Document:

<PAGE>

                                                                 Exhibit 10.21

                     THIRD AMENDMENT TO AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

         THIS THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Third Amendment") is dated as of the 18th day of November,1999
by and among CMC HEARTLAND PARTNERS, a Delaware general partnership ("CMC") and
HEARTLAND PARTNERS, L.P., a Delaware limited partnership ("Heartland"), jointly
and severally (CMC and Heartland are referred to herein from time to time
individually as a "Borrower" and collectively as "Borrowers"); and LASALLE BANK
NATIONAL ASSOCIATION, a national banking association, f/k/a LaSalle National
Bank ("Bank").

                              W I T N E S S E T H:

         WHEREAS, Bank and Borrowers entered into that certain Amended and
Restated Loan and Security Agreement dated as of June 30, 1998, as amended by
that certain Amendment to Amended and Restated Loan and Security Agreement dated
as of October 23, 1998 and that certain Second Amendment to Amended and Restated
Loan and Security Agreement dated as of April 29, 1999 (collectively, the
"Agreement"), and now desire to amend the Agreement to, among other things,
increase Bank's commitment to Borrowers, as further set forth in this Amendment.

         NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Second Amendment, the parties, intending to be bound, hereby
agree as follows:

1. Incorporation of the Agreement. All capitalized terms which are not defined
hereunder shall have the same meanings as set forth in the Agreement, and the
Agreement to the extent not inconsistent with this Amendment is incorporated
herein by this reference as though the same were set forth in its entirety. To
the extent any terms and provisions of the Agreement are inconsistent with the
amendments set forth in Paragraph 2 below, such terms and provisions shall be
deemed superseded hereby. Except as specifically set forth herein, the Agreement
shall remain in full force and effect and its provisions shall be binding on the
parties hereto.

2. Amendment of the Agreement.  The Agreement is hereby amended as follows:

(a)  Any and all references to the Agreement shall be deemed to refer to and
include this Third Amendment, as the same may be further amended, modified or
supplemented from time to time.

(b)  The definition of the term "Galewood Assignment of Rents" in Paragraph 1.1
is hereby amended and restated to read in its entirety as follows:
<PAGE>

                           "Galewood Assignment of Rents" means that certain
                           Assignment of Rents and Leases dated as of June 30,
                           1998 between CMC and Bank with respect to the
                           Galewood Mortgaged Property, as amended by that
                           certain Amendment to Assignment of Rents and Leases
                           dated as of October 23, 1998, that certain Second
                           Amendment to Assignment of Rents and Leases dated as
                           of April 29, 1999 and that certain Third Amendment to
                           Assignment of Rents and Leases dated as of November
                           18, 1999, as the same may be amended, modified or
                           supplemented from time to time.

(c)  The definition of the term "Galewood Mortgage" in Paragraph 1.1 is hereby
amended and restated to read in its entirety as follows:

                           "Galewood Mortgage" means that certain Mortgage and
                           Security Agreement dated June 30, 1998 between CMC
                           and Bank with respect to the Galewood Mortgaged
                           Property, as amended by that certain Amendment to
                           Mortgage and Security Agreement dated as of October
                           23, 1998, that certain Second Amendment to Mortgage
                           and Security Agreement dated as of April 29, 1999 and
                           that certain Third Amendment to Mortgage and Security
                           Agreement dated as of November 18, 1999, as the same
                           may be amended, modified or supplemented from time to
                           time.

(d)  The definition of the term "Kinzie Station Assignment of Rents" in
Paragraph 1.1 is hereby amended and restated to read in its entirety as follows:

                           "Kinzie Station Assignment of Rents" means that
                           certain Assignment of Rents and Leases dated as of
                           March 15, 1996 made by CMC in favor of Bank with
                           respect to the Kinzie Station Mortgaged Property, as
                           amended by that certain Amendment to Assignment of
                           Rents and Leases dated as of May 14, 1997, that
                           certain Second Amendment to Assignment of Rents and
                           Leases dated as of April 30, 1998, that certain Third
                           Amendment to Assignment of Rents and Leases dated as
                           of June 30, 1998, that certain Fourth Amendment to
                           Assignment of Rents and Leases dated as of October
                           23, 1998, that certain Fifth Amendment to Assignment
                           of Rents and Leases dated as of April 29, 1999 and
                           that certain Sixth Assignment of Rents and

                                       2
<PAGE>

                           Leases dated as of November 18, 1999, as the same may
                           be further amended, modified or supplemented from
                           time to time.

(e)  The definition of the term "Kinzie Station Mortgage" in Paragraph 1.1 is
hereby amended and restated in its entirety to read as follows:

                           "Kinzie Station Mortgage" means that certain Mortgage
                           and Security Agreement dated as of March 15, 1996,
                           made by CMC in favor of Bank with respect to the
                           Kinzie Station Mortgaged Property, as amended by that
                           certain Amendment to Mortgage and Security Agreement
                           dated as of May 14, 1997, that certain Second
                           Amendment to Mortgage and Security Agreement dated as
                           of April 30, 1998, that certain Third Amendment to
                           Mortgage and Security Agreement dated as of June 30,
                           1998, that certain Fourth Amendment to Mortgage and
                           Security Agreement dated as of October 23, 1998, that
                           certain Fifth Amendment to Mortgage and Security
                           Agreement dated as of April 29, 1999 and that certain
                           Sixth Amendment to Mortgage and Security Agreement
                           dated as of November 18, 1999, as the same may be
                           further amended, modified or supplemented from time
                           to time.

(f)  The definition of the term "Milwaukee Assignment of Rents" in Paragraph 1.1
is hereby amended and restated in its entirety to read as follows:

                           "Milwaukee Assignment of Rents" means that certain
                           Assignment of Rents and Leases dated as of April 29,
                           1999 between CMC and Bank with respect to the
                           Milwaukee Mortgaged Property, as amended by that
                           certain Amendment to Assignment of Rents and Leases
                           dated as of November 18, 1999, as the same may be
                           amended, modified or supplemented from time to time.

(g)  The definition of the term "Milwaukee Mortgage" in Paragraph 1.1 is hereby
amended and restated in its entirety to read as follows:

                           "Milwaukee Mortgage" means that certain Mortgage and
                           Security Agreement dated as of April 29, 1999 between
                           CMC and Bank with respect to the Milwaukee Mortgaged
                           Property, as amended by that certain Amendment to
                           Mortgage and Security Agreement dated as of

                                       3
<PAGE>

                           November 18, 1999, as the same may be amended,
                           modified or supplemented from time to time.

(h)  The definition of the term "Revolving Note" in Paragraph 1.1 is hereby
amended and restated to read in its entirety as follows:

                           "Revolving Note" means that certain Substitute
                           Revolving Note dated as of November 18, 1999 made by
                           Borrowers, jointly and severally, in favor of Bank,
                           in the maximum principal amount available of Thirteen
                           Million Three Hundred Thousand and 00/100 Dollars
                           ($13,300,000), as the same may be amended, modified
                           or supplemented from time to time, together with any
                           renewals thereof or exchanges or substitutes
                           therefor.

(i)  The term "Assignment of Partnership Interests" is hereby added to the
definition of the term "Other Agreements" in Paragraph 1.1.

(j)  The definition of the term "Assignment of Partnership Interests" is hereby
added to Paragraph 1.1 to read as follows: "Assignment of Partnership Interests"
means that certain Assignment of Partnership Interests dated as of November 18,
1999 made by Heartland in favor of Bank.

(k)  Paragraph 2.1 is hereby amended and restated to read in its entirety as
follows:

                           2.1 Revolving Credit Commitment. On the terms and
                           subject to the conditions set forth in this
                           Agreement, Bank agrees to make revolving credit
                           available and Letters of Credit available to
                           Borrowers from time to time prior to the Revolving
                           Credit Termination Date with respect to revolving
                           credit loans and the Letter of Credit Termination
                           Date with respect to Letters of Credit, in such
                           aggregate amounts as Borrowers may from time to time
                           request but in no event exceeding Thirteen Million
                           Three Hundred Thousand Dollars ($13,300,000) in the
                           aggregate (the "Revolving Credit Commitment");
                           provided, however, that in no event shall the
                           aggregate amount of Letters of Credit outstanding at
                           any one time exceed the Letter of Credit Limit. The
                           Revolving Credit Commitment shall be available to
                           Borrowers by means of Loans, it being understood that
                           the Loans may be repaid and used again during the
                           period from the date hereof to and including the
                           Revolving Credit Termination Date, at which time the
                           Revolving Credit Commitment shall expire.

                                       4
<PAGE>

(l)  Any and all references to "LaSalle National Bank" shall be deemed to refer
to "LaSalle Bank National Association."

3. Closing Documents. All the documents on the Closing Checklist (attached
hereto as Exhibit A) shall be delivered concurrently with this Amendment, each
in form and substance satisfactory to Bank.

4. Representations and Warranties; No Event of Default. The representations and
warranties set forth in Paragraph 8.1 are deemed remade as of the date hereof
and each Borrower represents that such representations and warranties are true
and correct as of the date hereof. No Event of Default exists nor does there
exist any event or condition which with notice, lapse of time and/or the
consummation of the transactions contemplated hereby would constitute an Event
of Default.

5. Fees and Expenses. The Borrowers agree to pay on demand all costs and
expenses of or incurred by Bank in connection with the evaluation, negotiation,
preparation, execution and delivery of this Third Amendment and the other
instruments and documents executed and delivered in connection with the
transactions described herein (including the filing or recording thereof),
including, but not limited to, the fees and expenses of counsel for the Bank and
any future amendments to the Agreement. Borrowers also agree to pay to Bank, on
demand, a closing fee equal to $4,500.

