount of the damages recoverable by the Company, if
any, pursuant to an arbitration proceeding conducted in accordance with Section
4.7 hereof.

                  4.6.2 Notwithstanding anything to the contrary contained in
this Agreement, neither Stuhmer nor the Manager shall exercise any of its rights
or remedies under this Agreement in connection with any breach by Southern
Highlands, unless and until Southern Highlands has received written notice of
said breach or default and Southern Highlands shall have received the notice and
have had an opportunity to cure such breach or default to the extent specified
above.

         4.7 Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules, in Las Vegas, Nevada, by a single arbitrator who shall not be
authorized to vary the terms of this Agreement, and judgment on the award
rendered by the arbitrator may be entered in any court in Nevada. The arbitrator
shall award reasonable fees and expenses to the successful party in such
arbitration. The Members and the Manager shall cooperate in an effort to
promptly and efficiently resolve any disputed matter. The Members and the
Manager expressly authorize and agree to adopt the so-called "expedited
procedures" of the American Arbitration Association, and the Members and the
Manager direct that any such arbitration be resolved within the 90 day period
after either Member files an application to arbitrate any controversy or claim
arising out of or relating to this Agreement.

                                   ARTICLE 5
                          RIGHTS AND DUTIES OF MEMBERS

         5.1 Meetings. Meetings of the Members, for any purpose or purposes, may
be called by a Manager or by any Member. So long as the same is required by the
Act, the Members shall meet at least annually.

         5.2 Notice of Meeting. Written notice, by mail or by telecopy, stating
the place, day and hour of the meeting, and the purposes for which the meeting
is called, shall be delivered not less than fifteen (15) days before the date of
the meeting, either personally or by mail, by or at the direction of the
Manager, to each Member of record entitled to vote at such meeting on the
certificate roster as of the date the notice is prepared for delivery. It
mailed, such notice shall be deemed to be

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delivered when deposited in the United States mail, addressed to the Member at
its address as it appears on the certificate roster, with postage thereon
prepaid. When all the Members of the Company are present at any meeting, or if
those not present sign a written waiver of notice of such meeting, or
subsequently ratify all of the proceedings thereof, the transactions of such
meeting are as valid as if the meeting were formally called and notice had been
given.

         5.3 Quorum. At any meeting of the Members, the presence of all Members,
represented in person or by proxy, shall constitute a quorum for the transaction
of business. All Members shall make themselves available for each meeting of the
Company.

         5.4 Order of Business. The order of business at all meetings of the
Members shall be as follows:

         (a) Roll call.

         (b) Proof of notice of meeting or waiver of notice.

         (c) Reading of minutes of preceding meeting.

         (d) Report of the Manager.

         (e) Report of Committees.

         (f) Unfinished Business.

         (g) New Business.

         5.5 Proxies. At all meetings of Members, a Member may vote by proxy
executed in writing by the Member or by its duly authorized attorney-in-fact.
Such proxy shall be filed with a Manager of the Company before or at the time of
the meeting. No proxy shall be valid after six (6) months from the date of
execution, unless otherwise provided in the proxy.

         5.6 Voting by Certain Members. Interests standing in the name of a
corporation, partnership, limited liability company or other entity may be voted
by such officer, partner, manager, member, agent or proxy as the bylaws or other
governing document of such entity may prescribe or, in the absence of such
provision, as the Board of Directors or other authorized representative of such
entity may determine. Any voting or approval rights attributable to any Interest
held by a trustee, personal representative, administrator, executor, guardian or
conservator may be voted by such Person, either in person or by proxy; provided,
however that any voting or approval rights attributable to Interests held by any
family limited partnership or family trust established by or for Stuhmer or
members of his family shall always be exercised exclusively by Stuhmer,
personally. Interests held by an Assignee do not have any voting or approval
rights.

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         5.7 Manner of Acting.

                  5.7.1 For any action by the Members, the unanimous approval of
all Members shall be required except for (i) unilateral Member actions expressly
allowed by Section 3.6, (ii) unilateral Member actions allowed under Section
3.4 because a Member is an Insolvent Member, (iii) unilateral Member actions
allowed under Sections 4.5 and 4.6 because of a breach of this Agreement, (iv)
unilateral Member action to commence an arbitration proceeding, and (v) various
rights granted to Southern Highlands under this Agreement to approve or
disapprove certain matters, including Southern Highland's right to determine
certain matters under Section 7.2 where the Manager or Stuhmer would have a
conflict of interest.

                  5.7.2 The Manager of the Company shall preside at meetings of
the Members. A record shall be maintained of the meetings of the Members. The
Members may adopt their own rules of procedure which shall not be inconsistent
with the laws of the State of Nevada or this Agreement.

                  5.7.3 A Member who is present at a meeting of the Members at
which action on any matter is taken shall be presumed to have assented to the
action taken, unless the Member's dissent shall be entered in the minutes of the
meeting or unless the Member shall file a written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by certified mail to the secretary of the meeting
within five (5) days following the adjournment of the meeting. Such right to
dissent shall not apply to a member who voted in favor of such action.

         5.8 Telephonic Meetings. Members may participate in any meeting of the
Members by means of conference telephone or similar communication if all persons
participating in such meeting can hear one another for the entire discussion of
the matter(s) to be voted upon. Participating in a meeting pursuant to this
Section shall constitute presence in person at such meeting.

         5.9 Action by Consent. Unless otherwise provided by the laws of the
State of Nevada, any action required or permitted to be taken at a meeting of
the Members, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all the Members.

         5.10 Voting Rights of Members. The following matters require the
unanimous consent of both Members:

                  5.10.1 Approval of the Parcel 305 Development Budget and the
         Project Projections, as well as any substantial changes thereto. For
         purposes of this subsection 5.10.1, a "substantial change" shall be
         deemed to mean, without limitation, any change except a change of
         $25,000 or less in any item in the Development Budget or Project
         Projections which, when aggregated with all other

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                                                                        9/10//99

         previous changes not specifically approved, is less than $200,000.00 in
         the aggregate.

                  5.10.2 Approval of the terms and provisions of all Loans and
         other financing arrangements obtained by the Company or secured by
         Company assets, including the terms of all loan agreements, notes,
         deeds of trust and other security agreements, and any changes to such
         loan or financing arrangements;

                  5.10.3 Approval of the Marketing Budget as well as any
         substantial changes thereto. For purposes of this subsection, a
         "substantial change" shall be deemed to mean, without limitation, any
         change which would increase the aggregate Marketing Budget to an amount
         in excess of seven percent of the budgeted Sales Revenues for the
         Project and any change that would authorize or permit the payment of
         sale commissions or incentives of more than 1% to Manager or Company
         employees or Affiliates or the payment of sales commission or
         incentives at a rate of more than 3% to independent "outside" brokers
         on the "base price" of a Lot and Residence, if it is a "to be built
         home," and 3% of the entire price of a Lot and Residence that is a
         "spec" home.

                  5.10.4 Any change in the stated purpose of the Company,
         including the acquisition of additional real property;

                  5.10.5 Except as specifically allowed and authorized as set
         forth herein, any cash or other monetary distribution by the Company;

                  5.10.6 Removal of Manager, except as otherwise provided in
         Sections 3.6;

                  5.10.7 Election of an accounting year other than a calendar
         year and any tax election by the Company, the approval (in advance of
         filing) of any federal income tax return for the Company;

                  5.10.8 Amendment to the Articles of Organization;

                  5.10.9 Dissolution of the Company (except to the extent
         authorized in Section 10.1);

                  5.10.10 Admission of Additional or Substitute Members;

                  5.10.11 Any Affiliate Agreement or amendment to an Affiliate
         Agreement;

                  5.10.12 The selection of the accountants and legal counsel to
         the Company;

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                                                                         9/1//99

                  5.10.13 Any matter or item that this Agreement states must be
         approved by both Members;

                  5.10.14 Any filing for bankruptcy or similar relief;

                  5.10.15 The commencement of any lawsuit; or

                  5.10.16 Any change in the zoning of Parcel 305 or any portion
         thereof.

Until otherwise modified or repealed by the unanimous consent of the Members,
the authority to act, except for the matters set forth above or otherwise
reserved to the Members pursuant to the Act or as otherwise set forth herein, on
all matters on behalf of the Company shall be vested in the Manager,

         5.11 Other Rights of Members. By way of illustration, and not
limitation, Members may:

                  5.11.1 Object to transfers of Interests;

                  5.11.2 Review the books and records of the Company;

                  5.11.3 Receive notice of resignation of Manager and officers;
         and

                  5.11.4 Receive distributions pursuant to Article 8.

                  5.11.5 Within five (5) days after any written request,
         Southern Highlands shall receive copies of Purchase Contracts,
         Agreements, Amendments thereto, Marketing Reports, Closing Statements
         for the sale of the Lots and Residences and each of the documents
         referred to in Section 3.2.1.

         5.12 Conflicts of Interest.

                  5.12.1 A Member shall be entitled to enter into transactions
that may be considered to be competitive with, or a business opportunity that
may be beneficial to, the Company, it being expressly understood that a Member
may individually enter into transactions that are similar to the transactions
into which the Company may enter with respect of real property other than Parcel
305. Each Member shall account to the Company and hold as trustee for it any
property, profit, or benefit derived by the Member, without the written consent
of the other Member, in the conduct and winding up of the Company business or
from a use or appropriation by the Member of Company property employed in the
development of Parcel 305, including information developed exclusively for the
Company and opportunities offered by third parties in writing to the Company and
within the scope of the Company's stated purpose of the development of Parcel
305. No Member shall have any obligation to account to the Company or any Member
for any profits realized in connection with

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any non-Parcel 305 real property. The designs, plans and specifications for
Residences to be constructed on Parcel 305 shall not be treated as property of
the Company upon the termination of the Company, but such designs, plans and
specifications shall continue to be available to the Company during the course
of the Project notwithstanding the removal of any Manager.

