Atlantic  Gulf  Communities  Corporation  Exhibit to the June 30, 1998 Form 10-Q
Exhibit (a)(1) Third Amendment to the Second Amended and Restated Revolving Loan
Agreement Atlantic Gulf Communities Corporation, dated as of June 30, 1998
--------------------------------------------------------------------------------

                 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
                            REVOLVING LOAN AGREEMENT
                      ATLANTIC GULF COMMUNITIES CORPORATION


                  THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED  REVOLVING
LOAN AGREEMENT (this "THIRD AMENDMENT") is dated as of June 30, 1998 and entered
into by and among ATLANTIC GULF COMMUNITIES CORPORATION, a Delaware corporation,
formerly known as General  Development  Corporation  ("COMPANY"),  THE FINANCIAL
INSTITUTIONS  LISTED ON THE SIGNATURE PAGES HEREOF (together with each financial
institution  that may  become  a party to this  Agreement  as  herein  provided,
referred  to herein  individually  as a "BANK"  and  collectively  as  "BANKS"),
FOOTHILL CAPITAL CORPORATION, a California corporation, as successor to Chemical
Bank as agent  for  Banks  (hereinafter,  in such  capacity,  together  with any
successors  thereto in such  capacity,  referred to as  "AGENT"),  and  FOOTHILL
CAPITAL  CORPORATION,  a California  corporation,  as collateral agent for Banks
(hereinafter,  in such capacity,  together with any  successors  thereto in such
capacity, referred to as "COLLATERAL AGENT").

                                R E C I T A L S:

                  WHEREAS,  Company,  Banks,  Agent and Collateral Agent entered
into that certain Second Amended and Restated  Revolving Loan Agreement dated as
of September 30, 1996, as modified by that certain  Amendment  dated as of March
31, 1997, as further  modified by that certain Second  Amendment  (collectively,
the "Loan Agreement").

                  WHEREAS, pursuant to the Loan Agreement, Company executed that
certain Second Amended and Restated  Working  Capital Note dated as of September
30,  1996,  in the  principal  amount  of  TWENTY  MILLION  AND  NO/100  DOLLARS
($20,000,000.00) (the "Original Note").

                  WHEREAS,  Company  has  applied to Banks for a future  advance
loan in the principal amount of FIVE MILLION AND NO/100 DOLLARS  ($5,000,000.00)
(the "Future Advance") for the purpose of providing funds to Company to pay down
the Reducing Revolver Note and/or the Secured Floating Rate Notes.

                  WHEREAS, the Future Advance shall be evidenced by that certain
Future Advance Working Capital Note executed by Company of even date herewith in
the principal  amount of FIVE MILLION AND NO/100  DOLLARS  ($5,000,000.00)  (the
"Future Advance Note"),  so that the aggregate amount of indebtedness  available
under the  Working  Capital  Loans is  TWENTY-FIVE  MILLION  AND NO/100  DOLLARS
($25,000,000.00).

                  WHEREAS,  the  Mortgages  shall be modified  by those  certain
Future Advance and


<PAGE>


Mortgage Modification  Agreements of even date herewith and those certain Future
Advance  and Deed of Trust  Modification  Agreements  dated on or about the date
hereof (collectively,  the "Future Advance Mortgage  Modification  Agreements"),
modifying said Mortgages to provide, inter alia, that the Future Advance Note is
secured by the Mortgages.

                  WHEREAS,  the parties  hereto  desire to enter into this Third
Amendment for the purpose of modifying the Loan  Agreement and the payment terms
of the Original Note as provided herein.

                  WHEREAS,  all terms  which  are  capitalized  but not  defined
herein shall have the meaning set forth therefor in the Loan Agreement.

                  NOW  THEREFORE,  in  consideration  of the  premises  and  the
agreements, provisions and covenants herein contained, Company, Banks, Agent and
Collateral Agent agree as follows:

         1.       AMENDMENT AND RESTATEMENT OF CERTAIN DEFINED TERMS.

                  The  definitions of the following  terms in the Loan Agreement
are hereby amended and restated as follows:

                  "ACKNOWLEDGEMENT AGREEMENT" means that certain Acknowledgement
Agreement regarding Security Documents, dated as of September 30, 1996, executed
by Company  and its  Subsidiaries  listed on the  signature  pages  thereof,  as
modified by that certain First Amendment to Acknowledgment  Agreement  regarding
Security  Documents  of even date  herewith,  as it may be further  amended  and
restated, supplemented or otherwise modified from time to time.

                  "AGREEMENT"  means the Second  Amended and Restated  Revolving
Loan  Agreement  dated as of September 30, 1996, as modified by (i) that certain
Amendment  dated as of March 31, 1997, (ii) that certain Second  Amendment,  and
(iii) that certain Third Amendment to Second Amended and Restated Revolving Loan
Agreement  dated as of June  30,  1998  (the  "Third  Amendment"),  as it may be
further amended and restated,  supplemented  or otherwise  modified from time to
time.

                  "AVERAGE   UNUSED   PORTION  OF  THE  WORKING   CAPITAL   LOAN
COMMITMENTS"  means,  for any month for which a determination is to be made, (a)
the average amount of the Working Capital Loan Commitments during such month but
not exceeding the amount of the Borrowing Base Limit during such month, LESS (b)
the average Working Capital Facility Usage during such month.

                  "BOOK VALUE", with respect to a specified asset of a specified
Person,  means the carrying value of the specified asset on the balance sheet of
such  Person,  less the  aggregate  amount of debt  which (i) is secured by such
specified  asset;  and (ii) is superior to Banks' lien on such 


                                       2
<PAGE>


specified  asset,  prepared in accordance  with GAAP and delivered to Agent from
time to time pursuant to the Loan Documents.