6. Effectuation. The amendments to the Agreement contemplated by this Third
Amendment shall be deemed effective immediately upon the full execution of this
Third Amendment and without any further action required by the parties hereto.
There are no conditions precedent or subsequent to the effectiveness of this
Third Amendment.

7. Counterparts. This Third Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                       5
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed this Third
Amendment as of the date first above written.

                                 CMC HEARTLAND PARTNERS, a
                                 Delaware general partnership

                                 By:  HEARTLAND TECHNOLOGY, INC., a
                                      Delaware corporation and an authorized
                                      general partner

                                 By:
                                    -----------------------------------
                                          Its President

                                 By:  HEARTLAND PARTNERS, L.P., a
                                      Delaware limited partnership and an
                                      authorized general partner

                                 By:  Heartland Technology, Inc.,
                                 Its:   General Partner

                                 By:
                                    -----------------------------------
                                          Its President

                                 HEARTLAND PARTNERS, L.P.,
                                 a Delaware limited partnership

                                 By:  Heartland Technology, Inc.
                                 Its:   General Partner

                                 By:
                                    -----------------------------------
                                          Its President

                                 LASALLE BANK NATIONAL ASSOCIATION,
                                 a national banking
                                 association

                                 By:
                                    -----------------------------------
                                          Its:
                                              -------------------------

                                       6
<PAGE>

                                   EXHIBIT A

                        (See Attached Closing Checklist)
<PAGE>

                                   EXHIBIT B

                                      None<PAGE>

                                                                 Exhibit 10.22

                          CONSTRUCTION LOAN AGREEMENT

                                    BETWEEN

                        CMC HEARTLAND PARTNERS VII, LLC,
               a Delaware limited liability company, as Borrower

                                      AND

                       BANK ONE, ILLINOIS, NA, a national
                         banking association, as Lender
<PAGE>

                                TABLE OF CONTENTS

Section                                                               Page No.

1.       RECITALS..........................................................1
         --------

2.       DEFINITIONS.......................................................1
         -----------

3.       COMMITMENTS TO LEND; COMMITMENT FEE...............................7
         -----------------------------------
         3.1      Maximum Amount of the Loan...............................7
                  --------------------------
         3.2      Reborrowing..............................................8
                  -----------
         3.3      Voluntary Prepayment; Mandatory Prepayment...............8
                  ------------------------------------------
         3.4      Loan Advances Evidenced by the Note......................8
                  -----------------------------------
         3.5      Interest Rate and Payment of Interest.  .................8
                  -------------------------------------
         3.6      Mandatory Principal Payments.............................9
                  ----------------------------
         3.7      Default Rate.............................................9
                  ------------
         3.8      Late Charge..............................................9
                  -----------
         3.9      Fees.  ..................................................9
                  ----
         3.10     Loan Extension Option....................................9
                  ---------------------

4.       LOAN DOCUMENTS...................................................10
         --------------

5.       DISBURSEMENT OF THE LOAN.........................................14
         ------------------------
         5.1      Conditions Precedent....................................14
                  --------------------
         5.2      Conditions Precedents for Disbursements after the
                  Initial Loan Advance....................................14
                  --------------------------------------------------
         5.3      Use of Loan Proceeds; Inspections of the Work...........15
                  ---------------------------------------------
         5.4      Disbursement Requests...................................16
                  ---------------------
         5.5      Certifications, Representations and Warranties..........17
                  ----------------------------------------------
         5.6      Amount of Disbursements; Retainage......................18
                  ----------------------------------
         5.7      Costs...................................................18
                  -----
         5.8      Reserves................................................18
                  --------
         5.9      Loan In Balance.........................................19
                  ---------------
         5.10     Application of Disbursements............................19
                  ----------------------------
         5.11     Release of Retainage....................................20
                  --------------------
         5.12     Additional Loan Limitations.............................21
                  ---------------------------

6.       REPRESENTATIONS AND WARRANTIES...................................22
         ------------------------------
         6.1      Borrower................................................22
                  --------
         6.2      Sole Member.............................................22
                  -----------
         6.3      Heartland...............................................22
                  ---------
         6.4      Title...................................................22
                  -----
         6.5      Improvements............................................23
                  ------------
         6.6      Validity and Enforceability of Documents................23
                  ----------------------------------------
         6.7      Litigation..............................................23
                  ----------
<PAGE>

         6.8      Utilities; Authorities..................................23
                  ----------------------
         6.9      Solvency................................................23
                  --------
         6.10     Financial Statements....................................24
                  --------------------
         6.11     Compliance with Laws....................................24
                  --------------------
         6.12     Construction Contract...................................24
                  ---------------------
         6.13     Subcontracts............................................24
                  ------------
         6.14     Plans and Specifications................................24
                  ------------------------
         6.15     Budget..................................................24
                  ------
         6.16     Financing Statements....................................25
                  --------------------
         6.17     Event of Default........................................25
                  ----------------
         6.18     Responsible Property Transfer Act.......................25
                  ---------------------------------
         6.19     Additional Agreements...................................25
                  ---------------------

7.       BORROWER'S COVENANTS.............................................25
         --------------------
         7.1      Manner of Construction..................................25
                  ----------------------
         7.2      Compliance with Laws....................................25
                  --------------------
         7.3      Inspection..............................................25
                  ----------
         7.4      Mechanics' Liens........................................26
                  ----------------
         7.5      Release by Lender.......................................26
                  -----------------
         7.6      Financial Statements; Reports...........................27
                  -----------------------------
         7.7      Affirmation of Representations and Warranties...........27
                  ---------------------------------------------
         7.8      Title...................................................27
                  -----
         7.9      Proceedings Affecting Property..........................28
                  ------------------------------
         7.10     Disposal and Encumbrance of Property....................28
                  ------------------------------------
         7.11     Insurance...............................................28
                  ---------
         7.12     Performance of Obligations; Notice of Default...........28
                  ---------------------------------------------
         7.13     Subcontracts............................................29
                  ------------
         7.14     Restrictions Affecting Borrower.........................29
                  -------------------------------
         7.15     Use of Receipts.........................................29
                  ---------------
         7.16     Management and Leasing Agreements; Subordination........29
                  ------------------------------------------------
         7.17     Additional Documents....................................29
                  --------------------
         7.18     Sale to Investors.......................................30
                  -----------------
         7.19     Survey..................................................30
                  ------

8.       LOAN EXPENSES....................................................30
         -------------

9.       LENDER'S REPRESENTATIVES.........................................30
         ------------------------

10.      EVENTS OF DEFAULT................................................30
         -----------------

11.       REMEDIES........................................................32
          --------

12.      SALES OF UNITS; PARTIAL RELEASES.................................34
         --------------------------------
         12.1     Sales Prices............................................34
                  ------------

                                       ii
<PAGE>

         12.2     Release Prices..........................................34
                  --------------

13.      MISCELLANEOUS....................................................34
         -------------
         13.1     Additional Indebtedness.................................34
                  -----------------------
         13.2     Additional Acts.........................................34
                  ---------------
         13.3     Loan Agreement Governs..................................34
                  ----------------------
         13.4     Additional Advances.....................................34
                  -------------------
         13.5     Amendment; Waiver; Approval.............................35
                  ---------------------------
         13.6     Notice..................................................35
                  ------
         13.7     Benefit; Assignment.....................................36
                  -------------------
         13.8     Governing Law...........................................36
                  -------------
         13.9     Indemnity...............................................36
                  ---------
         13.10    Headings................................................36
                  --------
         13.11    No Partnership or Joint Venture.........................37
                  -------------------------------
         13.12    Time is of the Essence..................................37
                  ----------------------
         13.13    Invalid Provisions......................................37
                  ------------------
         13.14    Offset..................................................37
                  ------
         13.15    Acts by Lender..........................................37
                  --------------
         13.16    Binding Provisions......................................37
                  ------------------
         13.17    Counterparts............................................37
                  ------------
         13.18    No Third Party Beneficiary..............................37
                  ---------------------------
         13.19    Publicity...............................................38
                  ---------
         13.20    JURISDICTION AND VENUE..................................38
                  ----------------------
         13.21    JURY WAIVER.............................................39
                  -----------

                                      iii
<PAGE>

                           CONSTRUCTION LOAN AGREEMENT
                           ---------------------------

         This Construction Loan Agreement ("Agreement") is dated as of December
9, 1999, by and between CMC HEARTLAND PARTNERS VII, LLC, a Delaware limited
liability company ("Borrower"), and BANK ONE, ILLINOIS, NA, a national banking
association ("Lender").

         1.       RECITALS.
                  --------

                  1.1 Seller is the fee owner of the Land (this and all other
         capitalized terms used in this Article 1 and not otherwise defined
         shall have the meanings ascribed thereto in Article 2 below).

                  1.2 Borrower has certain rights to purchase the Land pursuant
         to the terms of the Option Agreement.

                  1.3 Borrower has requested that Lender make available to
         Borrower a construction loan (the "Loan") in the maximum outstanding
         principal amount of $5,000,000 to pay a portion of the amounts needed
         to pay certain Project Costs associated with the construction of Units
         (hereinafter defined) on the Land. Lender has agreed to make the Loan
         subject to the terms and conditions set forth herein.

                  1.4 In consideration of the mutual agreements set forth herein
         and for other good and valuable consideration, the receipt and
         sufficiency of which are hereby acknowledged, Borrower and Lender agree
         as follows:

         2.       DEFINITIONS. As used in this Agreement, the following terms
         shall have the following meanings:

                  2.1 "Acceptable Unit Sale Contract" shall mean a binding,
         unconditional sale contract for a Unit (with any financing and other
         contingencies having been satisfied or expired) (i) with a third party
         unrelated to and unaffiliated with Borrower or Seller, (ii) with
         earnest money paid in cash in the amount of 5% of the sales price
         thereof, but not less than $1,000, and (iii) on a form of contract
         approved in writing by Lender (with only such changes thereto as may be
         requested by the purchaser and agreed to by Borrower exercising
         commercially reasonable judgment).