                  5.12.2 A Member, including a Manager, does not violate a duty
or obligation to the Company merely because the Member's conduct furthers the
member's own interest. Subject to Section 7.1.3 hereof, a Member may lend money
to and transact other business with the Company; provided that the opportunity
to make any loan to the Company first has been offered to both Members. The
rights and obligations of a Member who lends money to or transacts business with
the Company are the same as those of a person who is not a Member, subject to
other applicable law. No transaction with the Company shall be voidable solely
because a Member has a direct or indirect interest in the transaction it either
the transaction is fair to the Company or the disinterested Manager or
disinterested Member(s), in either case knowing the material facts of the
transaction and the Member's interest, authorize, approve or ratify the
transaction.

                  5.12.3 In the event Stuhmer or the Manager make any Loan to
the Company permitted under this Agreement, in order to prevent the occurrence
of a conflict of interest, Southern Highlands shall have the sole authority to
direct the Company with respect to any election or other decision under such
Loan, including any prepayments or any Loan collection or enforcement matters.

         5.13 Restrictions on Withdrawal. Neither Southern Highlands nor Stuhmer
shall have any right to retire or withdraw voluntarily from the Company or to
sell, transfer, pledge or assign all or any part of their Interest in the
Company or to voluntarily commit an act that constitutes an event of withdrawal
under the Act (except a limited transfer permitted by Section 4.1 hereof). Any
voluntary act that constitutes an event of withdrawal from the Company shall
constitute a material breach of this Agreement and the Company shall be entitled
to collect damages for such breach. Such damages shall include (without
limitation) any loss or expense suffered by the Company as a consequence of such
event of withdrawal. Such damages shall offset any cash or other property
otherwise distributable to the wrongfully withdrawing Member. A withdrawal from
the Company by a Member, whether voluntary or involuntary, shall not accelerate
the time within which the Company shall be required to make any distribution to
such Member or pay any Fees to the Manager. If a Member exercises any power to
withdraw from the Company in breach of this Agreement, they expressly waive any
right to require under the Act or other applicable law a distribution from the
Company before the Company's completion of the sale of all of the Lots and
Residences in the Project at the end of the stated term of the Company and such
Member further waives any right to require that such deferred distribution be
secured by a bond or be payable with interest. These express waivers are given
in recognition of the Company's need to retain its capital for its stated term
and in further recognition that the Company was formed by Southern Highlands in
reliance upon the expertise, experience and financial standing of Stuhmer and
the Manager. In

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the absence of such waivers, Southern Highlands and Stuhmer would not have
entered into this Agreement.

         5.14 Rejection.

                  (a) In the event Stuhmer files for bankruptcy or has a
         bankruptcy proceeding commenced against him and this Agreement is
         rejected pursuant to Bankruptcy Code, such rejection shall be a
         material breach of this Agreement and shall constitute a Manager
         Default. In such event, Southern Highlands shall be entitled to all of
         its remedies under this Agreement (including without limitation under
         Section 4.5 hereof), the Act and as otherwise provided under applicable
         law, subject to the applicable provisions of the Bankruptcy Code. If
         this Agreement is assumed by Stuhmer in a bankruptcy proceeding, it is
         not assignable.

                  (b) In the event the Manager files for bankruptcy or has a
         bankruptcy proceeding commenced against it and this Agreement is
         rejected pursuant to Bankruptcy Code, such rejection shall be a
         material breach of this Agreement and shall constitute a Manager
         Default. In such event, Southern Highlands shall be entitled to all of
         its remedies under this Agreement (including without limitation under
         Section 4.5 hereof), the Act and as otherwise provided under applicable
         law, subject to the applicable provisions of the Bankruptcy Code. If
         this Agreement is assumed by the manager in a bankruptcy proceeding, it
         is not assignable.

                  (c) In the event Southern Highlands files for bankruptcy or
         has a bankruptcy proceeding commenced against it and this Agreement is
         rejected pursuant to Bankruptcy Code, such rejection shall be a
         material breach of this Agreement. In such event, Stuhmer shall be
         entitled to all of its remedies under this Agreement (including without
         limitation under Section 4.5 hereof), the Act and as otherwise provided
         under applicable law, subject to the applicable provisions of the
         Bankruptcy Code. If this Agreement is assumed by Southern Highlands in
         a bankruptcy proceeding, it is not assignable.

                                   ARTICLE 6
                                    MANAGER

         6.1 Appointment and Authority. Until its removal, Chris Homes shall be
the Manager of the Company. Chris Homes shall have no right to resign or
delegate its duties under this Agreement to any third party without the written
consent of both Members. Southern Highlands entered into this Agreement in
reliance upon the reputation, experience and financial standing of Chris Homes
and Stuhmer. Chris Homes is not a Member, and any successor Manager need not be
a Member of the Company.

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         6.2 Term of Office. The Manager shall serve until the removal of such
Manager pursuant to Section 3.6.

                  6.3 Authority of Manager to Bind the Company. Subject to the
limitations of Section 5.10 hereof, the Manager shall only have such rights and
authority as are expressly stated in this Agreement. The Members may with the
unanimous approval of both Members at any time limit or reduce the authority of
the Manager (but the requirement of unanimity shall not apply to any removal of
a Manager authorized by Section 3.6). Only the Manager and its authorized
officers, and authorized officers of the Company shall have authority to bind
the Company, except as to matters reserved to the Members. Authorized officers
of the Manager and authorized officers of the Company shall include sales agents
employed by the Manager. No Member shall take any action as a Member to bind the
Company, except as expressly authorized herein, and shall indemnify the Company
for any costs or damages incurred by the Company as a result of the unauthorized
action of such Member. The Manager shall have the power, on behalf of the
Company, to do all things necessary or convenient to carry out the business and
affairs of the Company (except as otherwise may be specifically limited pursuant
to this Agreement, or as otherwise reserved to the Members pursuant to the Act),
including without limitation, the following:

                  6.3.1 The institution, prosecution and defense of any
         proceeding in the Company's name;

                  6.3.2 The purchase, receipt, lease or other acquisition,
         ownership, holding, improvement, use and other dealing with, Company
         property, in accordance with the Development Budget;

                  6.3.3 The marketing and sale of Lots, and any improvements
         constructed thereon in accordance with the Marketing Budget and with
         approved Marketing Materials;

                  6.3.4 Subject to Section 5.10.2 the procurement of financing
         for the Company, and the mortgage, pledge, lease, exchange,
         hypothecation and other disposition of the Company assets in connection
         with all financing procured for the Company;

                  6.3.5 The entering into of contracts and obligations of the
         Company; and subject to Section 5.10.2 incurring of liability;
         borrowing money; issuance of notes, bonds and other obligations; and
         securing of any of its obligations by mortgage, pledge or hypothecation
         of any Company Property, income or account receivables;

                  6.3.6 The conduct of the Company's business, the establishment
         of Company offices, and the exercise of the powers of the Company
         within Nevada;

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                                                                        9/10//99

                  6.3.7 The appointment of employees and agents of the Company,
         the defining of their duties, the establishment of their compensation;

                  6.3.8 Any other act that furthers the business and affairs of
         the Company; and

                  6.3.9 The approval of changes to the Development Budget which,
         under Section 5.10.1, do not constitute a "substantial change."

                  6.3.10 Day-to-day matters with respect to the development,
         operation and management of the Project.

                  6.4 Actions of the Manager. The Manager has the power to bind
the Company as provided in this Article 6. The act of the Manager for the
purpose of carrying on in the usual way the business or affairs of the Company,
including the exercise of the authority indicated in this Article 6, shall bind
the Company and no Person dealing with the Company shall have any obligation to
inquire into the power or authority of such Manager acting on behalf of the
Company; provided, however, if the act of the Manager violates this Agreement,
the Manager shall be fully liable for such act.

                  6.5 Compensation of Manager. The sole compensation payable to
the Manager (including compensation to the Manager as general contractor for the
Project) shall be the Fees described in Section 8.3. The Manager and its
Affiliates shall receive no other compensation or reimbursement from the Company
with respect of the Project, except to the extent such additional consideration
or compensation has been approved in writing by both Members in a written
Affiliate Agreement.

                  6.6 Manager's Standard of Care. A Manager's duty of care in
the discharge of the Manager's duties to the Company and other Members is
limited to refraining from engaging in grossly negligent or reckless conduct,
intentional misconduct, a breach of this Agreement or any Affiliate Agreement,
or a knowing violation of the law. In discharging its duties, the Manager shall
be fully protected in relying in good faith upon the records required to be
maintained under Article 3 and upon such information, opinions, reports or
statements by any of the Members, or agents, or by any other Person, as to
matters the Manager reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits or
losses of the Company or any other facts pertinent to the existence and amount
of assets from which distributions to Members might properly be paid.

                  6.7 Officers. The Manager shall act as the General Manager and
President of the Company and shall function as the chief operating officer of
the Company. The Members may also elect from time to time additional officers
including, without limitation, one or more Vice Managers

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                                                                        9/10//99

or Vice Presidents, a secretary and one or more assistant secretaries, and a
Treasurer and one or more Assistant Treasurers, which officers may be elected by
the unanimous approval of the Members. If the members do not elect such
additional officers, the Manager may appoint such additional Officers from time
to time. An officer need not be selected from among the Members. One Person may
hold two or more offices. Any officer appointed by the Manager may be removed at
any time by the Manager or with the Members' unanimous consent, with or without
cause.