                  "BORROWING BASE" means the lesser of:

         A. The result of:

                           (i)   an amount up to 75% of the principal  amount of
         Eligible   Homesite  Contract   Receivables  and  Eligible   Commercial
         Receivables;

                  PLUS

                           (ii)  the lesser of:

                                    (A) $27,500,000; and

                                    (B) the sum of (without duplication):

                                            (1) an  amount  up  to  40%  of  the
                           Company's  or  a  Subsidiary's  Book  Value  of  Real
                           Property consisting of subdivision homesites;

                                    PLUS

                                            (2) an amount up to 26%  (i.e.,  40%
                           of  the  relevant  Venture   Subsidiary's  65%  Joint
                           Venture interest in Sunset Lakes; such interest to be
                           proportionately  reduced if such  Subsidiary's  Joint
                           Venture  interest  in  Sunset  Lakes is  reduced)  of
                           Sunset  Lakes'  Book  Value  of JV Real  Property  of
                           Sunset Lakes;  PLUS an amount up to 26% (i.e., 40% of
                           the relevant  Venture  Subsidiary's 65% Joint Venture
                           interest  in  Sunset  Lakes;   such  interest  to  be
                           proportionately  reduced if such  Subsidiary's  Joint
                           Venture  interest in Sunset  Lakes is reduced) of the
                           principal amount of Eligible JV Receivables of Sunset
                           Lakes;

                                    PLUS

                                            (3) an amount up to 8% (i.e., 40% of
                           the relevant  Venture  Subsidiary's 20% Joint Venture
                           interest  in  Country  Lakes;  such  interest  to  be
                           proportionately  reduced if such  Subsidiary's  Joint
                           Venture  interest  in Country  Lakes is  reduced)  of
                           Country  Lakes'  Book  Value of JV Real  Property  of
                           Country Lakes;  PLUS an amount up to 8% (i.e., 40% of
                           the relevant  Venture  Subsidiary's 20% Joint Venture
                           interest  in  Country  


                                       3
<PAGE>


                           Lakes; such interest to be proportionately reduced if
                           such  Subsidiary's  Joint Venture interest in Country
                           Lakes is reduced) of the principal amount of Eligible
                           JV Receivables of Country Lakes;

                                    PLUS

                                            (4) an  amount  up  to  40%  of  the
                           Company's  Book Value of Real Property  consisting of
                           the Regency Development;

                                    PLUS

                                            (5) an  amount  up  to  40%  of  the
                           Company's  Book Value of the aggregate  Joint Venture
                           interests   of  all  Venture   Subsidiaries   in  the
                           Borrowing  Base Joint  Ventures  (other  than  Sunset
                           Lakes and Country Lakes); PLUS an amount up to 40% of
                           the principal  amount of Eligible JV  Receivables  of
                           such Borrowing Base Joint Ventures;

                  PLUS

                           (iii) an  amount  up to 40% of the  Company's  or any
         Subsidiary's  Book  Value  of Real  Property  consisting  of  scattered
         homesites;

                  PLUS

                           (iv)  an  amount  up to 50% of the  Company's  or any
         Subsidiary's Book Value of Real Property consisting of raw tract land;

                  LESS

                           (v)   the  aggregate  amount  of  reserves,  if  any,
         established by Agent in Agent's  reasonable  credit judgment in respect
         of  Homesite   Contract   Receivables,   Commercial   Receivables,   JV
         Receivables,  Real Property, and JV Real Property. Without limiting the
         generality of the foregoing, Agent may create reserves against Homesite
         Contract  Receivables  and JV Receivables for  cancellations,  reserves
         against JV Receivables,  Homesite Contract Receivables,  and Commercial
         Receivables for valuation discounts, and reserves against Real Property
         and JV Real  Property  in  respect of the  contents  or status of items
         disclosed  in surveys  and  environmental  reports or in respect of the
         failure of Company to deliver (or cause the relevant Venture Subsidiary
         or Joint  Venture to deliver)  such surveys and  environmental  reports
         required hereunder; or

         B.  With respect to each corresponding period, the amounts set forth on
the chart below (the "Borrowing Base Limits"):


                                       4
<PAGE>


         DATE                                        BORROWING BASE LIMIT

         June 30, 1998, through
         August 1, 1998                              $ 25,000,000.00

         August 2, 1998, through
         August 31, 1998                             $ 23,000,000.00

         September 1, 1998, through
         September 30, 1998                          $ 20,000,000.00

         October 1, 1998, through
         October 31, 1998                            $ 17,000,000.00

         November 1, 1998, through
         November 30, 1998                           $ 12,500,000.00

         December 1, 1998                            $           0.0

         Notwithstanding  the above chart, upon the release of the $2,500,000.00
         held in escrow in  connection  with the prior sale of Daves Creek,  the
         Borrowing  Base Limit  shall be the amount  calculated  by  subtracting
         $2,500,000.00  from the Borrowing Base Limit in place immediately prior
         to the release of the  $2,500,000.00  held in escrow in connection with
         the prior sale of Daves Creek, and each Borrowing Base Limit thereafter
         shall be  $2,500,000.00  less than the  Borrowing  Base Limit shown for
         each  corresponding  period on the above chart  through  and  including
         September 30, 1998. Likewise,  upon the refinancing of the West Meadows
         project debt, the Borrowing  Base Limit shall be the amount  calculated
         by  subtracting  $2,500,000.00  from the Borrowing  Base Limit in place
         immediately  prior to the refinancing of the West Meadows project debt,
         and each Borrowing Base Limit thereafter  shall be  $2,500,000.00  less
         than the Borrowing  Base Limit shown for each  corresponding  period on
         the above chart through and including September 30, 1998.

Anything to the contrary notwithstanding,  the Borrowing Base shall not include,
directly or indirectly,  either any asset of any Unrestricted Subsidiary, or any
of the following:  (a) any Homesite Contract Receivable,  Commercial Receivable,
or JV Receivable to the extent the same is sold or  discounted;  or (b) any Real
Property  or JV Real  Property  to the  extent  the  same  is sold or  otherwise
disposed of; or (c) any Borrowing Base Joint Venture  interest to the extent the
same (or any  underlying JV Real Property of the relevant  Borrowing  Base Joint
Venture) is sold or  otherwise  disposed of; in each case,  whether  pursuant to
Section 7.6 or otherwise.

