SECOND AMENDED AND RESTATED

                       CREDIT AND SECURITY AGREEMENT

                                By and Among

                            MCO PROPERTIES INC.
                     WESTCLIFF DEVELOPMENT CORPORATION,
                            HORIZON CORPORATION,
                      HORIZON PROPERTIES CORPORATION,
                            MCO PROPERTIES, L.P.

                                    and

                     THE FIRST NATIONAL BANK OF BOSTON

                               July 15, 1995

<PAGE>
                             TABLE OF CONTENTS


Section                                                                Page

1    DEFINITIONS AND RULES OF INTERPRETATION               

     1.1.      Definitions  
     1.2.      Rules of Interpretation 

2.1. REVOLVING CREDIT LOANS                                    

     Sub-Part A - Loans to the Borrower

     2.1.1.    Commitment to Lend  
     2.1.2.    The Borrower Revolving Credit Note  

     Sub-Part B - Loans to the L.P.

     2.1.3.    Commitment to Lend  
     2.1.4.    The LP Revolving Credit Note 

     Sub-Part C - Applicable to All Revolving Credit Loans

     2.1.5.    Collateral Note(s)  
     2.1.6.    Interest on Revolving Credit Loans  
     2.1.7.    Requests for Revolving Credit Loans  
     2.1.8.    Conversion Options  

2.2. REPAYMENT OF THE REVOLVING CREDIT LOANS              

     2.2.1.    Maturity  
     2.2.2.    Mandatory Repayments of Revolving Credit Loans  
     2.2.3.    Optional Repayments of Revolving Credit Loans  
     2.2.4.    Periodic Payments of Revolving Credit Loans  

2.3. LETTERS OF CREDIT                                         

     2.3.1.    Issuance of Letters of Credit  
     2.3.2.    Interest on Letters of Credit  
     2.3.3.    Effects of Drawing  

3.   FEES                                                 

     3.1.      Facility Fee  
     3.2.      Administration Fee  
     3.3.      L/C Fee  

4.   CERTAIN GENERAL PROVISIONS                                

     4.1.      Funds for Payments  
     4.2.      Computations  
     4.3.      Inability to Determine Eurodollar Rate  
     4.4.      Illegality  
     4.5.      Additional Costs, Etc. . 
     4.6.      Capital Adequacy  
     4.7.      Indemnity  
     4.8.      Certificate  
     4.9.      Interest on Overdue Amounts  
     4.10.     Late Charge  

5.   COLLATERAL SECURITY  

     5.1.      Grant of Security Interest  
     5.2.      Warranty of Title  
     5.3.      Pro Rata Security  

6.   REPRESENTATIONS AND WARRANTIES

     6.1.      Corporate Authority; Etc.  
     6.2.      Governmental Approvals  
     6.3.      Title to Properties; Leases  
     6.4.      No Material Changes, Etc.  
     6.5.      Franchises, Patents, Copyrights, Etc.  
     6.6.      Litigation  
     6.7.      No Material Adverse Contracts, Etc.  
     6.8.      Compliance With Other Instruments, Laws, Etc.  
     6.9.      Tax Status 
     6.10.     No Suspension Event or Event of Default  
     6.11.     Holding Company and Investment Company Acts  
     6.12.     Absence of UCC Financing Statements, Etc.  
     6.13.     Setoff, Etc.  
     6.14.     Certain Transactions 
     6.15.     Employee Benefit Plans; Multiemployer Plans; Guaranteed
                    Pension Plans  
     6.16.     Regulations U and X  
     6.17.     Environmental Compliance  
     6.18.     Subsidiaries  
     6.19.     Material Lease Summaries  
     6.20.     Loan Documents  
     6.21.     Mortgaged Property  
     6.22.     Existing Notes Receivable Value  
     6.23.     Existing Lots and Undeveloped Acres  
     6.24.     Non-Underwriting Criteria Loans  
     6.25.     Amended and Restated Credit and Security Agreement  
     6.26      LP Partners
     6.27      LP Assets and Liabilities

7.   AFFIRMATIVE COVENANTS OF THE BORROWER

     7.1.      Punctual Payment  
     7.2.      Maintenance of Office  
     7.3.      Records and Accounts  
     7.4.      Financial Statements, Certificates and Information  
     7.5.      Notices  
     7.6.      Existence; Maintenance of Properties  
     7.7.      Insurance  
     7.8.      Taxes  
     7.9.      Inspection of Properties and Books  
     7.10.     Compliance with Laws, Contracts, Licenses, and Permits  
     7.11.     Use of Availability  
     7.12.     Further Assurances  
     7.13.     Appraisals  
     7.14.     Notification Letters  
     7.15.     Hazardous Substance Remedial Action

8.   CERTAIN NEGATIVE COVENANTS OF THE BORROWER

     8.1.      Restrictions on Indebtedness  
     8.2.      Restrictions on Liens, Etc.  
     8.3.      Restrictions on Investments  
     8.4.      Merger, Consolidation  
     8.5.      Sale and Leaseback  
     8.6.      Compliance with Environmental Laws  
     8.7.      Distributions  
     8.8       Cash Transactions with Affiliated Entities
     8.9.      Material Leases  
     8.10.     Restrictions on Compromise of Notes Receivable  
     8.11.     Subsidiaries  
     8.12      Change in Ownership

9.   FINANCIAL COVENANTS OF THE BORROWER

10.  CLOSING CONDITIONS

     10.1.     Loan Documents  
     10.2.     Certified Copies of Organization Documents  
     10.3.     By-laws; Resolutions  
     10.4.     Incumbency Certificate  
     10.5.     Validity of Liens  
     10.6.     Survey and Taxes  
     10.7.     Title Insurance; Title Exception Documents  
     10.8.     Leases and Service Contracts  
     10.9.     Certificates of Insurance  
     10.10.    Hazardous Substance Assessments  
     10.11.    Environmental Indemnity  
     10.12.    Opinions of Counsel Concerning Organization and Loan
                    Documents  
     10.13.    Financial Information  
     10.14.    Payment of Fees  
     10.15.    Zoning, Environmental and Land Use Compliance Opinion of
                    Counsel  
     10.16.    Borrowing Base Report  
     10.17.    Guaranties  
     10.18.    Lock Box Account  
     10.19.    Subordination  
     10.20.    Commercial Finance Exam  
     10.21.    Evidence of Licenses, Permits, Utilities,  Etc.  
     10.22.    Additional Matters  

11.  CONDITIONS TO ALL BORROWINGS

     11.1.     Representations True; No Event of Default
     11.2.     No Legal Impediment  
     11.3.     Governmental Regulation  
     11.4.     Proceedings and Documents  

12.  EVENTS OF DEFAULT; ACCELERATION; ETC.

     12.1.     Events of Default and Acceleration  
     12.2.     Termination of Commitment  
     12.3.     Remedies  
     12.4.     Distribution of Collateral Proceeds  

13.  SETOFF

14.  EXPENSES

15.  INDEMNIFICATION

16.  SURVIVAL OF COVENANTS, ETC.

17.  PERMITTED SALES/RELEASE OF LIEN

     17.1      Permitted Sales  
     17.2      Release of Collateral  

18.  ASSIGNMENT; PARTICIPATION; ETC.

     18.1.     Assignment by the Bank  
     18.2.     Participations  
     18.3.     Disclosure  
     18.4.     Pledge by Bank  
     18.5.     No Assignment by Borrower  

19.  AGENTS, ATTORNEYS, TRUSTEES

20.  NOTICES, ETC.

21.  PUBLICITY

22.  GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE

23.  HEADINGS

24.  COUNTERPARTS

25.  ENTIRE AGREEMENT, ETC.

26.  WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS

27.  CONSENTS, AMENDMENTS, WAIVERS, ETC.

28.  SEVERABILITY

<PAGE>

                                  EXHIBITS


     A.   Form of Borrower Revolving Credit Note
     B.   Form of LP Revolving Credit Note 
     C.   Form of Loan Request
     D.   Form of Material Lease Summaries
     E.   Form of Reimbursement Agreement
     F.   Borrowing Base Report

<PAGE>
                                 SCHEDULES


     1.1(a)         "Letters of Credit"
     1.1(b)         "Non-Strategic Projects"
     1.1(c)         "Strategic Projects"
     1.1(d)         "Title Insurance Company"
     1.1(e)         "Underwriting Criteria for Notes Receivable"
     1.1(f)         LP Assets
     1.1(g)         Acceptable Existing Notes Receivable
     5.1            Collateral Exclusions
     5.2(iii)       Exception to Notes Receivable 
     5.2(iv)        Patents and Trademarks
     5.2(vi)        Warranty of Title
     6.3            Title to Properties; Leases
     6.4            Material Changes
     6.6            Litigation
     6.7            Adverse Contracts, Etc.
     6.15           Employee Benefit Plans, Etc.
     6.17           Environmental Compliance
     6.18           Subsidiaries
     6,21           Leases
     6.21(c)        Notice of Adverse Zoning, etc.
     6.21(e)        Real Property Taxes; Special Assessments
     6.21(h)        Agreements Relating to the Mortgaged Property
     6.21(i)        Service Agreements
     6.21(j)        Other Material Real Property Agreements
     6.23           Existing Lots and Undeveloped Acres
     7.14           Notification Letter
     8.1            Outstanding Indebtedness
     8.2            Outstanding Liens
     8.3            Outstanding Investments
     8.7            Form of Letter
     10.10          Environmentally Deficient Developed Lots 
     17             Affidavit
     18.3           Confidentiality Agreement


<PAGE>
         SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT


     This SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT is made
as of the 15th day of July, 1995, by and among:

     MCO Properties Inc., a Delaware corporation, with its principal
     executive office located at 5847 San Felipe, Suite 2600, P.O. Box
     572887, Houston, Texas 77057 (the "Borrower"),

     Westcliff Development Corporation, a Texas corporation with its
     principal executive office located at 5847 San Felipe, Suite 2600,
     P.O. Box 572887, Houston, Texas 77057 ("Westcliff" ), 

     Horizon Corporation, a Delaware corporation with its principal
     executive office located at 5847 San Felipe, Suite 2600, P.O. Box
     572887, Houston, Texas 77057 ("Horizon"), 

     Horizon Properties Corporation, a Delaware corporation with its
     principal executive office located at 5847 San Felipe, Suite 2600,
     P.O. Box 572887, Houston, Texas 77057 ("HPC"), 

     MCO Properties, L.P., a Delaware limited partnership with its
     principal executive office located at 5847 San Felipe, Suite 2600,
     P.O. Box 572887, Houston, Texas 77057 ("LP"); and 

     THE FIRST NATIONAL BANK OF BOSTON, a national banking association with
     its principal executive offices located at 100 Federal Street, Boston,
     Massachusetts (the "Bank").

     This Second Amended and Restated Credit and Security Agreement is
intended to amend, restate and replace certain terms and conditions set
forth in a certain Amended and Restated Credit and Security Agreement dated
as of December 29, 1992 by and among the Borrower, Westcliff, Horizon, HPC
and the Bank, as amended pursuant to instruments dated June 30, 1993 and
December 29, 1993 (the "1992 Agreement"), provided, however, each and all
of the terms and conditions set forth in 5 of the 1992 Agreement and 6 of
the 1988 Agreement (as defined in the 1992 Agreement) shall remain in full
force and effect (except as the Collateral described therein has been
previously released).  

     1.1  Definitions.  The following terms shall have the meanings set
forth in this 1 or elsewhere in the provisions of this Agreement referred
to below:

     Acceptable Contracts.  A contract or agreement which is in form
substantially the same as the form which has been approved by the Bank,
entered into by and between any Party and a Person with respect to any
Amenity Sales Contracts, Retail Lot Contracts, Bulk Land Sales Contracts
and Home Mortgages which contracts or agreements give rise to Notes
Receivable, which Notes Receivable may, subject to the terms and conditions
set forth herein, create Availability.  

     Acceptable Existing Notes Receivable.  (a) Such of each of the Party's
Existing Notes Receivable for each of the Strategic Projects and the Non-
Strategic Projects (subject, however, to the limitations set forth in
subsection (b), below), which have been earned by performance and are owed
to any of the Parties by the Note Obligors, and in each instance (A) as
have arisen in the ordinary course of such Party's business, and (B) have
been endorsed (in form and substance satisfactory to the Bank and the
Bank's Counsel), delivered and collaterally assigned to the Bank, (C) in
which the Bank has been granted valid and first perfected security inter-
ests and (D) for which the Bank has received a collateral assignment (in
form and substance satisfactory to the Bank and the Bank's counsel) of the
mortgage or deed of trust and other collateral documents securing such
Existing Notes Receivable.

          (b)  The following is a listing of those types of Notes
Receivable which are not Acceptable Existing Notes Receivables:

               (i)  Any which is more than sixty (60) days past due as
     shown on the Borrowing Base Report;

               (ii) Any which is owed by any individual Party to any of the
     other Parties, or any which is owed by any affiliated or related
     entity of any of the Parties; 

               (iii)     Any as to which the Note Obligor holds or is
     entitled to any claim, counterclaim, set off, or chargeback;

               (iv) Any Existing Note Receivable arising out of an In-
     stallment Sales Contract, except: (A) where Borrower's, Westcliff's,
     Horizon's, HPC's or the LP's performance thereunder consists solely of
     deeding the subject premises to the Note Obligor upon payment of all
     installment payments under any such Installment Sales Contract, or (B)
     as to any Installment Sales Contract which the Bank, in its sole and
     absolute discretion, deems acceptable;

               (v)  Any which is owed by any person employed by, or a
     salesperson of any of the Parties.

          (c)  Set forth on Schedule 1.1(g) to this Agreement is a listing
as of the date hereof of Acceptable Existing Notes Receivable.

     Acceptable New Notes Receivable.  Such of the Parties' New Notes
Receivable arising out of Acceptable Contracts having a term of not more
than ten (10) years from the date of closing of the transaction giving rise
to the Note Receivable, for each of the Strategic Projects and the Non-
Strategic Projects (subject, however, to the limitations set forth in
subsection (b), below), and in each instance (A) as arise in the ordinary
course of the Parties' business, (B) have been endorsed (in form and
substance satisfactory to the Bank and Bank's counsel), delivered and
collaterally assigned to the Bank, (C) in which the Bank has been granted
valid and first perfected security interest  (D) for which the Bank has
received a collateral assignment (in form and substance satisfactory to the
Bank and the Bank's counsel) of the mortgage or deed of trust and other
collateral documents securing each of said New Notes Receivable, and (E)
(i) with respect to such New Notes Receivables realized on account of Bulk
Land Sales Contracts and Amenity Contracts, such of the Parties' New Notes
Receivable meeting the Underwriting Criteria for such Notes Receivable, and
(ii) with respect to such New Notes Receivables realized on account of
Retail Lot Contracts, and Home Mortgages, such of the Parties' New Notes
Receivable meeting the Underwriting Criteria for such Notes Receivable.

          (b)  The following is a listing of those types of New Notes
Receivable which are not Acceptable New Notes Receivables:

               (i)  Any which is more than sixty (60) days past due as
     shown on the Borrowing Base Report;

               (ii) Any which is owed by any Note Obligor (as defined
     below) arising out of any sale involving a downpayment of less than:
     (A) twenty percent (20%) of the purchase price established under
     Retail Lot Contracts and Home Mortgages, or (B) ten percent (10%) of
     the purchase price established under Bulk Sales Land Contracts and
     Amenity Sales Contracts;

               (iii)     Any which is owed by any individual Party to any
     of the other Parties, or any which is owned by any affiliated or
     related entity of any of the Parties; 

               (iv) Any as to which the Note Obligor holds or is entitled
     to any claim, counterclaim, set off, or chargeback;

               (v)  Any New Note Receivable arising out of an Installment
     Sales Contract; 
               
               (vi) Any which is owed by any person employed by, or a
     salesperson of any of the Parties.

     Administration Fee.  See 3.2.  

     Agency Agreement.  See 2.2.4.  

     Agreement.  This Second Amended and Restated Credit and Security
Agreement, including the Schedules and Exhibits hereto.

     Agreements Relating to the Mortgaged Property shall mean service
agreements, whether written or oral, relating to the operation,
maintenance, security, finance or insurance of any of the Mortgaged
Property.

     Amenity Sales Contracts.  Such contracts and agreements entered into
by and between any of the Parties and any Person relating to the sale of
land at any of the Strategic Projects: (i) sold for the purpose of
development(s) of certain amenities to be constructed on any of the
Strategic Projects, or (ii) already developed as an amenity on any of the
Strategic Projects, which purpose of such amenities include, without
limitation, swimming pools, tennis courts, clubhouse facilities and other
amenities appurtenant to the construction or development of any of the
Strategic Projects.  

     Appraisals.  Appraisals of the value of the Mortgaged Property,
performed by an independent appraiser selected by the Bank who is not
employed by the Parties or the Bank, the form of such appraisal and the
identity and qualifications of the appraiser to be acceptable to the Bank
in its sole and absolute discretion.

     Appraised Value.  The Fair Market Value of the Mortgaged Property
determined by the most recent Appraisal obtained pursuant to 7.13.

     Availability.  The aggregate of Borrower Availability and LP
Availability.

     Balance Sheet Date.  December 31, 1994.  

     Bank.  The First National Bank of Boston, and its successors and
assigns.

     Base Rate.  The annual rate of interest announced from time to time by
the Bank at its head office in Boston, Massachusetts as its "base rate".

     Book Value.  The value ascribed to each asset, as set forth on the
balance sheet of the Parties, as determined in accordance with generally
accepted accounting principles consistently applied.  

     Borrower.  As defined in the preamble hereto.

     Borrower Availability.   Borrower Availability refers at any time to
the lesser of (i) or (ii), below:

          (i)  up to (A) Fourteen Million Dollars ($14,000,000.00),
     inclusive of the Letter of Credit Amount, 
          
               minus

               (B)  the aggregate amounts then undrawn on all outstanding
          Letters of Credit, acceptances, or any other accommodations
          issued or incurred by the Bank in connection with the Loan,

               minus

               (C)  the aggregate amounts of Letters of Credit,
          acceptances, or any other accommodations paid by the Bank in
          connection with the Loan and for which the Bank has not received
          reimbursement from the Borrower or any other Party;

               minus

               (D)  the aggregate amount of then Outstanding Revolving
          Credit Loans to the LP;

               or

          (ii) up to (A) seventy-five percent (75%) of (I) the then
     outstanding principal balance of each of the Acceptable New Notes
     Receivables of the Borrower, Westcliff, Horizon and/or HPC derived
     from Retail Lot Contracts and Home Mortgages, and (II) the then
     outstanding principal balances of each of the Acceptable Existing
     Notes Receivable of the Borrower, Westcliff, Horizon and/or HPC
     derived from Retail Lot Contracts and Home Mortgages,


               plus

               (B)  up to the lesser of:

                    (I)  Six Million Dollars ($6,000,000.00), or

                    (II) up to fifty percent (50%) of the aggregate of (a)
               the then outstanding principal balance of Acceptable New
               Notes Receivable of the Borrower, Westcliff, Horizon and/or
               HPC derived from Bulk Land Sales Contracts, and (b) the then
               outstanding principal balance of Acceptable Existing Notes
               Receivables of the Borrower, Westcliff, Horizon and/or HPC
               derived from Bulk Land Sales Contracts,

                    plus

               (C)  up to the lesser of:

                    (I)  fifty percent (50%) of the Book Value of Developed
               Lots of the Borrower, Westcliff, Horizon and/or HPC, or

                    (II) Three Million Dollars ($3,000,000.00);

                    minus

               (D)  the aggregate amounts then undrawn on all outstanding
          Letters of Credit, acceptances, or any other accommodations
          issued or incurred by the Bank in connection with the Loan,

                    minus

               (E)  the aggregate amounts of Letters of Credit,
          acceptances, or any other accommodations paid by the Bank in
          connection with the Loan and for which the Bank has not received
          reimbursement from the Borrower or any other Party.

     Borrower's Revolving Credit Note.  See Section 2.1.2

     Borrowing Base Report.  A report with respect to the Availability in
the form attached hereto as Exhibit F.  

     Building.  The buildings, structures and improvements now or hereafter
located on any of the Mortgaged Property.

     Bulk Land Sales Contracts.  Such contract or agreement entered into by
and between any Party and any Person for the sale of: (i) any portion of
the Strategic Projects and/or Non-Strategic Projects which exceeds five (5)
acres, unless such portion of the Strategic Projects and/or Non-Strategic
Projects is zoned for the construction of no more than one commercial
establishment, or no more than two residences, and the minimum price is
less than the amount set forth in (ii), below, or (ii) any portion of the
Strategic Projects and/or Non-Strategic Projects, the gross purchase price
of which exceeds $350,000.00, provided, however, until such time as (i) the
Mirada Action is resolved to the satisfaction of the Bank (in its sole and
absolute discretion), or (ii) the Borrower furnishes the Bank with such
evidence or assurances (each satisfactory to the Bank in its sole and
absolute discretion) that the Mirada Action will not, in any way, affect or
impair the Borrower's title to, or the Bank's first perfected security
interest in, or ability to realize upon, the MCO California Collateral
and/or any Notes Receivable arising on account of the MCO California
Collateral (hereinafter (i) and (ii) collectively referred to as the
"Mirada Preconditions"), none of the Notes Receivable derived from Bulk
Land Sales Contracts entered into by and between the Borrower and any
Person relating to the sale of land at the Strategic Project known as
Rancho Mirage/Mirada, California shall constitute Acceptable New Notes
Receivable.  

     Business Day.  Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in the
case of Eurodollar Rate Loans, also a day which is a Eurodollar Business
Day.

     Cash Equivalents:   Any of the following:

     (1)  U.S. Government Obligations;

     (2)  Any certificate of deposit or banker's acceptance, in each case,
maturing not more than 180 days after the date of acquisition, issued by,
or, in the case of bankers' acceptances, accepted by, or time deposit of,
any bank or trust company organized under the laws of the United States of
America or any state thereof or the District of Columbia or any United
States branch office or agency of any foreign depository institution;

     (3)  Repurchase agreements entered into with entities whose unsecured,
unguaranteed long-term debt obligations are rated "A" (or higher) by S&P
and "A2" (or higher) by Moody's, or whose unsecured, unguaranteed
commercial paper obligations are rated "A-2" (or higher) by S&P and "P-2"
(or higher) by Moody's, pursuant to written agreement with respect to any
obligation described in clauses (1), (2) or (4) of this definition of Cash
Equivalents;

     (4)  Commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of acquisition),
issued by a corporation organized and existing under the laws of the United
States of America with a rating, at the time as of which any investment
thereof is made, of "P-2" (or higher) according to Moody's or "A-2" (or
higher) according to S&P;

     (5)  Adjustable rate preferred stock that is rated "A" (or higher) by
Moody's or S&P;

     (6)  Taxable or non-taxable auction rate securities which have
interest rates reset on periodic short-term intervals (typically each 7,
14, 21, 28 or 49 days via a Dutch auction process) and which at the time of
purchase have been rated and the ratings for which (A) for direct issues,
must not be less than "P2" if rated by Moody's and not less than "A2" if
rated by S&P, or (B) for collateralized issues which follow the asset
coverage tests set forth in the Investment Company Act of 1940, as amended,
must have long-term ratings of at least "AAA" if rated by S&P and "Aaa" if
rated by Moody's;

     (7)  Money Market deposit accounts issued or offered by any bank or
trust company organized under the laws of the United States of America or
any state thereof or the District of Columbia, in each case having capital
and surplus in excess of $500 million;

     (8)  Non-taxable securities, maturing not later than one year after
the date of acquisition, issued by any state or municipality and having
ratings of at least "A" if rated by S&P and "A-2" if rated by Moody's; and

     (9)  Any investments which are substantially comparable to those
described above and which are approved by the Bank.