                  2.2 "Additional Agreements" shall be all contracts, options,
         leases, management, leasing, development, sales or other agreements in
         existence that affect the Property (written or oral) as set forth in
         Exhibit E attached hereto.

                  2.3 "Applicable Laws" shall mean all laws, statutes,
         ordinances, rules, regulations, judgments, decrees or orders of any
         state, federal or local government or agency which are applicable to
         Borrower, Seller and/or the Property.
<PAGE>

                  2.4 "Assignment of Option Agreement" shall mean the Collateral
         Assignment of Option Agreement made by Borrower to Lender and consented
         to by Seller to secure the Loan. 2.5 "Assignment of Plans" shall mean
         the collateral assignment of all licenses, permits, plans,
         specifications and contracts relating to the construction, use or
         operation of the Project to be made by Borrower to Lender to secure the
         Loan.

                  2.6 "Assignment of Rents" shall mean the Assignment of Rents
         and Leases dated as of the date hereof made by Borrower to Lender, as
         the same is amended, restated, modified or supplemented from time to
         time.

                  2.7 "Assignment of Sales Contracts" shall mean the assignment
         of all sales contracts with respect to any Unit to be made by Borrower
         to Lender to secure the Loan.

                  2.8 "Borrower Mortgage Title Policy" shall mean the title
         insurance policy described in Section 4.5 below.

                  2.9 "Budget" shall mean the detailed budget of all costs to be
         incurred in connection with the Work, including both hard costs and
         soft costs, as set forth in Exhibit B attached hereto.

                  2.10 "Business Day" shall mean each day excluding Saturdays,
         Sundays and any other day on which Lender is closed for business to the
         public.

                  2.11 "Construction Contract" shall mean that certain contract
         dated February 10, 1999 between Borrower and the Contractor regarding
         the general contracting and construction management services to be
         performed in connection with the construction of the Improvements.

                  2.12 "Consultant" shall mean an independent architect or
         engineer selected by Lender.

                  2.13 "Contractor" shall mean Lifestyle Construction Company,
         Inc., a Delaware corporation.

                  2.14 "Default Rate" shall mean the Loan Rate plus 3.0% per
         annum.

                  2.15 "Event of Default" shall have the meaning ascribed to it
         in Section 10 of this Agreement.

                  2.16 "Existing Lender" shall mean Bank of America.

                  2.17 "Heartland" shall mean Heartland Technology, Inc., a
         Delaware corporation, a general partner of Sole Member.

                                       2
<PAGE>

                  2.18 "Hazardous Materials" shall mean and include any and all
         hazardous, toxic or dangerous substances, wastes and materials and
         other pollutants and contaminants as defined or described in any or all
         applicable federal, state or local statutes, laws, ordinances, codes,
         rules, regulations, orders or decrees now or hereafter regulating,
         relating to or imposing liability or standards of conduct with respect
         to environmental matters, including, without limitation the
         Comprehensive Environmental Response, Compensation, and Liability Act
         of 1980, as amended by the Superfund Amendments and Reauthorization Act
         of 1986 (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
         Transportation Act (49 U.S.C. Section 1801 et seq.), the Solid Waste
         Disposal Act, as amended by the Resource Conservation and Recovery Act
         of 1976, as amended by the Solid and Hazardous Waste Amendments of 1984
         (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution Control
         Act, as amended by the Clean Water Act of 1977 and the Water Quality
         Act of 1987 (33 U.S.C. Section 1251 et seq.), the Toxic Substances
         Control Act of 1976 (15 U.S.C. Section 2601 et seq.), the Emergency
         Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section
         11001 et seq.), the Clear Air Act of 1966, as amended (42 U.S.C.
         Section 7401 et seq.), the National Environmental Policy Act of 1970
         (42 U.S.C. Section 4321 et seq.), the Rivers and Harbours Act of 1899
         (33 U.S.C. Section 401 et seq.), the Endangered Species Act of 1973, as
         amended (16 U.S.C. Section 1531 et seq.), the Safe Drinking Water Act
         of 1974, as amended (42 U.S.C. Section 300(f) et seq.), and the
         Occupational Safety and Health Act of 1970, as amended (29 U.S.C.
         Section 651 et seq.) and all rules, regulations and guidance documents
         promulgated or published thereunder, all as amended or hereinafter
         amended.  Without intending to limit the scope or breadth of the
         foregoing definition, the term Hazardous Materials shall include
         asbestos, urea formaldehyde, polychlorinated biphenyls, crude oil,
         radioactive materials and underground storage tanks.

                  2.19 "Improvements" shall mean the Units.

                  2.20 "Indemnity Agreement" shall mean the Environmental
         Indemnity Agreement dated as of the date hereof, made by Borrower in
         favor of Lender, as the same may be hereafter amended or otherwise
         modified from time to time.

                  2.21 "Initial Disbursement Date" shall mean the date on which
         the first disbursement of the Loan occurs.

                  2.22 "Land"shall mean the real property legally described on
         Exhibit A attached hereto and known as the Longleaf developments in
         Southern Pines, North Carolina.

                  2.23 "Loan Advance" shall mean a disbursement of all or any
         portion of the Loan.

                  2.24 "Loan Documents" shall mean this Agreement, the
         Assignment of Option Agreement, the Assignment of Plans, the Assignment
         of Sales Contracts, the Assignment of Rents, the Mortgage, the Note,
         the Security Agreement, the Seller Mortgage, the

                                       3
<PAGE>

         Indemnity Agreement and every other document now or hereafter
         evidencing, securing or otherwise executed in conjunction with the
         Loan, together with all amendments and modifications thereof.

                  2.25 "Loan Expenses" shall mean the expenses, charges, costs
         (including both hard costs and soft costs) and fees relating to the
         making, administration, negotiation, documentation or any other aspect
         of the Loan or relating to the performance of the Work, including,
         without limitation, Lender's reasonable attorneys' fees and costs in
         connection with the negotiation, documentation and enforcement of the
         Loan, the fees of the Consultant, all recording fees and charges, title
         insurance charges and premiums, escrow fees, fees of insurance
         consultants, costs of surveys and of other bonds required by the Title
         Company in connection with clearing title to the Real Property or the
         issuance of title reports, binders, policies and the like, and all
         other costs, expenses, charges and fees referred to in or necessitated
         by the terms of this Agreement or any of the other Loan Documents.

                  2.26 "Loan Rate" shall mean the Prime Rate.

                  2.27 "Maturity Date" shall mean December 8, 2000, unless
         otherwise extended pursuant to the terms of Section 3.12 below.

                  2.28 "Model Unit" shall mean a model Unit which is open for
         viewing by prospective purchasers and which is not a Sold Unit.

                  2.29 "Mortgage" shall mean the Deed of Trust dated as of the
         date hereof made by Borrower to Lender, as the same is amended,
         restated, modified or supplemented from time to time, to secure the
         Loan.

                  2.30 "Note" shall mean that certain Note of even date herewith
         made by Borrower to Lender in the original principal amount of
         $5,000,000 to evidence the Loan.

                  2.31 "Option Agreement" shall mean that certain Option,
         Management and Marketing Agreement dated as of September 9, 1998, by
         and between Borrower and Seller, as the same is amended, restated,
         modified or supplemented from time to time.

                  2.32 "Parcel" shall mean, individually, a portion of the Land
         upon which an individual Unit shall be constructed and collectively,
         the portions of the Land upon which the Units shall be constructed.

                  2.33 "Permitted Exceptions" shall mean the exceptions to the
         title of the Real Property listed as "Permitted Exceptions" on Exhibit
         C attached hereto.

                                       4
<PAGE>

                  2.34 "Person" shall mean any individual, firm, corporation,
         business enterprise, trust, association, joint venture, partnership,
         governmental body or other entity, whether acting in an individual,
         fiduciary or other capacity.

                  2.35 "Personal Property" shall mean and include any and all
         furniture, furnishings, appliances, equipment and all fixtures (to the
         extent such fixtures are attached in a manner so as not to be deemed to
         be part of the Real Property) to be located in the Homes or otherwise
         at the Land which will be used or usable in connection with the
         ownership, development, construction or operation of the Project and
         which will be owned or otherwise possessed by Borrower or any of its
         affiliates, including all of such personal property contemplated under
         the Plans and Specifications.

                  2.36 "Plans and Specifications" shall mean, collectively, the
         architectural and engineering plans and specifications relating to the
         Work or any portion thereof, all of which must be acceptable to Lender
         in its sole and absolute discretion.

                  2.37 "Prime Rate" shall mean an annual rate of interest equal
         to the prime rate as publicly announced by Lender to be in effect from
         time to time, adjusted and changing when and as said prime rate changes
         (but such rate may not be the lowest, best or most favorable rate of
         interest which Lender may charge on loans to its customers).

                  2.38 "Project" shall mean the residential development to be
         constructed on the Land, together with certain other related on-site
         improvements.

                  2.39 "Project Cost" shall mean each of the following items,
         but only to the extent specifically set forth in the Budget and only to
         the extent specifically required to complete the Project:

                           (a)      The actual hard costs of completing
                  construction of the Improvements, including demolition and
                  environmental remediation costs;

                           (b)      The actual costs of acquiring and installing
                  the Personal Property;

                           (c)      Premiums for title, casualty, liability and
                  other insurance required by Lender;

                           (d)      The cost of recording and filing the Loan
                  Documents;

                           (e)      Real estate taxes and other assessments
                  which Borrower is obligated to pay during the term of the
                  Loan;

                           (f)      Interest, fees and similar charges payable
                  by Borrower to Lender hereunder or under the Note;

                                       5
<PAGE>

                           (g)      Legal and other closing costs;

                           (h)      Architectural, engineering and consulting
                  fees;

                           (i)      Such other soft costs as may be set forth in
                  the Budget or as may be hereafter approved in writing by
                  Lender; and

                           (j)      All other Loan Expenses.