                  "DEEDS OF TRUST" means the Deeds of Trust  executed  from time
to time between  Company or a Subsidiary  and Collateral  Agent,  as the same be
amended,  supplemented  or otherwise  


                                       5
<PAGE>


modified from time to time  (including as modified by the Future Advance Deed of
Trust  Modification  Agreements  made in connection  with the Third  Amendment),
pursuant to which Company and Subsidiaries grant a security interest in the Real
Property located in Tennessee (and in such other  jurisdictions  where "deeds of
trust" are used to encumber  real  property)  and related  Personal  Property of
Company or  Subsidiaries  to  Collateral  Agent,  for the  benefit of Banks,  as
required by this Agreement.

                  "DEPOSIT ACCOUNT SECURITY AGREEMENT" means the Deposit Account
Security Agreement dated as of September 30, 1996,  executed by Company and each
of its  Subsidiaries in favor of Collateral  Agent, for the benefit of Banks, as
modified by that certain First Amendment to Deposit Account  Security  Agreement
of even date  herewith,  as the same may be  further  amended,  supplemented  or
otherwise modified from time to time.

                  "MORTGAGES"   means  the  Mortgage  and  Security   Agreements
executed  from time to time by Company or a  Subsidiary  in favor of  Collateral
Agent, and as the same may be amended,  supplemented,  consolidated or otherwise
modified from time to time (including as modified by the Future Advance Mortgage
Modification  Agreements made in connection with the Third Amendment),  pursuant
to which Company and Subsidiaries grant a security interest in the Real Property
located in Florida (or in such other jurisdictions where "mortgages" are used to
encumber real property) and related Personal Property of Company or Subsidiaries
to Collateral Agent, for the benefit of Banks.

                  "PERSONAL PROPERTY SECURITY AGREEMENT" means the Consolidated,
Amended,  and  Restated  Personal  Property  Security  Agreement,  dated  as  of
September 30, 1996,  executed by Company and the  Subsidiaries  now or hereafter
party  thereto  in favor of  Collateral  Agent,  for the  benefit  of Banks,  as
modified by that certain First Amendment to Consolidated,  Amended, and Restated
Personal Property Security  Agreement of even date herewith,  as the same may be
further amended, supplemented or otherwise modified from time to time.

                  "STOCK PLEDGE AGREEMENT" means the Second Amended and Restated
Stock Pledge Agreement,  dated as of September 30, 1996, among Company,  each of
its  Subsidiaries  and  Collateral  Agent,  as  modified by that  certain  First
Amendment  to Second  Amended and Restated  Stock Pledge  Agreement of even date
herewith, as the same may be further amended, supplemented or otherwise modified
from time to time,  pursuant to which Company and Subsidiaries pledge Subsidiary
Stock to Collateral Agent for the benefit of Banks.

                  "SUBSIDIARY  GUARANTEE" means the Consolidated  Second Amended
and Restated Subsidiary  Guarantee,  dated as of September 30, 1996, executed by
Company  and each of its  Subsidiaries  in favor of Agent,  for the  benefit  of
Banks,  as modified by that  certain  First  Amendment  to  Consolidated  Second
Amended and Restated Subsidiary Guarantee of even date herewith, as the same may
be further amended, supplemented or otherwise modified from time to time.


                                       6
<PAGE>


         2.       OTHER DEFINITIONAL PROVISIONS.

                  a. The words  "hereof",  "herein" and "hereunder" and words of
similar  import  when used in this  Third  Amendment  shall  refer to this Third
Amendment  as a  whole  and  not to  any  particular  provision  of  this  Third
Amendment.

                  b. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

                  c. References  to  "Sections",   "subsections",  Exhibits  and
Schedules are to Sections,  Sections, Exhibits and Schedules,  respectively,  of
this Agreement unless otherwise specifically provided.

                  d. Unless  the  context  of this  Agreement  clearly  requires
otherwise, the term "including" is not limiting.

         3.       SCHEDULE 2.1 (WORKING CAPITAL LOAN COMMITMENT).

                  SCHEDULE 2.1 attached to the Loan  Agreement is hereby amended
and restated as shown on SCHEDULE 2.1 attached hereto and made a part hereof.

         4.       SECTION 2.2 (DEFINITION OF "WORKING CAPITAL NOTE").

                  Section  2.2 of the  Loan  Agreement  is  hereby  modified  to
provide that the  definition of "Working  Capital Note" shall  include,  without
limitation,  the Future Advance Note. Notwithstanding anything in Section 2.2 to
the contrary, the Future Advance Note shall be dated of even date herewith.


                                       7
<PAGE>


         5.       SECTION 2.4 (REPAYMENT OF WORKING CAPITAL LOANS).

                  The parties  hereto  wish to modify the  payment  terms of the
Original  Note such that the payment  terms of the Original Note are the same as
the payment terms of the Future  Advance Note,  resulting in the entire  Working
Capital  Loans,  as evidenced by the Original Note and the Future  Advance Note,
having the same payment terms. Accordingly, Section 2.4 of the Loan Agreement is
hereby amended and restated as follows:

         "At no time shall the outstanding  balance of the Working Capital Loans
         exceed the amount of the Borrowing  Base.  Accordingly,  if at any time
         and on such date that the  outstanding  balance of the Working  Capital
         Loans exceeds the  Borrowing  Base,  then Company  shall make,  without
         demand,  a payment in such amount as required to reduce the outstanding
         balance of the  Working  Capital  Loans to the amount of the  Borrowing
         Base.  On  the  Working  Capital  Loan  Maturity  Date,  the  remaining
         aggregate   principal   amount  of  the  Working   Capital  Loans  then
         outstanding  shall be repaid  (together  with all  accrued  and  unpaid
         interest and fees then accrued thereon) without demand."

         6.       PROCEEDS OF FUTURE ADVANCE.

                  It is hereby  acknowledged  that Company's  utilization of the
proceeds of the Future Advance to pay down the Reducing Revolver Note and/or the
Secured Floating Rate Notes is a permitted use of the Working Capital Loans.

         7.       FUTURE ADVANCE SECURED BY COLLATERAL.

                  It is  hereby  acknowledged  and  agreed  that the  Collateral
secures the prompt  payment to Banks of the Secured  Debt,  including the Loans,
and further including,  without  limitation,  the indebtedness  evidenced by the
Future Advance Note.