     CERCLA.  See 6.17(a).

     Certificate.  See 4.8.

     Certificate of Compliance.  The Parties' certifications by each of
their respective chief financial officer, treasurer, controller or other
authorized financial officer designated by the Parties and approved by the
Bank setting forth the calculations necessary to indicate the Borrower's
and the LP's compliance with  8.1, 8.7 and 9, and indicating that there is
then existing no Suspension Event or Event of Default.  

     Closing Date.  The first date on which the conditions set forth in 10
and 11 have been satisfied and any Revolving Credit Loans are to be made.

     Code.  The Internal Revenue Code of 1986, as amended.

     Collateral.  See 5.  

     Collateral Note.  See 2.1.5.  

     Commercial Finance Exam.  See 7.4(d).  

     Commitment.  Subject to Availability, $14,000,000.00.

     Consolidated or consolidated.  With reference to any term defined
herein, shall mean that term as applied to the accounts of each of the
Parties and their respective Subsidiaries, consolidated in accordance with
generally accepted accounting principles.

     Conversion Request.  A notice given by the Borrower or the LP to the
Bank of its election to convert or continue a Loan in accordance with
2.1.8.  

     Creditor(s).  See definition of Subordination Agreement.

     Default Rate.  The per annum sum of four percent (4.0%) above the
Domestic Rate.  

     Depository.  See 2.2.4.  

     Developed Lots.  A subdivided lot and the improvements thereon at any
of the Strategic Projects and Non-Strategic Projects (and which is not
otherwise subject to an Acceptable Contract), and with respect to which all
infrastructure improvements necessary for the sale of such lot thereon have
been completed, and with respect to which all permits and approvals, and
evidence of access to utilities necessary for the sale of such lot have
been obtained all as evidenced by such approvals, certificates, or permits
executed by the appropriate duly authorized federal, state and/or local
official for the applicable Strategic Project or Non-Strategic Project,
provided, however, (a) until satisfaction of the Mirada Preconditions, none
of the property located at the Strategic Project known as Rancho Mirage
Mirada, California shall qualify as a Developed Lot and shall not be
included as Developed Lots under Subsection (ii)(C) of the defined term
Borrower Availability set forth in  1, herein, and (b) the Developed Lots
listed on Schedule 10.10, annexed hereto shall not be deemed to be
Developed Lots.  

     Distribution.  The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Parties, or any
other distribution on or in respect of any shares of any class of capital
stock of the Parties (other than On-Loans permitted pursuant to Section 7-
11 (b) hereof); or the return of capital, or payment of any amount, to the
holders of, or on account of, any partnership interest in the LP (other
than On-Loans permitted pursuant to Section 7-11 (b) hereof).

     Dollars or $.  Dollars in lawful currency of the United States of
America.

     Domestic Rate.  The sum of one half of one percent (0.50%) plus the
Base Rate.  

     Domestic Rate Loans.  Those Revolving Credit Loans bearing interest
calculated by reference to the Domestic Rate.

     Drawdown Date.  The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted
or continued in accordance with 2.1.8.  

     Employee Benefit Plan.  Any employee benefit plan within the meaning
of 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.

     Environmental Indemnity Agreements.  The Environmental Indemnity
Agreements executed individually by each of the Parties and MAXXAM in favor
of the Bank, as required pursuant to 10.11.  

     Environmental Laws.  See 6.17(a).

     ERISA.  The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.

     ERISA Affiliate.  Any Person which is treated as a single employer
with the Borrower under 414 of the Code.

     Eurodollar Business Day.  Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in
London or such other eurodollar interbank market as may be selected by the
Bank in its sole discretion acting in good faith.  

     Eurodollar Rate.  For any Interest Period with respect to a Eurodollar
Rate Loan, the aggregate of: (a) two and three-quarters percent (2.75%),
plus (b) the rate per annum equal to the rate at which the Bank is offered
Dollar deposits two Eurodollar Business Days prior to the beginning of such
Interest Period in an interbank eurodollar market where the eurodollar and
foreign currency and exchange operations of the Bank are customarily
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount
of the Eurodollar Rate Loan to which such Interest Period applies.

     Eurodollar Rate Loans.  Revolving Credit Loans bearing interest
calculated by reference to the Eurodollar Rate.

     Event of Default.  See 12.1.

     Existing Notes Receivable.  Such of each of the Parties' Notes
Receivable in existence as of the date hereof, as set forth on the Schedule
annexed to the initial monthly Borrowing Base Report.  

     Facility Fee.  See 3.1.  

     Fair Market Value.  A value that is within the range of prices that
could reasonably be paid for the property sold in an arms-length
transaction conducted in the competitive open market under all conditions
requisite to a fair sale, the buyer and seller, each acting prudently and
knowledgeably and in view of the market conditions prevailing at the time
of such determination.  Implied in this definition is the consummation of a
sale as of a specified date and the passing of title from seller to buyer
under conditions whereby: (a) buyer and seller are typically motivated; (b)
both parties are well informed or well advised, and each acting in what
they consider their own best interest; (c) payment is made in cash or its
equivalent; and (d) financing, if any, is on terms generally available in
the community and typical for the property type in its locale.  

     Generally accepted accounting principles.  (a) When used herein,
whether directly or indirectly through reference to a capitalized term used
herein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date
and (ii) to the extent consistent with such principles, the accounting
practices of each of the Parties reflected in their respective financial
statements for the year ended on the Balance Sheet Date and (b) when used
in general, other than as provided above, means principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, or such successor organ-
ization recognized by the American Institute of Certified Public Accoun-
tants as in effect from time to time; provided that in each case referred
to in this definition of "generally accepted accounting principles" a
certified public accountant would, insofar as the use of such accounting
principles is pertinent, be in a position to deliver an unqualified opinion
(other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles
have been properly applied.

     Guaranteed Pension Plan.  Any employee pension benefit plan within the
meaning of 3(2) of ERISA maintained or contributed to by the Borrower, the
LP or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.

     Guaranties.  Individually and collectively, the Unconditional
Guaranties of Payment and Performance, dated December 29, 1992 and/or
December 29, 1993, made by each of the Guarantors in favor of the Bank
pursuant to which each of the Guarantors guarantee to the Bank the payment
and performance of the Obligations, such Guaranties to be in form and
substance satisfactory to the Bank.

     Guarantor(s) shall mean (jointly and severally) with respect to the
Obligations of both the Borrower and the LP, each of Westcliff, Horizon,
HPC and MAXXAM; with respect to the Obligations of the Borrower only, the
term "Guarantor" shall also mean the LP; and with respect to the
Obligations of the LP only, the term "Guarantor" shall also mean the
Borrower.

     HPC.  As defined in the preamble hereto.  

     Hazardous Substances.  See 6.17(b).

     Home Mortgages.  Such contracts and agreements entered into by and
between any of the Parties and any Person relating to the sale of a
Building at either any of the Strategic Projects or any of the Non-
Strategic Projects and in all circumstances not otherwise constituting a
Bulk Land Sales Contract, provided, however, until satisfaction of the
Mirada Preconditions, none of the Notes Receivable derived from Home
Mortgages entered into by and between the Borrower and any Person relating
to the sale of land at the Strategic Project known as Rancho Mirage/Mirada,
California shall constitute Acceptable New Notes Receivable.  

     Horizon.  As defined in the preamble hereto.  

     Indebtedness.  All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be
classified on the Party's respective balance sheets as liabilities, or to
which reference should be made by footnotes thereto, including in any event
and whether or not so classified:  (a) all debt and similar monetary
obligations, whether direct or indirect; (b) all liabilities secured by any
mortgage, pledge, security interest, lien, charge, or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
endorsements and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to supply funds
to or in any manner to invest in, directly or indirectly, the debtor, to
purchase indebtedness, or to assure the owner of indebtedness against loss,
through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by
such owner or otherwise, and the obligations to reimburse the issuer in
respect of any letters of credit.

     Installment Sales Contract.  Any contract or agreement in which any of
the Parties continue to remain liable for the performance of conditions.  

     Insured Projects.  The Strategic Projects and Non-Strategic Projects
for which Title Policies are required, as specifically set forth in the
within 1.1, under the defined term "Title Policy."  

     Interest Payment Date.  As to any Revolving Credit Loan (exclusive of
any drawing under any Letters of Credit), interest shall be payable monthly
in arrears on the first day of each month during the term of the Loan.  

     Interest Period.  With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Revolving
Credit Loan and ending on the last day of one of the periods set forth
below, as selected by the Borrower and/or the LP, as applicable, in a Loan
Request (i) for any Domestic Rate Loan, the last day of the calendar month;
(ii) for any Eurodollar Rate Loan, 3, 6, 9, or 12 months; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Revolving Credit Loan and ending on the
last day of one of the periods set forth above, as selected by the Borrower
and/or the LP, as applicable, in a Conversion Request, or as provided for
in Subsection (C), below;  provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:

          (A)  if any Interest Period with respect to a Eurodollar Rate
     Loan would otherwise end on a day that is not a Eurodollar Business
     Day, that Interest Period shall be extended to the next succeeding
     Eurodollar Business Day unless the result of such extension would be
     to carry such Interest Period into another calendar month, in which
     event such Interest Period shall end on the immediately preceding
     Eurodollar Business Day;

          (B)  if any Interest Period with respect to a Domestic Rate Loan
     would end on a day that is not a Business Day, that Interest Period
     shall end on the next succeeding Business Day;

          (C)  if the Borrower and/or the LP shall fail to give notice as
     provided in 2.1.8, the Borrower and the LP shall be deemed to have re
     quested a conversion of the affected Eurodollar Rate Loan to a
     Domestic Rate Loan on the last day of the then current Interest Period
     with respect thereto;

          (D)  any Interest Period relating to any Eurodollar Rate Loan
     that begins on the last Eurodollar Business Day of a calendar month
     (or on a day for which there is no numerically corresponding day in
     the calendar month at the end of such Interest Period) shall end on
     the last Eurodollar Business Day of a calendar month; and

          (E)  any Interest Period relating to any Eurodollar Rate Loan
     that would otherwise extend beyond the Revolving Credit Loan Maturity
     Date shall end on the Revolving Credit Loan Maturity Date.

          (F)  in no event shall there be more than four (4) Interest
     Periods in the aggregate in effect at any one time for the Borrower
     and the LP.  

          (G)  after the occurrence of an Event of Default, at the Bank's
     option, interest on the Revolving Credit Loans and all other amounts
     payable hereunder and under the other Loan Documents shall bear
     interest at the Default Rate, compounded daily (to the extent
     permitted by law), to accrue from the due date thereof until the
     obligation of the Borrower and/or the LP with respect to the payment
     thereof shall be discharged, whether before or after judgment.  

     Interstate Land Sales Act.  See 6.8(b).  

     Investments.  All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness
(excluding the Existing Notes Receivable and the New Notes Receivable
incurred or acquired in the ordinary course of business) of, or for loans,
advances, capital contributions or transfers of property to, or in respect
of any guaranties (or other commitments as described under Indebtedness),
or obligations of, any Person.  In determining the aggregate amount of
Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b)
there shall be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until such interest
is paid; (c) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution);
(d) there shall not be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as dividends, interest or
otherwise, except that accrued interest included as provided in the forego-
ing clause (b) may be deducted when paid; and (e) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.

     Leases.  Leases, licenses and agreements whether written or oral,
relating to the use or occupation of any of the Mortgaged Property by
persons other than the Parties, including but not limited to the leases and
parking agreements listed on Schedule 6.21.

     Letters of Credit.  Standby Letters of Credit issued by the Bank for
the account of the Parties subsequent to the Closing Date, and any
extension or renewal of any Standby Letters of Credit issued prior to the
Closing Date by the Bank for the account of the Parties or MAXXAM, as set
forth on the Schedule entitled "Letters of Credit".  

     Letter of Credit Amount.  Eight Million Five Hundred Thousand Dollars
($8,500,000.00).  

     Letter of Credit Interest Rate.  The sum of four percent (4.0%) above
the Domestic Rate.  

     L/C Fee.  See 3.3.  

     Loan Account.  See 2.1.7(c).  

     Loan Documents.  Any and all documents, instruments and/or agreements
(including all amendments, modifications, substitutions, replacements or
extensions) previously (unless such document, instrument and/or agreement
has been replaced in the entirety), now or hereafter executed and/or
delivered by any of the Parties, any of their respective Subsidiaries,
and/or MAXXAM, in connection with the Obligations, including, without
limitation, this Agreement, the Note, the Collateral Note, the Subor-
dination Agreements, the Security Documents and the Guaranties.

     Loan Request.  See 2.1.7.

     Loan(s).  Collectively, the Revolving Credit Loans, all undrawn
Letters of Credit, and all drawings made under any of the Letters of
Credit.

     Lock Box Account.  See 2.2.4.

     LP.  MCO Properties L.P., a Delaware limited partnership, whose
general partner is the Borrower.

     LP Assets.     The real estate located in Fountain Hills, Arizona and
Lake Havasu, Arizona and Paradise Hills, New Mexico owned by the LP, the
LP's equity interest in SunRidge Canyon LLC, as well as all Notes
Receivable now or hereafter owned by the LP and the other personal property
specified in Schedule 1.1(f) to this Agreement.

     LP Availability.    LP Availability refers at any time to the lesser
of (i) or (ii), below:

          (i)  up to (A) Fourteen Million Dollars ($14,000,000.00),
     inclusive of the Letter of Credit Amount,
     
               minus

               (B)  the aggregate amounts then undrawn on all outstanding
          Letters of Credit, acceptances, or any other accommodations
          issued or incurred by the Bank in connection with the Loan,

                    minus

               (C)  the aggregate amounts of Letters of Credit,
          acceptances, or any other accommodations paid by the Bank in
          connection with the Loan and for which the Bank has not received
          reimbursement from the LP or any other Party;

                    minus

               (D)  the aggregate amount of then Outstanding Revolving
          Credit Loans to the Borrower;

                    or

          (ii) up to (A) seventy-five percent (75%) of (I) the then
     outstanding principal balance of each of the Acceptable New Notes
     Receivables of the LP derived from Retail Lot Contracts and Home
     Mortgages, and (II) the then outstanding principal balance of each of
     the Acceptable Existing Notes Receivable of the LP derived from Retail
     Lot Contracts and Home Mortgages,

                    plus<PAGE>
               (B)  up to the lesser of:

                    (I)  Six Million Dollars ($6,000,000.00), 

                    or

                    (II) up to fifty percent (50%) of the aggregate of (a)
               the then outstanding principal balance of Acceptable New
               Notes Receivable of the LP derived from Bulk Land Sales
               Contracts, and (b) the then outstanding principal balance of
               Acceptable Existing Notes Receivables of the LP derived from
               Bulk Land Sales Contracts,

                    plus

               (C)  up to the lesser of:

                    (I)  fifty percent (50%) of the Book Value of Developed
               Lots of the LP, 

                    or
                    
                    (II) Three Million Dollars ($3,000,000.00);
               
                    minus
               
               (D)  the aggregate amounts then undrawn on all outstanding
          Letters of Credit, acceptances, or any other accommodations
          issued or incurred by the Bank in connection with the Loan,
          
                    minus

               (E)  the aggregate amounts of Letters of Credit,
          acceptances, or any other accommodations paid by the Bank in
          connection with the Loan and for which the Bank has not received
          reimbursement from the LP or any other Party.

     LP Revolving Credit Note.   See Section 2.1.4.

     Material Leases.  Any Lease and other agreements affecting more than
five (5) acres of any of the Strategic Projects, 25,000 square feet of any
of the Strategic Projects, or generating gross income of more than
$50,000.00 per annum with respect to any of the Strategic Projects.  

     Material Lease Summaries.  Summaries of the material terms of the
Material Leases.  Such Material Lease Summaries shall contain the
information described on Exhibit D and any other material terms of Material
Leases relating to the Mortgaged Property.

     Maturity Date.  The Revolving Credit Maturity Date.

     MAXXAM.  MAXXAM Inc., a Delaware corporation with its principal place
of business located at 5847 San Felipe, Suite 2600, P.O. Box 572887,
Houston, Texas 77057

     MAXXAM Guaranty.  See 12.1(k).

     MAXXAM Pledge Agreement.  See 12.1(k).

     MCO California Collateral.  See 5.1.  

     Minimum Capital.  See 9

     Mirada Action.  Individually and collectively (i) Con. C.A. No. 12111,
filed with the Court of Chancery of the State of Delaware and entitled In
re: MAXXAM Inc./Federated Development Shareholders' Litigation and (ii) NL
Industries Inc. and Harold C. Simmons in his capacity as Trustee of The
Combined Master Retirement Trust v. MAXXAM Inc., MCO Properties Inc.,
Federated Development Company, Charles F. Hurwitz, Ezra G. Levin, Barry
Munitz, John B. Connally, John M. Seidl, William C. Leone, Stanley D.
Rosenberg and C.V. Wood, Jr., CA 12353, Court of Chancery, State of
Delaware.  

     Mortgaged Property.  Individually and collectively, the Strategic
Projects and the Non-Strategic Projects.

     Multiemployer Plan.  Any multiemployer plan within the meaning of
3(37) of ERISA maintained or contributed to by the Borrower, the LP or any
ERISA Affiliate.

     Notification Letters.  See 7.14.  

     Net Proceeds.  The difference between gross sales price, less
reasonable closing costs.  

     Net Worth.  Shareholder's Equity, plus, as long as MCO Limited
Partner, Inc. remains an affiliate of the Borrower, the entire amount of
partners' equity in the LP owned by MCO Limited Partner, Inc., which is
categorized as a minority interest on the consolidated balance sheet of the
Borrower.

     New Notes Receivable.  Such of a Party's Notes Receivable arising
subsequent to the date of this Agreement.  

     Non-Strategic Projects.  Each of the properties listed on the Schedule
1-1(b) annexed hereto entitled "Non-Strategic Projects," including, without
limitation, those properties located in, or known as, Pueblo West, Colora-
do, Westcliff, Texas, Waterwood, Texas, Rio Communities, New Mexico, Vail
Valley Ranch, Arizona, Paradise Hills, New Mexico, Arizona Sunsites,
Arizona, Tucson Day Ranch, Arizona, Ina/LaCholla, Arizona.  

     Note.  Shall mean individually and collectively the Borrower Revolving
Credit Note and the LP Revolving Credit Note.  

     Note Obligors.  An unaffiliated third party individual(s) or entity
liable to any of the Parties on account of any Notes Receivable.

     Notes Receivable.  Negotiable instruments: (i) not subject to any de-
fenses, and (ii) representing an unconditional order to pay for credit
extended to any Note Obligor, whether or not yet earned by performance.  

     On-Loan.  See 7.11.  

     Obligations.  All indebtedness, obligations and liabilities of the
Parties, and each of them, jointly and severally, to the Bank, whether
existing on or prior to the date of this Agreement or arising or incurred
hereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured,
arising by contract, operation of law of otherwise, including, without
limitation those arising under this Agreement, the Guaranties, the Security
Documents or any of the other Loan Documents or in respect of any of the
Loans or other instruments at any time evidencing any thereof.

     Outstanding.  With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.

     PBGC.  The Pension Benefit Guaranty Corporation created by 4002 of
ERISA and any successor entity or entities having similar responsibilities.

     Parties.  Jointly and severally, the Borrower, the LP, Westcliff,
Horizon and HPC.

     Permitted Distributions.  Distributions and/or payments permitted
pursuant to 8.7.  

     Permitted Liens.  Liens, security interests and other encumbrances
permitted by 8.2.

     Person.  Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.

     Real Estate.  All real property owned or leased (as lessee or
sublessee) by any of the Parties, or any of their respective Subsidiaries,
including any real property owned with other Persons as a partner, joint
venturer, or otherwise (as, for example, SunRidge Canyon, L.L.C.).

     Record.  The grid attached to the Note, or the continuation of such
grid, or any other similar record, including computer records, maintained
by the Bank with respect to any Revolving Credit Loan.  

     Reimbursement Agreement.  The applications made and agreements entered
into between the Bank and the Parties relating to the Letters of Credit, in
substantially the form annexed hereto as Exhibit E, as the same may be
amended and in effect from time to time.  

     Release.  See 6.17(c)(iii).

     Retail Lot Contracts.  Such contracts and agreements entered by and
between any of the Parties and any Person for the sale of any subdivided
lot that is part of the Mortgaged Property, and not otherwise constituting
a Bulk Sales Land Contract, provided, however, until satisfaction of the
Mirada Preconditions, none of the Notes Receivable derived from Retail Lot
Contracts entered into by and between the Borrower and any Person relating
to the sale of land at the Strategic Project known as Rancho Mirage/Mirada,
California shall constitute Acceptable New Notes Receivable.  

     Revolving Credit Loans.  Revolving credit loans (inclusive of all
undrawn Letters of Credit) made or to be made by the Bank to the Borrower
and/or the LP pursuant to 2.

     Revolving Credit Maturity Date.  May 15, 1998, or such earlier date on
which the Revolving Credit Loans shall become due and payable pursuant to
the terms hereof.

     Revolving Credit Note.  Shall mean individually and collectively the
Borrower Revolving Credit Note and the LP Revolving Credit Note.  

     Revolving Credit Note Record.  A Record with respect to the Revolving
Credit Note.  

     Security Documents.  All documents, instruments and/or agreements
executed and/or delivered by any of the Parties, evidencing all collateral
security granted, pledged, assigned or delivered by any of the Parties as
collateral security for the payment and performance of the Obligations, all
as more particularly described in 5.  

     Service Agreements shall mean service agreements, whether written or
oral, relating to the maintenance, security, finance or insurance of the
Notes Receivable.  

     Shareholder's Equity shall mean shareholder's equity (or deficit) of
the Borrower determined in accordance with Generally accepted accounting
principles, consistently applied.

     Strategic Projects.  Individually and collectively, the properties
located in, or known as, Fountain Hills, Arizona, Lake Havasu City, Arizona
and Rancho Mirage, sometimes referred to as Mirada, California (as more
particularly described on a current real estate inventory and receivable
summary annexed hereto as Schedule 1-1(c) entitled "Strategic Projects").  