                  2.40 "Property" shall mean the Real Property, the Units and
         the Personal Property (whether before or after completion of the Work)
         and all other tangible and intangible assets benefitting or otherwise
         appertaining to the Project, including, without limitation, all of the
         collateral for the Loan described in the Loan Documents.

                  2.41 "Real Property" shall mean the Land, the Improvements and
         all easements and appurtenants thereto.

                  2.42 "Reserves" shall mean the reserves described in Section
         5.8 below.

                  2.43 "Retainage" shall mean the portion of each Loan Advance
         retained by Lender in accordance with Section 5.6 below.

                  2.44 "Security Agreement" shall mean the security agreement
         encumbering the Personal Property dated as of the date hereof, made by
         Borrower to, as the same may be hereafter amended, restated, modified
         or supplemented from time to time.

                  2.45 "Seller" shall mean Longleaf Associates Limited
         Partnership, a North Carolina limited partnership.

                  2.46 "Seller Mortgage" shall mean the Deed of Trust executed
         and delivered by Seller and Borrower to secure the Loan, as described
         in Section 5.2(a) below.

                  2.47 "Seller Mortgage Title Policy" shall mean the title
         insurance policy described in Section 5.2(b) below.

                  2.48 "Sold Unit" means a Unit that is subject to an Acceptable
         Unit Sale Contract.

                  2.49 "Sole Member" shall mean CMC Heartland Partners, a
         Delaware general partnership, the sole member of Borrower.

                  2.50 "Spec Unit" means any Unit for which construction has
         commenced (including construction of foundations) and which is not a
         Model Unit or a Sold Unit.

                                       6
<PAGE>

                  2.51 "Subcontracts" shall mean all subcontracts now or
         hereafter entered into by the Contractor for the construction of any of
         the Improvements or the installation of any of the Personal Property or
         the performance of any other aspect of the Work, together with all
         sub-subcontracts, material or equipment purchase orders, equipment
         leases and other agreements entered into by the Contractor, any
         subcontractor or any other party supplying labor or materials in
         connection with the Work.

                  2.52 "Title Company" shall mean Chicago Title Insurance
         Company.

                  2.53 "Title Policies" shall mean the Borrower Mortgage Title
         Policy and the Seller Mortgage Title Policy.

                  2.54 "Town" shall mean the town of Southern Pines, North
         Carolina.

                  2.55 "Town Assessments" shall mean the payments to the Town
         for each Unit.

                  2.56 "Unit" shall mean a detached single family home or an
         attached town home on the Land.

                  2.57 "Unmatured Default" shall mean an event or circumstance
         that with the giving of notice, the passage of time, or both, would
         constitute an Event of Default.

                  2.58 "Work" shall mean the performance of all work to be
         performed and the supplying of all materials to be supplied in
         connection with the building, furnishing, fixturing and equipping of
         the Units, all in accordance with the provisions of this Agreement and
         with the Plans and Specifications, the Budget and other documentation
         approved by Lender.

         3.       COMMITMENTS TO LEND; COMMITMENT FEE.
                  -----------------------------------

                  3.1 Maximum Amount of the Loan. Lender agrees to lend to
         Borrower, and Borrower agrees to borrow from Lender $5,000,000 for the
         Loan, upon the terms and subject to the conditions contained in this
         Agreement. Notwithstanding anything contained in this Article to the
         contrary, Loan Advances shall be limited to such amounts as Borrower is
         eligible to receive pursuant to, and upon compliance with, the
         conditions of Article 5 hereof. Additionally, the aggregate amount of
         the Loan that may be advanced for any Unit at any time (the "Advance
         Rate") shall not exceed the lesser of the following:

                           (a) the lesser of 100% of the cost of such Unit or
                  80% of the appraised value of such Unit, if such Unit at such
                  time is a Sold Unit, or

                                       7
<PAGE>

                           (b) subject to Section 3.10(b), the lesser of 90% of
                  the cost of such Unit or 75% of the appraised value of such
                  Unit, if such Unit at such time is a Model Unit or Spec Unit.

         Notwithstanding anything to the contrary contained herein, (i) for
         Units which are currently under construction and financed with the
         Existing Lender, the cost of such Unit shall be deemed to include
         Borrower's acquisition cost of the Parcel for such Unit pursuant to the
         Option Agreement, and (ii) for those Units which are not currently
         under construction or financed with the Existing Lender, the cost of
         such Unit shall not include any amounts payable to Seller pursuant to
         the Option Agreement. Furthermore, there shall be no more than seven
         Spec Units or more than two Model Units financed by Lender at any time.

                  3.2      Reborrowing.  Borrower shall be entitled to reborrow
         portions of the Loan that are repaid or prepaid.

                  3.3      Voluntary Prepayment; Mandatory Prepayment.

                           (a) Borrower may prepay all or any part of the Loan
                  at any time and from time to time upon five days prior written
                  notice to Lender without cost or penalty.

                           (b) If the outstanding principal balance of the Loan
                  at any time exceeds the maximum permitted amount set forth in
                  Section 3.1 above, Borrower shall immediately repay the amount
                  of such excess.

                           (c) Borrower must make a mandatory principal payment
                  on the Loan equal to the aggregate amount of the Loan
                  previously disbursed by Lender with respect to each Sold Unit
                  nine months after the date on which the first draw of proceeds
                  of the Loan for such Sold Unit was made. Borrower must make a
                  mandatory principal payment on the Loan equal to the aggregate
                  amount of the Loan previously disbursed by Lender with respect
                  to each Spec Unit twelve months after the date on which the
                  first draw of proceeds of the Loan for such Spec Unit was
                  made. Borrower must make a mandatory principal payment on the
                  Loan equal to the aggregate amount of the Loan previously
                  disbursed by Lender with respect to each Model Unit eighteen
                  months after the date on which the first draw of proceeds of
                  the Loan for such Model Unit was made.

                  3.4      Loan Advances Evidenced by the Note.  All advances of
         the Loan shall be evidenced by the Note.

                  3.5      Interest Rate and Payment of Interest. Interest shall
         accrue on the unpaid principal balance of the Loan during each calendar
         month (whether full or partial) at the Prime Rate. Interest shall be
         computed on the basis of a year consisting of 360 days and

                                       8
<PAGE>

         shall be based on the actual number of days during the period for which
         interest is being charged. Accrued and unpaid interest on the Loan
         shall be due and payable to Lender on the first day of each month
         commencing on the first day of the month following the month in which
         the Initial Disbursement Date occurs. Borrower hereby authorizes Lender
         during the term of the Loan to disburse to itself from the undisbursed
         proceeds of the Loan all then accrued and unpaid interest on the Loan
         which is then due and payable; provided, however, that such
         authorization shall not be deemed to limit, reduce or otherwise affect
         Borrower's obligation to pay interest if (a) there are no remaining
         amounts in the Budget for the Loan allocated for the payment of such
         interest (including Reserves specifically allocated to pay such
         interest), or (b) Lender is entitled to withhold disbursement of the
         Loan for any reason. Any amounts disbursed from the interest reserve
         shall become part of the outstanding principal balance of the Loan and
         interest thereon shall accrue and be payable as provided herein.

                  3.6 Mandatory Principal Payments. Concurrently with the
         closing of the sale of each Unit, Borrower shall make a principal
         payment on the Loan equal to the aggregate amount of the Loan
         previously disbursed by Lender with respect to such Unit.

                  3.7 Default Rate. At any time when an Event of Default exists
         under this Agreement or any of the other Loan Documents and after the
         Maturity Date (or the First Extended Maturity Date or the Second
         Extended Maturity Date, if applicable), (a) the aggregate outstanding
         principal balance of the Loan and any other amounts then owing by
         Borrower to Lender shall bear interest at the Default Rate until paid
         in full and (b) subject to the maximum rate permitted by Applicable
         Law, all accrued but unpaid interest shall bear interest at the Default
         Rate therefrom until paid in full.

                  3.8 Late Charge. If any payment of interest or principal due
         under the Note is not made within ten days after such payment is due,
         then, in addition to the payment of the amount so due, Borrower shall
         pay to Lender a "late charge" equal to five percent (5.0%) of the
         amount of that payment or $25.00, whichever is greater, up to the
         maximum amount of $1,500.00 per late charge to compensate Lender for
         the cost of collecting and handling such late payment. This late charge
         may be assessed without notice, shall be immediately due and payable
         and shall be in addition to all other rights and remedies available to
         Lender.

                  3.9 Fees. Concurrently with the initial disbursement of the
         Loan, Lender shall be deemed to have fully earned a non-refundable loan
         and administration fee in the amount of $50,000 (the "Loan Fee"), which
         fee shall be due and payable by Borrower on the Initial Disbursement
         Date.