         8.       FUTURE ADVANCE GUARANTIED BY GUARANTEES.

                  It is  hereby  acknowledged  and  agreed  that the  Subsidiary
Guarantees  shall  guarantee  the  payment  and  performance  by  Company of all
Obligations  under the Loan  Agreement,  as  modified  by this Third  Amendment,
including, without limitation, repayment of the Future Advance Note.

         9.       REPRESENTATIONS AND WARRANTIES.

                  To induce  Banks to enter  into this Third  Amendment,  and to
make the Future  Advance,  Company  hereby  represents and warrants to Agent and
each Bank that:


                                       8
<PAGE>


         A.       FINANCIAL CONDITION.

                  (1) The audited consolidated balance sheets of Company and its
consolidated  Subsidiaries as at December 31, 1997, and the related consolidated
statements  of income and of cash flows for the fiscal  year ended on such date,
reported on by Ernst & Young,  copies of which have been or will be furnished to
each Bank, fairly and accurately present the consolidated financial condition of
Company and its consolidated  Subsidiaries as at such date, and the consolidated
results of their  operations  and their  consolidated  cash flows for the fiscal
year then ended.

                  (2) The unaudited  consolidated  balance sheets of Company and
its consolidated Subsidiaries as at March 31, 1998, and the related consolidated
statements  of income  and of cash flows for the  fiscal  quarter  ended on such
date,  copies of which have been or will be furnished  to each Bank,  fairly and
accurately  present  the  consolidated  financial  condition  of Company and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended.

                  (3) All such financial statements described in clauses (1) and
(2) above, including the related schedules and notes thereto, have been prepared
in accordance  with GAAP applied  consistently  throughout the periods  involved
(except for such  inconsistencies as approved by such accountants or Responsible
Officer, as the case may be, and as disclosed therein).  Neither Company nor any
of its  consolidated  Subsidiaries  had, at the date of the most recent  balance
sheet referred to above, any material Guarantee Obligation, contingent liability
or liability for taxes,  or any long-term  lease or unusual forward or long-term
commitment,  including  any interest  rate or foreign  currency swap or exchange
transaction,  which is not reflected in the foregoing statements or in the notes
thereto  or  otherwise  as  disclosed  in writing to Banks on or before the date
hereof.  During the period from March 31, 1998, to and including the date hereof
there has been no sale,  transfer or other  disposition or agreement therefor by
Company or any of its  consolidated  Subsidiaries  of any  material  part of its
business or property  and no purchase or other  acquisition  of any  business or
property  (including any capital stock of any other Person) which is material in
relation to the consolidated financial condition of Company and its consolidated
Subsidiaries at March 31, 1998.


                                       9
<PAGE>


         B.       NO MATERIAL ADVERSE CHANGE.

                  Since March 31,  1998,  (a) except as  disclosed in writing to
Banks on or before the date hereof,  there has been no  development or event nor
any  prospective  development  or event,  which has had or could  reasonably  be
expected to have a Material Adverse Effect,  except such  developments or events
or  prospective  developments  or events as have been  disclosed  by  Company in
filings  with the  Securities  and  Exchange  Commission  made prior to the date
hereof and true and correct  copies of which have been  delivered to Banks,  and
(b) no dividends or other  distributions  have been declared,  paid or made upon
the Capital  Stock of Company nor has any of the Capital  Stock of Company  been
redeemed,  retired,  purchased or otherwise acquired for value by Company or any
of its Subsidiaries.  As of the date hereof, no motion for the conversion of the
case,  appointment of a trustee, or dismissal is pending or has been denied, the
reversal of which on appeal would affect the validity of this  Agreement  and no
appeal  has  been  taken  from  the  entry  of  the  Confirmation  Order  in the
Reorganization Proceedings, the reversal,  modification,  or affirmance of which
will affect the validity or  enforceability,  or change the provisions,  of this
Agreement.

         C.       CORPORATE EXISTENCE; COMPLIANCE WITH LAW.

                  Each of Company and its  Subsidiaries  (a) is duly  organized,
validly  existing and in good standing under the laws of the jurisdiction of its
organization,  except,  in the  case of any  such  Subsidiary,  where  all  such
failures to be in good standing are not reasonably likely, in the aggregate,  to
have a Material Adverse Effect,  (b) has the corporate power and authority,  and
the legal  right,  to own and operate  its  property,  to lease the  property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly  qualified as a foreign  corporation  and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business  requires such  qualification,  except to the extent
that  all  such  failures  to be so  qualified  and in  good  standing  are  not
reasonably likely, in the aggregate,  to have a Material Adverse Effect, and (d)
is in  compliance  with all  Requirements  of Law except to the extent  that any
failures to comply therewith is not reasonably likely, in the aggregate, to have
a Material Adverse Effect.


                                       10
<PAGE>


         D.       CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.

                  (1) COMPANY.  Company has the corporate  power and  authority,
and the legal  right,  to make,  deliver and perform this Third  Amendment,  the
Notes and other  Loan  Documents,  including,  without  limitation,  the  Future
Advance Note as consolidated with the Original Note into the Consolidation Note,
and to  borrow  hereunder  and has  taken  all  necessary  corporate  action  to
authorize the  borrowings on the terms and  conditions of this Third  Amendment,
and the Notes and to authorize the execution,  delivery and  performance of this
Agreement,  the Notes and other Loan Documents.  Except as set forth on SCHEDULE
4.4 attached  hereto and made a part  hereof,  no consent or  authorization  of,
filing with or other act by or in respect of, any Governmental  Authority or any
other Person is required in connection with the borrowings hereunder or with the
execution,  delivery,  performance,  validity  or  enforceability  of this Third
Amendment,  the  Notes  or the  other  Loan  Documents,  except  such  consents,
authorizations,  filings or other acts as have been obtained, made or performed,
as the case may be,  prior to the date  hereof  and as remain in full  force and
effect or which the  failure to  obtain,  make or  perform,  as the case may be,
could not reasonably be expected to have a Material  Adverse Effect.  This Third
Amendment  and the other Loan  Documents to which  Company is party have been or
will be, duly executed and delivered on behalf of Company. This Third Amendment,
and each  other  Loan  Document  executed  and  delivered  constitutes,  or when
executed and delivered will constitute, a legal, valid and binding obligation of
Company  enforceable  against  Company in accordance  with its terms,  except as
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium,  or  similar  laws  affecting  the  enforcement  of
creditors  rights  generally  and  by  general  equitable   principles  (whether
enforcement is sought by proceedings in equity or at law).