     Subordination Agreement.  The Subordination Agreements, dated December
29, 1992, December 29, 1993 and to be dated on or prior to the Closing Date
(if any), among the Bank, the Guarantors, or any of their respective
affiliates or subsidiaries (collectively, the "Creditors"), the Borrower
and the LP in form and substance satisfactory to the Bank, pursuant to
which the rights of the Creditors against the Borrower and/or the LP with
reference to indebtedness of the Borrower and/or the LP to such Creditors
are subordinated to the rights of the Bank against the Borrower with
reference to the Borrower's and the LP's Indebtedness to the Bank.

     Subsidiary.  Any corporation, association, partnership, trust, or
other business entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes or controlling interests) of the outstanding
Voting Interests.

     Survey shall mean an instrument survey (or plans), including any date-
down survey, or engineer's certification, sufficient to continue the
deletion (if presently existing) of the survey exception from any existing
Title Policy for which any update or endorsement shall be issued with
respect to any of the Strategic Projects, or to remove the survey exception
from any new Title Policy to be issued in connection with the Loan with
respect to any of the Strategic Projects, except for (i) any additional
Developed Lots at the Strategic Project known as Fountain Hills, Arizona,
and (ii) until satisfaction of the Mirada Preconditions, any Developed Lots
at the Strategic Project known as Mirada/Rancho Mirage located in
California, which, if necessary to delete, or continue the deletion of the
survey exception, shall show the location of all buildings, structures,
easements and utility lines on the Mortgaged Property, shall show that all
buildings and structures are within the lot lines of the Mortgaged
Property, shall not show any encroachments by others, shall show the zoning
district or districts in which the Mortgaged Property is located and shall
show whether or not the Mortgaged Property is located in a flood hazard
district as established by the Federal Emergency Management Agency or any
successor agency or is located in any flood plain, flood hazard or wetland
protection district established under federal, state or local law.

     Surveyor Certificate  shall mean a certificate executed by the
surveyor who prepared the Survey, or the engineer who prepared the
certification, dated as of a recent date and containing such information
relating to the Mortgaged Property as the Bank, its counsel or the Title
Insurance Company may require (and as customarily furnished within the
professional capacities of the surveyor or engineer), such certificate to
be satisfactory to the Bank and its counsel, in form and substance.

     Suspension Event.  The occurrence of any event which, solely with the
passage of time or the giving of notice (or both), would be, an Event of
Default.  

     Title Insurance Company.  See Schedule 1-1(d) annexed hereto entitled
"Title Insurance Company."  

     Title Policy shall mean ALTA standard form title insurance policies
issued by the Title Insurance Companies acceptable to the Bank, and in each
instance (with such reinsurance or co-insurance as the Bank may require,
any such reinsurance to be with direct access endorsements), equal to the
corresponding amount for the following projects (the "Insured Projects"): 

     Insured Projects                                  Amount

     Fountain Hills, Arizona
       Arizona - Simultaneous Issue with 
       Lake Havasu City Arizona (and including 
       separate Fountain Hills Developed Lots 
       Coverage in the amount of $2,000,000.00)   $27,000,000.00

     Lake Havasu, Arizona - Simultaneous
       with Fountain Hills, Arizona               $25,000,000.00

     Rancho Mirage/Mirada, California             $ 2,000,000.00

     Ina/LaCholla, Arizona                        $   100,000.00

     Vail Valley/Tuscon Day Ranch, Arizona        $   900,000.00

     Waterwood, Texas                             $ 1,000,000.00

     each insuring the priority of the Security Documents (relevant to the
     Insured Projects), and that each of the Parties (where applicable)
     hold marketable or insurable (as applicable in each state of issuance)
     fee simple title to the Insured Projects, subject only to the
     encumbrances permitted by the Security Documents (relevant to the
     Insured Projects) and which shall not contain exceptions for mechanics
     liens, persons in occupancy or matters which would be shown by a
     survey (if applicable), shall not insure over any matter except to the
     extent that any such affirmative insurance is acceptable to the Bank
     in its sole discretion, and shall contain such endorsements and
     affirmative insurance as the Bank in its discretion may require (as is
     available in each state of issuance), including but not limited to (a)
     comprehensive endorsement, (b) variable rate of interest endorsement,
     (c) usury endorsement, (d) revolving credit endorsement, (e) doing
     business endorsement and (f) ALTA form 3.1 zoning endorsement. 

     Title Update Letter shall mean a title certification letter addressed
to the Bank (in form and substance satisfactory to the Bank), pursuant to
which a Title Insurance Company (acceptable to the Bank) shall certify as
to the status of title to the property that is the subject of such Title
Update Letter.  

     Type.  As to any Revolving Credit Loan its nature as a Domestic Rate
Loan or a Eurodollar Rate Loan.

     Underwriting Criteria.  See Schedule 1-1(e) annexed hereto entitled
Underwriting Criteria for Notes Receivable.  

     Voting Interests.  Stock or similar ownership interests, of any class
or classes (however designated), the holders of which are at the time
entitled, as such holders, (a) to vote for the election of a majority of
the directors (or persons performing similar functions) of the corporation,
association, partnership, trust or other business entity involved, or (b)
to control, manage or conduct the business of the corporation, partnership,
association, trust or other business entity involved.

     Westcliff.  As defined in the preamble hereto.  

     1.2.  Rules of Interpretation.

          (a)  A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.

          (b)  The singular includes the plural and the plural includes the
singular.

          (c)  A reference to any law includes any amendment or
modification to such law.

          (d)  A reference to any Person includes its permitted successors
and permitted assigns.

          (e)  Accounting terms not otherwise defined herein have the
meanings assigned to them by Generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they refer.

          (f)  The words "include", "includes" and "including" are not
limiting.

          (g)  All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in Massachusetts, have the meanings assigned
to them therein.

          (h)  Reference to a particular "" refers to that section of this
Agreement unless otherwise indicated.

          (i)  The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.

     2.   THE REVOLVING CREDIT FACILITY.

     2.1.  Revolving Credit Loans.  

     Sub-Part A - Loans to the Borrower

     2.1.1.  Commitment to Lend and Borrower's Promise to Pay.  (a) Subject
to the terms and conditions set forth in this Agreement, and provided there
is then existing no Suspension Event or Event of Default, the Bank agrees
to lend to the Borrower and the Borrower may borrow, repay, and reborrow
from time to time between the Closing Date and the Revolving Credit
Maturity Date upon notice by the Borrower to the Bank given in accordance
with 2.1.7, such sums as are outstanding as of the Closing Date and as may
thereafter be requested by the Borrower, provided, however, the maximum
principal amount of Revolving Credit Loans made to the Borrower (after
giving effect to all amounts requested) shall not, at any one time, exceed
the Borrower Availability.  Each request for a Revolving Credit Loan here-
under shall constitute a representation and warranty by Borrower on behalf
of itself and each of the Parties that the conditions set forth in 10 and
11, in the case of the initial Revolving Credit Loan, and 11, in the case
of all other Revolving Credit Loans, have been satisfied on the date of
such request.  

          (b)  Except as provided for in 2.2.2, and in 2.2.4, herein, and
provided there is no Event of Default pursuant to which the Obligations are
deemed to be accelerated (as provided for herein), or the Bank accelerates
the Obligations, the Revolving Credit Loans shall mature and be due and
payable, in full, on the Revolving Credit Maturity Date.  

     2.1.2.  The Borrower Revolving Credit Note.  The Borrower's Revolving
Credit Loans shall be evidenced by an amended and restated promissory note
of the Borrower in substantially the form of Exhibit A hereto (the
"Borrower Revolving Credit Note"), dated as of the Closing Date and
completed with appropriate insertions.  The Borrower Revolving Credit Note
shall be payable to the order of the Bank in the principal amount equal to
the Commitment or, if less, the outstanding amount of all Revolving Credit
Loans made by the Bank to the Borrower, plus interest accrued thereon, as
set forth below.  The Borrower irrevocably authorizes the Bank to make or
cause to be made, at or about the time of the Drawdown Date of any
Revolving Credit Loan to the Borrower, or at the time of receipt of any
payment of principal on the Borrower's Revolving Credit Note, an appro-
priate notation on the Record reflecting the making of such Revolving
Credit Loan to the Borrower, or (as the case may be) the receipt of such
payment.  The outstanding amount of the Revolving Credit Loans made to the
Borrower set forth on the Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Bank, but the failure to
record, or any error in so recording, any such amount on the Record shall
not limit or otherwise affect the obligations of the Borrower hereunder or
under the Borrower Revolving Credit Note to make payments of principal of,
or interest on, the Borrower Revolving Credit Note when due.  

     Sub-Part B - Loans to the LP

     2.1.3.  Commitment to Lend and the LP's Promise to Pay.  (a) Subject
to the terms and conditions set forth in this Agreement, and provided there
is then existing no Suspension Event or Event of Default, the Bank agrees
to lend to the LP and the LP may borrow, repay, and reborrow from time to
time between the Closing Date and the Revolving Credit Maturity Date upon
notice by the LP to the Bank given in accordance with 2.1.7, such sums as
are outstanding on the Closing Date and as thereafter may be requested by
the LP, provided, however, the maximum principal amount of Revolving Credit
Loans made to the LP (after giving effect to all amounts requested) shall
not, at any one time, exceed the LP Availability.  Each request for a
Revolving Credit Loan to the LP hereunder shall constitute a representation
and warranty by the LP on behalf of itself and each of the Parties that the
conditions set forth in 10 and 11, in the case of the initial Revolving
Credit Loan made to the LP, and 11, in the case of all other Revolving
Credit Loans made to the LP, have been satisfied on the date of such
request.  

          (b)  Except as provided for in 2.2.2, and in 2.2.4, herein, and
provided there is no Event of Default pursuant to which the Obligations are
deemed to be accelerated (as provided for herein), or the Bank accelerates
the Obligations, the Revolving Credit Loans made to the LP shall mature and
be due and payable, in full, on the Revolving Credit Maturity Date.  

     2.1.4.  The LP's Revolving Credit Note.  The LP's Revolving Credit
Loans shall be evidenced by an amended and restated promissory note of the
LP in substantially the form of Exhibit B hereto (the "LP Revolving Credit
Note"), dated as of December 29, 1993 and completed with appropriate
insertions.  The LP's Revolving Credit Note shall be payable to the order
of the Bank in the principal amount equal to the Commitment or, if less,
the outstanding amount of all Revolving Credit Loans made to the LP made by
the Bank, plus interest accrued thereon, as set forth below.  The LP
irrevocably authorizes the Bank to make or cause to be made, at or about
the time of the Drawdown Date of any Revolving Credit Loan made to the LP
or at the time of receipt of any payment of principal on the LP Revolving
Credit Note, an appropriate notation on the Record reflecting the making of
such Revolving Credit Loan to the LP or (as the case may be) the receipt of
such payment.  The outstanding amount of the Revolving Credit Loans made to
the LP set forth on the Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Bank, but the failure to
record, or any error in so recording, any such amount on the Record shall
not limit or otherwise affect the obligations of the LP hereunder or under
the LP Revolving Credit Note to make payments of principal of, or interest
on, the LP Revolving Credit Note when due.

     Sub-Part C - Applicable to All Revolving Credit Loans  

     2.1.5.  Collateral Note.  In addition to the Revolving Credit Note, to
the extent the Bank or its counsel deem it necessary or advisable to
perfect and/or enforce its rights and remedies against the Parties in each
or any of the jurisdiction where any of the Strategic Projects or Non-
Strategic Projects are located, the Parties shall execute and deliver to
the Bank, a note and/or an amendment and restatement to any existing
note(s) (hereinafter, individually and collectively, the "Collateral Note")
evidencing all or any portion of the Obligations to the Bank, or to any
beneficiary under any Deed(s) of Trust.  The Collateral Note shall not
constitute an obligation in addition to the Revolving Credit Notes, but
rather, the outstanding principal balance of any such Collateral Note shall
constitute a portion of the Revolving Credit Notes.  Additionally, interest
shall accrue and be payable, together with the outstanding principal
balance of the Collateral Note, in accordance with the terms and conditions
of the Revolving Credit Notes.  

     2.1.6.  Interest on Revolving Credit Loans.

     (a)  Each Domestic Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the Domestic Rate.

     (b)  (i)  Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the Eurodollar Rate determined for
such Interest Period.

          (ii) In accordance with 2.1.8, herein, until the occurrence of an
Event of Default or Suspension Event, the Borrower and/or the LP may select
interest periods of three, six, nine or twelve months with respect to the
Eurodollar Rate Loans, provided that no interest period shall end after the
Revolving Credit Maturity Date and in no event shall there be more than
four (4) Interest Periods in the aggregate in effect at any one time.  

     (c)  The Borrower and the LP shall each pay interest on each Revolving
Credit Loan made to the Borrower or the LP, respectively, in arrears on
each Interest Payment Date with respect thereto.

     2.1.7.  Requests for Revolving Credit Loans.  (a) The Borrower and the
LP may request in the aggregate up to four (4) advances each month.  The
first request for an advance during each month must be made concurrent with
the Borrower's and the LP's submittance of the Borrowing Base Report for
the subject month.  Each subsequent request for an advance must be in the
form of Exhibit C hereto.  The Borrower and the LP shall give to the Bank
written notice in the form of Exhibit C hereto of each Revolving Credit
Loan requested hereunder (a "Loan Request") (a) no less than three (3)
Business Days prior to the Drawdown Date for the first Domestic Rate Loan
requested by the Borrower or the LP in any month, (b)(i) on the same
Business Day as the proposed Drawdown Date for any Domestic Rate Loan
requested by the Borrower or the LP after the first advance during any
month if such request for a subsequent advance is received by the Bank by
11:00 a.m. Boston time; in the event that any such requests for subsequent
advances are not received by 11:00 a.m. Boston time, one (1) Business Day
prior to the Drawdown Date, and (c) no less than three (3) Eurodollar
Business Days prior to the proposed Drawdown Date of any Eurodollar Rate
Loan.  Each such notice shall be irrevocable and binding on the Borrower
and the LP and shall obligate the Borrower and/or the LP to accept the
Revolving Credit Loan requested from the Bank on the proposed Drawdown
Date.  

          (b)  Provided there is then existing no Suspension Event or Event
of Default, the Borrower and/or the LP may, from time to time, request that
the Bank make loans and advances against Notes Receivable arising out of
Amenity Sales Contracts, provided, however, (i) nothing contained herein
shall in any way constitute a commitment by the Bank to make any loans or
advances against Notes Receivable arising out of Amenity Sales Contracts,
(ii) all loans or advances against Notes Receivable arising out of Amenity
Sales Contracts shall be subject to Borrower Availability and LP
Availability, as applicable, (iii) the making of any such loan or advance
on any one occasion shall not, in any way, constitute a commitment by the
Bank to make any additional loans or advances on any other occasion, and
(iv) any loans and advances so made by the Bank against Notes Receivable
arising out of any Amenity Sales contracts shall be upon such terms and
conditions as the Bank may determine in its sole and absolute discretion. 
In the event that any such loans or advances are so made by the Bank, each
such loan or advance shall constitute a Loan.  

          (c)  The Borrower and the LP shall each open and maintain at the
Bank an account (hereinafter, each, a "Loan Account"), into which Loan
Account the Bank may (at the Bank's discretion and without notice in each
instance) deposit the proceeds of any loans or advances under the Revolving
Credit Loan.  The payment of principal, interest, Facility Fees,
Administrative Fees, L/C Fees, closing fees and any other amounts due
hereunder or under any of the other Loan Documents may (at the Bank's
discretion, and without notice, in each instance), be automatically debited
by the Bank from the Loan Account.  The Bank shall endeavor to furnish the
Borrower and the LP with notice of any deposit into, or withdrawal of funds
from, the Loan Account, provided, however, the Bank shall not, in any way,
be liable to the Borrower, the LP or any of the other Parties as a result
of its failure to furnish such notice.  

     2.1.8.  Conversion Options.  

          (a)  The Borrower and/or the LP may elect from time to time to
convert any outstanding Revolving Credit Loan to a Revolving  Credit Loan
of another Type, provided that (i) with respect to any such conversion of a
Eurodollar Rate Loan into a Domestic Rate Loan, such conversion shall only
be made on the last day of the Interest Period with respect thereto; (ii)
with respect to any such conversion of a Domestic Rate Loan to a Eurodollar
Rate Loan, the Borrower and/or the LP, as applicable, shall give the Bank
at least three (3) Eurodollar Business Days' prior written notice of such
election and (iv) no Loan may be converted into a Eurodollar Rate Loan when
any Suspension Event or Event of Default has occurred.  All or any part of
outstanding Revolving Credit Loans of any Type may be converted as provided
herein, provided that partial conversions shall be in an aggregate
principal amount of $50,000 or an integral multiple of $50,000 in excess
thereof.  Each Conversion Request relating to the conversion of a Domestic
Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the Borrower
and/or the LP.

          (b)  Any Revolving Credit Loans of any Type may be continued as
such upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower and/or the LP, as applicable, with the notice
provisions contained in 2.1.8(a); provided that when any Suspension Event
or Event of Default has occurred, any or all Eurodollar Rate Loans may, at
the option of the Bank (in its sole and absolute discretion), be automati-
cally converted to Domestic Rate Loans bearing interest at the Default Rate
either immediately upon such occurrence or on the last day of the Interest
Period relating thereto.

          (c)  In the event that the Borrower or the LP does not notify the
Bank of its election hereunder with respect to any Revolving Credit Loan,
such Revolving Credit Loan shall be automatically converted to a Domestic
Rate Loan at the end of the applicable Interest Period.

          (d)  Any conversion to or from Eurodollar Rate Loans shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of all Eurodollar Rate Loans
having the same Interest Period shall not be less than $1,000,000 or an
integral multiple of $100,000 in excess thereof.

     2.2.  REPAYMENT OF THE REVOLVING CREDIT LOANS.

     2.2.1.  Maturity.  (a) The Borrower and the LP each promises to pay on
the Revolving Credit Maturity Date, and there shall become absolutely due
and payable on the Revolving Credit Maturity Date, all of their respective
Revolving Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.

          (b)  On the Revolving Credit Maturity Date, the Borrower and the
LP shall each cause to be returned to the Bank all undrawn Letters of
Credit.  

     2.2.2.  Mandatory Repayments of Revolving Credit Loans. If at any time
the sum of the outstanding amount of the Revolving Credit Loans exceed the
Borrower Availability or the LP Availability, as applicable, then the
Borrower or the LP, as applicable, shall immediately pay the amount of such
excess to the Bank for application to the Revolving Credit Loans made to
the Borrower or the LP, as applicable.

     2.2.3.  Optional Repayments of Revolving Credit Loans. The Borrower
and/or the LP, in addition to the payments to be made pursuant to 2.2.4,
below, shall have the right, at its election, to repay the outstanding
amount of the Revolving Credit Loans, as a whole or in part, at any time
without penalty or premium, subject, however, to the terms and conditions
set forth in 4.8, below;  provided that the full or partial prepayment of
the outstanding amount of any Eurodollar Rate Loans pursuant to this 2.2.3
may be made only on the last day of the Interest Period relating thereto. 
Except with respect to the payments to be made pursuant to 2.2.4, below,
the Borrower and/or the LP shall give the Bank, no later than 10:00 a.m.,
Boston time, at least three (3) Eurodollar Business Days' prior written
notice of any proposed repayment pursuant to this 2.2.3 of Eurodollar Rate
Loans, specifying the proposed date of payment of Revolving Credit  Loans
and the principal amount to be paid. Each such partial prepayment of the
Eurodollar Rate Loans (other than payments to be made pursuant to 2.2.4,
below) shall be in an integral multiple of $10,000, and shall be accompa-
nied by the payment of accrued interest on the principal repaid to the date
of payment.  In the absence of instruction by the Borrower or the LP,
partial prepayments of outstanding Revolving Credit Loans shall be applied
first to the principal of Domestic Rate Loans and then to the principal of
Eurodollar Rate Loans.

     2.2.4.  Periodic Payments of Revolving Credit Loans.  (a) (i) Whether
or not there is then existing a Suspension Event or an Event of Default,
each of the Parties shall cause all payments, checks, drafts, letters of
credit, and other items which represent payment on account of the Notes
Receivables, and any proceeds and collections of the Notes Receivable to be
delivered by the Note Obligors and/or any other Person directly to a lock
box/blocked account or accounts (the "Lock Box Account") at Bank One,
Arizona, or its successors (the "Depository"), or similar recipient.  

               (ii) Until the within Agreement is terminated by a duly
authorized officer of the Bank, and provided there is then existing no
Suspension Event or Event of Default, weekly (on Tuesday of each week), the
Borrower and the LP shall, pursuant to the terms and conditions of the
Agency Agreement (hereinafter, the "Agency Agreement") entered into by and
among the Borrower, the LP, the Bank and the Depository, instruct the
Depository to transfer all available (collected) funds in the Lock Box
Account to the Bank in the manner provided for in the Agency Agreement. 
The Borrower and the LP each acknowledges and agrees that except with
respect to its (and/or its servicing agent's) ability to instruct the
Depository to transfer funds to the Bank, and its (and/or its servicing
agent's) ability to monitor the status of the Lock Box Account by virtue of
its (and/or its servicing agent's) on-line computer networking with the
Depository, neither the Borrower, the LP nor their respective servicing
agents shall have any right to control, manage or otherwise direct the
Depository to take any action with respect to, the Lock Box Account.  

          (b)  To the extent that any payments, checks, drafts, payments or
the proceeds of any drawing of any letters of credit, and other items
representing payment on account of the Notes Receivable are received by any
of the Parties, each of the Parties shall deliver to the Lock Box Account,
in the same form as so received, all of such payments, checks, drafts,
payments or the proceeds of any drawing of any letters of credit issued for
the benefit of any of the Parties, and other items which represent payments
on account of the Notes Receivable and any proceeds and collections of the
Notes Receivable, each of which payments, checks, drafts, payments or the
proceeds of any drawing of any letters of credit, and other items shall be
endorsed (in form and substance satisfactory to the Bank and the Bank's
counsel) in favor of, and delivered to the Lock Box.  

          (c)  (i)  Payments on account of the outstanding amount of the
Revolving Credit Loans shall be paid, from time to time, by application by
the Bank of payments received by the Bank from the Depository on account of
the Notes Receivable.  

               (ii) All items received in payment toward the Borrower's or
the LP's Obligations prior to 3:00 p.m. Boston Time on the date of receipt
shall be credited against the Obligations on the date of receipt, provided,
however, all items received in payment towards the Obligations after 3:00
p.m. Boston Time on the date of receipt shall not be credited against such
Obligations until the next Business Day, and all such credits shall be
subject to collectability by the Bank of each such item.  All payments may
be applied to the Borrower's Revolving Credit Note, the LP's Revolving
Credit Note and the other Obligations in such order and manner as the Bank
in its reasonable discretion determines.