         The Manager waives any right to resign from the Company in view of the
expected duration of the Company and the reliance of the Members on the skill
and reputation of the Manager. Southern Highlands would not have agreed to form
the Company in the absence of the commitment of the Manager to remain as Manager
for the entire term of the Company.

                                   ARTICLE 7
                 CONTRIBUTIONS, INTERESTS, AND CAPITAL ACCOUNTS

         7.1 Initial Contributions.

                  7.1.1 Land Contribution. For its initial capital contribution
to the Company, Southern Highlands shall execute and deliver to the Company a
Grant, Bargain, Sale Deed conveying to the Company Parcel 305, as described on
Exhibit "A" attached hereto and incorporated herein, free and clear of all
liens, encumbrances and title exceptions except Permitted Exceptions, as defined
below. The agreed upon value of the initial capital contribution of Southern
Highlands is $6,444,750, which represents $150,000 per acre. (If the actual
acreage of Parcel 305 is adjusted with the written consent of both Members, the
initial Capital Account credit of Southern Highlands shall be changed to an
amount equal to $150,000 multiplied by the adjusted acreage of Parcel 305.) The
capital contribution of Southern Highlands shall be reflected on Exhibit "E,"
attached hereto and incorporated in full by this reference. The date Southern
Highlands makes its initial capital contribution is the Contribution Date.
Unless and until Southern Highlands contributes Parcel 305 to the Company, the
Company shall have no right, title or interest in Parcel 305. This Agreement is
not an option agreement or an executory contract to sell Parcel 305 to the
Company.

                           7.1.1.1 "Permitted Exceptions" means (i) those
                  matters reflected on and approved as permitted exceptions in a
                  Preliminary Title Report or Title Commitment to be issued by
                  Fidelity National Title Insurance Company, (ii) the
                  Development Agreement between the County of Clark and Southern
                  Highlands, et al, which was recorded on March 2, 1999 in book
                  990302, as instrument No. 01676, (iii) conditions,
                  restrictions and reservations imposed by the County of Clark
                  or other governmental authorities or public utilities arising
                  from the approval of any parcel or subdivision maps, (iv) the
                  Master CC&R's, including supplemental declarations thereto
                  which shall be mutually agreed to by Southern Highlands and
                  Stuhmer before the Contribution Date and otherwise shall be
                  consistent with supplemental declarations established for

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                                                                        9/10//99

                  other "Estate" areas of the Southern Highlands Master Planned
                  Community, (v) all restrictions and encumbrances arising from
                  the SID No. 121 for the Southern Highlands Master Planned
                  Community, of which Parcel 305 is a part, (vi) the terms and
                  conditions of the Clark County Code Chapter 28.46 relating to
                  desert tortoise habitat, (vii) any other covenant, condition,
                  restriction, reservation, rights, rights of way, easements,
                  dedications, offers of dedication and other matters apparent
                  from a visual inspection of Parcel 305 and the other real
                  property in the Southern Highlands Master Planned Community,
                  and (viii) the effect of any and all applicable laws,
                  ordinances, rules, regulations or guidelines of any
                  governmental entity, agency or department having jurisdiction
                  over the Project or Parcel 305.

                           7.1.1.2 After the Contribution Date, the Manager is
                  authorized and directed for and on behalf of the Company to
                  cause the Company to execute and deliver such instruments and
                  contracts as may be requested by Southern Highlands to (i)
                  incorporate Parcel 305 in SID No. 121 (at an assessed cost not
                  to exceed $35,000 per acre); (ii) adopt and endorse the final
                  Master CC&R's for Parcel 305; and (iii) adopt and endorse the
                  Declaration of Developments.

                  7.1.2 Additional Capital Contributions by Southern Highlands.
Southern Highlands shall not under any circumstances be required to make any
additional contributions to the capital of the Company or to make any loans to
the Company.

                  7.1.3 Stuhmer Contribution. Stuhmer shall not be required to
make an initial capital contribution on the Contribution Date, and his Capital
Account shall initially be zero. Stuhmer shall contribute services to the
Company in connection with the Company's development, ownership, construction,
marketing and sale of the Lots and Residences, and will procure financing for
the Company to farther the foregoing purposes. Stuhmer also shall make any
capital contribution required by Section 7.1.7 hereof.

                  7.1.4 Conditions Precedent. Southern Highlands shall have no
obligation to make its initial capital contribution of Parcel 305 unless and
until each of the following conditions precedent have been fully satisfied (or
waived, in the reasonable discretion of Southern Highlands) on or before the
Contribution Date, which shall be November 15, 1999 except to the extent a later
date is applicable pursuant to Section 12.1.3:

                           (a) Stuhmer has secured a written binding and
                  unconditional commitment from a Lender to finance the Project
                  on terms and conditions reasonably acceptable to Southern
                  Highlands (which financing shall be (i) nonrecourse to
                  Southern Highlands and its principals and shall not be
                  required to be guaranteed by any of them and (ii) shall
                  expressly authorize distributions to be made by the Company to
                  Southern Highlands on a release price or similar

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                                                                        9/10//99

                  basis sufficient to return to Southern Highlands $3,222,375
                  upon the initial contribution of Parcel 305 and not less than
                  an additional $3,222,375 (plus the Preferred Return accrued
                  thereon) in ratable amounts as Lots are sold out of the
                  Project) and (iii) expressly allow Southern Highlands and
                  Stuhmer to exercise their respective rights and remedies
                  hereunder, including the removal and replacement of the
                  Manager without creating a default under any Loan, and (iv)
                  shall expressly authorize the disbursement to the Manager of
                  its Fees in accordance with a written schedule reflecting the
                  timing and amount of work performed by the Manager;

                           (b) Stuhmer and the Manager each have fully satisfied
                  each of their obligations or undertakings that are required to
                  be satisfied before the Contribution Date;

                           (c) Southern Highlands has approved in writing the
                  terms and conditions of any construction contracts and other
                  agreements between the Company and the Manager or any of its
                  Affiliates;

                           (d) The Company is prepared to close on the Member
                  approved financing and to make an immediate distribution to
                  Southern Highlands of $3,222,375 in cash simultaneous with the
                  initial capital contribution of Parcel 305 to be made by
                  Southern Highlands;

                           (e) Southern Highlands and Stuhmer have mutually
                  approved the Development Budget, the Project Projections, the
                  Marketing Budget, the Marketing Materials, the Standard Sales
                  Contract and the Lot Premiums for all Lots.

                           (f) Stuhmer and the Manager shall have delivered to
                  Southern Highlands certificates certifying the continuing
                  accuracy of their respective representations and warranties as
                  of the Contribution Date;

                           (g) Deleted intentionally.

                           (h) Simultaneous with the contribution of Parcel 305,
                  the Company shall have executed and delivered to Southern
                  Highlands a Performance Deed of Trust in a form satisfactory
                  to Southern Highlands securing the obligation of the Company
                  to make the distributions required by Section 8.3 hereof; and

                           (i) Southern Highlands and Stuhmer shall have agreed
                  in writing on the commission to be paid pursuant to Section
                  13.6 hereof.

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                                                                        9/10//99

                  7.1.5 Preferred Return. Southern Highlands shall be entitled
to a "Preferred Return" on its unreturned initial capital contribution in an
amount equal to twelve percent (12%) per annum from the date such initial
capital contribution is made until the Unpaid Prorated Land Basis is paid in
full.

                  7.1.6 Operating Capital. The operating capital of the Company
shall consist of the capital contribution of Southern Highlands as set forth an
Exhibit "E" attached hereto, Deposits for purchase of the Lots and Residences
and the improvements thereon, Loan proceeds obtained by the Company, any funds
contributed by Stuhmer and undistributed proceeds from the close of sale
escrows.

                  7.1.7 Additional Capital Contributions by Stuhmer. In addition
to the initial capital contribution to be made by Southern Highlands, any
additional capital needed by the Company to complete the Project shall be
promptly contributed by Stuhmer as an equity contribution. Neither Stuhmer nor
the Manager be authorized to loan funds to the Company without the express
written authorization of Southern Highlands.

         7.2 Enforcement of Commitments. In the event Stuhmer fails to
contribute any amounts required to be contributed under Section 7.1.7 (a
"Commitment") after the initial capital contribution of Parcel 305 by Southern
Highlands, Stuhmer shall become a Delinquent Member and the Manager (or Southern
Highlands, if the Manager fails or refuses to act) shall give the Delinquent
Member a Notice of the failure to meet the obligations hereunder. If the
Delinquent Member fails to perform the commitment, including any costs
associated with the failure to comply with the Commitment and interest on such
obligation at the Default Interest Rate within ten (10) business days of the
giving of Notice, the Manager (or Southern Highlands, if the Manager fails or
refuses to act) may take such action as necessary to enforce the Commitment,
including but not limited to enforcing the Commitment in the court. Such
personal obligation of Stuhmer is not subject to the limitation of Section 3.7.
Each Member expressly agrees to the jurisdiction of such courts. Notwithstanding
the foregoing, no Commitment or other obligation to make an additional
contribution may be enforced by a creditor of the Company unless the Member
expressly consents to such enforcement or to the assignment of the obligation to
such creditor.

         7.3 Maintenance of Capital Accounts. The Company shall establish and
maintain Capital Accounts for each Member and any permitted Assignee. Each
Member's Capital Account shall be initially credited with the amount reflected
on Exhibit "E," and increased by (1) the amount of any money actually
contributed by the Member to the capital of the Company, (2) the fair market
value of any Property contributed, as determined by the Company and the
contributing Member at arm's length at the time of contribution (net of
liabilities assumed by the Company or subject to which the company takes such
Property, within the meaning of Section 752 of the Code), and (3) the Member's
share of Net Profits and of any separately allocated items of income or gain
(including any gain and income from unrealized income with respect to accounts
receivable allocated to the Member to reflect the difference between the book
value and tax basis of assets contributed by the Member).