                  3.10 Loan Extension Option. If on the Maturity Date (a) any
         Units are then under construction, or (b) there are any Units then
         deemed to be Spec Units or Model Units, Borrower shall have the right
         to extend the maturity date of the Loan for an additional six months
         (the last day of said six month period being referred to herein as the

                                       9
<PAGE>

         "First Extended Maturity Date"), upon and subject to the following
         terms, provisions and conditions:

                           (i) Borrower shall give written notice (the
                  "Extension Notice") to Lender of Borrower's election to
                  exercise the aforementioned extension right not less than 60
                  days prior to the Maturity Date;

                           (ii) No Event of Default or Unmatured Default exists
                  under any of the Loan Documents on the date Borrower delivers
                  the Extension Notice or on the Maturity Date;

                           (iii) Concurrently with the delivery of the Extension
                  Notice, Borrower shall pay to Lender $25,000 for the six month
                  extension period;

                           (iv) The Advance Rate for each Spec Unit shall be
                  reduced from 75% to 70% of the appraised value on the date
                  that is twelve months after the date on which the first draw
                  of proceeds of the Loan for such Spec Unit was made;

                           (v) The Advance Rate for each Spec Unit shall be
                  reduced from 70% to 65% of the appraised value on the date
                  that is eighteen months after the date on which the first draw
                  of proceeds of the Loan for such Spec Unit was made;

                           (vi) Borrower makes mandatory principal payments on
                  the Loan equal to the amount of the Loan previously disbursed
                  by Lender with respect to each Spec Unit twenty-four months
                  after the date on which the first draw of proceeds of the Loan
                  for such Spec Unit was made; and

                           (vii) Borrower may not commence construction of any
                  Units;

                           (viii) Except as expressly provided to the contrary
                  in this Section 3.10, all of the other terms, provisions and
                  conditions of the Loan Documents shall remain in full force
                  and effect in accordance with their respective terms during
                  the additional extension period, including without limitation,
                  the obligation to make monthly payments of interest.

         4. LOAN DOCUMENTS. Prior to the Initial Disbursement Date, Borrower
shall execute and/or deliver to Lender those of the following documents and
other items required to be executed and/or delivered by Borrower (and Seller),
and shall cause to be executed and/or delivered to Lender those of the following
documents and other items required to be executed and/or delivered by others,
all of which documents and other items shall contain such provisions as shall be
required to conform to this Agreement and otherwise shall be satisfactory in
form and substance to Lender:

                  4.1      The Loan Documents.

                                       10
<PAGE>

                  4.2      UCC financing statements perfecting the security
         interests created by the Security Agreement.

                  4.3      Copies of surveys reasonably acceptable to Lender.

                  4.4      Borrower, at its expense, shall obtain and deliver to
         Lender policies of insurance providing the following:

                           (a) Policies of insurance evidencing bodily injury,
                  death or property damage liability coverages in amounts not
                  less than $1,000,000 (combined single limit), and an
                  excess/umbrella liability coverage in an amount not less than
                  $1,000,000 shall be in effect with respect to Borrower. Such
                  policies must be written on an occurrence basis so as to
                  provide blanket contractual liability, broad form property
                  damage coverage, and coverage for products and completed
                  operations.

                           (b) "Special Cause of Loss" insurance on the
                  Improvements in an amount not less than the full insurable
                  value on replacement cost basis of the insured Improvements
                  and personal property related thereto. During the construction
                  period, such policy shall be written in the so-called
                  "Builder's Risk Completed Value Non-Reporting Form" (or
                  "Reporting Form" if the Improvements are a single family
                  residential development) with no coinsurance requirement and
                  shall contain a provision granting the insured permission to
                  complete.

                           (c) Evidence of worker's compensation insurance
                  coverage satisfactory to Lender.

                           (d) If the Real Property, or any part thereof, lies
                  within a "special flood hazard area" as designated on maps
                  prepared by the Department of Housing and Urban Development, a
                  National Flood Insurance Association standard flood insurance
                  policy, plus insurance from a private insurance carrier if
                  necessary, for the duration of the Loan in the amount of the
                  full insurable value of the Improvements.

                           (e) Such other insurance as Lender may require, which
                  may include, without limitation, errors and omissions,
                  insurance with respect to the contractors, architects and
                  engineers, earthquake insurance, rent abatement and/or
                  business loss.

         All insurance policies shall (i) be issued by an insurance company
         having a rating of "A" VII or better by A.M. Best Co., in Best's Rating
         Guide, (ii) name Lender as additional insured on all liability
         insurance and as mortgagee and loss payee on all casualty insurance,
         (iii) provide that Lender is to receive thirty (30) days written notice
         prior to

                                       11
<PAGE>

         non-renewal or cancellation, (iv) be evidenced by a certificate of
         insurance to be held by Lender, and (v) be in form and amounts
         acceptable to Lender.

                  4.5 An ALTA Construction Loan Policy of Title Insurance
         ("Borrower Mortgage Title Policy") issued by the Title Company in the
         full amount of the Note insuring that the Mortgage will be a first
         priority lien upon the fee simple title to the Land to the extent of
         advances made by Lender from time to time under this Agreement, subject
         to no liens, claims, exceptions or encumbrances except the Permitted
         Exceptions and containing endorsements reasonably required by Lender
         from time to time (the Borrower Mortgage Title Policy, Permitted
         Exceptions and required endorsements are more fully described on
         Exhibit C attached hereto).

                  4.6  Copies of all recorded documents described in the
         Borrower Mortgage Title Policy.

                  4.7 Current Uniform Commercial Code, federal and state tax
         lien and judgment searches, pending suit and litigation searches and
         bankruptcy court filings searches covering Borrower, Sole Member,
         Contractor and Seller and disclosing no matters objectionable to
         Lender.

                  4.8 Copies of the form of Subcontract to be used by the
         Contractor.

                  4.9 The Plans and Specifications, which have been approved by
         Borrower and the Contractor and approved and stamped by the appropriate
         governmental authorities, including detailed descriptions (with
         drawings and specifications).

                  4.10 Certified copies of the Construction Contract, all
         licenses, permits and governmental approvals necessary for the
         construction, use or operation of the Project and all other documents
         and instruments relating to performance of the Work.

                  4.11 Opinion letter from Robbins, May & Rich, LLP, legal
         counsel for Borrower opining to the authority of such party to execute,
         deliver and perform its obligations under the Loan Documents, to the
         validity and binding effect of the Loan Documents and to such other
         matters as Lender and its counsel shall require.

                  4.12 Evidence that (i) no portion of the Real Property is
         located in an area designated by the Secretary of Housing and Urban
         Development as having special flood hazards, or if any portion of the
         Real Property is so located, evidence that flood insurance is in
         effect; and (ii) no portion of the Real Property is located in a
         federally, state or locally designated wetland or other type of
         government protected area.

                  4.13 Certified copies of the Limited Liability Company
         Operating Agreement of Borrower, together with all amendments thereto,
         and such resolutions and other documents as Lender deems appropriate
         evidencing the authority of Borrower to execute

                                       12
<PAGE>

         and deliver the Loan Documents to which such Persons are a party and to
         perform the obligations contemplated hereby and thereby.

                  4.14 Certified copies of all service contracts, development
         agreements and other agreements affecting the use, development or
         operation of the Project, if any.

                  4.15 Evidence that the environmental condition of the Property
         is satisfactory to Lender. Such testing and investigation shall be
         performed by an environmental professional acceptable to Lender in a
         manner satisfactory to Lender.

                  4.16 Evidence that, as of the date of the Initial Loan
         Advance, there has been no material adverse change in the financial or
         other projections for the Project, the physical condition of the
         Property or the financial condition of Borrower since the date of the
         most recent financial statements or projections delivered to Lender or
         the most recent inspections of the condition of the Property made by
         the Consultant, as the case may be.

                  4.17 Form of proposed sales contracts and other documents to
         be used in connection with the sale of the Units, together with a
         schedule of minimum sales prices therefor.

                  4.18 An appraisal satisfactory to Lender indicating the
         aggregate fair market value of the Project, as completed that is
         acceptable to Lender.

                  4.19 Certified copies of any sale contracts, letters of intent
         and other agreements relating to the sale of the Units that have been
         executed as of the date of the Initial Loan Advance.

                  4.20 A detailed marketing and sales projection, including a
         projection of the amount of time required to close sales of the Units.

                  4.21 Evidence that the Property is, and upon completion the
         Project will be, in compliance with all Applicable Laws.

                  4.22 A reasonably detailed Project development and
         construction schedule specifying all of the projected start and
         completion dates (or delivery dates) for each component of development
         of the Project, including each separate component of performance of the
         Work and each required license, permit or other public or private
         approval.

                  4.23 A certified copy of the Option Agreement.

                  4.24 An Consent Agreement from Seller regarding the Option
         Agreement in form and substance acceptable to Lender in its sole and
         absolute discretion.

                                       13
<PAGE>

                  4.25 Copies of all agreement, declarations, by laws,
         certificates, plans, opinions and other documents regarding or
         affecting the Land, the Project or the Option Agreement.

                  4.26 Such other assignments, certificates, opinions and other
         documents, instruments and information affecting or relating to
         Lender's interest in the Project or the use, operation, development or
         construction of the Project as Lender may reasonably require.

         50       DISBURSEMENT OF THE LOAN.
                  ------------------------

                  5.1 Conditions Precedent. In addition to the other conditions
         set forth herein, the obligation of Lender to make the initial and each
         subsequent disbursement of the Loan under this Agreement shall be
         conditioned upon and subject to the payment to Lender of all loan fees
         then owing from Borrower to Lender and to satisfaction of all of the
         following conditions:

                           (a) All representations and warranties contained in
                  this Agreement and in the other Loan Documents shall be true
                  in all material respects on and as of the date of such
                  disbursement.

                           (b) Borrower shall have performed all of its
                  obligations under all Loan Documents which are required to be
                  performed on or prior to the date of such disbursement.

                           (c) The Loan shall not be "out of balance" as
                  determined under Section 5.9 below, and the disbursement shall
                  not cause the Loan to be "out of balance."

                           (d) There shall be no material adverse change in the
                  financial condition of Borrower as reasonably determined by
                  Lender.

                           (e) No Event of Default shall have occurred that has
                  not been waived in writing by Lender, and no Unmatured Default
                  shall then exist.