          (d)  Notwithstanding the application of payments described
herein, the Borrower and the LP shall be responsible for all required
payments whether or not payments are received by the Bank on account of the
Notes Receivable.  

     2.3.  Letters of Credit.  

     2.3.1.  Issuance of Letters of Credit.  (a) Subject to the terms and
conditions set forth in this Agreement and the applicable Reimbursement
Agreement, upon the written request to the Bank by the Borrower or the LP
(with respect to new Letters of Credit), or by the Borrower, the LP or
MAXXAM (with respect to the extension or renewal of any existing Letter of
Credit), the Bank agrees to: (a) issue, for the account of the Parties,  on
any Business Day after the date hereof but prior to the Revolving Credit
Maturity Date (provided, however, no Letters of Credit to be issued shall
have an expiry date that is later in time than the Revolving Credit
Maturity Date), one or more irrevocable stand-by Letters of Credit, and (b)
extend or renew, for the account of the Parties or MAXXAM, any outstanding
Letter of Credit issued for the account of the Parties or MAXXAM prior to
the date hereof, the aggregate of which ((a) and (b)) shall not exceed the
Letter of Credit Amount.  Any Letters of Credit previously issued for the
account of the Parties or MAXXAM prior to the date hereof that remain
outstanding as of the date hereof may remain outstanding or be extended or
renewed (subject to the Letter of Credit Amount) provided, however, no new
Letters of Credit will be issued for the account of MAXXAM (or any affili-
ated entity of MAXXAM which is not also a Party), subsequent to the date
hereof.  Each written request (including a completed application on the
Bank's form) for the issuance (in favor of the Parties), or the extension
or renewal (on behalf of the Parties or MAXXAM) of a Letter of Credit
hereunder shall be received by the Bank at least three Business Days prior
to the proposed date of issuance.  The expiry dates, amounts and bene-
ficiaries of the Letters of Credit will be as agreed by the Borrower, the
LP, or MAXXAM (where applicable) and the Bank (in its reasonable
discretion), and each Letter of Credit shall be in a form acceptable to the
Bank in its discretion.  Each Letter of Credit issued subsequent to the
date hereof shall be issued pursuant to a Reimbursement Agreement to be
entered into between the Borrower and/or the LP and the Bank;  provided,
however, that to the extent that the terms and conditions of any
Reimbursement Agreement are in conflict with or are inconsistent with the
terms and conditions of this Agreement, the obligations of the Bank, the
Borrower and/or the LP with respect to Letters of Credit shall be governed
by the terms and conditions of this Agreement.  

          (b)  (i)  The Borrower and the LP each acknowledges that
notwithstanding anything to the contrary contained herein in any Reimburse-
ment Agreement, and/or on any of the other Loan Documents, the Borrower and
the LP shall each be primarily obligated to the Bank for the prompt,
punctual and faithful payment and performance of any drawings under any
Letter of Credit, L/C Fees (as defined herein) and any other costs and
expenses incurred by the Bank in connection with any Letter of Credit,
whether or not such Letter of Credit is issued for the account of the
Borrower, the LP or for the account of MAXXAM or any of the other Parties.  

               (ii) The Borrower and the LP each hereby agrees that the
Bank may at any time, and from time to time, without thereby releasing the
Borrower or the LP from any liability on account of the matters referred to
in Subsection (i), above, and without notice to or further consent from the
Borrower or the LP, either with or without consideration:  release or
surrender any lien or other security of any kind or nature whatsoever held
by it or by any person, firm or corporation on its behalf or for its
account, securing any of the Obligations; substitute for any collateral so
held by it, other collateral of like kind, or of any kind; modify the terms
of any Letter of Credit issued for the account of MAXXAM or any of the
Parties or any instrument, document, or agreement relating to such Letter
of Credit between the Bank and MAXXAM or any such Party; extend or renew
the Obligations for any period; grant releases, compromises and indulgences
with respect to the Obligations or the Loan Documents and to any persons or
entities now or hereafter liable thereunder or hereunder; release MAXXAM or
any Party, surety, endorser or accommodation party of the Obligations, the
Security Documents or any other Loan Documents; or take or fail to take any
action permitted or required pursuant to the Loan Documents.  

     2.3.2.  Interest on Letters of Credit.  Notwithstanding anything to
the contrary contained herein, any drawing under any Letters of Credit
shall bear interest at the Letter of Credit Interest Rate, compounded daily
(to the extent permitted by law) and shall be payable ON DEMAND.  

     2.3.3.  Effects of Drawings.  Each drawing under a Letter of Credit
shall be payable ON DEMAND.  The liability of the Borrower and the LP under
this Agreement to repay the Bank in respect of drawings under Letters of
Credit shall be Obligations secured pursuant to the Security Documents and
such liability shall rank  pari passu with the Obligations of the Parties
to repay all other Loans hereunder.  

     3.   FEES.  

     3.1.  Facility Fee.  The Borrower and/or the LP shall pay the Bank,
monthly in arrears for each month hereafter until the Revolving Credit
Maturity Date, a facility fee equal to 

               (i)       the difference between

                    (A)  Fourteen Million Dollars ($14,000,000.00)

                    and

                    (B)  the average outstanding balance owed by the
          Borrower and the LP in the aggregate to the Bank for borrowings
          made under the Revolving Credit Loan during the subject month, 

               (ii)      multiplied by 0.375, 

               (iii)     divided by twelve (12).  

     3.2.  Administration Fee.  In order to compensate the Bank for its
administration of the Revolving Credit Loan, the Borrower and/or the LP
shall pay to the Bank, a quarterly administration fee (the "Administration
Fee") in the amount equal to the product of (a) the Commitment and (b) one
quarter of one-half percent (e.g. based on a $14,000,000.00 Commitment, the
quarterly Administration Fee would be $17,500.00).  The quarterly Admin-
istration Fee shall be deemed fully earned on the first day of each quarter
that any Revolving Credit Loan is in effect and shall be nonrefundable even
if all Revolving Credit Loans are paid in full during any such quarter. 
The Administration Fee shall be paid in consecutive quarterly payments on
the first day of every April, July, October and January of each calendar
year during the term of this Agreement.  Notwithstanding anything to the
contrary contained herein, in the event that the Obligations are paid in
full and the within Agreement is terminated by a duly authorized officer of
the Bank on the Revolving Credit Maturity Date, the Administration Fee due
and owing for the last quarterly period covered by the Agreement that is
less than a full quarterly period shall be prorated for the number of days
of the subject quarter on a quarterly per diem basis.  

     3.3.  L/C Fee.  (a)  The Borrower and/or the LP shall pay to the Bank
a fee (hereinafter, the "L/C Fee") with respect to the Letters of Credit
equal to two percent (2.0%) per annum of the face amount of any outstanding
Letters of Credit, the L/C Fee being determined and payable as follows:

          (b)  The L/C Fee shall be determined based upon a 360 day year
over actual number of days elapsed.  

          (c)  (i)  For all Letters of Credit to be issued or renewed by
the Bank (including, without limitation, for any renewal of any existing
Letters of Credit), the entire L/C Fee shall be paid in advance.  (ii)
Provided there is then existing no Suspension Event or Event of Default,
for any Letter of Credit, the face amount of which is reduced, or for any
Letter of Credit returned (undrawn) to the Bank prior to the expiry date,
the Bank agrees (subject to the terms and conditions set forth herein) to
refund (on a pro-rata basis) that portion of the L/C Fee equal to: (x) the
difference between (A) the number of days for which the Letter of Credit
was initially issued, less (B) the number of days for which the Letter of
Credit remained outstanding prior to return or reduction, (y) divided by
the number of days of the initial term of the Letter of Credit, (z) (i) in
the event of any returned Letter of Credit, multiplied by the L/C Fee, and
(ii) in the event of a reduction of any Letter of Credit, multiplied by the
amount by which the face amount of such Letter of Credit was reduced,
divided by the original face amount of such Letter of Credit and multiplied
by the L/C Fee, provided, however, with respect to any new Letter of Credit
(other than the renewal of any Letters of Credit) returned (undrawn) to the
Bank prior to the expiry date, or reduced from the initial amount, the L/C
Fee to be paid (as provided for herein) shall not, in any event, be less
than an L/C Fee based upon an entire Letter of Credit outstanding for a six
(6) month period.  (iii) Except as provided for herein, there shall be no
refund of any portion of the L/C Fee in the event of the expiration,
termination or other modification of, or drawing under, any Letter of
Credit during any month.  

     4.   CERTAIN GENERAL PROVISIONS.

     4.1.  Funds for Payments.  

     (a)  Unless otherwise agreed to by the Bank, all payments of
principal, interest, Facility Fees, Administrative Fees, L/C Fees, closing
fees and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Bank at its head office at 100 Federal
Street, Boston, Massachusetts  02110, or at such other location in the
Boston, Massachusetts area that the Bank may from time to time designate,
in each case in immediately available funds, provided, however, the payment
of principal, interest, Facility Fees, Administrative Fees, L/C Fees,
closing fees and any other amounts due hereunder or under any of the other
Loan Documents may be automatically debited by the Bank from the Loan
Account (or any subsequent or replacement account maintained by the
Borrower at the Bank).

     (b)  All payments by any of the Parties hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless any of the Parties are compelled by law to make
such deduction or withholding.  If any such obligation is imposed upon any
of the Parties with respect to any amount payable by it hereunder or under
any of the other Loan Documents, each of the Parties will pay to the Bank,
on the date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Bank to receive the same net amount which the Bank
would have received on such due date had no such obligation been imposed
upon any of the Parties.  Each of the Parties will deliver promptly to the
Bank certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.  Except as otherwise provided
for in the within Agreement, nothing contained in the within Section shall
be deemed to impose any liability or obligation upon the Parties for the
payment of any such obligation incurred by the Bank for ordinary income
taxes generally paid by the Bank on account of the Bank's income or profit. 


     4.2.  Computations.  All computations of interest on the Loans, the
Facility Fees, L/C Fees and Administration Fees to the extent applicable
shall be based on a 360-day year and actual number of days elapsed.  Except
as otherwise provided in the definition of the term "Interest Period" with
respect to Eurodollar Rate Loans, whenever a payment hereunder or under any
of the other Loan Documents becomes due on a day that is not a Business
Day, the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension.  The
outstanding amount of the Loans as reflected on the Revolving Credit Note
Record from time to time shall be considered correct and binding on the
Borrower and/or the LP unless within thirty (30) Business Days after
receipt of any notice by the Borrower or the LP of such outstanding amount,
the Borrower or the LP shall notify the Bank to the contrary.  The Bank
will endeavor to furnish the Borrower or the LP with notice of any
discrepancy or inconsistency between the Bank's records and information
furnished by the Borrower or the LP to the Bank provided, however, the Bank
shall be under no obligation to furnish the Borrower or the LP with notice
of any such inconsistency or discrepancy and shall have no liability on
account of its failure to furnish such notice to the Borrower or the LP. 

     4.3.  Inability to Determine Eurodollar Rate.  In the event, prior to
the commencement of any Interest Period relating to any Eurodollar Rate
Loan, the Bank shall determine that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate that would otherwise determine
the rate of interest to be applicable to any Eurodollar Rate Loan during
any Interest Period, the Bank shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and
the LP) to the Borrower and the LP.  In such event (a) any Loan Request
with respect to Eurodollar Rate Loans shall be automatically withdrawn and
shall be deemed a request for Domestic Rate Loans, (b) each Eurodollar Rate
Loan will automatically, on the last day of the then current Interest
Period thereof, become a Domestic Rate Loan, and (c) the obligations of the
Bank to make Eurodollar Rate Loans shall be suspended until the Bank
determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Bank shall so notify the Borrower and the LP.

     4.4.  Illegality.  Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for the Bank
to make or maintain Eurodollar Rate Loans, the Bank shall forthwith give
notice of such circumstances to the Borrower and the LP and thereupon (a)
the commitment of the Bank to make Eurodollar Rate Loans or convert Loans
of another Type to Eurodollar Rate Loans shall forthwith be suspended and
(b) the Eurodollar Rate Loans then outstanding shall be converted auto-
matically to Domestic Rate Loans on the last day of each Interest Period
applicable to such Eurodollar Rate Loans or within such earlier period as
may be required by law.  The Borrower and the LP each hereby agrees to pay
the Bank, upon receipt of the Certificate (or any subsequent Certificates)
provided for in 4.8, herein, any additional amounts necessary to compensate
the Bank for any costs incurred by the Bank in making any conversion in
accordance with this 4.4, including any interest or fees payable by the
Bank to lenders of funds obtained by it in order to make or maintain its
Eurodollar Loans hereunder.

     4.5.  Additional Costs, Etc.  If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made
upon or otherwise issued to the Bank by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law),
shall:

          (a)  subject the Bank to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this Agreement,
the other Loan Documents, the Commitment or the Loans (other than taxes
based upon or measured by the income or profits of the Bank), or

          (b)  materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to the Bank of the principal of
or the interest on any Loans or any other amounts payable to the Bank under
this Agreement or the other Loan Documents, or

          (c)  impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of the Bank, or

          (d)  impose on the Bank any other conditions or requirements with
respect to this Agreement, the other Loan Documents, the Loans, the
Commitment, or any class of loans or commitments of which any of the Loans
or the Commitment forms a part; and the result of any of the foregoing is

               (i)  to increase the cost to the Bank of making, funding,
     issuing, renewing, extending or maintaining any of the Loans or the
     Commitment, or

               (ii) to reduce the amount of principal, interest or other
     amount payable to the Bank hereunder on account of the Commitment or 
     any of the Loans, or

               (iii)     to require the Bank to make any payment or to
     forego any interest or other sum payable hereunder, the amount of
     which payment or foregone interest or other sum is calculated by
     reference to the gross amount of any sum receivable or deemed received
     by the Bank from the Borrower hereunder,

then, and in each such case, upon receipt of the Certificate (or any
subsequent Certificates) provided for in 4.8, herein, the Borrower and the
LP each will, from time to time, pay to the Bank such additional amounts
set forth in the Certificate, which will be sufficient to compensate the
Bank for such additional cost, reduction, payment or foregone interest or
other sum.

     4.6.  Capital Adequacy.  If any present or future law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental
authority with appropriate jurisdiction affects the amount of capital
required or expected to be maintained by the Bank or any corporation
controlling the Bank and the Bank determines that the amount of capital
required to be maintained by it is increased by or based upon the existence
of the Loans made or deemed to be made pursuant hereto, then the Borrower
and the LP each shall upon its receipt of the Certificate (or any
subsequent Certificates) provided for in 4.8, herein, pay to the Bank, from
time to time, as an additional fee payable hereunder, such amount as set
forth in such Certificate or Certificates, which amount(s) will adequately
compensate the Bank in light of these circumstances for its increased costs
of maintaining such capital.  The Bank shall allocate such cost increases
among its customers in good faith and on an equitable basis.

     4.7.  Indemnity.  If, due to payments or Conversion Requests or due to
acceleration of the maturity of the Revolving Credit Loans pursuant to the
Note or due to any other reason, including without limitation the occur-
rence of an Event of Default, the Bank receives payments of principal of,
or is subject to a conversion of a Eurodollar Rate Loan into another Type
of Revolving Credit Loan other than on the last day of an Interest Period
relating thereto, the Borrower and/or the LP shall, upon its receipt of the
Certificate (or any subsequent Certificates) provided for in 4.8, pay to
the Bank any amounts required to compensate the Bank for any losses, costs
or expenses which it may reasonably incur as a result of such payment or
conversion, including, without limitation, any loss, costs or expenses
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by the Bank to fund or maintain such Revolving Credit Loans. 
Such compensation, and any additional compensation provided for in the Note
shall include, without limitation, an amount calculated as follows:

               (i)  First, the Bank shall determine the amount by which (A)
     the total amount of interest which would have otherwise accrued
     hereunder on each installment of principal so paid or not borrowed,
     during the period beginning on the date of such payment or failure to
     borrow (after having been given proper notice with a Loan Request or
     Conversion Request and ending on the date such installment would have
     been due (the "Reemployment Period"), exceeds (B) the total amount of
     interest which would accrue, during the Reemployment Period, on any
     readily marketable bond or other obligation of the United States of
     America designated by the Bank in its sole discretion at or about the
     time of such payment, such bond or other obligation of the United
     States of America to be in an amount equal (as nearly as may be) to
     the amount of principal so paid or not borrowed and to have a maturity
     comparable to the Reemployment Period, and the -interest to accrue
     thereon to take account of amortization of any discount from par or
     accretion of premium above par at which the same is selling at the
     time of designation.  Each such amount is hereafter referred to as an
     "Installment Amount".

               (ii) Second, each Installment Amount shall be treated as
     payable as of the date on which the related principal installment
     would have been payable by the Borrower or the LP, as applicable, had
     such principal installment not been prepaid or not borrowed.

               (iii)     Third, the amount to be paid on each such date
     shall be the present value of the Installment Amount determined by
     discounting the amount thereof from the date on which such Installment
     Amount is to be treated as payable, at the same annual interest rate
     as that payable upon the bond or other obligation of the United States
     of America designated as aforesaid by the Bank.

     4.8.  Certificate.  A certificate (hereinafter, the "Certificate")
setting forth the calculation of any additional amounts payable pursuant to
4.4, 4.5, 4.6, 4.7 or 14 and a brief explanation of the circumstances
giving rise to such amounts which are due, submitted by the Bank to the
Borrower or the LP, shall be prima facie evidence that such amounts are due
and owing.

     4.9.  Interest on Overdue Amounts.  After the occurrence of an Event
of Default, all principal and (to the extent permitted by applicable law)
accrued and unpaid interest on the Revolving Credit Loans and all other
amounts due and payable hereunder or under any of the other Loan Documents
shall, at the Bank's option, bear interest at the Default Rate, compounded
daily (to the extent permitted by law), until such amount shall be paid in
full (after as well as before judgment).

     4.10.  Late Charge.  Without derogating from the right of Bank to
accelerate the maturity of the Obligations upon the occurrence of an Event
of Default, if any payment due hereunder is not received by Bank within
thirty (30) days of the date such payment is due, the Borrower shall pay to
the Bank on demand a late charge equal to three percent (3%) of the amount
of such payment.

     5.   COLLATERAL.  

     5.1.  Grant of Collateral.  Except with respect to any of the
Borrower's Collateral (as defined below) located in the State of California
(hereinafter, the "MCO California Collateral"), whether now existing or
hereafter arising, which MCO California Collateral shall only be granted to
the Bank to secure the payment and performance of the Obligations due and
owing to the Bank, the payment and performance of the Obligations
(including, without limitation, the payment and performance of the Guaran-
ties), shall be secured by (where applicable as indicated below), a first
mortgage interest in and to each of the Party's Mortgaged Property, a
continuing security interest in and lien on (or an assignment of rights for
collateral purposes, as appropriate) each of the Party's respective
properties, assets and rights of every kind and nature, wherever located,
whether now owned or hereafter acquired or arising (other than the
properties and assets listed on Schedule 5.1 annexed hereto, or as
otherwise provided for in Subsection (xiii), below), including, without
limitation, a pledge of all of the Parties' Notes Receivable (except as set
forth on Schedule 5.2(iii) annexed hereto), and an assignment of all
mortgages or deeds of trust or other collateral granted by any Note Obligor
and held by a Party to secure the payment of such Notes Receivable, and an
assignment of certain rights of each of the Parties with respect to each of
the Mortgaged Property, and all proceeds and products thereof, subject only
to Permitted Liens, including, without limiting the generality of the
foregoing, the following properties, assets and rights of each of the
Parties:

          (i)  all Notes Receivable, together with all collateral security
     granted by all Note Obligors as collateral security for the payment of
     all Notes Receivable;

          (ii) the Mortgaged Property including all Buildings;

          (iii)     all building materials, supplies, furniture,
     furnishings, fixtures, equipment, contract rights, inventory,
     accounts, plans and specifications, trade names and other articles of
     personal property relating to, located on or used solely in connection
     with the construction, use, occupancy, operation or maintenance of any
     of the Mortgaged Property;

          (iv) the architect's contracts, the general contractor's
     contracts, agreements with soils, mechanical or structural engineers,
     if any, all subcontracts, all warranties, and all other rights,
     licenses, permits, approvals and agreements in any way relating to the
     construction of any of the Mortgaged Property, the Buildings or the
     use, occupancy, operation or maintenance of any of the Mortgaged
     Property;

          (v)  all Leases for use or occupancy of any of the Mortgaged
     Property and of all rents, issues and profits of any of the Mortgaged
     Property;

          (vi) Service Agreements for the Notes Receivable;

          (vii)     all of the issued and outstanding common stock of the
     Borrower;

          (viii)    all goods, cash, bank accounts (including, without
     limitation, the Loan Account and the Lock Box Account), receivables
     and contract rights, under any contract for the sale of any of its
     properties to any Person and under all instruments, security
     agreements and other documents related thereto;

          (ix) all rights to the payment of money, including tax refund
     claims (other than tax refunds payable to MAXXAM), insurance proceeds
     and tort claims;  

          (x)  all chattel paper, documents, instruments (including
     intercompany promissory notes) and securities, together with all
     income therefrom, increases therein and proceeds thereof;

          (xi) all general intangibles, patents, trademarks, trade names,
     including without limitation, all right, title and interest in and to
     the trademarks, service marks, registrations of trademarks and
     servicemarks, patents and applications for patents set forth on the
     attached Schedule 5.2(iv) (collectively, the "Patents and
     Trademarks"), together with all right, title and interest of each of
     the Parties, in and to all patents and trademarks which it may
     hereinafter acquire, the right to file and prosecute applications for
     patents and trademarks, including the Patents and Trademarks, and
     similar intellectual property anywhere in the world and the good will
     of the business connected with the use of and symbolized by the
     Patents and Trademarks, together with all assets which uniquely
     reflect the good will of the business of each of the Parties,
     including but not limited to, its trade names, customer lists, trade
     secrets, corporate and other business records, license rights,
     advertising materials, operating manuals, methods, processes, know-
     how, sales literature, drawings, specifications, descriptions,
     inventions, name plates, catalogues, copyrights, dealer contracts,
     supplier contracts, distribution agreements, proprietary information,
     consulting agreements, engineering contracts and engineering drawings;

          (xii)     all furniture, fixtures, equipment, inventory, raw
     materials, work in progress, books and records; 

          (xiii)    except with respect to the properties and assets listed
     on Schedule 5.1, annexed hereto, all interests and rights in, on or
     over real property pursuant to the terms of each of the mortgages,
     deeds of trust, assignments of rents, security agreements and the
     financing statements, collateral assignments of leases and rents, and
     such other documents as may be permitted or required in order to
     effect or exercise an interest or right in real property in the
     jurisdictions in which such property is located (collectively, the
     "Mortgages" ) granted by each of the Parties, (a) prior to the date
     hereof, with respect to any of the Strategic Projects and/or Non-
     Strategic Projects, and (b) with respect to all real property
     hereafter acquired by each of the Parties, as and when such hereafter
     acquired property which has not theretofore been pledged to the Bank
     aggregates an amount in excess of $500,000 in form and substance
     satisfactory to the Bank;  

          (xiv)     all of the partnership interests of the general
     partner(s) and limited partner(s) in the L.P.; and

          (xv) all right, title, and interest in and to SunRidge Canyon
     L.L.C., a limited liability company organized under the laws of the
     State of Arizona, including all proceeds, interest, dividends, rights
     to payment, allocations of profit and losses and other distributions
     arising out of, related to, or in connection with such company.