                  (2)   SUBSIDIARIES.   Each  of  the  Subsidiaries   (including
Unrestricted  Subsidiaries)  party to the Loan Documents has the corporate power
and  authority,  and the legal  right,  to make,  deliver  and  perform the Loan
Documents to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party.  Except as set forth on SCHEDULE 4.4  attached  hereto and made a
part hereof,  no consent or authorization  of, filing with or other act by or in
respect  of, any  Governmental  Authority  or any other  Person is  required  in
connection with the execution, delivery, performance, validity or enforceability
of  the  Loan  Documents  to  which  it  is  a  party,   except  such  consents,
authorizations,  filings or other acts as have been obtained, made or performed,
as the case may be,  prior to the date  hereof  and as remain in full  force and
effect or which the  failure to  obtain,  make or  perform,  as the case may be,
could not reasonably be expected to have a Material  Adverse  Effect.  Each Loan
Document to which any  Subsidiary  (including  Unrestricted  Subsidiaries)  is a
party has been or will be duly  executed  and  delivered  on behalf of each such
Subsidiary.  Each Loan Document to which any Subsidiary (including  Unrestricted
Subsidiaries) is a party, executed and delivered  constitutes,  or when executed
and delivered will  constitute,  a legal,  valid and binding  obligation of each
such Subsidiary, enforceable against each such Subsidiary in accordance with its
terms,  except  as  enforceability  may be  limited  by  applicable  bankruptcy,
insolvency,   reorganization,   moratorium,   or  similar  laws   affecting  the
enforcement of creditors  rights generally and by general  equitable  principles
(whether 


                                       11
<PAGE>


enforcement is sought by proceedings in equity or at law).

         E.       NO LEGAL BAR.

                  The  execution,   delivery  and   performance  of  this  Third
Amendment,  the Notes,  the Guarantees and the other Loan Documents,  including,
without  limitation,  the Future Advance Note, the borrowings  hereunder and the
use  of  the  proceeds  thereof  will  not  violate  any  Requirement  of Law or
Contractual  Obligation of Company or of any of its Subsidiaries,  the violation
of which could reasonably be expected to have a Material Adverse Effect and will
not result in, or require,  the creation or imposition of any Lien on any of its
or their respective  properties or revenues  pursuant to any such Requirement of
Law or Contractual Obligation.

         F.       NO MATERIAL LITIGATION.

                  As  of  the  date  hereof,  no  litigation,  investigation  or
proceeding of or before any arbitrator or Governmental  Authority is pending or,
to the  knowledge  of Company,  threatened  by or against  Company or any of its
Subsidiaries  or against any of its or their  respective  properties or revenues
(a) with respect to this Third  Amendment,  the Notes or other Loan Documents or
any  of the  transactions  contemplated  hereby  or  thereby  or  (b)  which  is
reasonably  likely  to have a  Material  Adverse  Effect,  which  has  not  been
disclosed  (including,  estimates of the Dollar  amounts  involved) in Company's
filings  with the  Securities  and  Exchange  Commission  made prior to the date
hereof, true and correct copies of which have been delivered to Banks.


         G.       NO DEFAULT.

                  As of  the  date  hereof,  neither  Company  nor  any  of  its
Subsidiaries  is in  default  under or with  respect  to any of its  Contractual
Obligations in any respect which is reasonably likely to have a Material Adverse
Effect, except as disclosed, including estimates of the Dollar amounts involved,
in Company's  filings with the  Securities  and  Exchange  Commission,  true and
correct copies of which have been delivered to Banks or on SCHEDULE 4.7 attached
hereto  and made a part  hereof.  As of the date hereof,  no Default or Event of
Default has occurred and is continuing.

         H.       OWNERSHIP OF PROPERTY; LIENS.

                  As of the date hereof,  each of Company and its  Subsidiaries,
as the case may be, has good record and marketable  title in fee simple to, or a
valid  leasehold  interest  in,  all of the  Collateral  and all its other  real
property,  and good title to all its other property  necessary for the operation
of its business,  and none of such property of Company or such  Subsidiaries  is
subject to any Lien except as permitted by Section 7.3 of the Loan Agreement.


                                       12
<PAGE>


         I.       INTELLECTUAL PROPERTY.

                  As of the date  hereof,  Company and each of its  Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and  processes  necessary  for the conduct of its business as currently
conducted except for those the failure to own or license which is not reasonably
likely to have a Material Adverse Effect (the "INTELLECTUAL PROPERTY"). No claim
has been asserted and is pending by any Person  challenging or  questioning  the
use of any such  Intellectual  Property or the validity or  effectiveness of any
such  Intellectual  Property,  nor does  Company know of any valid basis for any
such  claim.  The  use  of  such  Intellectual   Property  by  Company  and  its
Subsidiaries  does not  infringe  on the rights of any  Person,  except for such
claims and infringements that, in the aggregate,  do not have a Material Adverse
Effect.  To the  knowledge  of Company,  there exists no  infringement  upon the
Intellectual Property rights of Company and Subsidiaries by any other Person.

         J.       TAXES.

                  As of the date  hereof,  each of Company and its  Subsidiaries
(including Unrestricted  Subsidiaries and Joint Ventures) has filed or caused to
be filed all tax returns which, to the knowledge of Company,  are required to be
filed and has paid all taxes shown to be due and  payable on said  returns or on
any assessments made against it or any of its property and all other taxes, fees
or  other  charges  imposed  on it or any of its  property  by any  Governmental
Authority (other than any taxes, fees or other charges the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of Company or its Subsidiaries  (including  Unrestricted  Subsidiaries and
Joint Ventures), as the case may be) except tax claims which are to be paid on a
deferred basis pursuant to the Reorganization  Plan; no tax Lien has been filed,
and, to the knowledge of Company,  no claim is being  asserted,  with respect to
any such tax, fee or other charge, except as disclosed on Schedule 4.10 attached
hereto  and made a part  hereof  and as set forth on the Tax  Service  Agreement
provided to Banks by Lawyers Title Insurance Corporation.