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                                                                        9/10//99

Each Member's Capital Account shall be decreased by (1) the amount of any money
actually distributed to the Member from the capital of the Company, (2) the fair
market value of any Property distributed to the Member, as determined by the
Company and the contributing Member at arm's length at the time of distribution
(net of liabilities of the Company assumed by the Member or subject to which the
Member takes such property within the meaning of Section 752 of the Code), and
(3) the Member's share of Net Losses and of any separately allocated items of
deduction or loss (including any loss or deduction allocated to the Member to
reflect the difference between the book value and tax basis of assets
contributed by the Member).

         7.4 Distribution of Assets. The Company shall not at any time
distribute any of its assets in kind to any Member without the written consent
of both Members. If the Company at any time distributes any of its assets
in-kind to any Member, the Capital Account of each Member shall be adjusted to
account for that Member's allocable share (as determined under Article 8 below)
of the Net Profits or Net Losses that would have been realized by the Company
had it sold the assets that were distributed at their respective fair market
values immediately prior to their distribution.

         7.5 Sale or Exchange of Interest. In the event of a permitted sale or
exchange of some or all of an Interest in the Company, the Capital Account of
the transferring Member shall become the Capital Account of the transferee, to
the extent it relates to the portion of the interest transferred.

        7.6 Compliance with Section 704(b) of the Code. The provisions of this
Article 7 as they relate to the maintenance of Capital Accounts are intended,
and shall be construed, and, if necessary, modified to cause the allocations of
profits, losses, income, gain and credit pursuant to Article 8 to have
substantial economic effect under the Regulations promulgated under Section
704(b) of the Code, in light of the distributions made pursuant to Articles 8
and 12 and the Capital Contributions made pursuant to this Article 7.
Notwithstanding anything herein to the contrary, this Agreement shall not be
construed as creating a deficit restoration obligation or otherwise personally
obligate any Member to make a Capital Contribution in excess of the
contributions required under this Article 7.

        7.7. Compliance with Section 704(c) of the Code. The Company shall use
the traditional method to account for the excess of the fair market value of
Parcel 305 over its adjusted basis.

                                   ARTICLE 8
                         ALLOCATIONS AND DISTRIBUTIONS

         8.1 Allocations of Net Profits and Losses from Operations. Except as
may be required by Section 704(c) of the Code, Net Profits, Net Losses, and
other items of income, gain, loss, deduction and credit shall be allocated among
the Members and the Manager in accordance with the following provisions:

                  8.1.1 Net Profits. Net Profits for any Fiscal Year or other
period (an "Accounting Period") for which separate accounting is appropriate
(after adjustment for items of income, gain,

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                                                                         9/10/99

loss or deduction required to be specially allocated under Section 704(b) of the
Code) shall be allocated among the Members so as to reduce, proportionately, the
differences between their respective Target Capital Account balances and
adjusted Capital Account balances. No portion of the Net Profits for any
Accounting Period (after such adjustments) shall be allocated to a Member whose
adjusted Capital Account balance is greater than or equal to its Target Capital
Account Balance for such Fiscal Year.

                  8.1.2 Net Losses. Net Losses for any Accounting Period (after
adjustment for items of income, gain, loss or deduction required to be specially
allocated under Section 704(b) of the Code) shall be allocated among the Members
so as to reduce, proportionately, the differences between their respective
adjusted Capital Account balances and Target Capital Account Balances. No
portion of the Net Losses for any Accounting Period shall be allocated to a
Member whose Target Capital Account Balance is greater than or equal to its
Adjusted Capital Account Balance.

                  8.1.3 Definitions. The term "Target Capital Account Balance"
means the amount which the Member would then be entitled to receive if,
immediately following such Accounting Period: (i) all of the assets of the
Company (other than claims of the Company for contributions) were sold for cash
equal to their respective book values (or, in the case of assets subject to
liabilities for which the creditor's right is limited to assets of the Company,
the amounts of such liabilities, if greater than the aggregate book values of
such assets); and (ii) the proceeds of such sale were applied to pay all debts
of the Company with the balance distributed as provided in Section 8.3. The term
"book value" shall mean the value at which property of the Company is properly
reflected in the Capital Accounts of the Company pursuant to Regulation Section
1.704-1(b)(2)(iv) and this Agreement.

         8.2 Special Items. There shall be a Company Minimum Gain Chargeback,
Member Minimum Gain Chargeback and Qualified Income Offset, if and to the extent
required by the Code or the Regulations.

         8.3 Distributions. The Available Cash of the Company, as determined by
the Members, shall be distributed not less frequently than quarterly to the
Members in accordance with the following priorities:

                  (a) First, to Southern Highlands on the Contribution Date in
         the amount of $3,222,375, at the same time Southern Highlands conveys
         its initial capital contribution of Parcel 305 to the Company;

                  (b) Second, on a Lot by Lot basis at the closing of the sale
         of each Lot and/or Residence to a third party home buyer, to Southern
         Highlands in an amount equal to the sum of (i) the Prorated Land Basis
         for each such Lot, plus (ii) the accrued and unpaid Preferred Return on
         the amount of Prorated Land Basis for the Lot

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         being sold, plus (iii) an amount equal to fifty (50%) percent of any
         Lot Premium attributable to such Lot;

                  (c) Third, from time to time to Southern Highlands and Stuhmer
         equally in an amount equal to the Deposits received by the Company for
         the sale of Lots and Residences; subject to the following:

                           (i) Any distribution of Deposits to Southern
                  Highlands first shall be applied to satisfy any unpaid
                  Preferred Return accrued on the Unpaid Prorated Land Basis;
                  and

                           (ii) If the Fees scheduled to be paid to the Manager
                  (as reflected in the Project Projections) exceed the Fees
                  actually paid to the Manager at any time, Stuhmer's one-half
                  share of the Deposits shall be paid to the Manager at
                  Stuhmer's sole election to the extent required to pay the
                  Manager its earned and unpaid scheduled Fees, as reflected on
                  the Project Projections.

                           (iii) For purposes of this subsection (c) and
                  subsection (d), scheduled Fees shall not be treated as earned
                  by the Manager except to the extent the work required to be
                  performed by the Manager or the work required to be performed
                  under its supervision (e.g., construction of Residences) has
                  in fact been performed and the payment of such Fees is
                  expressly authorized by the Loan documents.

                           (iv) Any Fees paid in advance shall be credited
                  against Fees otherwise due upon the sale of a Lot or Residence
                  under this subsection (c) or subsection (d).

                  (d) Fourth, to the Manager on a Lot by Lot basis at the
         closing of the sale of each Lot to a third party home buyer in the
         amount of: (i) the General and Administration Fee for general
         management and administration of the Company, as set forth in Exhibit
         "B," (ii) the Sales and Marketing Expense Fee as set forth in Exhibit
         "C," and (iii) the Construction Overhead Fee for indirect expenses in
         accordance with the formula set forth on Exhibit "D." No payment shall
         be made to Manager under this subsection (d) until all distributions
         under subsections (a) through (c) have been fully made; provided,
         however, that to the extent any Loan agreement permits the Fees to be
         paid in advance of the closing of a particular sale of a Lot or
         Residence pursuant to the terms of such Loan, such Fees may be paid in
         advance to the extent such advance Fee payments satisfy each of the
         following requirements: (i) such advance Fees do not exceed the earned
         and scheduled Fees payable at any time under the Project Projections,
         (ii) the advance Fee payments do not impair or impede Southern
         Highland's distributions under subsections (a)

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                                                                        9/10//99

         through (c), and (iii) such advance Fee payments do not violate the
         terms and conditions of any Loan.

                  (e) Fifth, to Southern Highlands not less frequently than the
         last day of each calendar quarter (i.e., March 31, June 30, September
         30 and December 31), from any available source of Available Cash, an
         amount equal to the accrued and unpaid Preferred Return on the entire
         Unpaid Prorated Land Basis;

                  (f) Sixth, not less frequently than the last day of each
         calendar quarter with reference to the previous calendar quarter to the
         extent the Company earned a Net Profit for such quarter, any remaining
         Available Cash (not including reasonable reserves required to satisfy
         the anticipated expenses and other obligations of the Company,
         including the anticipated Preferred Return distribution required by
         subsection (e) for the next calendar quarter) shall be distributed to
         the Members as follows:

                           (i) The sum of (i) such Available Cash plus (ii) the
                  amount of any Preferred Return previously received by Southern
                  Highlands shall be calculated.

                           (ii) Available Cash equal to one-half of the sum
                  determined in subsection (i) above shall be distributed to
                  Stuhmer and the remaining Available Cash shall be distributed
                  to Southern Highlands.

         Provided, however, no distribution shall be made to Stuhmer hereunder
         until all of the accrued to date Preferred Return has been fully paid
         to Southern Highlands.

                  (g) Any remaining Available Cash upon the winding up and
         termination of the Company shall be distributed in accordance with
         subsection (f) above.

                  8.4 Tax Distribution. Each Member shall be responsible for
payment of all taxes with respect to its interest in the Company's income. The
Company has no independent or additional obligation to make distributions to
each of the Members on account of any such tax liability.

                  8.5 Limitations on Distributions. Notwithstanding the
provisions of Section 8.3, no distribution shall be declared and paid unless,
after the distribution is made, the assets of the Company are in excess of all
liabilities of the Company, except liabilities to Members on account of their
Capital Accounts.