     All such assets subject to such Security Documents are collectively
referred to herein as the "Collateral".  

     Each of the Parties shall execute or deliver or cause to be executed
or delivered to the Bank any and all documents, instruments and/or
agreements, including, mortgages and/or deeds of trust, security
agreements, assignments, and amendments to any existing collateral security
documents, as Bank's counsel shall prepare in order to create the
collateral security interests in and to the above described Collateral,
together with such financing statements and other documents as are required
to comply with and create and perfect a security interest under the Uniform
Commercial Code.  The Bank, and its counsel, shall, where permissible (as
determined by the Bank and its counsel), endeavor to prepare amendment
documents in order to effectuate documentation of the Loan.  

     5.2.  Warranty of Title.  Each of the Parties each represent and
warrant to the Bank, effective as of the date of the execution of this
Agreement and effective as of the Closing Date, as follows:

          (i)  Except for Permitted Liens, each of the Parties is the owner
     of the Collateral free and clear of all security interests, liens,
     defects, irregularities, encumbrances, easements, rights of way and
     clouds on title and has validly and effectively granted to the Bank a
     security interest in and lien upon such Collateral.  

          (ii) Except as described on Schedule 5.1, none of the Parties has
     equity or ownership rights of any nature in any real property or
     fixtures attached to real property other than the real property and
     fixtures described in the Security Documents;

          (iii)     Except as described on Schedule 5.1, none of the
     Parties has rights as the lessee of real estate or fixtures attached
     to real estate under any form of tenancy other than, and with respect
     to, such rights under those leases described in the Security
     Documents;

          (iv) None of the Parties has ownership rights of any name or
     nature in and to any patent, copyright, trademark, service mark or
     trade name (or any applications with respect to the foregoing) other
     than those patents, copyrights, trademarks, service marks and trade
     names (and applications) listed in Schedule 5.2(iv) annexed hereto;
     and

          (v)  Collateral consisting of tangible personal property
     (including without limitation, all machinery, equipment, goods and
     inventory) is maintained (except for the use of motor vehicles in the
     conduct of each of the Party's businesses and the occasional temporary
     removal of any items of Collateral in connection with repairs) only at
     the Strategic Projects, the Non-Strategic Projects and its offices at
     5847 San Felipe, Houston, Texas.

          (vi) Except as described on the Schedule entitled Existing Notes
     Receivable, and on Schedule 5.2(vi), none of the Parties have any
     interest in any Notes Receivable.  

     5.3.  Pro Rata Security.  All amounts owing with respect to the
Obligations shall be secured pro rata by the Collateral without distinction
as to whether some Obligations are then due and payable and other
Obligations are not then due and payable, provided that all costs and
expenses as provided in 14 hereof shall first be paid before any proceeds
are applied to any other Obligations.  

     6.   REPRESENTATIONS AND WARRANTIES.  Each of the Parties each repre-
sent and warrant to the Bank as follows.

     6.1.  Corporate Authority; Etc.

          (a)  Incorporation; Good Standing.  The Borrower is a Delaware
corporation; Westcliff is a Texas corporation; Horizon is a Delaware
corporation; HPC is a Delaware corporation and the LP is a limited
partnership duly organized under the laws of the State of Delaware.  Each
are validly existing and in good standing under the laws of their
respective states of incorporation or organization, as applicable, and have
all requisite power to own property and conduct their respective businesses
as now conducted and as presently contemplated, and are in good standing as
foreign entities and are duly authorized to do business in the respective
jurisdictions where any of its Mortgaged Property is located and in each
other jurisdiction where such qualification is necessary except where a
failure to be so qualified in such other jurisdiction would not have a
materially adverse effect on the business, assets or financial condition of
the Parties.  

          (b)  Authorization.  The execution, delivery and performance of
this Agreement, the Security Documents and the other Loan Documents to
which any of the Parties, is to become a party and the transactions
contemplated hereby and thereby (i) are within the authority of each of the
Parties, (ii) have been duly authorized by all necessary proceedings on the
part of each such Person, (iii) do not conflict with or result in any
breach or contravention of any provision of law, statute, rule or regula-
tion to which any of the Parties, is subject or any judgment, order, writ,
injunction, license or permit applicable to any of the Parties, and (iv) do
not conflict with any provision of any of the Parties' respective Articles
of Organization, Certificates of Incorporation, By-Laws, partnership
agreements, or other charter documents or bylaws of, or any agreement or
other instrument binding upon, any of the Parties.

          (c)  Enforceability.  The execution and delivery of this
Agreement, the Security Documents, and the other Loan Documents to which
any of the Parties, is or is to become a party will result in valid and
legally binding obligations of each of the Parties, enforceable against
each of them in accordance with the respective terms and provisions hereof
and thereof.

     6.2.  Governmental Approvals.  The execution, delivery and performance
by each of the Parties, of this Agreement, the Security Documents, and the
other Loan Documents to which any of the Parties, is or is to become a
party and the transactions contemplated hereby and thereby do not require
the approval or consent of, or filing with, any governmental agency or
authority, except with respect to the recording and filing of the Security
Documents and related financing statements in the appropriate records
office with respect thereto.

     6.3.  Title to Properties; Leases.  Except as indicated on  Schedule
6.3 hereto, each of the Parties own all of the assets reflected in the
consolidated balance sheet of the Parties as of the Balance Sheet Date or
acquired since that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that date), subject to
no rights of others, including any mortgages, leases, conditional sales
agreements, title retention agreements, liens or other encumbrances except
Permitted Liens as described in Section 8.2, annexed hereto.

     6.4.  No Material Changes, Etc.  Except as stated on Schedule 6.4,
since the Balance Sheet Date, there has occurred no materially adverse
change in the financial condition or business of any of the Parties, or any
of their respective  Subsidiaries as shown on or reflected in the consol-
idated balance sheet of each of the Parties, as of the Balance Sheet Date,
or the consolidated statement of income for the fiscal year then ended,
other than changes in the ordinary course of business that have not had any
materially adverse effect either individually or in the aggregate on the
business or financial condition of the Parties.

     6.5.  Franchises, Patents, Copyrights, Etc.  Each of the Parties
possess all franchises, patents, copyrights, trademarks, trade names, li-
censes and permits, and rights in respect of the foregoing, adequate for
the conduct of its business substantially as now conducted without known
conflict with any rights of others.

     6.6.  Litigation.  Except as stated on Schedule 6.6 there are no
actions, suits, proceedings or investigations of any kind pending or
threatened against any of the Parties, or any of their respective Subsid-
iaries before any court, tribunal or administrative agency or board that,
if adversely determined, might, in any case materially adversely affect the
properties, assets, financial condition or business of the Parties, or
materially impair the right of any of the Parties, and their respective
Subsidiaries to carry on business substantially as now conducted by each of
them, or result in any substantial liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the balance
sheet of each of the Parties, or which question the validity of this
Agreement, the Security Documents or any of the other Loan Documents, or
any action taken or to be taken pursuant hereto or thereto.

     6.7.  No Materially Adverse Contracts, Etc.  Except as set forth on
Schedule 6.7, annexed hereto, none of the Parties, nor any of their
respective Subsidiaries are subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation that
has or is expected in the future to have a materially adverse effect on the
business, assets or financial condition of any of the Parties.  None of the
Parties, nor any of their respective Subsidiaries are a party to any
contract or agreement that has or is expected, in the judgment of each of
the Party's officers, to have any materially adverse effect on the business
of any of the Parties, or their respective Subsidiaries.

     6.8.  Compliance With Other Instruments, Laws, Etc. (a) None of the
Parties, nor any of their respective Subsidiaries is in violation of any
provision of its respective charter or other organization documents, by-
laws, or any agreement or instrument to which they may be subject or by
which they or any of their properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing
cases in a manner that could result in the imposition of substantial penal-
ties or materially and adversely affect the financial condition, properties
or business of any of the Parties, or any of their respective Subsidiaries.

          (b)  Except as disclosed on Schedule 6.6, none of the Parties,
any of their respective subsidiaries, or any of their respective directors,
officers, agents or employees is or at any time in the past has been
advised by any governmental agency having jurisdiction that it was (unless
otherwise cured, satisfied or released), or is, in violation of (i) the
Interstate Land Sales Full Disclosure Act (the "Interstate Land Sales Act")
or similar laws pertaining to land sales in any state in which any of the
Parties, or any of their respective subsidiaries, owns, sells, transfers,
manages, operates, develops or otherwise disposes of real property (ii) any
federal or state securities law, (iii) the federal Truth in Lending Act
(including regulations written under such Act by the Board of Governors of
the Federal Reserve System) or any similar state statute, (iv) the federal
Equal Credit Opportunity Act (including regulations written under such Act
by the Board of Governors of the Federal Reserve System) or any similar
state statute, or (v) any judgment, decree, order, law, license, rule or
regulation arising under such statutes or with respect to the matters
covered thereby.  

     6.9.  Tax Status.  Except as provided for in 7.8, herein, each of the
Parties (a) have made or filed all federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which
they are subject, (b) have paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and by
appropriate proceedings and (c) have set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply.  Except
as provided for in 7.8, herein, there are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and
the officers of any of the Parties know of no basis for any such claim.

     6.10.  No Suspension Event or Event of Default.  No Suspension Event
or Event of Default has occurred and is continuing.

     6.11.  Holding Company and Investment Company Acts. None of the
Parties nor any of their respective Subsidiaries are a "holding company",
or a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor are any of them an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment
company", as such terms are defined in the Investment Company Act of 1940.

     6.12.  Absence of UCC Financing Statements, Etc. Except with respect
to Permitted Liens, there is no financing statement, security agreement,
chattel mortgage, real estate mortgage or other document filed or recorded
with any filing records, registry, or other public office, that purports to
cover, affect or give notice of any present or possible future lien on, or
security interest in, any Collateral, or rights thereunder.

     6.13.  Setoff, Etc.  The Collateral and the Bank's rights with respect
to the Collateral are not subject to any setoff, claims, withholdings or
other defenses.  

     6.14.  Certain Transactions.  None of the officers, trustees,
directors, or employees of any of the Parties, or any of their respective
Subsidiaries are presently a party to any transaction with the other, or
any of their respective Subsidiaries (other than for services and benefits
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, trustee, director or such
employee or, to the knowledge of the Parties, any corporation, partnership,
trust or other entity in which any officer, trustee, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

     6.15.  Employee Benefit Plans; Multiemployer Plans; Guaranteed Pension
Plans.  Except as set forth on Schedule 6.15 annexed hereto, none of the
Parties, nor any ERISA Affiliate maintains or contributes to any Employee
Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan.

     6.16.  Regulations U and X.  No portion of any Loan is to be used for
the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

     6.17.  Environmental Compliance.  Each of the Parties, have taken all
reasonable steps to investigate the past and present condition and usage of
the Real Estate and the operations conducted thereon and, based upon such
diligent investigation, make the following representations and warranties:

          (a)  Except as set forth on Schedule 6.17, with respect to any of
     the Mortgaged Property, and any other Real Estate, none of the
     Parties, nor any of their respective Subsidiaries or any operator of
     the Real Estate, or any operations thereon is in violation, or alleged
     violation, of any judgment, decree, order, law, license, rule or
     regulation pertaining to environmental matters, including without
     limitation, those arising under the Resource Conservation and Recovery
     Act ("RCRA"), the Comprehensive Environmental Response, Compensation
     and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amend
     ments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
     Water Act, the Federal Clean Air Act, the Toxic Substances Control
     Act, or any state or local statute, regulation, ordinance, order or
     decree relating to health, safety or the environment (hereinafter
     "Environmental Laws"), which violation involves any of the Mortgaged
     Property or involves other Real Estate which would have a material
     adverse effect on the environment or the business, assets or financial
     condition of any of the Parties.

          (b)  Except as set forth on Schedule 6.17, annexed hereto, none
     of the Parties, nor any of their respective Subsidiaries have received
     notice from any federal, state or local governmental authority, (i)
     that it has been identified by the United States Environmental
     Protection Agency ("EPA) as a potentially responsible party under
     CERCLA with respect to a site listed on the National Priorities List,
     40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous waste,
     as defined by 42 U.S.C.  9601(5), any hazardous substances as defined
     by 42 U.S.C.  9601(14), any pollutant or contaminant as defined by 42
     U.S.C. 9601(33) or any toxic substances, oil or hazardous materials or
     other chemicals or substances regulated by any Environmental Laws
     ("Hazardous Substances") which it has generated, transported or
     disposed of have been found at any site at which a federal, state or
     local agency or other third party has conducted or has ordered that
     any of the Parties, or any of their respective Subsidiaries conduct a
     remedial investigation, removal or other response action pursuant to
     any Environmental Law; or (iii) that any of them are or shall be a
     named party to any claim, action, cause of action, complaint, or legal
     or administrative proceeding (in each case, contingent or otherwise)
     arising out of any third party's incurrence of costs, expenses, losses
     or damages of any kind whatsoever in connection with the release of
     Hazardous Substances.

          (c)  With respect to any of the Mortgaged Property, and any other
     Real Estate, except as set forth on Schedule 6.17 attached hereto: (i)
     no portion of the Real Estate has been used for the handling,
     processing, storage or disposal of Hazardous Substances except in
     accordance with applicable Environmental Laws; and no underground tank
     or other underground storage receptacle for Hazardous Substances is
     located on any portion of the Mortgaged Property; (ii) in the course
     of any activities conducted by any of the Parties, or any of their 
     respective Subsidiaries or to the best of their knowledge the opera
     tors of the Real Estate, no Hazardous Substances have been generated
     or are being used on the Real Estate except in accordance with
     applicable Environmental Laws; (iii) there has been no release i.e.
     any past or present releasing, spilling, leaking, pumping, pouring,
     emitting, emptying, discharging, injecting, escaping, disposing or
     dumping (a "Release") or threatened Release of Hazardous Substances
     on, upon, into or from the Mortgaged Property, or, on upon, into or
     from the other properties of any of the Parties, or any of their
     respective Subsidiaries, which Release would in the case of such other
     properties have a material adverse effect on the value of any of the
     Real Estate or adjacent properties or the environment; (iv) there have
     been no Releases on, upon, from or into any real property in the
     vicinity of any of the Real Estate which, through soil or groundwater
     contamination, may have come to be located on, and which would have a
     material adverse effect on the value of, the Real Estate; and (v) any
     Hazardous Substances that have been generated on any of the Real
     Estate have been transported off-site only by carriers having an
     identification number issued by the EPA, and to the best of each of
     the Parties knowledge, treated or disposed of only by treatment or
     disposal facilities maintaining valid permits as required under
     applicable Environmental Laws, which transporters and facilities have
     been and are, to the best of each of the Party's knowledge, operating
     in compliance with such permits and applicable Environmental Laws.

          (d)  Except as set forth on Schedule 6.17, annexed hereto, none
     of the Parties, nor any of the Mortgaged Property is subject to any
     applicable Environmental Law requiring the performance of Hazardous
     Substances site assessments, or the removal or remediation of
     Hazardous Substances, or the giving of notice to any governmental
     agency or the recording or delivery to other Persons of an
     environmental disclosure document or statement by virtue of the
     transactions set forth herein and contemplated hereby, or as a
     condition to the recording of the Security Documents or to the effec
     tiveness of any other transactions contemplated hereby.

     6.18.  Subsidiaries.  Schedule 6.18 sets forth all of the Subsidiaries
of each of the Parties.

     6.19.  Material Lease Summaries.  Each of the Parties, has delivered
to the Bank Material Lease Summaries dated as of the date hereof relating
to the Material Leases.  Such Material Lease Summaries are true, accurate
and complete summaries and representations of the material terms of all
Material Leases relating to the Mortgaged Property as of the date thereof.

     6.20.  Loan Documents.  All of the representations and warranties of
each of the Parties, made in the other Loan Documents or any document or
instrument delivered to the Bank pursuant to or in connection with any of
the Loans are true and correct in all material respects.

     6.21.  Mortgaged Property.  Each of the Parties, make the following
representations and warranties concerning all of the Mortgaged Property:

          (a)  Off-Site Utilities.  Only with respect to the Developed
     Lots, all water, sewer, electric, gas, telephone and other utilities
     are adequate to service the Developed Lots in full compliance with
     applicable law.  

          (b)  Access; Etc.  The streets abutting each of the Mortgaged
     Property (based upon the outside perimeter of each of the Mortgaged
     Property), are public roads, to which the Mortgaged Property has
     direct access by trucks and other motor vehicles and by foot, or are
     private ways (with direct access by trucks and other motor vehicles
     and by foot to public roads) to which the Mortgaged Property (based
     upon the outside perimeter of each of the Mortgaged Property), has
     direct access without charge or liability for maintenance or repair.

          (c)  No Required Real Property Consents, Permits, Etc.  (i) None
     of the Parties, has received any notices of, or has any knowledge of,
     any approvals, consents, licenses, permits, utility installations and
     connections (including, without limitation, drainage facilities), curb
     cuts and street openings, for the Developed Lots, which have not or
     will not be granted, effected, or performed and completed (as the case
     may be) or any fees or charges therefor which have not been fully
     paid.  No such approvals, consents, permits or licenses, (including,
     without limitation, any railway siding agreements) will terminate, or
     become void or voidable or terminable on any foreclosure sale of the
     Developed Lots pursuant to the Security Documents.  

               (ii) Except as set forth on Schedule 6.21(c), annexed
     hereto, there are no outstanding notices, suits, orders, decrees or
     judgments relating to adverse zoning, building use and occupancy,
     fire, health, sanitation, or other violations affecting, against, or
     with respect to, the Mortgaged Property or any part thereof that, if
     adversely determined, might materially adversely affect the use of the
     Mortgaged Property, the ability of any of the Parties, and their
     respective Subsidiaries, to carry on business substantially as now
     conducted by each of them, or the ability of any of the Parties, and
     their respective Subsidiaries to comply with any of the terms of the
     within Agreement.

          (d)  Insurance.  None of the Parties, has received any notices
     from any insurer or its agent requiring performance of any work with
     respect to the Mortgaged Property or cancelling or threatening to
     cancel any policy of insurance, and the Mortgaged Property complies
     with the requirements of all insurance carriers.

          (e)  Real Property Taxes; Special Assessments. There are no
     unpaid or outstanding real estate or other taxes or assessments, or
     other governmental charges on or against the Mortgaged Property or any
     part thereof which are payable by any of the Parties other than (i)
     real estate taxes not yet due and payable); (ii) real estate taxes,
     the validity or amount of which are currently being contested in good
     faith by appropriate proceedings, and in which payment is not required
     prior to contesting the validity or amount of such real estate taxes,
     and in which the Parties, or any of their respective Subsidiaries have
     set aside on their books adequate reserves with respect thereto; and
     (iii) miscellaneous real estate taxes not exceeding Two Hundred Fifty
     Thousand Dollars ($250,000.00) for property not essential to the
     continued use or operation of the Mortgaged Property.  The Parties and
     each Subsidiary of any of the Parties will pay all such taxes,
     assessments, charges, levies or claims forthwith upon the commencement
     of proceedings to foreclose any lien that may have attached as
     security therefor.  Except as set forth on Schedule 6.21(e), annexed
     hereto, no abatement proceedings are pending with reference to any
     real estate taxes assessed against the Mortgaged Property.  Except as
     set forth on the Title Insurance Policies, there are no betterment
     assessments or other special assessments presently pending with
     respect to any portion of the Mortgaged Property, and none of the
     Parties has received any notice of any such special assessment being
     contemplated.

          (f)  Historic Status.  The Mortgaged Property is not located
     within any historic district pursuant to any federal, state or local
     law or governmental regulation.

          (g)  Eminent Domain.  There are no pending eminent domain
     proceedings against any of the Mortgaged Property or any part thereof,
     and, to each of the Party's knowledge, no such proceedings are
     presently threatened or contemplated by any taking authority.

          (h)  Agreements Relating to the Mortgaged Property.  Except with
     respect to agreements for which payments thereunder do not exceed Four
     Thousand Dollars ($4,000.00) per month, there are no agreements
     relating to the operation and maintenance of the Mortgaged Property,
     or any portion thereof, except as listed on Schedule 6.21(h).  To the
     best of each of the Party's knowledge, there are no adverse claims or
     any basis for adverse claims in respect of the Mortgaged Property or
     its operation, by any party to any Agreements Relating to the
     Mortgaged Property.

          (i)  Service Agreements.  Except as listed on Schedule 6.21(i),
     there are no Service Agreements relating to servicing rights relevant
     to the servicing of any of the Notes Receivable.  To the best of each
     of the Party's knowledge, there are no adverse claims or any basis for
     adverse claims in respect of servicing rights relevant to the Notes
     Receivable.  

          (j)  Other Material Real Property Agreements; No Options.  Except
     as set forth on Schedule 6.21(j), and except for any existing Amenity
     Sales Contracts, Bulk Land Sales Contracts, Retail Lot Contracts, and
     Home Mortgages, there are no material agreements pertaining to the
     Mortgaged Property or the operation or maintenance thereof other than
     as described in this Agreement (including the Schedules hereto) or
     otherwise disclosed in writing to the Bank by any of the Parties; and
     no person or entity has any right or option to acquire the Mortgaged
     Property or any portion thereof or interest therein. 

     6.22.  Existing Notes Receivable Value.  Each of the Parties represent
and warrant that as of May 31, 1995, the total aggregate balance of the
Existing Notes Receivable is at least equal to $21,500,000.00.  

     6.23.  Existing Lots and Undeveloped Acres.  As set forth on Schedule
6.23 entitled Existing Lots and Undeveloped Acres, each of the Parties
represent and warrant that as of May 31, 1995, the aggregate total of lots
owned by the Parties exceeds nine thousand lots (9,000), and the aggregate
total of undeveloped acres owned by the Parties exceeds eighteen thousand
(18,000) acres.  

     6.24.  Non-Underwriting Criteria Loans.  The Borrower and the LP may
enter into any loan arrangements, or otherwise extend credit to any Person
in the ordinary course of the Borrower's or the LP's business, provided,
however, the Bank shall be under no obligation to deem any Note Receivable
not satisfying the Underwriting Criteria as an Acceptable New Note
Receivable or an Acceptable Existing Note Receivable.   

     6.25.  Amended and Restated Credit and Security Agreement Dated
December 29, 1992.  Each of the Parties acknowledge, confirm and agree that
the within Agreement is intended to amend, restate and replace certain
terms and conditions set forth in a certain Amended and Restated Revolving
Credit Loan and Security Agreement dated December 29, 1992, as amended, by
and among the Bank, MCO Properties, Inc., MCO Properties L.P., Westcliff
Development Corporation, Horizon Properties and Horizon Properties
Corporation, as previously amended.  