         K.       FEDERAL REGULATIONS.

                  No  part  of the  proceeds  of any  Loans  will  be  used  for
"purchasing" or "carrying" any "margin stock" within the respective  meanings of
each of the quoted terms under Regulation G, T, U or X of the Board of Governors
of the Federal  Reserve  System as now and from time to time hereafter in effect
or for any purpose  which  violates the  provisions of the  Regulations  of such
Board of Governors.

         L.       ERISA.

                  Company  hereby affirms and ratifies the  representations  and
warranties  contained  in Section  4.12 of the Loan  Agreement as being true and
correct as of the date hereof.


                                       13
<PAGE>


         M.       INVESTMENT COMPANY ACT; OTHER REGULATIONS.

                  Company  is  not  an   "investment   company,"  or  a  company
"controlled"  by an "investment  company,"  within the meaning of the Investment
Company Act of 1940, as amended.  Company is not subject to regulation under any
Federal  or state  statute  or  regulation  which  limits  its  ability to incur
Indebtedness.

         N.       SUBSIDIARIES AND JOINT VENTURES.

                  As of the date hereof, (a) the Subsidiaries listed on SCHEDULE
4.14(A)  attached  hereto  and  made  a  part  hereof   constitute  all  of  the
Subsidiaries  and such schedule  identifies the shareholders of such Subsidiary,
(b) the Joint Ventures  listed on SCHEDULE  4.14(B)  attached  hereto and made a
part hereof  constitute all of the Joint  Ventures and such schedule  identifies
all owners of the Joint  Venture  interests  thereof and the  percentage  equity
ownership of such owners,  and (c) neither Company nor any Subsidiary other than
a Venture Subsidiary owns any Joint Venture interest.

         O.       ENVIRONMENTAL MATTERS.

                  Each  of the  representations  and  warranties  set  forth  in
paragraphs  (a) through (g) of Section  4.15 of the Loan  Agreement  is true and
correct,  except as disclosed on SCHEDULE  4.15 to the Loan  Agreement or in the
certificate regarding  environmental matters required pursuant to Section 5.1(i)
or to the  extent  that the  facts  and  circumstances  giving  rise to any such
failure to be so true and  correct is not  reasonably  likely to have a Material
Adverse Effect.

         P.       INDEBTEDNESS.

                  SCHEDULE 4.16 attached hereto and made a part hereof lists all
Indebtedness  (including available  commitments) of Company and its Subsidiaries
as existing on the date hereof.

         Q.       CONTINGENT OBLIGATIONS.

                  SCHEDULE 4.17 attached hereto and made a part hereof lists all
guarantees by Company and all guarantees by any of its Subsidiaries.

         R.       RESTITUTION PROGRAM AND FINAL JUDGMENT.

                  As of the date  hereof,  Company and its  Subsidiaries  are in
compliance with the "Restitution  Program" and the "Final  Judgment," as defined
in the Reorganization Plan.


                                       14
<PAGE>


         S.       CERTAIN FEES.

                  No broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions  contemplated  hereby,  and
Company hereby  indemnifies  Banks  against,  and agrees that it will hold Banks
harmless from, any claim,  demand or liability for any such broker's or finder's
fees alleged to have been incurred in  connection  herewith or therewith and any
expenses  (including  reasonable  fees,  expenses and  disbursements of counsel)
arising in connection with any such claim, demand or liability.

         T.       DISCLOSURE.

                  No  representation  or  warranty  of  Company  or  any  of its
Subsidiaries   contained  in  any  Loan  Document  or  in  any  other  document,
certificate or written  statement  furnished to Banks by or on behalf of Company
or  any  of  its  Subsidiaries  for  use in  connection  with  the  transactions
contemplated by this Third Amendment contains any untrue statement of a material
fact or omits to state a  material  fact  (known to  Company  in the case of any
document  not  furnished  by it)  necessary  in  order  to make  the  statements
contained  herein or therein not  misleading  in light of the  circumstances  in
which the same were made. Any projections  and pro forma  financial  information
contained in such materials are based upon good faith  estimates and assumptions
believed by Company to be reasonable  at the time made,  it being  recognized by
Banks that such  projections  as to future  events are not to be viewed as facts
and that  actual  results  during  the  period or  periods  covered  by any such
projections may differ from the projected results.  There are no facts known (or
which  should upon the  reasonable  exercise of  diligence  be known) to Company
(other  than  matters  of an  economic  nature)  that,  individually  or in  the
aggregate,  could  reasonably be expected to result in a Material Adverse Effect
and  have  not  been  disclosed  herein  or in  such  other  written  documents,
certificates  and statements  furnished to Banks for use in connection  with the
transactions contemplated hereby.

         U.       TOTAL REAL PROPERTY MATTERS.

                  Company  and each of its  Subsidiaries  (including  the  Joint
Ventures) is in compliance with all  development  orders obtained by Company and
its  Subsidiaries  (including the Joint Ventures) with respect to any Total Real
Property, except to the extent noncompliance could not reasonably be expected to
have a Material Adverse Effect.

         V.       REORGANIZATION PROCEEDINGS.

                  Company has  delivered  to Agent and Banks  true,  correct and
complete copies of the Reorganization Plan and Confirmation Order, together with
copies  of  any  modifications  thereto  or  subsequent   proceedings  with  the
Bankruptcy Court.


                                       15
<PAGE>


         W.       EXCLUDED SUBSIDIARIES; UNRESTRICTED SUBSIDIARIES.

                  (1)  The  Excluded  Subsidiaries  do not  have,  nor are  they
anticipated to have, any assets or revenues.  The Excluded  Subsidiaries  do not
currently conduct, nor are they anticipated to begin to conduct, any business.