                  5.2 Conditions Precedents for Disbursements after the Initial
         Loan Advance. In addition to all of the other conditions set forth
         herein, the obligation of Lender to make each subsequent disbursement
         of the Loan under this Agreement shall be conditioned upon and subject
         to the satisfaction of all of the following conditions:

                           (a) Borrower and Seller shall execute and deliver to
                  the Title Company a Deed of Trust for the benefit of Lender
                  (the "Seller Mortgage"), in form and substance reasonably
                  acceptable to Lender for each Parcel that Seller is the fee
                  simple title holder and which Borrower has exercised its right
                  to purchase

                                       14
<PAGE>

                  pursuant to the Option Agreement. Notwithstanding anything to
                  the contrary, after the Seller Mortgage is recorded with the
                  Register of Deeds for Moore County, North Carolina, Borrower
                  and Seller may execute and deliver to the Title Company,
                  amendments to the Seller Mortgage, in form and substance
                  reasonably acceptable to Lender adding each new Parcel to the
                  legal description of the Seller Mortgage.

                           (b) An ALTA Construction Loan Policy of Title
                  Insurance ("Seller Mortgage Title Policy") issued by the Title
                  Company in the full amount of the Note insuring that the
                  Seller Mortgage will be a first priority lien upon the fee
                  simple title to each new Parcel to the extent of advances made
                  by Lender from time to time under this Agreement, subject to
                  no liens, claims, exceptions or encumbrances except the
                  Permitted Exceptions and containing endorsements reasonably
                  required by Lender from time to time (the Seller Mortgage
                  Title Policy, Permitted Exceptions and required endorsements
                  are more fully described on Exhibit C attached hereto).

                           (c) Prior to any second disbursement for any Unit,
                  Borrower shall deliver to Lender and the Title Company a
                  boundary survey for such Unit's Parcel.

                           (d) Copies of all recorded documents described in the
                  Seller Mortgage Title Policy pertaining to each new Parcel.

                           (e) Opinion letter from Robbins, May & Rich, LLP,
                  legal counsel for Borrower and Seller opining to the authority
                  of each party to execute, deliver and perform its obligations
                  under the Seller Mortgage, to the validity and binding effect
                  of the Seller Mortgage and to such other matters as Lender and
                  its counsel shall reasonably require.

                           (f) Such other assignments, certificates, opinions
                  and other documents, instruments and information affecting or
                  relating to Lender's interest in the Project or the use,
                  operation, development or construction of the Project as
                  Lender may reasonably require.

                  5.3 Use of Loan Proceeds; Inspections of the Work. The
         proceeds of the Loan disbursed to Borrower shall be used by Borrower
         solely for the purpose of paying (or reimbursement to others for
         payment of) items of Project Cost actually incurred by Borrower, and,
         in connection therewith, no Project Cost shall include expenses
         relating to any development, construction, operating or other cost
         attributable to any project other than the Project specifically
         described in this Agreement. Notwithstanding anything contained in this
         Agreement to the contrary, all inspections of the Work made by Lender,
         the Consultant or their respective agents, employees and designees
         shall be solely for Lender's own information and shall not be deemed to
         have been made for or on account

                                       15
<PAGE>

         of Borrower or any other party. Borrower hereby specifically relieves
         Lender of any and all liability or responsibility relating in any way
         whatsoever to the construction of the Project, including but not
         limited to, the work thereat, the material or labor supplied in
         connection therewith, and any errors, inconsistencies or other defects
         in the Project or the Plans and Specifications.

                  5.4      Disbursement Requests.
                           ---------------------

                           (a) Borrower shall request and Lender shall be
                  required to make disbursements of the Loan not more frequently
                  than once each calendar month per Loan. Lender shall not be
                  required to make more than five disbursements in connection
                  with the construction of any one Unit. Lender may at any time
                  take such action as it deems appropriate to verify that the
                  conditions precedent to each disbursement have been satisfied,
                  including, without limitation, verification of any amounts due
                  under the Construction Contract or any Subcontract. Borrower
                  agrees to cooperate with Lender in any such action. If in the
                  course of any such verification, any amount shown on any
                  contract or subcontract entered into for the performance of
                  any portion of the Work, or any application for payment, sworn
                  statement or waiver of lien is subject to a possible
                  discrepancy, such discrepancy shall be eliminated by Borrower
                  to Lender's satisfaction. Each request for disbursement shall
                  be made by a letter from the chief financial officer of
                  Borrower, addressed to Lender, specifying in detail the amount
                  and mode of each disbursement, and accompanied by the
                  following, all in form and substance satisfactory to Lender:

                                    (i) An Owner's Sworn Statement and
                           disbursement request;

                                    (ii) A Contractor's Application for Payment
                           and Sworn Contractor's Statement from Contractor, and
                           a statement of a duly authorized officer of
                           Contractor that all items of construction cost have
                           been incorporated into the Project in accordance with
                           the Plans and Specifications, together with waivers
                           of lien with respect to the current disbursement and
                           all previous disbursements from Contractor and all
                           subcontractors and materialmen to whom payment is to
                           be made, as are required by the Title Company as a
                           condition to issuing the date-down endorsements
                           described in subparagraph (b) below;

                                    (iii) An inspection report of the Consultant
                           certifying the percentages of completion of the
                           components of the Work and setting forth the amount
                           authorized for disbursement and such other matters as
                           Lender may require (including compliance with the
                           Plans and Specifications). It is understood and
                           agreed by Borrower that any and all inspections of
                           the Work made by Lender, the Consultant or their
                           respective agents, employees and/or designees shall
                           be solely for Lender's

                                       16
<PAGE>

                           own information and shall not be deemed to have been
                           made for or on account of Borrower or any other
                           party, and that Lender shall have no liability or
                           responsibility relating in any way whatsoever to the
                           construction of the Project, including, but not
                           limited to, the work thereon, the material or labor
                           supplied in connection therewith, and any errors,
                           inconsistencies or other defects in the Plans and
                           Specifications.

                                    (iv) Such other documents, assignments,
                           certificates and opinions as are required by the
                           Title Company, or as may be reasonably required by
                           Lender.

                           (b) Notwithstanding anything contained in this
                  Agreement to the contrary, Lender shall not be required to
                  make any disbursement of the Loan pursuant to this Agreement
                  until the Title Company is unconditionally prepared to issue
                  endorsements to the Title Policies, updating the same to the
                  date of such disbursement and increasing the amount of
                  coverage (including mechanic lien coverage) thereunder to the
                  aggregate outstanding principal balance of the Loan (taking
                  into account the then current disbursement), and insuring the
                  lien of the Mortgage and the Seller Mortgage to be superior to
                  all defects in title other than the Permitted Exceptions and
                  other exceptions hereafter approved by Lender in writing.

                           (c) No disbursement of any amount shown in a Budget
                  as a contingency reserve shall by made without Lender's
                  approval with respect to the type and amount of the requested
                  expenditure, which approval shall not be unreasonably
                  withheld.

                  5.5 Certifications, Representations and Warranties. Each
         request for disbursement by Borrower shall constitute (a) Borrower's
         certification that the representations and warranties contained in
         Article 6 below are true and correct in all material respects as of the
         date of such request, (b) Borrower's certification that Borrower is in
         compliance with the conditions contained in this Article 5, and (c)
         Borrower's representation and warranty to Lender, with respect to the
         Work, materials and other items for which payment is requested that (i)
         such Work and materials have been incorporated into the Project, free
         and clear of liens and encumbrances, (ii) the value thereof is as
         estimated therein, (iii) such Work and materials substantially conform
         to the Plans and Specifications, this Agreement and all Applicable
         Laws, and (iv) the requisitioned value of such Work and materials and
         the amounts of all other items of cost for which payment is requested
         by Borrower have theretofore been in fact paid for in cash by Borrower
         or the same are then due and owing by Borrower and (unless Lender
         disburses funds directly to the parties performing the Work or to the
         Title Company) will in fact be paid in cash by Borrower within five
         days after Borrower's receipt of the requested disbursement. Neither
         review nor approval by Lender of requests for disbursement or any
         information contained therein or any other information provided to

                                       17
<PAGE>

         Lender in accordance with the other provisions of this Article 5 shall
         constitute the acceptance or approval by Lender of any portion of the
         Work.

                  5.6 Amount of Disbursements; Retainage. Subject to the other
         conditions and limitations set forth herein, the amount of each
         disbursement shall be the amount requested by Borrower; provided,
         however, that (a) Lender shall have the right to retain 10% of each
         "hard cost" item of Project Cost (other than amounts requested for
         payment to suppliers of materials who have either fully delivered all
         materials or delivered such portion thereof whereby it is reasonable
         and necessary to fully pay for such materials)(the "Retainage"), which
         Retainage shall be disbursed in accordance with the provisions of
         Section 5.11 below, and (b) in no event shall Lender be obligated to
         disburse for any item an amount in excess of the amount allocated for
         such item pursuant to the Budget, including any Reserve set aside
         specifically for such item as provided in Section 5.8 below.

                  5.7 Costs. For purposes of this Agreement, including without
         limitation, Section 5.3 hereof, (a) the cost of labor and material
         furnished for the Work shall be deemed to be incurred by Borrower when
         the labor and material have been incorporated into the Project and the
         payment therefor is due and payable, (b) the cost of services (other
         than labor included in the Work) shall be deemed to be incurred by
         Borrower when the services are actually rendered and the payment
         therefor is due and payable, (c) real estate taxes, interest and
         insurance premiums shall be deemed to be incurred by Borrower when such
         items become due and payable, and (d) any other costs shall be deemed
         to be incurred by Borrower when the payment therefor is due and
         payable, but not before the value to be received in return for such
         cost has been received by Borrower.