     6.26.     LP Partners.   The sole general partner of the LP is, and
shall remain, the Borrower.  The sole limited partner of LP is, and shall
remain, MCOP Limited Partner, Inc.

     6.27.     LP Assets and Liabilities.    (A) The only assets of the LP
as of the date hereof are the LP Assets.  All Notes Receivable of the LP
are set forth on Schedule 1.1(g) annexed hereto.  No LP Assets are subject
to any rights of others, including any mortgages, leases, conditional sales
agreements, title retention agreements, liens or other encumbrances, except
in favor of the Bank or liens permitted pursuant to Section 8.2.

          (B)  The LP has no Indebtedness as of the date hereof other than
Indebtedness in favor of the Bank or indebtedness permitted pursuant to
Section 8.1.

     7.   AFFIRMATIVE COVENANTS OF THE PARTIES.  Each of the Parties
covenant and agree that, so long as any Loan or Note is outstanding or the
Bank has any obligation to make any Loans:

     7.1.  Punctual Payment.  Each of the Parties will duly and punctually
pay or cause to be paid the principal and interest on the Loans and all
interest and fees provided for in this Agreement, all in accordance with
the terms of this Agreement, the Note and the Guaranties, as well as all
other sums owing pursuant to the Loan Documents.

     7.2.  Maintenance of Office.  Each of the Parties will maintain their
respective chief executive offices in the locations set forth in the Pre-
amble of this Agreement, or at such other place in the United States of
America as the Parties, shall designate upon thirty (30) days prior written
notice to the Bank, where notices, presentations and demands to or upon the
Parties, in respect of the Loan Documents may be given or made.

     7.3.  Records and Accounts.  Each of the Parties will (a) keep, and
cause each of its Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in
accordance with generally accepted accounting principles and (b) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves.

     7.4.  Financial Statements, Certificates and Information.  (a) Each of
the Parties will deliver to the Bank:

               (i)  Monthly, within thirty (30) days following the end of
     each month, (A) the Borrowing Base Report (whether or not the Borrower
     or the LP intends to request a loan or advance under the Loan) setting
     forth the information necessary to calculate the Borrower Availability
     and the LP Availability as of the last day of the preceding calendar
     month and setting forth information necessary to reconcile to the most
     recent Borrowing Base Report submitted to the Bank; (B) internally
     prepared financial statements of: (x) the Borrower's financial
     condition at, and the results of operations for, the period ending
     with the end of the subject month, which shall include, at a minimum,
     a balance sheet and a cash flow and income statement and the
     Borrower's monthly management report which sets forth cash flow and 
     earnings information, for each of the Strategic Projects and the Non-
     Strategic Projects; and (y) cash flow statements for each of the
     Strategic Projects and the Non-Strategic Projects, and in connection
     with the statements, reports and information to be furnished pursuant
     to (x) and (y), herein, a comparison of same against each of the
     Party's financial projections set forth in the Borrower's  business
     plans previously prepared and delivered to the Bank for the subject
     monthly period; 

               (ii) Quarterly, within forty-five (45) days following the
     end of the Borrower's fiscal quarter, internally prepared
     (consolidated and consolidating) financial statements (prepared in
     accordance with generally accepted accounting principals consistently
     applied) of the Borrower's financial condition at, and the results of
     the Borrower's operations for the year-to-date period ending with the
     end of the subject quarter, which statements shall include, at a
     minimum, a balance sheet and a cash flow and income statement,
     together with a Certificate of Compliance executed by the Parties.

               (iii)     Annually, within ninety (90) days following the
     end of the Borrower's fiscal year, original signed counterparts of (A)
     the Borrower's consolidated annual audited financial statements, which
     statements shall have been prepared by Borrower and bear the
     unqualified opinions of, the Borrower's independent certified public
     accountants (which accountants shall be subject to the Bank's
     approval), and (B) the Borrower's Certificate of Compliance; and (C)
     the Borrower's consolidating annual financial statements, which
     statements shall have been prepared by the Borrower.  

               (iv) quarterly, within forty-five (45) days after the end of
     each of the fiscal quarters of each of the Parties, and promptly after
     execution of a new Material Lease or the amendment of any Material
     Lease, updated Material Lease Summaries with respect to any of the
     Mortgaged Property.

          (b)  In addition to the foregoing, each of the Parties and MAXXAM
shall furnish the Bank with such other financial information as may be
reasonably requested by the Bank, including, without limitation, additional
financial information pertaining to the Borrower, the LP, any of the
Guarantors and/or any of the Strategic Projects and Non-Strategic Projects. 

          (c)  None of the Parties or MAXXAM will change their respective
fiscal years (which each of the Parties acknowledge and agree is from
January 1 to December 31 of each calendar year) without prior written
notice to the Bank.  

          (d)  (i)  Annually, the Bank may conduct a Commercial Finance
Exam (hereinafter, the "Commercial Finance Exam") of each or any of the
Parties, the Strategic Projects or the Non-Strategic Projects, the Notes
Receivable and/or any other matters determined by the Bank (in its sole and
absolute discretion) to be necessary in connection with the Loan, the
reasonable out-of-pocket costs of which shall be borne by the Borrower
and/or the other Parties (jointly and severally) and paid to the Bank on
Demand.  

               (ii) Each of the Parties agree to assist the Bank, or any
other independent contractor conducting such exams, in connection with the
conducting of such Commercial Finance Exam, and in connection therewith
shall make each of the Party's and the Strategic Projects and Non-Strategic
Projects books and records available to the Bank or any other independent
contractor for review.  

          (e)  Except with respect to the financial information and reports
set forth in 7.4(a)(i), above, all financial information and/or reports to
be furnished by the Parties and MAXXAM to the Bank shall each be prepared
in accordance with generally accepted accounting principles consistently
applied.  

     7.5.  Notices.

          (a)  Defaults.  The Borrower or the applicable Party will
promptly notify the Bank in writing of the occurrence of any Suspension
Event or Event of Default.  In addition, if any Person shall give any
notice or take any other action in respect of a claimed default (whether or
not constituting an Event of Default) under this Agreement or under any
note, evidence of indebtedness, indenture or other obligation to which or
with respect to which any of the Parties, or any of their respective Sub-
sidiaries are a party or obligor, whether as principal or surety, and such
default would permit the holder of such note or obligation or other
evidence of indebtedness to accelerate the maturity thereof, which
acceleration would have a material adverse effect on any of the Parties,
each of the Parties, shall forthwith give written notice thereof to the
Bank, describing the notice or action and the nature of the claimed
default.

          (b)  Environmental Events.  Each of the Parties will promptly
give notice to the Bank (i) of any violation of any Environmental Law that
the Parties or any of their respective Subsidiaries reports in writing or
is reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (ii) upon becoming aware thereof by a notice from
any public agency of any inquiry, proceeding, investigation, or other
action, of potential environmental liability, or any federal, state or
local environmental agency or board, that in either case involves the Real
Estate or has the potential to materially affect the assets, liabilities,
financial conditions or operations of each of the Parties or the Bank's
security interests pursuant to the Security Documents.

          (c)  Notification of Claims against Collateral. Each of the
Parties will, immediately upon becoming aware thereof, notify the Bank in
writing of any setoff, claims (including, with respect to the Mortgaged
Property, environmental claims), withholdings or other defenses to which
any of the Collateral, or the Bank's rights with respect to the Collateral,
are or may be subject.

          (d)  Notice of Litigation and Judgments.  Each of the Parties
will, or will cause each of their respective Subsidiaries to, give notice
to the Bank in writing within twenty (20) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting any of the Parties, or any of their respective
Subsidiaries or to which any of the Parties, or any of their respective
Subsidiaries are or are to become a party involving an uninsured claim
against any of the Parties, or any of their respective Subsidiaries that
could reasonably be expected to have a materially adverse effect on any of
the Parties and stating the nature and status of such litigation or
proceedings.  Each of the Parties will, and will cause each of its
Subsidiaries to, give notice to the Bank, in writing, in form and detail
satisfactory to the Bank, within ten (10) days of any judgment not covered
by insurance, final or otherwise, against any of the Parties, or any of
their respective Subsidiaries in an amount in excess of $250,000.00.

     7.6.  Existence; Maintenance of Properties.  Each of the Parties will
do or cause to be done all things necessary to preserve and keep in full
force and effect their existence as corporations in the states of incor-
poration indicated in the Preamble of this Agreement.  Each of the Parties
will do or cause to be done all things necessary to preserve and keep in
full force all of their respective rights and franchises and those of their
Subsidiaries.  Each of the Parties (a) will cause all of their respective
properties and those of their respective Subsidiaries used or useful in the
conduct of their respective business or the business of their respective
Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment, (b) will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Parties may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (c) will, and will
cause each of their respective Subsidiaries to, continue to engage
primarily in the businesses now conducted by each of them and in related
businesses.

     7.7.  Insurance.  Each of the Parties: (a) will obtain and maintain
with respect to the Strategic Projects and the Non-Strategic Projects, such
insurance as the Bank may reasonably require, including: (i) "all risks"
property insurance written on a builder's risk, completed value, non-re-
porting form, in connection with the construction of any improvements,
including, without limitation, the construction of any Building on the
Mortgaged Property; (ii) flood insurance, if the Strategic Projects or the
Non-Strategic Projects are located in any federally designated "special
hazard area"; (iii) commercial general liability insurance and owner's
contingent or protective liability insurance; (iv) employer's liability
insurance; (v) umbrella liability insurance; and (vi) workmen's
compensation insurance.  The insurance provided for in clauses (i) and (ii)
shall name the Bank as mortgagee and loss payee and shall be first payable
in case of loss to the Bank pursuant to standard non-contributory mortgage
clauses and lender's loss payable endorsements.  The insurance provided for
in clauses (iii) and (v) shall name the Bank as an additional insured.

          (b)  will require its general contractor to obtain and maintain
at all times the insurance customarily required by a general contractor's
contract.

          (c)  will require its architect, engineer and any other design
professional providing design or engineering services to obtain and
maintain professional liability insurance customarily required by an
architect's, engineer's or other design professional's contract.

          (d)  All insurance referred to in this paragraph 7.7 shall be in
such amounts and form, shall include such coverages, endorsements and
deductibles, and shall be issued by such insurers as shall be approved by
the Bank, and shall contain the written agreement of the insurer to give
the Bank thirty (30) days prior written notice of cancellation, non-
renewal, modification or expiration.  

     7.8.  Taxes.  Each of the Parties will pay taxes, assessments and
other governmental charges against the Mortgaged Property and will duly pay
and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges
imposed upon it and its other real properties, sales and activities, or any
part thereof, or upon the income or profits therefrom, as well as all
claims for labor, materials, or supplies that if unpaid might by law become
a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if:

          (a)  the aggregate of any taxes for any part of the Mortgaged
     Property not essential to the continued current use and operation of
     the Mortgaged Property does not exceed Two Hundred Fifty Thousand
     Dollars ($250,000.00), or

          (b)  the validity or amount thereof shall currently be contested
     in good faith by appropriate proceedings and if any of the Parties, or
     any of their respective Subsidiaries shall have set aside on its books
     adequate reserves with respect thereto; and provided further that the
     Parties and each Subsidiary of any of the Parties will pay all such
     taxes, assessments, charges, levies or claims forthwith upon the
     commencement of proceedings to foreclose any lien that may have
     attached as security therefor.

     7.9.  Inspection of Properties and Books.  Each of the Parties shall
permit the Bank at the Bank's expense prior to the occurrence of any
Suspension Event or Event of Default, but thereafter at the Party's
expense, to visit and inspect any of the properties of any of the Parties,
or any of their respective Subsidiaries to examine the books of account of
each of the Parties and each of their respective Subsidiaries (and to make
copies thereof and extracts therefrom) and to discuss the affairs, finances
and accounts of each of the Parties and their respective Subsidiaries with,
and to be advised as to the same by, its officers, all at such reasonable
times and intervals as the Bank may reasonably request, provided, however,
nothing contained herein shall in any way affect the Borrower's or the LP's
obligation to reimburse the Bank for the Bank's reasonable out-of-pocket
costs incurred in connection with the Commercial Finance Exams to be
conducted by the Bank, as provided for in 7.4(d), herein.

     7.10.  Compliance with Laws, Contracts, Licenses, and Permits.  Each
of the Parties will comply with, and will cause each of their respective
Subsidiaries to comply with (a) all applicable laws and regulations now or
hereafter in effect wherever its business is conducted, including all
Environmental Laws, (b) the provisions of its corporate charter, and other
charter documents and by-laws, (c) all agreements and instruments to which
it is a party or by which it or any of its properties may be bound and (d)
all applicable decrees, orders, and judgments.  If at any time while any
Loan or Note is outstanding or the Bank has any obligation to make Loans
hereunder, any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary
or required in order that any of the Parties, may fulfill any of their
obligations hereunder, each of the Parties will immediately take or cause
to be taken all reasonable steps within the power of each of the Parties,
to obtain such authorization, consent, approval, permit or license and
furnish the Bank with evidence thereof.

     7.11.  Use of Availability.  (a) (i) The proceeds of the Loans shall
be used: (x) subject to the limitations contained herein and in the Loan
Documents, for general business purposes of the Parties; (y) to assist in
financing the construction of certain infrastructure improvements and resi-
dential development at the Strategic Projects or Non-Strategic Projects;
(z) to assist in financing certain carrying costs of the Strategic Projects
and the Non-Strategic Projects; (ii) Availability under the Loan may be
used for the issuance (up to the Letter of Credit Amount) by the Bank of
Letters of Credit for the account of the Parties subsequent to the date
hereof, and/or for the extension or renewal of any Letters of Credit issued
for the account of the Parties or MAXXAM prior to the date hereof.  

          (b)  (i)  Each of the Parties shall be permitted to make, and
each of the Parties shall be entitled to receive, loans (individually and
collectively, the "On-Loan") to be utilized for payments due and owing on
account of the liabilities of the Parties; provided, however, the aggregate
amount of any such On-Loans to each of the Parties shall not, at any time,
exceed the Book Value of all collateral security individually granted by
any of the Parties to the Bank as collateral security for the payment and
performance of each of their respective Guaranties, as provided for herein,
and in each instance, each On-Loan shall be evidenced by an instrument of
indebtedness (in form and substance satisfactory to the Bank, in its sole
and absolute discretion), endorsed (in form and substance satisfactory to
the Bank and the Bank's counsel), delivered and collaterally assigned to
the Bank, and subordinate to the Obligations.  To the extent that any
collateral security is granted by any of the Parties (other than the
Borrower or the LP) to the Borrower or the LP to secure the payment and
performance of such On-Loan( s), all such collateral security shall be
collaterally assigned to the Bank.  

               (ii) Each of the Parties acknowledge, confirm and agree that
each shall be liable (jointly and severally) to the Bank for the payment of
the Obligations, whether or not any On-Loan is made by the Parties to
another Party.

          (c)  (i)  Each of the Parties acknowledge, confirm and agree that
the Bank may (without any request for a loan or advance by the Borrower),
except as otherwise provided herein, use the proceeds of the Revolving
Credit Loans to pay for any and all reasonable costs and expenses incurred
by the Bank in connection with the matters set forth in the within
Agreement, including, without limitation, costs and expenses associated
with attorneys' fees, appraisals and Commercial Finance Exams.  Without
limiting the Bank's rights set forth in the within subsection, the Bank
will endeavor to furnish the Parties with notice of such use of the
proceeds but shall be under no obligation to furnish such notice.  

               (ii) Each of the Parties acknowledge, confirm and agree that
interest on any advance made by the Bank pursuant to Subsection (c)(i),
above, shall accrue and be payable at the Domestic Rate.  

     7.12.  Further Assurances.  Each of the Parties will cooperate with,
and will cause each of its Subsidiaries to cooperate with the Bank and
execute such further instruments and documents as the Bank shall reasonably
request to carry out to its satisfaction the transactions contemplated by
this Agreement and the other Loan Documents.

     7.13.  Appraisals.  (a) (i) The Bank at its option, shall have the
right to obtain updated Appraisals of the Strategic Projects and/or the
Non-Strategic Projects at any time during the term of the Loan.  (ii) The
costs of such Appraisals for any of the Non-Strategic Projects shall be
borne by the Bank.  

               (iii)     Without limiting the terms of Subsections (b) and
(c), below, the Borrower and the LP each acknowledges, confirms and agrees
that upon the occurrence of a Suspension Event or an Event of Default, all
costs and expenses incurred by the Bank with respect to Appraisals for any
of the Strategic Projects shall be borne by the Borrower and the LP, as
applicable, if, such additional Appraisals for any of the Strategic
Projects were ordered by the Bank during the period of a Suspension Event
not otherwise cured or after the occurrence of an Event of Default. 

          (b)  To the extent that any Revolving Credit Loans are made under
the Loan based upon Availability created by Developed Lots at either of the
Lake Havasu City, Arizona, or Rancho Mirage/Mirada, California properties,
the Borrower or the LP, as applicable, shall pay all costs and expenses
incurred by the Bank in connection with the Bank's procurement of an ap-
praisal for such Developed Lots giving rise to Availability under the Loan. 


          (c)  The Bank has received an Appraisal prepared by an appraiser
designated by the Bank stating that the Fountain Hills, Arizona property,
with improvements located thereon, which has a fair value that is
satisfactory to the Bank, in the Bank's reasonable discretion.  Provided
that so long as no Suspension Event or Event of Default shall have occurred
(and not been cured) under the Loan, the LP shall not be obligated to pay
for the expenses associated with any additional appraisal for the Fountain
Hills, Arizona, property prior to the Revolving Credit Maturity Date.  

     7.14.  Notification Letters.  At closing, each of the Parties shall
execute and deliver to the Bank notification letters (hereinafter, the
"Notification Letters"), substantially in the form of Schedule 7.14,
advising each Note Obligor to make payment on account of all Note
Receivables to the Bank.  At the time any of the Parties enter into any
additional Amenity Sales Contracts, Retail Lot Contracts, Bulk Land Sales
Contracts and/or Home Mortgages, concurrent with the delivery of the Bank
of Note Receivable generated on account thereof, the Parties shall deliver
to the Bank a Notification Letter for each such Note Receivable.  As
provided for herein, the Bank may only forward the Notification Letters to
each Note Obligor directing them to make payment on account of all Notes
Receivable to the Bank after the occurrence of an Event of Default.

     7.15.  Hazardous Substance Remedial Action.  Each of the Parties
shall, at the Bank's (or its engineer's) request, take all additional
action as may be recommended by any Phase I environmental assessment report
furnished to the Bank pursuant to 10.10, below, including, without
limitation, take all remedial action as may be recommended therein.  

     8.   CERTAIN NEGATIVE COVENANTS OF THE PARTIES.  Each of the Parties
covenant and agree that, so long as any Loan or Note is outstanding or the
Bank has any obligation to make any Loans:

     8.1.  Restrictions on Indebtedness.  (a) Each of the Parties will not,
and will not permit any of its Subsidiaries to, create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect
to any Indebtedness other than:

               (i)  Indebtedness to the Bank arising under any of the Loan
Documents;

               (ii) Indebtedness created or incurred on account of any On-
Loan; 

               (iii)     current liabilities of the Parties, or their
respective Subsidiaries incurred in the ordinary course of business but not
incurred through (i) the borrowing of money, or (ii) the obtaining of
credit except for credit on an open account basis customarily extended and
in fact extended in connection with normal purchases of goods and services;

               (iv) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies
to the extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of 7.8;

               (v)  endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;

               (vi) Indebtedness existing on the date of this Agreement and
listed and described on Schedule 8.1 hereto, including any refinancing of
any debt listed on Schedule 8.1 hereto, so long as such refinancing is not
for an amount in excess of 100% of the fair market value of the asset being
refinanced;

               (vii)     Indebtedness of the Parties in respect of obli-
gations to complete subdivision improvements; and

               (viii)    Indebtedness approved or previously approved by
the Bank in its sole and absolute discretion.  

          (b)(i)  Notwithstanding anything to the contrary herein
contained, the aggregate amount of the Borrower's (including its
Subsidiaries and the LP) recourse Indebtedness on a consolidated basis
(exclusive of Indebtedness, the repayment of which is subordinated to the
Bank pursuant to the Subordination Agreement and also exclusive of accounts
payable, accrued liabilities, estimated obligations for lot improvements,
deferred taxes, and other liabilities not commonly characterized as third-
party debt, but inclusive of the amount set forth in 8.2(ix), below)
(collectively, the "Other Liabilities")), shall not, at any time, exceed
the aggregate of the then outstanding principal balance of the Loans, plus
$13,900,000.00. 

          (ii)   Notwithstanding anything to the contrary herein contained,
the aggregate amount of the Borrower's (including   its Subsidiaries and
the LP) recourse Indebtedness (other than on account of the Loans,
Indebtedness due to affiliates of the Borrower and subordinated to the
Bank, and the Other Liabilities) on a consolidated basis with respect to
the Strategic Projects and Non-Strategic Projects (other than the Fountain
Hills, Arizona Project) shall not, at any time, exceed $7,500,000.00.  

     8.2.  Restrictions on Liens, Etc.  Each of the Parties will not, and
will not permit any of its Subsidiaries to, (a) create or incur or suffer
to be created or incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon any
of its property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; (b) transfer any of its
property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more
than thirty (30) days after the same shall have been incurred any Indebted-
ness or claim or demand against it that if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority whatsoever
over its general creditors; or (e) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper
or instruments, with or without recourse; provided that each of the Parties
and any Subsidiary of any of the Parties may create or incur or suffer to
be created or incurred or to exist:

          (i)  liens in favor of any of the Parties, on all or part of
their respective Subsidiaries securing Indebtedness owing by Subsidiaries
to any of the Parties, or by any of Westcliff, Horizon, HPC or MAXXAM to
the Borrower or to the LP on account of the On-Loans;

          (ii) liens on properties other than the Mortgaged Property to
secure taxes, assessments and other government charges or claims for labor,
material or supplies in respect of obligations not overdue;

          (iii)     deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;

          (iv) liens on properties other than the Mortgaged Property in
respect of judgments or awards, the Indebtedness with respect to which is
permitted by 8.1(iv);

          (v)  liens of carriers, warehousemen, mechanics and materialmen
and other like liens and liens imposed by law, created in the ordinary
course of business, for amounts not yet due or which are being contested in
good faith by appropriate proceedings in accordance with applicable law and
as to which adequate reserves or other appropriate provisions are being
maintained in accordance with generally accepted accounting principles; 

          (vi) pledges or deposits made in connection with workmen's
compensation, employee benefit plans, unemployment or other insurance, old
age pensions, or other Social Security benefits; 

          (vii)     encumbrances on properties consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which any of the Parties is a party, and
other minor liens or encumbrances none of which interferes materially with
the use of the property affected in the ordinary conduct of the business of
each of the Parties, which defects do not individually or in the aggregate
have a materially adverse effect on the business of any of the Parties, or
any of their respective Subsidiaries on a consolidated basis.