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                                   ARTICLE 9
                                     TAXES

         9.1 Elections. With the written consent of both Members, the Manager
may make any tax elections for the Company allowed under the Code or the tax
laws of any state or other jurisdiction having taxing jurisdiction over the
Company.

         9.2 Taxes of Taxing Jurisdictions. To the extent that the laws of any
Taxing Jurisdiction require, each Member requested to do so by the Manager will
submit an agreement indicating that the Member will make timely income tax
payments to the Taxing Jurisdiction and that the Member accepts personal
jurisdiction of the Taxing Jurisdiction with regard to the collection of income
taxes attributable to the Member's income, and interest, and penalties assessed
on such income. If the Member fails to provide such agreement, the Company may
withhold and pay over to such Taxing Jurisdiction the amount of tax, penalty and
interest determined under the laws of the Taxing Jurisdiction with respect to
such income. Any such payments with respect to the income of a Member shall be
treated as a distribution for purposes of Article 8. The Manager may, where
permitted by the rules of any Taxing Jurisdiction, file a composite, combined or
aggregate tax return reflecting the income of the Company and pay the tax,
interest and penalties of some or all of the Members of such income to the
Taxing Jurisdiction, in which case the Company shall inform the Members of the
amount of such tax interest and penalties so paid.

         9.3 Tax Matters Member. Southern Highlands shall be the tax matters
partner of the Company pursuant to Section 6231(a)(7) of the Code. Southern
Highlands may not take any action contemplated by Sections 6222 through 6232 of
the Code without the consent of both Members.

         9.4 Method of Accounting. The records of the Company shall be
maintained in accordance with the accounting method elected to be followed by
the Company for federal income tax purposes under the Code. The accounting
method elected to be followed by the Company for financial reporting purposes
shall be in accordance with generally accepted accounting principles (GAAP).

                                   ARTICLE 10
                            DISSOCIATION OF A MEMBER

         10. 1 Dissociation. A Member shall cease to be a Member upon the
happening of any of the following events:

                  10.1.1 The retirement or resignation from the Company of a
         Member with the consent of all the remaining Members;

                  10.1.2 A Member becoming a bankrupt Member;

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                  10.1.3 In the case of a Member that is an entity other than a
         corporation, the dissolution and commencement of winding up such
         Member;

                  10.1.4 In the case of a Member that is a corporation, the
         filing of a certificate of dissolution, or its equivalent, or the
         revocation of the charter of such Member;

                  10.1.5 In the case of a Member who is a Member by virtue of
         being a trustee of a trust, the termination of the trust (but not
         merely the substitution of a new trustee); or

                  10.1.6 In the case of an estate, the distribution of the
         estate's entire Interest in the Company.

The dissociation of a Member shall not cause the dissolution of the Company. The
Manager is not a Member and its removal shall not cause the dissolution of the
Company.

        10.2 Rights of Dissociating Member. In the event of a dissociation of
any Member prior to the expiration of the term of the Company:

                  10.2.1 If the dissociation causes a dissolution and winding up
         of the Company under Article 12, the Member shall be entitled to
         participate in the winding up of the Company to the same extent as any
         other Member except that any distributions to which the Member would
         have been entitled shall be reduced by the damages sustained by the
         Company as a result of the dissolution and winding up;

                  10.2.2 If the dissociation does not cause a dissolution and
         winding up of the Company under Article 12, the remaining Member shall
         have the option but not the obligation to purchase the entire Interest
         of the Dissociating Member for an agreed upon amount, or if no amount
         can be agreed upon, the fair market value of such Interest as
         determined by an independent qualified appraiser appointed by the
         Members, including the Dissociating Member, reduced by any damages
         incurred by the Company if such dissociation is in breach of this
         Agreement. If they cannot agree on an appraiser, the remaining Members
         and the Dissociating Member shall each choose an appraiser and the two
         appraisers shall choose one additional appraiser. The three appraisers
         shall thereupon determine the fair market value of such Interest. The
         Dissociating Member shall thereupon be entitled to an amount equal to
         such value of the Member's Interest in the Company, to be paid within
         six months of the date of dissociation. Notwithstanding the foregoing,
         if the dissociation is other than as a result of the death or
         incompetence of the Member, the Members may pay the value of the
         Member's Interest in the Company over a

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         period not to exceed five (5) years, provided that the Dissociating
         Member shall be entitled to participate as an Assignee in the Company
         until the value of such Interest plus interest at a rate equal to the
         Reference Rate plus one and one-half percent (1.5%) is paid in full.
         The value of the member's Interest shall include the amount of any
         distributions to which the Member is entitled under this Agreement as
         of the date of dissociation based upon the Member's, right to share in
         distributions from the Company reduced by any damages sustained by the
         Company as a result of the Member's dissociation.

                                   ARTICLE 11
                 ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS

         11.1 Rights of Assignees. The Assignee of a Interest has no right to
participate in the management or the business and affairs of the Company or to
become a Member. A permitted Assignee is only entitled to receive the
distributions and return of capital, and to be allocated the Net Profits and Net
Losses attributable to the assigned Interest, or portion thereof. The Company
has no obligation to recognize the assignment of an Interest in breach of this
Agreement.

         11.2 Admission of Substitute Members. An Assignee of a Interest shall
be admitted as a Substitute Member and admitted to all the rights of the Member
who initially assigned the Interest only with the unanimous approval of the
Members. The Members may grant or withhold the approval of such admission in
their sole and absolute discretion. If so admitted, the Substitute Member has
all the rights and powers and is subject to all the restrictions and liabilities
of the Member originally assigning the Interest. The admission of a Substitute
Member, without more, shall not release the Member assigning the Interest from
any liability to the Company that existed prior to the approval.

                                   ARTICLE 12
                           DISSOLUTION AND WINDING UP

         12.1 Dissolution. The Company shall be dissolved and its affairs wound
up only upon the first to occur of the following events (which shall constitute
Dissolution Events):

                  12.1.1 The completion of the Project, which shall require the
sale or other disposition of all of the Lots and Residences, and the collection
of all amounts due the Company and the payment or other satisfaction of its
debts and other obligations;

                  12.1.2 The unanimous written consent of all of the Members
(other than a Member in default under this Agreement); and

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                  12.1.3 Subject to extension in accordance with the following
         sentences, November 15, 1999 (or such later date as Southern Highlands
         shall unilaterally establish), if all of the conditions precedent to
         the contribution of Parcel 305 and have not occurred to the sole
         satisfaction of Southern Highlands by November 15, 1999 or such later
         date as Southern Highlands unilaterally establishes.

The deadline date of November 15, 1999 shall be extended automatically solely
for the period of time required to permit Southern Highlands to cure any failure
of Southern Highlands, to satisfy its obligations under Section 1.9.6 and 1.9.7
that have materially impeded the ability of Stuhmer to secure the Loan required
by Section 7.1.4 hereof. Notwithstanding the provisions of Section 12.1.3,
above, and Section 7.1.4, above, the deadline date of November 15, 1999 may be
extended to November 30, 1999 provided that each of the following conditions
have been satisfied: (i) the proposed Lender to the Company has identified in
writing all of the conditions precedent required by the Lender for the close of
the Loan, (ii) the Lender has scheduled the Loan to close on or before November
30, 1999, and (iii) Stuhmer certifies in a writing delivered to Southern
Highlands that he can satisfy or cause the Company to satisfy the conditions
precedent for the Loan to close on or before November 30, 1999.

         12.2 Effect of Dissolution. Upon dissolution the Company shall cease
carrying on its business as distinguished from the winding up of the Company
business. The Company will not be terminated, but will continue until the
winding up of the affairs of the Company is completed and the Articles of
Dissolution have been filed with the Nevada Secretary of State.

         12.3 Distribution of Assets on Dissolution. Upon the winding up of the
Company, all Property of the Company shall be sold and the proceeds distributed
as follows:

                  12.3.1 To creditors, including Members who are creditors, to
         the extent permitted by law, in satisfaction of Company Liabilities;

                  12.3.2 To Members in accordance with Section 8.3.

Liquidation proceeds shall be paid within sixty (60) days of the end of the
Company's taxable year or, if later, within ninety (90) days after the date of
liquidation. Such distributions shall be in cash or property (which need not be
distributed proportionately) or partly in both, as determined by the Member.

         12.4 Winding Up and Certificate of Dissolution. The winding up of the
Company shall be completed when all debts, liabilities, and obligations of the
Company have been paid and discharged or reasonably adequate provision therefor
has been made, and all of the remaining property and assets of the Company have
been distributed to the Members. Upon the completion of winding up the Company,
Articles of Dissolution shall be delivered to the Nevada Secretary of State for
filing. The Articles of Dissolution shall set forth the information required by
the Act.

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                                                                         9/10/99

                                   ARTICLE 13
             DEVELOPMENT, CONSTRUCTION AND MARKETING OF THE PROJECT

         13.1 Development and Construction of the Project. Subject to the
provisions of Section 5.10 hereof, the Manager shall have full authority and
responsibility to complete the construction and to oversee the development of
the Project in accordance with the Development Budget, including hiring
necessary engineers to complete the plans and specifications for the preparation
of Parcel 305 and improvements thereon, developing Parcel 305 into finished
Lots, constructing, improvements and residences on the finished Lots, preparing
final subdivision maps, if necessary, affecting product development for the Lots
and Residences, constructing and installing the streets, curbs, gutters,
lighting and all other subdivision improvements on Parcel 305.

         Following the execution of this Agreement, the Manager shall update the
Development Budget no less frequently than annually.