                  5.8 Reserves. In addition to any reserves for specific line
         items that are already established in the Budget, Lender may establish
         and set aside out of the undisbursed proceeds of the Loan, reserves
         (collectively, the "Reserves") in such amounts as may be reasonably
         estimated by Lender from time to time to provide for payment of the
         items of Project Cost as the same may accrue or become payable prior to
         the repayment in full of the Loan. Amounts set aside as Reserves shall
         not be available for disbursement to Borrower for any purpose other
         than payment of the item or group or items for which the Reserve was
         established. Based upon the facts then available to Lender, Lender may
         adjust and reallocate the amount of any Reserve from time to time.
         Items for which Reserves may be established shall include (i) Loan
         Expenses, (ii) interest on the Loan, (iii) real estate taxes and
         assessments, (iv) premiums on insurance policies and bonds (if any)
         required to be furnished by Borrower hereunder (v) professional fees
         and (vi) promotion and sale costs.

                                       18
<PAGE>

                  5.9      Loan In Balance.
                           ---------------

                  (a) At all times prior to repayment of the Loan in full, (i)
         the undisbursed proceeds from the Loan allocated to each line item in
         the Budget (the aggregate amount of such proceeds being hereinafter
         referred to as the "Available Proceeds") must be sufficient, in
         Lender's reasonable determination, to pay the unpaid costs and expenses
         that will be incurred to complete such item, and (ii) the aggregate
         Available Proceeds must be sufficient, in Lender's reasonable
         determination, to pay all Project Costs remaining unpaid and all
         operating, management and other expenses of the Project through the
         projected date on which all of the Units for which construction of
         Improvements have commenced will be sold, as such date is determined by
         Lender from time to time.

                  (b) If Lender determines that (i) the costs and expenses to
         complete a Unit exceeds the amount allocated therefor, or (ii) the
         Project Costs remaining unpaid and all estimated operating, management
         and other expenses of the Project through the projected date on which
         all of the Units for which construction of Improvements have commenced
         will be sold, as such date is determined by Lender from time to time,
         exceed the sum of the Available Proceeds, then the Loan shall be deemed
         "out of balance" to the extent of such excess.

                  (c) If Lender deems the Loan to be out of balance as
         aforesaid, Borrower shall, within five days after written request by
         Lender, deposit with Lender an amount equal to the excess amount or
         amounts determined pursuant to subparagraph (b) above of this Section.
         The sums thus deposited with Lender will be disbursed by Lender to
         complete the Work prior to any further disbursement of Loan proceeds
         (or, if the Work has been completed, to the repayment of the
         outstanding principal balance of the Loan). If such deposit is not made
         within such time, an Event of Default shall be deemed to have occurred.
         No interest shall be payable to Borrower on the amounts so deposited.

                  5.10     Application of Disbursements.
                           ----------------------------

                  (a) Lender shall make each requested disbursement of the Loan
         within ten days after all of the conditions precedent to such
         disbursement set forth in this Article have been satisfied (including
         delivery of all documentation required under Sections 5.2 and 5.4
         above), except that Lender, in its discretion, may make payments of
         Project Cost directly to the person or entity Lender determines is
         entitled to such payment or jointly to Borrower and such person or
         entity.

                  (b) Notwithstanding the foregoing, Lender shall not be
         responsible, liable or obligated to the contractors, subcontractors,
         suppliers, materialmen, laborers, architects, engineers, or any other
         parties, for services or work performed, or for goods delivered by them
         or any of them, in and upon the Land or employed directly or indirectly
         in the performance of the Work, or for any debts or claims whatsoever
         accruing in favor of any

                                       19
<PAGE>

         such parties and against Borrower or others, or against the Project. It
         is expressly understood and agreed that Borrower is not and shall not
         be an agent of Lender for any purpose whatsoever. Without limiting the
         generality of the foregoing, advances made at Lender's option, directly
         to any contractor, subcontractor or supplier of labor or materials, or
         any other party, shall not be deemed a recognition by Lender of any
         third party beneficiary status of any such person or entity.

                  (c) Borrower covenants and agrees that it shall receive all
         advances of Loan proceeds to be made hereunder by Lender as a trust
         fund and that Borrower shall withdraw and use said funds solely for the
         payment of the bills for the labor and materials used in the
         performance of the Work for which such Loan funds were requested by
         Borrower, and for the payment of the other items of Project Cost for
         which such Loan proceeds were requested by Borrower, and for no other
         purpose whatsoever; however, nothing herein shall impose upon Lender
         any obligation whatsoever to see to the proper application of any such
         monies by Borrower.

                  (d) Whenever so requested by Lender, Borrower shall promptly
         furnish Lender written evidence reasonably satisfactory to Lender that
         all monies theretofore advanced by Lender pursuant to this Agreement
         have actually been paid or applied in payment of the cost of
         performance of the Work and in payment of the other items of Project
         Cost for which such funds were advanced by Lender, and until such
         evidence is produced, at the option of Lender, no future or additional
         payments or advances of a Loan funds need be made hereunder.

                  5.11 Release of Retainage. Retainage(s) shall be released as
         follows:

                  (a) Retainage on any Subcontract shall be released within
         thirty days after such Subcontract has been fully performed and the
         following conditions have been satisfied:

                           (i) Borrower has delivered final and unconditional
                  waivers of lien from the subcontractor whose individual
                  Subcontract has been fully performed to the Title Company with
                  copies to Lender;

                           (ii) All conditions precedent to disbursement of
                  proceeds of the Loan as set forth in this Agreement have been
                  fully satisfied; and

                           (iii) Lender has received a certificate in writing
                  signed by a duly authorized officer of Contractor certifying
                  that the Work provided for in the Subcontract has been fully
                  and satisfactorily completed in accordance with the Plans and
                  Specifications, and in compliance with all Applicable Laws,
                  and the Consultant has approved all such Work.

                                       20
<PAGE>

                  (b) Final disbursement of construction retainages to the
         Contractor for the Work not previously released shall be made upon
         satisfaction of the following conditions in addition to satisfaction of
         the other conditions precedent for disbursement of proceeds of the Loan
         by Lender:

                           (i) Borrower has delivered to Lender a certificate in
                  writing signed by a duly authorized officer of the Contractor
                  certifying that all obligations of the Contractor under the
                  Construction Contract and all obligations of the
                  subcontractors under the Subcontracts have been fully
                  performed, and that the construction of the Work has been
                  completed in all respects in accordance with the Plans and
                  Specifications and the use and occupancy of the Project is
                  permitted under all Applicable Laws;

                           (ii) If requested by Lender, Lender shall have
                  received a certificate in writing signed by the Consultant
                  certifying that the construction of the Work has been
                  completed in all respects in accordance with the Plans and
                  Specifications and the use and occupancy of the Project is
                  permitted under all Applicable Laws;

                           (iii) Borrower has delivered to Lender all applicable
                  licenses or permits necessary for the use of the Project,
                  including without limitation, a final, unconditional
                  certificate of occupancy for each Unit as final disbursement
                  of retainage is made for such Units;

                           (iv) Borrower has delivered to Lender original
                  policies of fire and extended coverage insurance as herein
                  required, with Lender named as mortgagee and as an additional
                  insured party and loss payee;

                           (v) The Title Company is unconditionally prepared to
                  issue its final updated Title Policies, subject only to the
                  Permitted Exceptions and other exceptions approved by Lender
                  in writing, and containing full coverage against all
                  mechanics' liens and such other endorsements as are required
                  under Section 4.5 above, as modified by the requirements under
                  Section 5.2 above;

                           (vi) Borrower has delivered to the Title Company and
                  Lender final and unconditional waivers of lien from the
                  Contractor and all subcontractors and materialmen who have
                  supplied labor or material in connection with the Work and who
                  have not previously submitted such final waivers.

                  5.12     Additional Loan Limitations.

                           (a) At no time shall more than seven Spec Units be
                  under construction. At no time shall more than two Model Units
                  be under construction.

                                       21
<PAGE>

                           (b) Borrower shall not commence construction of a
                  Unit if the then unpaid hard and soft costs that will be
                  incurred to complete the construction and sale of such Unit,
                  as determined by Lender in its sole and absolute discretion,
                  exceeds the undisbursed portion of the Loan allocated to such
                  construction and sale.

         6.       REPRESENTATIONS AND WARRANTIES.  In order to induce Lender to
execute this Agreement and to make the Loan, Borrower represents and warrants to
Lender as follows:

                  6.1 Borrower. Borrower is a duly formed limited liability
         company under the laws of the State of Delaware, validly existing, in
         good standing and fully qualified to do business in the State of North
         Carolina. The Limited Liability Company Operating Agreement dated as of
         December 12, 1997, creating Borrower and the Certificate of Formation
         of Borrower, copies of which have been furnished to Lender, are in
         effect, unamended and is the true, correct and complete documents
         relating to Borrower's creation and governance. Borrower, Sole Member
         and their affiliates have fully complied with all applicable securities
         and other laws and regulations in connection with the formation of
         Borrower and the sale and offer for sale of interests therein.

                  6.2 Sole Member. Sole Member is a duly formed general
         partnership validly existing and in good standing in the State of North
         Carolina and has full power and authority to execute and deliver the
         Loan Documents and to perform its obligations hereunder and thereunder.
         Heartland Partners, L.P., a Delaware limited partnership and Heartland
         are the sole general partners of Member. The Amended and Restated
         Partnership Agreement dated as of June 27, 1990 creating Sole Member, a
         copy of which has been furnished to Lender, is in effect, unamended and
         is the true, correct and complete documents relating to Sole Member's
         creation and governance. Sole Member has fully complied with all
         applicable securities and other laws and regulations in connection with
         the formation of Sole Member and the sale and offer for sale of
         interests therein.

                  6.3 Heartland. Heartland is a duly formed corporation under
         the laws of the State of Delaware, validly existing, in good standing
         and fully qualified to do business in the State of Illinois. The
         articles of incorporation and by-laws of Heartland, copies of which
         have been furnished to Lender, are in effect, unamended, and are the
         true, correct and complete documents relating to Heartland's creation
         and governance.