          (viii)    presently outstanding liens listed on Schedule 8.2
hereto;

          (ix) purchase money security interests in or purchase money
mortgages not exceeding $500,000 on real or personal property acquired
after the date hereof to secure purchase money indebtedness incurred in
connection with the acquisition of such property, which security interests
or mortgages cover only the real or personal property so acquired;

          (x)  liens in favor of the Bank under the Loan Documents;

          (xi) other liens and encumbrances expressly permitted under the
terms of the Security Documents; and

          (xii)     other liens and encumbrances approved or previously
approved by the Bank in its sole and absolute discretion.  

     8.3.  Restrictions on Investments.  Each of the Parties will not, and
will not permit any of their respective Subsidiaries to, make or permit to
exist or to remain outstanding any Investment except Investments in:

          (a)  Cash Equivalents;

          (b)  SunRidge Canyon L.L.C., a limited liability company
organized under the laws of the State of Arizona in an amount not to exceed
$5,000,000.00.

          (c)  Investments existing on the date hereof and listed on
Schedule 8.3 hereto; and

          (d)  any other Investments made in the ordinary course of each of
the Party's businesses in a manner consistent with past practice, provided
that the aggregate value of all Investments under this subsection (d), on a
consolidated basis, shall not exceed at any time $10,000,000.

     8.4.  Merger, Consolidation.  (a) Each of the Parties will not, and
will not permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock
acquisition or disposition (other than the acquisition or disposition of
assets other than the Mortgaged Property in the ordinary course of business
consistent with past practices).
          (b)  Notwithstanding the foregoing (i) the merger, acquisition or
consolidation of any of the assets or stock of MAXXAM (other than any
merger, acquisition or consolidation with the Borrower or any of the
Guarantors) shall be permitted provided Charles E. Hurwitz continues to
maintain a controlling interest in MAXXAM, and (ii) mergers, acquisitions
or consolidations of the assets or stock of (i) the Borrower into any of
its Subsidiaries, (ii) any of the Borrower's Subsidiaries into the
Borrower, (iii) any of the Borrower's Subsidiaries into another of the
Borrower's Subsidiaries and (iv) any of the Parties into any of the other
Parties, shall be permitted subject, however, to any lien or encumbrance in
favor of the Bank, and only after execution of any documents reasonably
requested by the Bank, or the Bank's counsel in connection therewith.  

     8.5.  Sale and Leaseback.  Without the prior written approval of the
Bank (which approval shall not be unreasonably withheld), none of the
Parties will enter into any arrangement, directly or indirectly, whereby
the Parties shall sell or transfer any property owned by it in order then
or thereafter to lease such property or lease other property that the
Parties intend to use for substantially the same purpose as the property
being sold or transferred; notwithstanding the foregoing restrictions, the
Borrower shall be entitled to sell and leaseback up to three (3) model
homes per year, provided however, that no such property shall have a Fair
Market Value greater than Three Hundred Thousand Dollars ($300,000.00)
(other than properties at Mirada which shall not have a Fair Market Value
greater than $2,500,000.00).  

     8.6.  Compliance with Environmental Laws.  Each of the Parties will
not, and will not permit any of their respective Subsidiaries to, do any of
the following (except in compliance with all applicable environmental laws,
regulations or statutes, and provided the allowance of any of the following
does not change the current use of the Real Estate): (a) use any of the
Real Estate or any portion thereof as a facility for the handling,
processing, storage or disposal of Hazardous Substances, (b) cause or
permit to be located on any of the Real Estate any underground tank or
other underground storage receptacle for Hazardous Substances except in
full compliance with Environmental Laws, (c) generate any Hazardous
Substances on any of the Real Estate except in full compliance with
Environmental Laws, or (d) conduct any activity at any Real Estate or use
any Real Estate in any manner so as to cause a Release.

     8.7.  Distributions.  (a) Except as set forth herein, neither the
Borrower nor the LP shall pay any Distributions to Westcliff, Horizon, HPC
or MAXXAM or any affiliated or related entity of the Borrower.  

          (b)  Provided no Suspension Event or Event of Default has oc-
curred (and not been cured), the Borrower and the LP shall be entitled to
make Distributions to MAXXAM so that the cumulative amount of cash
Distributions made to MAXXAM after July 1, 1995 shall not exceed the
amounts shown below as of the dates shown below:

     December 31, 1995        $16,500,000
     December 31, 1996        $22,500,000
     December 31, 1997        $36,000,000
     May 15, 1998             $45,000,000

          (c)  Provided no Suspension Event or Event of Default has
occurred (and not been cured), the Borrower shall be entitled to pay
dividends to the shareholder(s) of its Class A 7% Cumulative Exchangeable
Preferred Stock.

          (d)  At the time of the payment of any of the amounts referred to
in 8.7(b), above, the Borrower and the LP shall deliver to the Bank, a
letter (substantially in the form of Schedule 8.7) setting forth the total
amount paid to MAXXAM during such fiscal year and that there is then
existing no Suspension Event or Event of Default.  

     8.8  Cash Transactions with Affiliated Entities.

          (a)  The Borrower, its Subsidiaries and the LP shall not make
cash payments with respect to transactions with affiliated entities, except
in accordance with the provisions of Section 7-11(b), and, provided no
Suspension Event or Event of Default has occurred (and not been cured), the
Borrower, its Subsidiaries or the LP may make cash payments:

          (i)  with respect to transactions permitted by Section 8.7;

          (ii) with respect to amounts which may be due and owing under tax
     sharing agreements by and between MAXXAM, on the one hand, and the
     Borrower and its Subsidiaries, on the other hand; and

          (iii) to reimburse MAXXAM or MAXXAM Property Co. for expenses
     incurred on behalf of the Borrower and its Subsidiaries and/or with
     respect to an allocation of overhead from MAXXAM or MAXXAM Property
     Co. to Borrower; and

          (iv) with respect to goods and services actually purchased from
     such affiliated entity for a price which shall not differ in a
     material adverse manner from that which would have been charged in an
     arms length transaction.

          (b)  Borrower may receive reimbursement from non-subsidiary real
estate affiliated entities equal to a portion of the amount, if any,
included in the Borrower's allocation of overhead from MAXXAM and MAXXAM
Property Co. for such affiliated entities.

     8.9.  Material Leases.  No Material Leases shall be entered into by
any of the Parties, without the approval of Bank nor shall any such
approved Material Lease, be modified or amended without such approval by
the Bank.  

     8.10.  Restrictions on Compromise of Notes Receivable.  Each of the
Parties may reduce, compromise, or otherwise discount the amounts due and
owing by any Note Obligor under any of the Notes Receivable, provided,
however, (i) the amount of such reduction, compromise or discount shall not
exceed the dollar equivalent of the product of: (x) the then outstanding
principal amount of the Note Receivable, multiplied by (y) the difference
between (A) one hundred percent (100%), less (B) the percentage that is
equal to the advance rate (as such advance rates are set forth in 1.1 under
the defined term "Availability") applicable to such Note Receivable, (ii)
each such Note Receivable that is the subject of any reduction, compromise,
or other discount shall, contemporaneous with any reduction, compromise or
discount, be paid in full, and (iii) the Borrower shall furnish the Bank
with prompt written notice of any discount, compromise or reduction,
together with copies of any documents, instruments or agreements evidencing
such discount, compromise or reduction and the payment in full of the Note
Receivable effected by any such discount, compromise or reduction.  

     8.11.  Subsidiaries.  The Parties will not permit any of their
respective Subsidiaries to take, and the Parties' respective Subsidiaries
will not take, any action that might materially adversely affect the use or
value of the Mortgaged Property, the ability of any of the Parties to carry
on business substantially as now conducted by each of them, the financial
condition of the Parties, or any of their respective Subsidiaries, or the
ability of any of the Parties, and each of their respective Subsidiaries,
to comply with each and all of the terms of the within Agreement. 

     8.12.  Change in Ownership.  Except as provided in Section 8.4, none
of the Parties shall permit any direct or indirect change in the ownership
of such Person from that existing as of the date hereof.  Without limiting
the generality of the foregoing, except as provided in Section 8.4, none of
the Parties shall permit any Person not a stockholder or a partner as of
the date hereof to become such a stockholder or partner. 

     9.   FINANCIAL COVENANTS OF THE BORROWER.  The Borrower and the LP
covenant and agree that, so long as any Loan or Note is outstanding or the
Bank has any obligation to make any Loans, the Borrower and the LP shall,
on a combined basis, maintain Minimum Capital (to be tested quarterly,
commencing as of June 30, 1995) in an amount equal to at least Thirty
Million Dollars ($30,000,000.00).

     As used herein, the term Minimum Capital shall mean, all as determined
on a consolidated basis and in accordance with generally accepted
accounting principles:  the Borrower's Net Worth, plus without duplication
(A) the aggregate of (i) Indebtedness of the Borrower that is subordinated
to the Indebtedness of the Borrower to the Bank (upon terms and conditions
satisfactory to the Bank) and (ii) deferred income tax liabilities of the
Borrower, if any; less without duplication (B) the aggregate of (i) all of
the Borrower's receivables and other amounts due and owing from MAXXAM and
(ii) all of the Borrower's deferred income tax assets.

     10.  CLOSING CONDITIONS.  The obligation of the Bank to make the
initial Revolving Credit Loans, or to issue any Letters of Credit, shall be
subject to the satisfaction of the following conditions precedent on or
prior to the Closing Date:

     10.1.  Loan Documents.  (a) Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto and, shall be
in full force and effect and shall be in form and substance satisfactory to
the Bank.  The Bank shall have received a fully executed copy of each such
document.

          (b)  The Bank shall have received from each of the Parties, the
Notification Letters.  

     10.2.  Certified Copies of Organization Documents.  The Bank shall
have received from each of the Parties copies, certified by the appropriate
officer of the State in which each of the Parties, is organized, and/or in
the State in which any of the Parties conduct their respective businesses,
to be true and complete, of the corporate charter, partnership agreement,
and any other organization documents of Parties, as in effect on such date
of certification, including, without limitation, Certificates of Legal
Existence and Certificates of Qualification To Do Business.   In addition,
the Bank shall have received the information described above with respect
to SunRidge Canyon L.L.C.

     10.3.  By-laws; Resolutions.  All action on the part of each of the
Parties, necessary for the valid execution, delivery and performance by
each of the Parties, of this Agreement and the other Loan Documents to
which they are or shall become a party shall have been duly and effectively
taken, and evidence thereof satisfactory to the Bank shall have been
provided to the Bank.  The Bank shall have received from each of the
Parties, true copies of their respective by-laws and certificates of the
resolutions adopted by their partners, shareholders and boards of directors
authorizing the transactions described herein, each certified by their
respective clerks of the Parties as of a recent date to be true and com-
plete.

     10.4.  Incumbency Certificate; Authorized Signers.  The Bank shall
have received from each of the Parties incumbency certificates, dated as of
the Closing Date, signed by duly authorized officers of each of the Parties
and giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign, in the name and on behalf of each of the
Parties, each of the Loan Documents to which each of the Parties, is or is
to become a party; (b) to make Loan and Conversion Requests; and (c) to
give notices and to take other action on behalf of each of the Parties,
under the Loan Documents.

     10.5.  Validity of Liens.  The Security Documents shall be effective
to create in favor of the Bank a legal, valid and enforceable first (except
for Permitted Liens entitled to priority under applicable law) mortgage and
security interest in the Collateral.  All filings, recordings, deliveries
of instruments and other actions necessary or desirable in the opinion of
the Bank to protect and preserve such security interests shall have been
duly effected.  The Bank shall have received evidence thereof in form and
substance satisfactory to the Bank.

     10.6.  Survey and Taxes.  (a)  To the extent necessary to continue the
deletion (if presently existing) of the survey exception from any existing
Title Policy for which any update or endorsement shall be issued with
respect to any of the Strategic Projects, or to remove the survey exception
from any new Title Insurance Policy to be issued in connection with the
Loan with respect to any of the Strategic Projects except for (i) any addi-
tional Developed Lots at the Strategic Project known as Fountain Hills,
Arizona, and (ii) until satisfaction of the Mirada Preconditions, any
Developed Lots of the Strategic Project known as Mirada/Rancho Mirage,
California, up-to-date instrument surveys or plans or engineer's
certificates, including, date-down surveys, for each of the Strategic
Projects, each satisfactory to the Bank, its counsel and the Title
Insurance Company, which surveys shall be certified to the Title Insurance
Company and to the Bank, such certificates to be satisfactory to the Bank,
its counsel and the Title Insurance Company.  The surveys shall be prepared
by registered land surveyors or engineers in accordance with the Bank's
survey requirements and shall, to the extent necessary to continue the
deletion of the survey exception (as provided for herein), show dimensions
and locations of any improvements, easements, rights of way, adjoining
sites, encroachments and the extent thereof, established building lines and
street lines, the distance to, and names of, the nearest intersecting
streets and such other details as the Bank may require.  

          (b)  Evidence of payment of all real estate taxes and other
municipal charges on the Strategic Projects and the Non-Strategic Projects
and any existing improvements thereon which are due and payable prior to
the Closing Date, as provided herein.

     10.7.  Title Insurance; Title Exception Documents; UCC Searches.  (a)
The Bank shall have received (i) the Title Policies for each of the Insured
Projects, each issued by Title Insurance Companies approved by the Bank
(with such reinsurance or co-insurance as the Bank may require, any such
reinsurance to be with direct access endorsements), each in the amounts set
forth in Section 1.1, herein, each insuring the Bank that each of the
Parties (as applicable) hold marketable or insurable (as applicable in each
state in which any of the Insured Projects are situated) fee simple title
to the Insured Projects and that the Security Documents (relevant to the
Insured Projects) create valid, enforceable and first priority liens on
each of Party's title to the Insured Projects, subject only to such excep-
tions as the Bank may approve in writing, and which shall contain no
exceptions for mechanic's liens, or (except as provided for in 10.6,
herein) other matters which would be shown by a survey, shall not insure
over any matter except to the extent that any such affirmative insurance is
acceptable to Bank in its sole discretion, and shall contain a pending
disbursements clause or endorsement and such other endorsements and
affirmative insurance as the Bank in its reasonable discretion may require.

               (ii) Title Update Letters for the Rio Communities and
Paradise Hills, New Mexico projects.  

          (b)  Uniform Commercial Code lien searches disclosing no
conditional sales agreements, security agreements, chattel mortgages,
leases of personalty, financing statements or title retention agreements
with respect to any Collateral granted to secure the Obligations, except as
same may be reasonably acceptable to the Bank.  

     10.8.  Leases and Service Contracts.  The Bank shall have received
from each of the Parties true copies of all Material Leases and all
agreements (reflected on Schedule 6.21(h)), together with Material Lease
Summaries. 

     10.9.  Certificates of Insurance.  The Bank shall have received (a) a
certificate of insurance as to the insurance maintained by each of the
Parties, on the Mortgaged Property (including flood insurance if necessary)
from the insurer or an independent insurance broker dated as of the Closing
Date, identifying insurers, types of insurance, insurance limits, and
policy terms; (b) copies of all policies evidencing such insurance (or
certificates therefor signed by the insurer or an agent authorized to bind
the insurer), and if requested by the Bank, certified copies of all
policies evidencing such insurance; and (c) such further information and
certificates from each of the Parties, its insurers and insurance brokers
as the Bank may request.

     10.10.  Hazardous Substance Assessments.  The Bank shall have received
current Phase I environmental site assessment reports for those Developed
Lots at the Strategic Projects which are included in the calculation of the
Borrower's Availability, and any existing improvements thereon, which is
complete and free of qualification, prepared by qualified and reputable
civil or environmental engineers acceptable to the Bank, all at Borrower's
expense indicating that the Developed Lots (except for the Developed Lots
listed on Schedule 10.10, annexed hereto) are free and clear of Hazardous
Substances.  Such reports will be reviewed by an independent professional
engineering firm designated by the Bank, the costs of such review to be
borne by each of the Parties.  

     10.11.  Environmental Indemnity.  The Bank shall have received
individual Environmental Indemnity Agreements from each of the Parties,
pursuant to which each of the Parties agree to indemnify and hold harmless
the Bank with respect to the release or threatened release of any hazardous
materials and noncompliance with environmental laws at the Strategic
Projects and the Non-Strategic Projects, which agreement shall survive
termination of this Agreement, and/or the repayment of the Loans and the
exercise by the Bank of any of its rights and remedies under the Security
Documents.  

     10.12.  Opinions of Counsel Concerning Organization and Loan
Documents.  The Bank shall have received:  Opinions of counsel for each of
the Parties satisfactory to the Bank and the Bank's counsel (i) stating
that all Loan Documents have been duly authorized, executed and delivered
by each of the Parties and are valid, binding and enforceable against each
of the Parties, including, without limitation, the choice of law provisions
of the Loan Documents, (ii) indicating the due organization, legal
existence and good standing of each of the Parties, in its state of
organization and also in the state where the Strategic Projects and Non-
Strategic Projects are located, (iii) stating that the Loans are not
usurious under applicable laws and regulations (without resort to any
"usury savings" clause in the Loan Documents), (iv) indicating that the
Loan Documents create in favor of the Bank legal, valid and enforceable
first priority liens and security interests in and to the Collateral to
secure the Obligations, and all filings and recordings necessary to perfect
such liens and security interests have been duly affected, and (v) stating
that there is no action, suit or proceeding pending or to the best of the
Parties' knowledge threatened against or affecting any of the Parties, or
the Strategic Projects or the Non-Strategic Projects, before any court,
administrative agency, arbitrator or governmental authority, except as will
be fully disclosed by each of the Parties in the Loan documents or such
Opinion and approved by the Bank.

     10.13.  Financial Information.  The Bank shall have received current
financial statements of the Borrower and MAXXAM as of December 31, 1994,
prepared or reviewed and approved by a certified public accountant
satisfactory to the Bank, and other appropriate evidence to establish at
Loan closing that there has been no adverse change in the business, assets,
conditions (financial or otherwise), operations or prospects of the
Borrower or MAXXAM from that which was originally presented to the Bank,
and if none has been presented to the Bank, then such statements shall be
subject to the Bank's determination that such conditions are satisfactory.  

     10.14.  Payment of Fees.  The Borrower and the LP shall have paid to
the Bank all fees due and owing pursuant to 3.

     10.15.  Zoning, Environmental and Land Use Compliance.  The Bank shall
have received the agreements listed on Schedule 6.21(j), annexed hereto, to
which each of the Parties, is a party, which agreements materially affect
or materially relate to the use, operation, development, construction or
management of the Strategic Projects and Non-Strategic Projects.  

     10.16.  Borrowing Base Report.  The Borrower and the LP shall each
have furnished the Bank with an initial Borrowing Base Report.  

     10.17.  Guaranties.  The Guaranties shall have been duly executed and
delivered to the Bank.

     10.18.  Lock Box Account(s).  The Lock Box Account(s) shall have been
established.  

     10.19.  Subordination.  Each of Westcliff, Horizon, HPC and MAXXAM,
and any affiliated or related entity of the Borrower, or the LP, pursuant
to the Subordination Agreement (which shall be duly executed and delivered
to the Bank) shall subordinate all indebtedness of Borrower and the LP now
or hereafter owing to any of Westcliff, Horizon, HPC and MAXXAM and/or any
affiliated or related entity of the Borrower to all Obligations of Borrower
and/or the LP to Bank.

     10.20.  Commercial Finance Exam.  The Bank shall have received a
satisfactory (in the Bank's sole and absolute discretion) Commercial
Finance Exam to be conducted by the Bank (prior to the Closing Date), with
respect to each of the Parties, the Strategic Projects and/or the Non-
Strategic Projects, the Notes Receivable and/or any other matters deter-
mined by the Bank (in its sole and absolute discretion) to be necessary in
connection with the establishment of the Loan, the reasonable out-of-pocket
costs of which shall be borne by the Borrower and the LP. 

     10.21. Evidence of Licenses, Permits, Utilities, Etc.  Evidence (in
form and substance satisfactory to the Bank and/or the Bank's counsel) from
the Parties, and/or the Party's counsel indicating the issuance of all
licenses, permits, approvals and utilities, including, without limitation,
all water, electric and sanitary sewer facilities, for sale of each of the
Developed Lots at the Strategic Projects.  

     10.22.  Additional Matters.  Each of the Parties shall furnish the
Bank with such additional information (financial or otherwise) as may be
reasonably requested by the Bank, and shall execute and/or deliver any and
all additional documents, instruments and/or agreements requested by the
Bank in order to effectuate the matters set forth herein.  

     11.  CONDITIONS TO ALL BORROWINGS.  The obligations of the Bank to
make any Revolving Credit Loan and/or to issue any Letters of Credit,
whether on or after the Closing Date, shall be subject to satisfaction of
the conditions set forth in 10, and shall also be subject to the satis-
faction of the following conditions precedent:

     11.1.  Representations True; No Event of Default.  Each of the
representations and warranties of each of the Parties contained in this
Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Agreement shall be true as
of the date as of which they were made and shall also be true at and as of
the time of the making of any Loan, with the same effect as if made at and
as of that time (except to the extent of changes resulting from trans-
actions contemplated or permitted by this Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and except to the
extent that such representations and warranties relate expressly to an
earlier date) and no Suspension Event or Event of Default shall have
occurred and be continuing.  The Bank shall have received a certificate
from each of the Parties signed by an authorized officer of each of the
Parties to such effect.

     11.2.  No Legal Impediment.  No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of the Bank would make it illegal for the Bank to make any Loan.

     11.3.  Governmental Regulation.  The Bank shall have received such
statements in substance and form reasonably satisfactory to the Bank as the
Bank shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of
the Federal Reserve System.

     11.4.  Proceedings and Documents.  All proceedings in connection with
the transactions contemplated by this Agreement, the other Loan Documents
and all other documents incident thereto shall be satisfactory in substance
and in form to the Bank and its counsel, and the Bank and such counsel
shall have received all information and such counterpart originals or
certified or other copies of such documents as the Bank may reasonably re-
quest.