                  (2)  As of March 31, 1998, the  Unrestricted  Subsidiaries had
assets as disclosed  on the  consolidating  balance  sheet dated as of March 31,
1998,  attached hereto as SCHEDULE 4.24 and made a part hereof. The Unrestricted
Subsidiaries  do not currently  conduct,  nor are they  anticipated  to begin to
conduct,  any business  other than the  businesses  disclosed  on SCHEDULE  4.24
attached hereto and made a part hereof.


         X.       BANK ACCOUNTS.

                  SCHEDULE  4.26  attached  hereto  and made a part  hereof  (as
amended from time to time by written notice to Agent) is a true and correct list
of all Bank Accounts of Company and its Subsidiaries.

         Y.       ELIGIBLE RECEIVABLES AND ELIGIBLE JV RECEIVABLES.

                  (1)  The   Eligible   Receivables   are  bona  fide   existing
obligations  created by the sale and  delivery of Real  Property in the ordinary
course of Company's or any of its Subsidiary's business, unconditionally owed to
Company or such Subsidiary without defenses,  disputes, offsets,  counterclaims,
or rights of cancellation.  Neither Company nor any such Subsidiary has received
notice of any actual or imminent Insolvency Proceeding or material impairment of
the financial condition of any obligor regarding any Eligible Receivable.

                  (2)  The  Eligible  JV  Receivables  are  bona  fide  existing
obligations created by the sale and delivery of JV Real Property in the ordinary
course of the relevant Borrowing Base Joint Venture's business,  unconditionally
owed to such Borrowing Base Joint Venture without defenses,  disputes,  offsets,
counterclaims,  or rights of  cancellation.  Neither  Company  nor the  relevant
Venture  Subsidiary  nor the relevant  Borrowing Base Joint Venture has received
notice of any actual or imminent Insolvency Proceeding or material impairment of
the financial condition of any obligor regarding any Eligible JV Receivable.

         Z.       SPUD  SUBSIDIARIES.  Except  as  disclosed  on  SCHEDULE  4.29
attached hereto and made a part hereof, no Subsidiary is a SPUD Subsidiary.

         AA.      DRI AND ZONING MATTERS. The representations and warranties set
forth in SCHEDULE 4.30 attached hereto are by this reference incorporated herein
as though fully set forth and made in this Section AB.


                                       16
<PAGE>


         10.      CONDITIONS PRECEDENT

                  The  effectiveness of this Third Amendment and the obligations
of Banks to make the  Future  Advance  hereunder  are  subject  to the  prior or
concurrent satisfaction of all the following conditions:

         A.       LOAN  DOCUMENTS.  Agent  shall  have  received  (i) this Third
Amendment,  executed and delivered by a duly authorized officer of Company, with
a  counterpart  for each Bank,  (ii) for the  account  of each Bank,  the Future
Advance  Note,  (iii)  each  other  Loan  Document,  required  to  be  delivered
hereunder, conforming to the requirements hereof and executed and delivered by a
duly authorized officer of Company or each of its Subsidiaries  (including,  the
Unrestricted  Subsidiaries  and the  Excluded  Subsidiaries,  in each case as to
their respective  acknowledgments under the Stock Pledge Agreement), as the case
may be, which are parties to such Loan  Document,  with a  counterpart  for each
Bank.

         B.       CORPORATE  PROCEEDINGS OF COMPANY.  Agent shall have received,
with a  counterpart  for  each  Bank,  a copy of the  resolutions,  in form  and
substance   satisfactory  to  Agent,  of  the  Board  of  Directors  of  Company
authorizing the execution, delivery and performance of this Third Amendment, the
Future  Advance  Note,  and the  other  Loan  Documents  to which it is a party,
certified by the  Secretary  or an Assistant  Secretary of the Company as of the
date  hereof,  which  certificate  shall  state  that  the  resolutions  thereby
certified have not been amended,  modified, revoked or rescinded and are in full
force and effect and shall be in form and substance satisfactory to Agent.

         C.       CORPORATE  PROCEEDINGS OF THE  SUBSIDIARIES.  Agent shall have
received,  with a counterpart for each Bank, a copy of the resolutions,  in form
and  substance  satisfactory  to  Agent,  of the  Board  of  Directors  of  each
Subsidiary  of Company  which is a party to any Loan  Document  authorizing  the
execution,  delivery  and  performance  of the Loan  Documents  to which it is a
party,  certified by the secretary or an assistant  secretary of each Subsidiary
as of the date  hereof,  which  certificate  shall  state  that the  resolutions
thereby certified have not been amended,  modified, revoked or rescinded and are
in full force and effect.

         D.       CORPORATE  DOCUMENTS.   Agent  shall  have  received,  with  a
counterpart  for each Bank,  true and complete  copies of (i) the certificate or
articles of incorporation of the Company and each of its Subsidiaries which is a
party  to any  Loan  Document  certified  by the  Secretary  of  State  of their
respective  jurisdictions of incorporation as of a recent date prior to the date
hereof,  (ii) the Bylaws of the Company and each of its Subsidiaries  which is a
party to any Loan  Document  certified as of the date hereof by its secretary or
an assistant secretary,  (iii) good standing certificates,  including, in states
which provide such certificates, certification of tax status, of the Company and
each of its Subsidiaries  which is a party to any Loan Document certified by the
Secretary of State of their respective  jurisdictions  of  incorporation  and of
each  jurisdiction  in which  they are  qualified  to do  business  as a foreign
corporation  dated  as of a  recent  date  prior  to the  date  hereof  and (iv)
incumbency and signature  certificates for Company and each Subsidiary executing
any Loan


                                       17
<PAGE>


Documents as of the date hereof.

         E.       NO   VIOLATION.   The   consummation   of   the   transactions
contemplated  hereby  and by the other  Loan  Documents  shall  not  contravene,
violate or conflict with, nor involve Agent or any Bank in any violation of, any
Requirement of Law.