                  13.1.1 A & D Loan. Stuhmer and the Manager shall be
responsible for securing initial acquisition and development financing for the
Company in the approximate amount of $13,178,000. Upon securing such financing,
the Southern Highlands shall be entitled to the payment under Section 8.3(a) of
$3,222,375 upon the contribution of Parcel 305 to the Company. Thereafter,
subject to the obligation of Stuhmer to make capital contributions to the
Company under Section 7.1.3 hereof each Member may itself, either on its own or
through an Affiliate, advance such construction loan funds to the Company, upon
commercially reasonable terms, and in such amounts required by the Development
Budget; provided, further, that the terms and conditions of any such loan by the
Manager, Stuhmer or an Affiliate of Stuhmer shall have been expressly approved
by Southern Highlands, as required by Section 5.10.2 hereof. Southern Highlands
shall not under any circumstances be required to provide any guarantees or other
collateral to support such financing of the Project. The Manager shall promptly
notify both Members if either Member or the Manager is loaning funds or
extending credit to the Company. The terms and conditions of all Loans to the
Company require the approval of both Members.

                  13.1.2 Construction Financing. Stuhmer and the Manager shall
be responsible for securing construction financing for the Company, for the
purpose of constructing the Residences and improvements on the Lots. Southern
Highlands and its principals shall not be required to provide guarantees or
other collateral to support any construction financing.

         13.2 Marketing and Advertising. The Manager shall have full
responsibility and authority to perform the marketing and advertising for the
sale of the Lots and Residences. All of the Lots and Residences shall be
advertised and marketed in a manner and under such trade names as have been
agreed upon by both Members. For such services, the Manager shall be paid the
Sales and Marketing Reimbursement in accordance with the provisions of Exhibit
"C." If the Company does not have funds to pay the Sales and Marketing
Reimbursement when due, then the Sales and

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                                                                        9/10//99

Marketing Reimbursement shall be paid as soon as funds are available to the
Company, from time to time, in accordance with Section 8.3 hereof.

         13.3 Sales of Residences. Sales of Lots and Residences will be made
pursuant to the sales documents as may be approved by the Manager and as
modified from time to time (collectively, the "Standard Sales Contracts"). Each
Lot and Residence closing shall occur through an escrow (an "escrow") to be
established with Fidelity National Title Agency of Nevada, Inc., 500 North
Rainbow Boulevard, Suite 100, Las Vegas, Nevada 89107, Attention: Ron Bloecker
("Escrow Agent"). All closings shall occur at the office of the escrow agent or
at such other location as is mutually acceptable to the Company and the
Purchaser. At the request of Southern Highlands, such escrow agent shall be
directed to make the disbursements to the Members required by Section 8.3(b).

         13.4 Southern Highlands Tradename. Southern Highlands shall license the
Company to use the tradename "Southern Highlands" in connection with the Project
on terms and conditions mutually satisfactory to Southern Highlands and the
Company and set forth in a separate licensing agreement, which shall be
effective as of the Contribution Date. The Manager shall license the Company to
use the tradename "Christopher Homes" in connection with the Project on terms
and conditions mutually satisfactory to both Members but always in accordance
with Southern Highland's graphics design manual/guidelines.

         13.5 Special Fees. No guarantee, finder or other fee shall be paid by
the Company to Stuhmer, the Manager or an Affiliate of either of them in
connection with any loan made to the Company by any lender.

         13.6 Commission. The Company shall pay a real estate broker's
commission to the real estate broker retained by Southern Highlands, as an
expense of the Company. The amount and the timing of the payment of such
commission shall be determined by Southern Highlands and Stuhmer before the
Contribution Date.

                                   ARTICLE 14
                                   AMENDMENT

         This Agreement may be amended or modified from time to time only by a
written instrument adopted by all of the Members.

                                   ARTICLE 15
                            MISCELLANEOUS PROVISIONS

         15.1 Entire AgreeMent. This Agreement represents the entire agreement
among the Members and the Manager relating to the operation of the Company, but
the rights and obligations of the Members may be varied between them in a
writing executed by both Members.

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                                                                        9/10//99

         15.2 No Partnership Intended for Nontax Purposes. The Members have
formed the Company under the Act, and expressly do not intend hereby to form a
Partnership under either the Nevada Uniform Partnership Act nor the Nevada
Uniform Limited Partnership Act. The Members do not intend to be partners one to
another, or partners as to any third party. To the extent any Member or the
Manager, by word or action, represents to another Person that any other Member
is a partner or that the Company is a partnership, the Member making such
wrongful representation shall be liable to any other Member who incurs personal
liability by reason of such wrongful representation.

         15.3 Rights of Creditors and Third Parties under Agreement. This
Agreement is entered into among the Members for the exclusive benefit of the
Company, its Members, and their successors and assignees. This Agreement is
expressly not intended for the benefit of any creditor of the Company or any
other Person. Except and only to the extent provided by applicable statute, no
such creditor or third party shall have any rights under this Agreement or any
agreement between the Company and any Member with respect to any Capital
Contribution or otherwise.

         15.4 Indemnification by Members and Manager.

                  15.4.1 The Manager shall indemnify and hold the Company and
each Member harmless from any loss or damage incurred by any breach by the
Manager of its obligations under this Agreement or any breach by its Affiliates
of any obligation to the Company under any Affiliate Agreement.

                  15.4.2 The Manager hereby assumes full responsibility for, and
shall indemnify and hold the Company and each Member harmless from any claim,
demand or complaint from any purchaser or owner of a Lot or Residence
constructed or improved by the Company or an Affiliate of Manager.

                  15.4.3 Each Member shall indemnify and hold the Company and
the other Member harmless from any loss or damage incurred by reason of any
breach by the indemnifying Member of this Agreement or the representations of
such indemnifying Member set forth in this Agreement.

                  15.4.4 No indemnification payment made by a Manager or Member
to the Company or a Member shall be treated as a Capital Contribution to the
Company.

                  15.4.5 The indemnification obligation of Southern Highlands
and Stuhmer under this Section 15.4 shall be limited to the recovery (or
restoration) by the Company of any Net Profits distributed or distributable to
such Member by the Company.

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                                                                        9/10//99

         15.5 Indemnification by Company.

                  15.5.1 The Company shall indemnify any Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, (except (i) an action by or (ii) in the name of the Company or in
any matter where the Manager or Member has an obligation to indemnify the
Company or another Member), by reason of the fact that the person is or was a
Manager, Member, employee or agent of the Company, or is or was serving at the
request of the Company as a manager, member, officer, employee or agent of
another limited liability company, partnership, joint venture, trust or other
enterprise, against expenses, including attorney's fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with the action, suit, or proceeding if the person acted in good
faith and in a manner which the person reasonably believed to be in, or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in
or not opposed to the best interest of the Company and that, with respect to any
criminal action or proceeding, the person had reasonable cause to believe that
the person's conduct was unlawful.

                  15.5.2 Indemnification shall not be made to or an behalf of
any Person (as defined in Nevada Revised Statutes) if a final adjudication
establishes that the Person's acts or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was material to the cause of action.

                  15.5.3 The expenses of Members and the Manager incurred in
defending a civil or criminal action, suit or proceeding for which such Manager
or Member would be entitled to indemnification hereunder shall be paid by the
Company as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the Manager or Member to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
Company.

         15.6 Gender and Number. Whenever the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural thereof.

         15.7 Articles and Other Headings. The Articles and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation.

         15.8 Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
of the members, notwithstanding that all of the Members are not signatory to the
original or the same counterpart.

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                                                                        9/10//99

         15.9 Successors. This Agreement shall be binding upon the successors
and assigns of the Members and shall inure to the benefit of the permitted
successors and assigns of the Members.

         15.10 Governing Law. This Agreement shall be construed under the laws
of the State of Nevada as if this Agreement were executed in and to be performed
entirely within Nevada and all Members are resident in Nevada. Any suit or
action of a Manager or a Member as plaintiff to which the Company is named a
party shall be instituted in a court of competent jurisdiction in Clark County,
Nevada.

         15.11 Separate Representation. Each of the Members and the Manager have
been represented by their own legal counsel. Each Member and the Manager shall
pay the fees and expenses their own legal counsel without reimbursement as a
Company expense.

         15.12 Notices. Whenever any notice, demand or other communication (a
"notice") is required to be or may be given under this Agreement to a Member or
the Manager, such notice shall be deemed to have been received (i) immediately
upon delivery in a written form to the individual Member in person or to a
senior corporate officer of any corporate Member or corporate Manager, (ii)
three business days after such written notice was deposited in the U.S. mail,
postage prepaid addressed to the Member or Manager at the address stated below,
or (iii) the next business day after the written notice is delivered to a
nationally recognized courier service (e.g., Federal Express) for next day
delivery addressed to the Member or Manager at the address stated below:

                    Southern Highland Development Company
                    Attn. Garry Goett
                    3140 S. Rainbow Blvd., Suite 400
                    Las Vegas, Nevada 89146

                    Christopher Homes Custom Homes Division, Inc.
                    Attn: J. Christopher Stuhmer
                    9500 Hillwood Drive, Suite 200
                    Las Vegas, Nevada 89134

                    J. Christopher Stuhmer and
                    any Transferee of his Interest
                    9500 Hillwood Drive, Suite 200
                    Las Vegas, Nevada 89134

         The foregoing addresses may be changed at any time by a Member or
Manager by delivery of written notice to each other party to this Agreement.

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                                                                        9/10//99

                                   ARTICLE 16
                                  DEFINITIONS

         For purposes of this Agreement (as defined below) unless the context
clearly indicates otherwise, the following terms shall have the following
meanings:

         "Act" means the Nevada Limited Liability Company Act (Chapter 86 of the
Nevada Revised Statutes) and all amendments thereto.

         "Additional Member" means a Member other than an Initial Member or a
Substitute Member who has acquired an Interest from the Company in accordance
with this Agreement.