     12.  EVENTS OF DEFAULT; ACCELERATION; ETC.

     12.1  Events of Default and Acceleration.  If any of the following
events ("Events of Default") shall occur:

          (a)  the Borrower or the LP shall fail to pay any principal of
the Loans, or interest due thereon, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;

          (b)  the Borrower or the LP shall fail to pay any other sums due
hereunder or under any of the other Loan Documents, within ten (10) days of
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;

          (c)  (i)  any of the Parties, or any of their respective
Subsidiaries (where applicable), shall fail to comply with any of its
covenants contained in  7.1, 7.2, 7.3, 7.4(a)(i)(A), 7.4(c), 7.4(d)(i) and
(ii), 7.4(e), 7.7, 7.9, 7.11, 7.12, 7.13, 7.14, 8.1, 8.2, 8.3, 8.4, 8.5,
8.7, 8.8, 8.9, 8.10 or 8.12; and 

               (ii) any of the Parties, or any of their respective
Subsidiaries (where applicable), shall fail to comply with any of its
covenants contained in  7.4(a)(i)(B), 7.4(a)(ii), 7.4(a)(iii), 7.4(a)(iv),
7.4(b), or 9 within ten (10) days of when due, or when to be performed; and

               (iii)     any of the Parties, or any of their respective
Subsidiaries (where applicable), shall fail to perform any other term,
covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this 12, or in such
other Loan Documents) for thirty (30) days after written notice of such
failure has been given to the Borrower by the Bank;

          (d)  any representation or warranty of any of the Parties in this
Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Agreement shall
prove to have been false in any material respect upon the date when made or
deemed to have been made or repeated;

          (e)  any of the Parties shall fail to pay at maturity, or within
any applicable period of grace, any obligation for borrowed money or credit
received in an amount greater than $500,000, or fail to observe or perform
any material term, covenant or agreement contained in any agreement by
which they are bound, evidencing or securing borrowed money or credit
received (in an amount greater than $500,000) for such period of time as
would permit (assuming the giving of appropriate notice if required) the
holder or holders thereof, including, without limitation, the Bank, or of
any obligations issued thereunder, to accelerate the maturity thereof; 

          (f)  any of the Parties shall make an assignment for the benefit
of creditors, or admit in writing their inability to pay or generally fail
to pay their debts as they mature or become due, or shall petition or apply
for the appointment of a trustee or other custodian, liquidator or receiver
of any of the Parties of any substantial part of the assets of any of the
Parties or shall commence any case or other proceeding relating to any of
the Parties under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such peti-
tion or application shall be filed or any such case or other proceeding
shall be commenced against any of the Parties and any of the Parties or
shall indicate its approval thereof, consent thereto or acquiescence
therein;

          (g)  a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Parties
bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of any of
the Parties in an involuntary case under federal bankruptcy laws as now or
hereafter constituted; 

          (h)  there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, any uninsured final judgment
against any of the Parties, or any of their respective Subsidiaries that,
with other outstanding uninsured final judgments, undischarged, against any
of the Parties, or any of their respective Subsidiaries exceeds in the
aggregate $250,000;

          (i)  if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent or approval of the Bank,
or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced by
or on behalf of any of the Parties, or any of their respective Subsidiaries
or any of their respective holders of Voting Interests, or any court or any
other governmental or regulatory authority or agency of competent jurisdic-
tion shall make a determination that, or issue a judgment, order, decree or
ruling to the effect that, any one or more of the Loan Documents is
illegal, invalid or unenforceable in accordance with the terms thereof; 

          (j)  any of the Parties, any of their respective officers, or any
of their respective Subsidiaries shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of any of
the Parties, or of such Subsidiaries; or

          (k)  The occurrence of any event of default under any document,
instrument and/or agreement between MAXXAM and the Bank, including, without
limitation, certain Unconditional Guaranties of Payment and Performance
(hereinafter, individually and collectively, the "MAXXAM Guaranty") dated
December 29, 1992 (as amended) and December 29, 1993, and/or a certain
Pledge Agreement (hereinafter, the "MAXXAM Pledge Agreement") executed and
delivered by MAXXAM to the Bank, or under any document, instrument and/or
agreement executed and/or delivered by MAXXAM to the Bank, whether such
document, instrument and/or agreement now exists or hereafter arises 
(notwithstanding that the Bank may not have exercised its rights upon
default under any such document, instrument and/or agreement), then, and in
any such event, so long as the same may be continuing, the Bank may by
notice in writing to the Parties declare all amounts owing with respect to
this Agreement, the Note and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by each of the Parties; provided that in the event
of any Event of Default specified in 12(g) or 12(h), all such amounts shall
become immediately due and payable automatically and without any re-
quirement of notice from the Bank.

          (l)  Any direct or indirect change in the ownership of MAXXAM
Property Company or MCOP Limited Partners, Inc. from that existing as of
the date hereof.

     12.2  Termination of Commitment.  If any one or more Events of Default
specified in 12(f) or 12(g) shall occur, any unused portion of the credit
hereunder shall forthwith terminate and the Bank shall be relieved of all
obligations to make Loans to the Borrower and the LP.  If any other Event
of Default shall have occurred and be continuing, or if on any Drawdown
Date the conditions precedent to the making of the Loans to be made on such
Drawdown Date are not satisfied, the Bank may by notice to the Borrower and
the LP, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall
terminate immediately and the Bank shall be relieved of all further
obligations to make Loans.  So long as there continues to remain
outstanding Loans, no termination of the credit hereunder shall relieve any
of the Parties of any of the Obligations or any of its existing obligations
to the Bank arising under other agreements or instruments.

     12.3  Remedies.  (a)  In case any one or more of the Events of Default
shall have occurred and be continuing beyond any applicable grace period
uncured, and whether or not the Bank shall have accelerated the maturity of
the Revolving Credit Loans pursuant to 12.1, the Bank, if owed any amount
with respect to the Loans, may proceed to protect and enforce its rights
and remedies under this Agreement, the Security Documents, the Note, the
Collateral Note, or any of the other Loan Documents by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement, the
Security Documents and the other Loan Documents or any instrument pursuant
to which the Obligations are evidenced, including to the full extent
permitted by applicable law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Bank, including, without limitation, the forwarding
of the Notification Letters to the Note Obligors.  No remedy herein con-
ferred upon the Bank or the holder of any Note and/or Collateral Note is
intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
any other provision of law.

          (b)  In addition to the remedies provided for herein in
subsection (a), above, upon the occurrence of a Suspension Event or an
Event of Default, the Bank may hold any Collateral (or any cash proceeds
derived therefrom) and retain same as collateral security for the payment
and performance of any outstanding Letters of Credit.  

     12.4  Distribution of Collateral Proceeds.  In the event that,
following the occurrence or during the continuance of any Suspension Event
or Event of Default, the Bank receives any monies in connection with the
enforcement of any of the Security Documents, or otherwise with respect to
the realization upon any of the Collateral, such monies shall be
distributed for application as follows:

          (a)  First, to the payment of, or (as the case may be) the
reimbursement of the Bank for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Bank in connection with the collection of such monies by
the Bank, for the exercise, protection or enforcement by the Bank of all or
any of the rights, remedies, powers and privileges of the Bank under this
Agreement or any of the other Loan Documents or in respect of the Collat-
eral or in support of any provision of adequate indemnity to the Bank
against any taxes or liens which by law shall have, or may have, priority
over the rights of the Bank to such monies;

          (b)  Second, to all other Obligations in such order or preference
as the Bank may determine; provided, however, that the Bank may in its
discretion make proper allowance to take into account any Obligations not
then due and payable;

          (c)  Third, upon payment and satisfaction in full or other
provisions for payment in full satisfaction to the Bank of all of the
Obligations, to the payment of any obligations required to be paid pursuant
to 9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts; and

          (d)  Fourth, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.

     13.  SETOFF.  Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific,
time or demand, provisional or final), regardless of currency, maturity, or
the branch of the Bank where such deposits are held, or other sums credited
by or due from the Bank to any of the Parties and any securities or other
property of any of the Parties in the possession of the Bank may be applied
to or set off against the payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, of any of the Parties to the Bank.

     14.  EXPENSES.  Except as otherwise provided for herein, and (where
applicable), upon presentation of the Certificate provided for in 4.8,
herein, the Borrower and the LP jointly and severally agree to pay (a) the
reasonable costs of producing and reproducing this Agreement, the other
Loan Documents and the other agreements and instruments mentioned herein,
(b) any taxes (including any interest and penalties in respect thereto)
payable by the Bank (other than ordinary taxes based upon the Bank's net
income), including any recording, mortgage, documentary or intangibles
taxes in connection with the Security Deed and other Loan Documents, or
other taxes payable on or with respect to the transactions contemplated by
this Agreement, including any taxes payable by the Bank after the Closing
Date (the Borrower and the LP each hereby agreeing to indemnify the Bank
with respect thereto), (c) all title insurance premiums, appraisal fees,
engineer's fees, and the reasonable fees, expenses and disbursements of the
Bank's counsel or any local counsel to the Bank incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d) the
reasonable fees, expenses and disbursements of the Bank incurred in
connection with the preparation, administration or interpretation of the
Loan Documents and other instruments mentioned herein, (e) all reasonable
out-of-pocket expenses (including reasonable attorneys' fees and costs,
which attorneys may be employees of the Bank) and the fees and costs of
appraisers, engineers, investment bankers or other experts retained by the
Bank in connection with any such enforcement proceedings incurred by the
Bank in connection with (i) the enforcement of or preservation of rights
under any of the Loan Documents against any of the Parties, or any of their
respective Subsidiaries or the administration thereof, and (ii) any litiga-
tion, proceeding or dispute whether arising hereunder or otherwise, in any
way related to the Bank's relationship with any of the Parties, or any of
their respective Subsidiaries, unless, in either instance, the Bank is not
the successful party under any such enforcement proceedings, and (f) all
reasonable fees, expenses and disbursements of the Bank incurred in connec-
tion with UCC searches, UCC filings or mortgage recordings.  The covenants
of this 14 shall survive payment or satisfaction of payment of amounts
owing with respect to the Note.

     15.  INDEMNIFICATION.  Each of the Parties, agree to indemnify and
hold harmless the Bank from and against any and all claims, actions and
suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character
arising out of this Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any
actual or proposed use by any of the Parties, or any of their respective
Subsidiaries of the proceeds of any of the Loans, (b) any actual or alleged
infringement of any patent, copyright, trademark, service mark or similar
right of any of the Parties, or any of their Subsidiaries comprised in the
Collateral, (c) any of the Parties or any of their respective Subsidiaries
entering into or performing this Agreement or any of the other Loan
Documents or (d) with respect to any of the Parties and their respective
Subsidiaries and their respective properties and assets, the violation of
any Environmental Law, the Release or threatened Release of any Hazardous
Substances or any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances (including, but not
limited to claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable
fees and disbursements of counsel and allocated costs of internal counsel
incurred in connection with any such investigation, litigation or other
proceeding.  In litigation, or the preparation therefor, the Bank shall be
entitled to select its own counsel and, in addition to the foregoing
indemnity, each of the Parties agree to pay promptly the reasonable fees
and expenses of such counsel.  If, and to the extent that the obligations
of each of the Parties under this 15 are unenforceable for any reason, each
of the Parties hereby agree to make the maximum contribution to the payment
in satisfaction of such obligations which is permissible under applicable
law.  The provisions of this 15 shall survive the repayment of the Loan and
the termination of the obligations of the Bank hereunder.

     16.  SURVIVAL OF COVENANTS, ETC.  All covenants, agreements,
representations and warranties made herein, the 1992 Agreement (as
amended), the 1988 Agreement, in the Note, any of the other Loan Documents
or in any documents or other papers delivered by or on behalf of each of
the Parties, or any of their respective Subsidiaries (other than such
covenants, agreements, representations and warranties which have been
replaced in their entirety pursuant to the within Agreement, and/or any
other documents, instruments or agreement to be executed and/or delivered
in connection herewith) pursuant hereto shall be deemed to have been relied
upon by the Bank, notwithstanding any investigation heretofore or hereafter
made by it, and shall survive the making by the Bank of the Loans, as
herein contemplated, and shall continue in full force and effect so long as
any amount due under this Agreement or the Note or any of the other Loan
Documents remains outstanding or the Bank has any obligation to make any
Loans.  The indemnification obligations of each of the Parties provided
herein and the other Loan Documents shall survive the full repayment of
amounts due and the termination of the obligations of the Bank hereunder
and thereunder to the extent provided herein and therein.  All statements
contained in any certificate or other paper delivered to the Bank at any
time by or on behalf of each of the Parties or MAXXAM pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by each of the Parties.

     17.  PERMITTED SALES/RELEASE OF LIEN.  

     17.1.  Permitted Sales.  (a) If:

               (i)  an intended sale or disposition of any lot(s)
     comprising any part of any of the Strategic Projects is for a purchase
     price in excess of $350,000.00; 

               (ii) is evidenced by a bona-fide Agreement to an
     unaffiliated third-party acquiror; 

               (iii)     is for adequate consideration (as determined by
     the Bank in its reasonable discretion); and 

               (iv) provided there is then existing no Suspension Event or
     Event of Default, 

such sale or disposition shall not constitute an Event of Default under the
Loan, and the Bank agrees to release its lien against the subject property
upon payment to the Bank (for credit against the Obligations of the
Borrower and/or the LP under this Agreement) of all Net Proceeds realized
on account of any such sale or disposition.  The provisions of this Section
shall not apply, however, to one of a series of sales to a single purchaser
and/or such purchaser's affiliates.

          (b)  If:

               (i)  an intended sale or disposition of any lot(s)
     comprising part of any of the Strategic Projects is for a purchase
     price less than $350,000.00; 

               (ii) is evidenced by a bona-fide Agreement to an
     unaffiliated third-party acquiror;

               (iii)     is for adequate consideration (as determined by
     the Bank in its reasonable discretion); and 

               (iv) provided there is then existing no Suspension Event or
     Event of Default, 

such sale or disposition shall not constitute an Event of Default under the
Loan, and the Bank agrees to release its lien against the subject property
upon presentation to the Bank of an Affidavit substantially in the form of
Schedule 17, annexed hereto.  The provisions of this Section shall not
apply, however, to one of a series of sales to a single purchaser and/or
such purchaser's affiliates.

          (c)  If:

               (i)  an intended sale or disposition of any lot(s)
     comprising part of any of the Non-Strategic Projects is for a purchase
     price in excess of $1,000,000.00;

               (ii) is evidenced by a bona-fide Agreement to an
     unaffiliated third-party acquiror;

               (iii)     is for adequate consideration (as determined by
     the Bank in its reasonable discretion); and 

               (iv) provided there is then existing no Suspension Event or
     Event of Default, 

such sale or disposition shall not constitute an Event of Default under the
Loan, and the Bank agrees to release its lien against the subject property
upon payment to the Bank (for credit against the Obligations of the
Borrower and/or the LP under this Agreement) of all Net Proceeds realized
on account of any such sale or disposition.  The provisions of this Section
shall not apply, however, to one of a series of sales to a single purchaser
and/or such purchaser's affiliates.

          (d)  If:

               (i)  an intended sale or disposition of any lot(s)
     comprising any part of any of the Non-Strategic Projects is for a
     purchase price less than $1,000,000.00;

               (ii) is evidenced by a bona-fide Agreement to an
     unaffiliated third-party acquiror;

               (iii)     is for adequate consideration (as determined by
     the Bank in its reasonable discretion); and 

               (iv) provided there is then existing no Suspension Event or
     Event of Default, 

such sale or disposition shall not constitute an Event of Default under the
Loan, and the Bank agrees to release its lien against the subject property
upon presentation to the Bank of an Affidavit substantially in the form of
Schedule 17, annexed hereto.  The provisions of this Section shall not
apply, however, to one of a series of sales to a single purchaser and/or
such purchaser's affiliates.

          (e)  Notwithstanding anything to the contrary set forth in
Subsections (a) and (c), above, if a sale or distribution complies with the
foregoing terms and conditions, upon written request by the Borrower or the
LP to the Bank, and subject to the terms and conditions set forth in 8.7,
herein, the Net Proceeds of such sale or distribution may be used to make
payment on account of any Permitted Distribution.

     17.2.  Release of Collateral.  Provided there is no existing
Suspension Event or Event of Default, upon Borrower's or LP's request, the
Bank agrees to consider, from time to time, the release of its lien against
portions of the Collateral not included in the determination of Borrower
Availability or LP Availability.  Any such release shall not require the
payment of any consideration in connection therewith.  Nothing contained
herein shall constitute the Bank's legal obligation to so release its liens
and any determination to release Collateral shall be in the Bank's sole and
absolute discretion; rather the foregoing is intended to reflect the Bank's
willingness to consider such a request in good faith and not to
unreasonably withhold its consent to any such request.

     18.  ASSIGNMENT; PARTICIPATIONS; ETC.  

     18.1.  Assignment by the Bank.  The Bank may assign all or a portion
of its rights under this Agreement and the same portion of its Commitment,
the Loans at the time owing to it, provided that such assignment is in
writing (the "Assignment").  Upon execution and delivery of the Assignment
the assignee thereunder shall be a party hereto and, to the extent provided
in such assignment, shall have the rights and obligations of the Bank
hereunder and under the Loan Documents.  Upon the effective date of such
Assignment the commitment of the Bank shall be reduced and the Bank shall
be relieved from its obligations hereunder to the extent assigned to the
assignee pursuant to the Assignment.  Each of the Parties shall, on request
of the Bank, execute such further documents and instruments as may be
necessary to carry out the purposes of the Assignment.

     18.2.  Participations.  The Bank may sell participations to one or
more banks or other entities in all or a portion of the Bank's rights and
obligations under this Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and
duties of the Bank hereunder to any of the Parties and (b) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall
be the rights to approve waivers, amendments or modifications that would
reduce the principal of or the interest rate on any Loans, or extend any
regularly scheduled payment date for principal or interest.

     18.3.  Disclosure.  Each of the Parties agree that in addition to
disclosures made in accordance with standard banking practices the Bank may
disclose information obtained by the Bank pursuant to this Agreement to
assignees or participants and potential assignees or participants
hereunder, subject, however, to reasonable confidentiality agreements to be
executed by such prospective purchaser(s), the form of which confidential-
ity agreements shall be substantially in the form of Schedule 18.3, annexed
hereto.

     18.4.  Pledge by Bank.  The Bank may at any time pledge all or any
portion of its interest and rights under this Agreement (including all or
any portion of the Note) to any of the twelve Federal Reserve Banks
organized under 4 of the Federal Reserve Act, 12 U.S.C. 341.  No such
pledge or the enforcement thereof shall release the Bank from its
obligations hereunder or under any of the other Loan Documents.

     18.5.  No Assignment by Parties.  None of the Parties shall assign or
transfer any of their rights or obligations under any of the Loan Documents
without the prior written consent of the Bank.

     19.  AGENTS, ATTORNEYS, TRUSTEES.  (a) The Bank shall have full power
and authority to appoint such agents, attorneys and trustees as it may from
time to time designate to act for it under this Agreement, in such
capacities and with such powers as the Bank may specify.  The Bank, in its
sole discretion, shall have authority to revoke any such appointment and
shall have authority to designate a new agent, attorney or trustee for
itself any time, such action to be taken by an instrument in writing
addressed to such agent, attorney or trustee, counterparts of which shall
be sent to the Borrower or the LP.  Such agent, attorney or Trustee shall
not have any authority to act for the Bank in any capacity except as
expressly set forth in any agreement to which the Bank is a party. 
Furthermore, as more specifically set forth in 15, herein, each of the
Parties agree to save and hold the Bank, and each such agent, attorney or
trustee harmless from any action or nonaction of such agent, attorney or
trustee.  

          (b)  Each of the Parties acknowledge, confirm and agree that they
will recognize and fully cooperate with any such agent, attorney or trustee
so appointed by the Bank.  

     20.  NOTICES, ETC.  Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the Note shall be in writing and shall
be delivered in hand, mailed by United States registered or certified first
class mail, postage prepaid, sent by overnight courier, or sent by
telegraph, telecopy, telefax or telex and confirmed by delivery via courier
or postal service, addressed as follows:

          (a)  5847 San Felipe, Houston, Texas, Attention: Treasurer, with
a copy to the Parties (at the address set forth herein), Attention: General
Counsel, or at such other address for notice as the Borrower shall last
have furnished in writing to the Bank; and

          (b)  if to the Bank, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Real Estate Department, or such other address for
notice as the Bank shall last have furnished in writing to the Borrower,
and (except for Borrowing Base Reports and other financial reports), with a
copy to David S. Berman, Esquire, Riemer & Braunstein, Three Center Plaza,
Boston, Massachusetts 02108.

     Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight
courier or facsimile to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such officer or the sending
of such facsimile and (ii) if sent by registered or certified first-class
mail, postage prepaid, on the third Business Day following the mailing
thereof.

     21.  PUBLICITY.  Each of the Parties will permit the Bank to obtain
publicity in connection with the making of the Loan through press releases,
tombstones, and participation in such events as ground breaking and opening
ceremonies subject to Borrower's or LP's reasonable approval.  

     22.  GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.  THIS
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH COMMONWEALTH (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).  EACH OF THE PARTIES
AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE NON-
EXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON EACH OF THE PARTIES BY MAIL AT THE ADDRESS SPECIFIED
IN 20.  EACH OF THE PARTIES HEREBY WAIVE ANY OBJECTION THAT THEY MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
SUIT IS BROUGHT IN AN INCONVENIENT COURT.

     23.  HEADINGS.  The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.

     24.  COUNTERPARTS.  This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument.  In
proving this Agreement it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement
is sought.

     25.  ENTIRE AGREEMENT, ETC.  The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided in 27.

     26.  WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. EACH OF THE
PARTIES AND THE BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.  EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW,
EACH OF THE PARTIES HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH OF THE PARTIES (A) CERTIFY
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK HAD REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGA-
TION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT THE
BANK HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A OBLIGOR BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.

     27.  CONSENTS, AMENDMENTS, WAIVERS, ETC.  Except as otherwise
expressly provided in this Agreement, any consent or approval required or
permitted by this Agreement may be given, and any term of this Agreement or
of any other instrument related hereto or mentioned herein may be amended,
and the performance or observance by each of the Parties of any terms of
this Agreement or such other instrument or the continuance of any
Suspension Event or Event of Default may be waived (either generally or in
a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Bank.  No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon.  No course of dealing or delay or omission on the part of the Bank
in exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto.  No notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or
other circumstances.

     28.  SEVERABILITY.  The provisions of this Agreement are severable,
and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or
provision of this Agreement in any jurisdiction.

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.

                                   MCO PROPERTIES INC.


                                   By: /s/  James D. Noteware
                                       Name: James D. Noteware
                                       Title: President
                                   WESTCLIFF DEVELOPMENT
                                   CORPORATION


                                   By: /s/  James D. Noteware
                                       Name: James D. Noteware
                                       Title: President


                                   HORIZON CORPORATION


                                   By: /s/  James D. Noteware
                                       Name: James D. Noteware
                                       Title: President


                                   HORIZON PROPERTIES CORPORATION


                                   By: /s/  James D. Noteware
                                       Name: James D. Noteware
                                       Title: President


                                   MCO PROPERTIES, L.P.

                                   By: Its General Partner 

                                   MCO PROPERTIES, INC.

                                   By: /s/  James D. Noteware
                                       Name: James D. Noteware
                                       Title: President


                                   THE FIRST NATIONAL BANK OF BOSTON


                                   By: /s/  Jared H. Ward
                                       Name: Jared H. Ward
                                       Title: Vice President