         F.       CONSENTS,   AUTHORIZATIONS,  AND  FILINGS.  Agent  shall  have
received,  with a  counterpart  for each Bank, a  certificate  of a  Responsible
Officer  (i)  attaching  copies of all  consents,  authorizations,  and  filings
referred to in Section 4.4 of the Loan Agreement and in any similar provision of
any  of  the  other  Loan  Documents,  and  (ii)  stating  that  such  consents,
authorizations,  and filings are in full force and effect and each such consent,
authorization, and filing shall be in form and substance satisfactory to Agent.

         G.       LEGAL OPINION. Collateral Agent and Agent shall have received,
with a  counterpart  for each Bank,  the  executed  legal  opinion of  corporate
counsel  to  Company,  dated  as of the  date  hereof,  in  form  and  substance
satisfactory  to Collateral  Agent and Agent and addressed to Collateral  Agent,
Agent and Banks.  Such legal  opinion  shall cover such matters  incident to the
transactions  contemplated  by this  Third  Amendment  as Agent  may  reasonably
require.

         H.       REAL  PROPERTY  MATTERS.  Agent shall have received the Future
Advance Mortgage Modification Agreements,  in form and substance satisfactory to
Agent and its local  counsel,  to protect and  preserve the Lien and priority of
the  Mortgages and Deeds of Trust as they secure the Loans and other amounts due
hereunder,  together with  endorsements  to the existing ALTA lender's  extended
coverage  policies of title  insurance on the Real  Property  encumbered  by the
Mortgages  and Deeds of Trusts in  liability,  amount and form issued by a title
company  satisfactory  to Agent  showing the  Mortgages  and Deeds of Trust,  as
modified by the Future Advance Mortgage Modification Agreements,  as first Liens
upon the respective Real Property, subject only to Liens permitted hereunder and
thereunder  and such other  exceptions or exclusions as may be approved by Agent
in its sole discretion,  together with any endorsements  reasonably  required by
Agent, and affirmative  assurance that the improvements are fully located within
the boundaries of the insured land.

         I.       AGREEMENTS.  Agent  shall  have  received,  with  an  executed
counterpart  for each  Bank,  duly  executed  copies of the First  Amendment  to
Acknowledgment  Agreement regarding Security  Documents,  the First Amendment to
Deposit  Account  Security  Agreement,  the  First  Amendment  to  Consolidated,
Amended, and Restated Personal Property Security Agreement,  the First Amendment
to Second Amended and Restated Stock Pledge  Agreement,  and the First Amendment
to Consolidated Second Amended and Restated Subsidiary Guarantee.

         J.       NO  MATERIAL  ADVERSE  EFFECT.  Agent  shall have  received an
officer's certificate executed by a Responsible Officer stating that no Material
Adverse  Effect has occurred  since March 31,  1998,  except as disclosed in the
Company's  Form 10-Q for the quarter ended as of March 31, 


                                       18
<PAGE>


1998,  or as  otherwise  disclosed  in  writing  to Banks on or before  the date
hereof.

         K.       FEES,  COSTS,  AND  EXPENSES.  As of the date hereof,  Company
shall have paid:  (i) to the Agent all interest and fees accrued  under the Loan
Agreement  and shall have paid to Agent and Banks all fees and  expenses due and
payable  under the Loan  Agreement as of the date hereof;  (ii) to the Agent all
fees,  costs,  and expenses of Agent and its counsel incurred in connection with
the preparation,  negotiation,  and execution of this Third  Amendment,  and any
other  documents  executed in connection  herewith;  and (iii) to the Collateral
Agent all fees, costs, and expenses of Collateral Agent and its counsel incurred
in connection  with the  preparation,  negotiation,  and execution of this First
Amendment, and any other documents executed in connection herewith.

         L.       FEE FOR FUTURE ADVANCE. Company shall have paid a fee to Banks
for the Future  Advance in the amount of TWO HUNDRED  FIFTY  THOUSAND AND NO/100
DOLLARS ($250,000.00).

         M.       AMENDMENT OF CERTAIN LOAN  DOCUMENTS.  The Security  Documents
and  other  Loan  Documents  shall  have  been  amended  in form  and  substance
satisfactory to Agent.

         N.       OTHER MATTERS.  Company shall have made available to Agent and
Banks such other  documents and  information,  or taken such other  actions,  as
Agent and Banks may reasonably request.

         11.      RATIFICATION

         Except as modified by this Third  Amendment and by the other  documents
executed in connection herewith,  the terms and conditions of the Loan Agreement
and all other Loan  Documents  are hereby  ratified and  confirmed and remain in
full force and effect.

         12.      MISCELLANEOUS

         A.       SURVIVAL    OF    REPRESENTATIONS    AND    WARRANTIES.    All
representations  and warranties made hereunder and in any document,  certificate
or statement  delivered pursuant hereto or in connection  herewith shall survive
the execution and delivery of this Third Amendment and the Future Advance Note.

         B.       COUNTERPARTS.  This Third  Amendment may be executed by one or
more  of the  parties  to  this  Third  Amendment  on  any  number  of  separate
counterparts,  and all of said  counterparts  taken  together shall be deemed to
constitute one and the same instrument.


                                       19
<PAGE>


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


                                       ATLANTIC GULF COMMUNITIES CORPORATION


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


                                       FOOTHILL CAPITAL CORPORATION
                                       as Agent and as a Bank


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



                                       FOOTHILL CAPITAL CORPORATION
                                       as Collateral Agent


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


                                       20
<PAGE>


                 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
               REVOLVING LOAN AGREEMENT DATED AS OF JUNE 30, 1998


                                  SCHEDULE 2.1
                        WORKING CAPITAL LOAN COMMITMENTS

BANK:                                               AMOUNT OF BANK'S COMMITMENT:

Foothill Capital Corporation                                     $25,000,000.00*




*  PROVIDED,  HOWEVER,  THAT AT NO TIME  SHALL THE  OUTSTANDING  BALANCE  OF THE
WORKING  CAPITAL LOANS EXCEED THE BORROWING  BASE, AS PROVIDED IN SECTION 2.4 OF
THE LOAN AGREEMENT, AS MODIFIED BY THIS THIRD AMENDMENT.


                                       21