         "Affiliate" means, when used with reference to a specified Person, (i)
any Person that, directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, the specified
Person, (ii) any Person that is an officer of, Manager in, or trustee of, or
serves in a similar capacity with respect to the specified Person of or in which
the specified Person is an officer, general partner or trustee, or with respect
to which the specified Person serves in a similar capacity, (iii) any Person
that, directly or indirectly, is the beneficial owner of ten percent (10%) or
more of any class of equity securities of the specified Person or is the
beneficial owner of a ten percent (10%) or more interest in the capital and
profits of the specified Person, (iv) any Person of which the specified Person
is directly or indirectly the beneficial owner of ten percent (10%) or more of
any class of equity securities or any Person of which the specified Person is
the beneficial owner of a ten percent (10%) or more interest in the capital and
profits, and (v) any member of the immediate family of the specified Person. For
purposes hereof, a Person's immediate family shall include such Person's spouse,
parents and children. For purposes of this Agreement, Chris Homes and Stuhmer
shall be treated as Affiliates during any period of time while Stuhmer is
serving as a senior executive of Chris Homes, but such affiliation shall not
give Southern Highlands any right to review or inspect any employment,
directorship agreement, consulting agreement, shareholder agreement or ownership
between Chris Homes and/or Fortress and Stuhmer.

         "Affiliate Agreement" means any contract between the Company and
Stuhmer, between the Company and Chris Homes or between the Company and any
Affiliate of either of them, including any consulting agreement, construction
services agreement, design or engineering agreement, marketing agreement,
reimbursement agreement or other contract or arrangement.

         "Articles" means the Articles of Organization of the Company as filed
with the Nevada Secretary of State together with all amendments thereto, and
restatements thereof, properly adopted in accordance with this Agreement and
filed with the Nevada Secretary of State.

         "Assignee" means a permitted transferee of a Interest who has not been
admitted as a Substitute Member.

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                                                                        9/10//99

         "Available Cash" shall mean the excess of all cash receipts over the
sum of cash expenditures payable in connection with the generation thereof and
after the provision for any reserves for expenses, contingencies, or liabilities
deemed appropriate by the Members. "Available Cash" also includes all amounts
constituting Company reserves that are determined by the Members to be no longer
necessary as reserves. Available Cash shall be determined without reduction for
the distributions to be made to Members under Section 8.3 Any reserves
established for the Company shall be approved by both Members.

         "Bankrupt Member" means a Member who: (1) has become the subject of an
order for relief under the United States Bankruptcy Code, or (2) has initiated,
either in an original proceeding or by way of answer in any state insolvency or
receivership proceeding, an action for liquidation arrangement, composition,
readjustment, dissolution, or similar relief.

         "Capital Account" means the account maintained for a Member or Assignee
determined in accordance with Article 7.

         "Capital Contribution" means any contribution to the Company of cash or
the land made by a Member.

         "Christopher Homes" or "Chris Homes" means Christopher Homes Custom
Home Division, Inc., as Manager.

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

         "Commitment" means the Capital Contributions that a Member is obligated
to make.

         "Company" means Southern Highlands/Christopher Homes I, LLC, a Nevada
limited liability company formed under the laws of Nevada and the terms of this
Agreement, and any successor limited liability company.

         "Company Liability" means any enforceable debt or obligation for which
the Company is liable or which is secured by any Company property.

         "Company Nonrecourse Liability" means a Company Liability to the extent
that no Member or Related Person bears the economic risk of loss with respect to
the liability.

         "Company Property" means Parcel 305 and any other property owned by the
company.

         "Contributing Members" means those Members making additional
contributions to the Company or contributions as a result of the failure of a
Delinquent Member to make the contributions required by the Commitment as
described in Article 7.

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                                                                        9/10//99

         "Contribution Date" means the date Southern Highlands contributes
Parcel 305 to the Company.

         "Default Interest Rate" means the Reference Rate plus four percent (4%)
per annum.

         "Delinquent Member" means a Member who has failed to meet the
Commitment required to be contributed by that Member as described in Article 7.

         "Deposit" means any advance payment received by the Company from a
prospective purchaser of a Lot or Residence, including advance payments for
upgrades, options or premium features.

         "Development Agreement" means the Development Agreement referred to in
Section 7.1.1.1 hereof.

         "Development Budget" means the initial Member approved Development
Budget and each interim budget of the Company's total projected costs for
construction and development through completion of the Project.

         "Development Declaration" means that certain Declaration of Development
Covenants and Restrictions for the Southern Highlands Master Planned Community
to be recorded against Parcel 305, which shall be substantially similar to the
Declaration of Development Covenants and Restrictions for the Southern Highlands
Master Planned Community, draft dated July 23, 1999, attached hereto as Exhibit
"F".

         "Disposition (Dispose)" means any sale, assignment, transfer, exchange,
mortgage, pledge, grant, hypothecation, or other transfer, absolute or as
security or encumbrance (including dispositions by operation of law).

         "Dissociation" means any action which causes a Member to cease to be a
Member as described in Article 10 hereof.

         "Dissolution Event" means an event, the occurrence of which will result
in the dissolution of the Company under Article 12 unless the Members agree to
the contrary.

         "Effective Date" means the date on which the Members executed this
Agreement, but not earlier than the date the Articles are filed.

         "Fees" means the General and Administrative Fee, the Sales and
Marketing Expense Reimbursement, and the Construction Overhead Fee, as described
in detail in Exhibits "B," "C" and "D" hereof..

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         "Fortress" means The Fortress Group, Inc., a Delaware corporation, and
the sole shareholder of Chris Homes.

         "Interest" means the rights of a Member or, in the case of an Assignee,
the rights of the assigning Member in Distributions (liquidating or otherwise)
and allocations of the profits, looses, gains, deductions, and credits of the
Company.

         "J. Christopher Stuhmer" or "Stuhmer" means J. Christopher Stuhmer, an
individual.

         "Lender" means each third party who has extended credit to the Company
under any Loan.

         "Loan" means any of the loans and financings secured by the Company for
the Project, including any land acquisition or infrastructure development loan,
construction loan or working capital loan.

         "Lot" means one of the single family residential Lots within the
Project. A Lot does not include any portion of Parcel 305 not intended to be
sold, e.g., portions of Parcel 305 to be dedicated to homeowners associations,
for streets and medians and other public use.

         "Lot Premiums" means the premium paid by a third party purchaser of a
Lot, as disclosed in the purchase contract for such Lot.

         "Manager Default" means any of the foregoing:

         (i) a material failure of the Manager or an Affiliate to duly perform
         and observe, or a material violation or material breach of, any of the
         covenants of the Manager or Stuhmer under this Agreement, and the
         continuation thereof for a 30-day period after written notice shall
         have been given to the Manager and Stuhmer by Southern Highlands
         specifying such default and requiring such default be remedied; which
         period may be extended to the extent required (but not longer than 90
         days) if such default is not susceptible of cure within 30 days so long
         as the Manager and/or Stuhmer has commenced to cure such default within
         such 30-day period and is thereafter diligently prosecuting such cure
         to completion; provided, however, any such default that can be cured by
         the payment of money shall be promptly cured in not more than 5 days
         after notice from Southern Highlands; and provided further that if the
         Manager or Stuhmer files for bankruptcy or causes the Company to file
         for bankruptcy without the advance approval of Southern Highlands,
         Southern Highlands shall not be required to give the Manager or Stuhmer
         any notice or an opportunity to cure and such filing shall constitute a
         "Manager Default"; provided further, that this subparagraph (i) shall
         not extend the time to cure any monetary default under any Loan beyond
         the cure period provided in the applicable Loan documentation;

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                                                                        9/10//99

         (ii) a material breach by the Company of its obligations under any Loan
         after all applicable cure rights under the documents evidencing or
         securing such Loans have expired; or

         (iii) any act of fraud, wilful misconduct or gross negligence by the
         Manager or Stuhmer in the performance of their obligations under this
         Agreement.

         "Manager" means Christopher Homes ("Chris Homes") and any successor
Manager, and in the event that a successor Manager is appointed in accordance
with the terms of the Agreement.

         "Marketing Budget" means the initial Marketing Budget (as approved by
both Members) and any Member-approved amendments thereto reflecting the total
projected costs to be incurred by the Manager in connection with its marketing
and advertising the Lots and Residences for the sale to the home buying public.
Changes to the Marketing Budget may be prepared by the Manager, and shall be
subject to approval by both Members. The Marketing Budget shall include all
marketing expense and sales commissions and sales incentives.

         "Marketing Materials" means the brochures and advertising material used
to market the Lots and Residences in the Project, as approved by both Members.

         "Master CC&R's" means the Master Declaration of Covenants, Conditions,
and Restrictions for Southern Highlands, recorded against Parcel 305, which
shall be substantially similar to the Master Declaration of Covenants,
Conditions and Restrictions for Southern Highlands, draft dated July 14, 1999,
which is attached hereto as Exhibit "G".

         "Master Planner Criteria Documents" means (i) the Development
Declaration, (ii) the Development Agreement, and (iii) the Master CC&R's.

         "Member" means any Person who is an Initial Member, a Substitute Member
or an Additional Member.

         "Net Losses" means the losses and deductions of the Company determined
in accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the Company
filed for federal income tax purposes.

         "Net Profit" means the income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the Company
filed for federal income tax purposes.

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                                                                        9/10//99

         "Nonrecourse Liabilities" include Company Nonrecourse Liabilities and
Member Nonrecourse Liabilities.

         "Notice." Notices shall be in writing. Notices of the Company shall be
considered given when mailed by first class mail postage prepaid addressed by
any Member to the Company at the address of the Company's principal place of
business. Notices to a Member shall be considered given when mailed by first
class mail postage prepaid addressed to the Member at the address of the
principal place of business of the Member.

         "Operating Agreement" or "Agreement" means this Operating Agreement,
including all amendments adopted hereafter in accordance with this Operating
Agreement and the Act.

         "Parcel 305" means the real property described on Exhibit "A" attached
to and incorporated into this Agreement.

         "Performance Deed of Trust" means the deed of trust executed by the
Company and delivered to Southern Highlands upon the contribution of Parcel 305.
The Performance Deed of Trust shall be subordinated to the Member approved
financing of the Company.

         "Person" means any individual, partnership, limited liability company,
corporation, trust, or other entity.

         "Preferred Return" means a cumulative amount equal to twelve percent
(12%) per annum of the Unpaid Prorated Land Basis computed from the Contribution
Date to the date such unpaid amount is distributed to Southern Highlands.

         "Project Projections" means the written projections (which are not
guaranteed by Stuhmer or the Manager) prepared by the Manager and approved by
Southern Highlands before the Contribution Date.

         "Prorated Land Basis" means $3,222,375 divided by the number of Lots in
the Project, as determined under the final approved and recorded plat for the
Project.

         "Project" means the proposed development of Parcel 305 into a single
family residence community and the construction by the Manager, acting as a
general contractor, of Residences for such Project.

         "Property" means any property real or personal, tangible or intangible,
including money and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.

                                      -49-


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                                                                        9/10//99

         "Qualified Income Offset" means Qualified Income Offset shall have the
meaning set forth in Section 1.7041(b)(2) of the Regulations.

         "Recourse Liability" means a Company Liability is a recourse liability
to the extent that any Member or related person bears the economic risk of loss
for that liability under Section 1.752-2 of the Regulations.

         "Reference Rate" means the rate of interest publicly announced by the
Bank of America National Trust and Savings Association in San Francisco,
California as its "Reference Rate." Any change in the Reference Rate shall take
effect on the opening of business on the day specified in the public
announcement of a change in the Reference Rate. Interest shall be computed on
the basis of a 365 or 366 day year, as the case may be. If Bank of America shall
discontinue the announcement of its Reference Rate, the Reference Rate shall be
the highest "prime rate," set forth in the "Money Rates' section of The Wall
Street Journal.

         "Regulations" means, except where the context Indicates otherwise, the
permanent, temporary, proposed, or proposed and temporary regulations of the
Department of the Treasury under the Code as such regulations may be lawfully
changed from time to time.

         "Related Person" means a person having a relationship to a Member that
is described in Section 1.752-4(b) of the Regulations.

         "Residence" means a single family home built on a Lot owned by the
Company.

         "Sales Revenue" means the gross revenue from the sale or other
disposition of Lots and Residences, including any payments for upgrades, options
and improvements and excluding any (i) transfer or similar taxes reimbursed by a
buyer, (ii) any third party home warranty previously paid by the buyer, and
(iii) any title insurance prorations, premiums, dues or assignments paid by
buyer and owed to third parties. (Sales Revenue does not include any Deposit
previously received by the Company and distributed to the Members in accordance
with this Agreement.)

         "SID No. 121" means the special improvement district for the Southern
Highlands Master Planned Community.

         "Standard Sales Contract" means the standard form of contract for the
sale of a Lot and Residence, including the home purchaser warranty provisions.

         "Stuhmer-Controlled Manager" means a licensed residential home
construction general contractor (approved by each Lender) that is owned and
controlled by Chris Stuhmer, as an individual.

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                                                                        9/10//99

         "Substitute Member" means an Assignee who has been admitted to all of
the rights of the member who assigned the Interest, including Management Rights,
by the unanimous consent of the Members, pursuant to this Agreement.

         "Substantially Similar" means a document which is similar in all
material respects to the document originally presented by Southern Highlands to
the Company. A changed or modified document shall be Substantially Similar to
the document originally presented to the Company, provided any such subsequent
changes or modifications to such document do not place any additional material
financial or other burdens on the Company, add any additional material or
unforeseen costs to the Company or otherwise materially and adversely affect the
duties of the Company thereunder.

         "Taxable Year" means the taxable year of the Company as determined
pursuant to the Code.

         "Taxing Jurisdiction" means any state, local, or foreign government
that collects tax, interest or penalties, however designated, on any Member's
share of the income or gain attributable to the Company.

         "Unpaid Prorated Land Basis" means the $3,222,375 less at any time the
cumulative sum of the Prorated Land Basis payments received by Southern
Highlands pursuant to Section 8.3(c) hereof.


                                      -51-
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                                                                        9/10//99

         THE UNDERSIGNED, being all of the Members of the Company, hereby
evidence their adoption and ratification of the foregoing Agreement of the
Company as of the date indicated.

         DATED as of this 10th day of September, 1999.

                         SOUTHERN HIGHLANDS DEVELOPMENT
                         CORPORATION, a Nevada corporation



                         By:      /s/ Garry V. Goett
                             ------------------------------
                                Garry V. Goett, President


         DATED as of this 10th day of September, 1999.



                          /s/ J. CHRISTOPHER STUHMER
                         --------------------------------------------------
                         J. CHRISTOPHER STUHMER, as an individual


         DATED as of this 10th day of September, 1999.

                         CHRISTOPHER HOMES CUSTOM HOME
                         DIVISION, INC., a Nevada corporation, as Manager



                         By:  /s/ J. Christopher Stuhmer
                             ------------------------------
                              J. Christopher Stuhmer
                              resident

                                      -52-
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                                                                        9/10//99

                               CONSENT OF SPOUSE

         The undersigned spouse of Chris Stuhmer hereby declares that she has
read the Agreement for the Southern Highlands Christopher Homes I, L.L.C.,
including the provisions of Section 4.1, in its entirety, and being fully
convinced of the wisdom and equity of the terms of the Agreement, and in
consideration of the premises and of the provisions of the Agreement, she
expresses her acceptance of the same and does agree to its provisions.

         The undersigned further agrees that she will at any time make, execute
and deliver such instruments and documents which may be necessary to carry out
the provisions of the Agreement.

         This instrument is not a present transfer or release of any rights
which the undersigned may have in any of the community property of her
respective marriage.

         DATED: September 10, 1999.

                                   /s/ MICHELE DION STUHMER
                                   --------------------------------
                                   MICHELE DION STUHMER

                                      -53-

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                                                                        9/10//99

                                LIST OF EXHIBITS

       (Southern Highlands/Christopher Homes I, LLC Operating Agreement)

Exhibit "A"  Legal Description

Exhibit "B"  General and Administration Expense Fee

Exhibit "C"  Sales and Marketing Expense Reimbursement

Exhibit "D"  Construction Overhead Fee

Exhibit "E"  Capital Contributions

Exhibit "F"  Declaration of Development Covenants and Restrictions, draft dated
             July 23, 1999

Exhibit "G"  Master Declaration of Covenants, Conditions, and Restrictions for
             Southern Highlands, draft dated July 14, 1999

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                                                                        9/10//99

                                  EXHIBIT "B"

                     GENERAL AND ADMINISTRATION EXPENSE FEE

         A fixed fee of three percent (3%) of all Sales Revenues determined by
calculating the total Sales Revenue from the sale of Lots and Residences. The
General and Administration Expense Fee shall be paid to the Manager as provided
in Section 8.3 hereof. If cash and revenues are not available, then the General
and Administration Expense Fee shall accrue and be payable (without interest)
when proceeds and revenues are available for payment of the same.

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                                                                        9/10//99

                                  EXHIBIT "C"

                   SALES AND MARKETING EXPENSE REIMBURSEMENT

         A Sales and Marketing Expense Reimbursement shall be paid to the
Manager in an amount set forth in the Marketing Budget and not to exceed seven
percent (7%) of the Sales Revenue for Lots and Residences. The reimbursement
amount shall be paid to the Manager in accordance with the provisions of Section
8.3. If cash and revenues are not available to pay the reimbursement amount,
then any earned Sales and Marketing Expense Reimbursement amount shall be
deferred and paid (without interest) when available net cash flow is available,
as provided by Section 8.3.


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                                                                        9/10//99

                                  EXHIBIT "D"

                           CONSTRUCTION OVERHEAD FEE

         A Construction Overhead Fee shall be earned by the Manager in an amount
equal to seven and one-half percent (7-1/2%) of all Sales Revenues. The
Construction Overhead Fee includes compensation to the Manager for the Manager's
obligation to honor construction warranties on the constructed residences. In
consideration for payment of the Construction Overhead Fee, the Manager agrees
to indemnify and hold the Company, Stuhmer and the Southern Highlands harmless
from and against any and all any claims and actions with respect to construction
warranties on the constructed Residences. The foregoing obligation shall survive
the termination of the Company and the removal of the Manager.

         The Construction Overhead Fee shall be calculated based upon all Sales
Revenues, including Lots, Residences, Improvements/Options/Upgrades and shall be
paid in accordance with Section 8.3 hereof. The Construction Overhead Fee shall
be due and payable only after all priority amounts described in Section 8.3 have
been fully paid to Southern Highlands. If there is insufficient revenues and
cash to pay the Construction Overhead Fee when due, then the amount shall accrue
and shall be paid (without interest) when net cash flow is available, as
provided in Section 8.3.

<PAGE>

                                                                        9/10//99

                                  EXHIBIT "E"

                             CAPITAL CONTRIBUTIONS

Southern Highlands     Land--described on Exhibit "A" with an agreed upon value
                       of $6,444,750.

Stuhmer                Initially zero, subject to obligation in Section 7.1.7 to
                       contribute 100% of any additional funds required by the
                       Company