                  6.4 Title. Seller owns good and marketable fee simple title to
         the Real Property, subject to Borrower's interest in the Real Property
         pursuant to the Option Agreement. Borrower owns all of the Personal
         Property. The Real Property and the Personal Property are owned free
         and clear of all liens, claims and encumbrances, except the Permitted
         Exceptions.

                                       22
<PAGE>

                  6.5 Improvements. Subject to the terms and conditions
         contained in this Agreement, Borrower intends to improve the Land with
         the Improvements. The Work will be performed in accordance with the
         provisions of the Plans and Specifications and the Budget and all of
         the other requirements of this Agreement.

                  6.6 Validity and Enforceability of Documents. Upon the
         execution and delivery of the Loan Documents, the Loan Documents shall
         be valid and binding upon the parties that have executed the same in
         accordance with the respective provisions thereof, and enforceable in
         accordance with the respective provisions thereof, subject only to
         applicable bankruptcy, reorganization, insolvency, moratorium and other
         similar laws affecting the enforcement of creditor's rights. Execution,
         delivery and performance of the Loan Documents do not and will not
         contravene, conflict with, violate or constitute a default under any
         Applicable Law or any agreement, indenture or instrument to which the
         Borrower, Sole Member, Contractor or Seller is a party or is bound or
         which is binding upon or applicable to the Property or any portion
         thereof.

                  6.7 Litigation. There is not any condition, event or
         circumstance existing, or any litigation, arbitration, governmental or
         administrative proceeding, action, examination, claims or demand
         pending or, to the best of Borrower's knowledge after due inquiry,
         threatened affecting Borrower, Sole Member, Contractor or Seller or the
         Property, or involving the validity or enforceability of the Loan
         Documents or involving any risk of a judgment or liability which, if
         satisfied, would have an adverse effect on the financial condition,
         business or properties of Borrower, Sole Member, Contractor or Seller
         or the priority of the lien of the Mortgage or Seller Mortgage, or
         which would prevent Borrower, Contractor or Seller from complying with
         or performing its obligations under this Agreement, the Note or any of
         the other Loan Documents within the time limits set forth therein for
         such compliance or performance and no basis for any such matter exists.

                  6.8 Utilities; Authorities. All utilities necessary for use,
         operation and occupancy of the Property (including, without limitation,
         water, storm sewer, sanitary sewer and drainage, electric, gas and
         telephone facilities) are available at the boundaries of the Land (or
         in the streets adjoining the Land), and all requirements for the use of
         such utilities have been fulfilled. All building, zoning, safety,
         disabled persons, health, fire, water district, sewerage and
         environmental protection agency permits and other licenses and permits
         which are required by any governmental authority for the use, occupancy
         and operation of the Property have been obtained by or furnished to
         Borrower and are in full force and effect or will be obtained by and
         maintained in full force and effect by Borrower when and as required by
         any governmental authority.

                  6.9 Solvency. Borrower is solvent and able to pay its debts as
         such debts become due, and has capital sufficient to carry on its
         present business transactions. The value of Borrower's property, at a
         fair valuation, is greater than the sum of its debts. Borrower is not
         bankrupt or insolvent. Borrower has not made an assignment for the

                                       23
<PAGE>

         benefit of its creditors. There has been no trustee or receiver
         appointed for the benefit of Borrower's creditors and there has been no
         bankruptcy, reorganization or insolvency proceedings instituted by or
         against Borrower. Borrower will not be rendered insolvent by its
         execution, delivery or performance of the Loan Documents or by the
         transactions contemplated thereunder.

                  6.10 Financial Statements. All financial statements submitted
         to Lender relating to Borrower, its affiliates, and the Property are
         true, complete and correct, and have been prepared in accordance with
         sound accounting principles consistently applied and fairly present the
         financial condition of the Person to which they pertain and the other
         information therein described and do not contain any untrue statement
         of a material fact or omit to state a fact material to the financial
         statement submitted or this Agreement. No material adverse change has
         occurred in the financial condition of Borrower, any of its affiliates,
         or the Property since the dates of each such financial statements.

                  6.11 Compliance with Laws. The use, occupancy and operation of
         the Property for its intended purposes is not in violation any
         Applicable Laws, any contractual arrangements with third parties or any
         covenants, conditions, easements, rights of way or restrictions of
         record. Neither Borrower nor any agent thereof has received any notice,
         written or otherwise, alleging any such violation, which violation has
         not previously been cured. The Property is in full compliance and
         conformity with all zoning requirements, and will not be a
         non-conforming or special use. No right to any off-site facilities will
         be necessary to insure compliance by the Property with all Applicable
         Laws.

                  6.12 Construction Contract. Pursuant to the Construction
         Contract, the Contractor has agreed to construct the Work. The
         Construction Contract is in full force and effect, unamended, and no
         default exists thereunder by either party thereto. In the event of any
         conflict between the terms of the Construction Contract, other
         Subcontracts and this Agreement or any other Loan Document, Borrower
         shall abide by and shall cause the Contractor to act in accordance with
         the provisions of the Loan Documents.

                  6.13 Subcontracts. Borrower has delivered to Lender true,
         complete and correct copies of all Subcontracts that have been entered
         into prior to the date hereof. The Subcontracts that have been entered
         into prior to the date hereof are in full force and effect, unamended,
         and no default exists thereunder by any party thereto.

                  6.14 Plans and Specifications. Borrower has delivered to
         Lender true, complete and correct copies of all of the plans and
         specifications listed in Exhibit D attached hereto and the plans and
         specifications listed in Exhibit D are the Plans and Specifications
         which have been approved by Lender.

                  6.15 Budget. The Budget is a true, complete and correct budget
         with respect to the costs of the Work (including both hard costs and
         soft costs associated therewith).

                                       24
<PAGE>

                  6.16 Financing Statements. There are no UCC financing
         statements in effect other than those to be filed and/or recorded by
         Lender which name Borrower as debtor and pertaining to any rights in
         any of the Personal Property.

                  6.17 Event of Default. No Event of Default has occurred, and
         no Unmatured Default exists.

                  6.18 Responsible Property Transfer Act. To the best of
         Borrower's knowledge, there are no facilities on the Real Estate that
         are subject to reporting under Section 312 of the federal Emergency
         Planning and Community Right-To-Know Act of 1986, 43 U.S.C. Section
         11022, and federal regulations promulgated thereunder. To the best of
         Borrower's knowledge, the Real Estate does not contain any underground
         storage tanks.

                  6.19 Additional Agreements. Except for the Additional
         Agreements listed in Exhibit F attached hereto, true and correct copies
         of which have been furnished to Lender, there are no leases,
         management, leasing, development or other agreements in existence that
         affect the Property.

         All representations and warranties which have been made by Borrower in
         this Agreement or the other Loan Documents shall be true in all
         respects at the time of each disbursement of the Loan, and in the event
         of any material breach, misrepresentation or omission, Lender shall
         have the absolute right to terminate its obligations under this
         Agreement (without any obligation to refund any loan or other fees
         previously paid), and upon demand by Lender, Borrower shall reimburse
         Lender for the Loan Expenses, and Lender shall be entitled to recover
         from Borrower all losses and damages resulting therefrom.

         7.       BORROWER'S COVENANTS.
                  --------------------

                  7.1 Manner of Construction. Borrower shall, at its sole cost
         and expense, cause the construction of the Project to be diligently and
         expeditiously carried out, in a good and workmanlike manner, in
         accordance with the Plans and Specifications and all Applicable Laws.
         All materials, fixtures, equipment or articles used in the renovation,
         construction or equipping of the Project shall comply with the Plans
         and Specifications.

                  7.2 Compliance with Laws. Borrower shall comply or cause
         compliance with all Applicable Laws governing the construction,
         development, use and operation of the Project and the development,
         operation and sale of the Units. Evidence of such compliance shall be
         submitted to Lender on request.

                  7.3 Inspection. Upon reasonable prior written or oral notice
         (which shall not be required in the event of an emergency), Borrower
         shall permit inspection of the Property by Lender, the Consultant and
         any other agent or designee of Lender. In addition, upon reasonable
         prior written or oral notice (which shall not be required in the event
         of an emergency), Borrower shall permit Lender and/or its agents and
         designees

                                       25
<PAGE>

         access to and the right to inspect, audit and copy all books, records,
         contracts and other documents and information relating to Borrower or
         the Property. Lender shall use reasonable efforts to keep confidential
         all information and documentation obtained by Lender in connection with
         such audits and inspections, except to the extent that Lender
         determines, in its reasonable discretion, a need to disclose same;
         provided, however, under no circumstances shall Lender have any
         liability to Borrower in the event of an unintentional disclosure or
         disclosure deemed necessary by Lender. All such books, records and
         accounts of operations relating to the Property shall be kept in
         accordance with sound accounting practices consistently applied.
         Borrower shall promptly respond to any inquiry from Lender for
         information with respect to the Property, which information may be
         verified by Lender at Borrower's expense; provided, however, that
         Lender shall at all times be entitled to rely upon any statements or
         representations made by Borrower or any agent thereof.

                  7.4 Mechanics' Liens. Borrower shall not permit any mechanics'
         lien claims to be filed or otherwise asserted against the Property or
         against any funds due any contractor or subcontractor, and Borrower
         shall promptly (and in any event within fifteen days after Borrower has
         received notice of such filing) discharge or cause to be discharged the
         same in case of the filing of any claims for lien or proceedings for
         the enforcement thereof; provided that in connection with any such lien
         or claim which Borrower may in good faith desire to contest, Borrower
         may contest the same by appropriate legal proceedings diligently
         prosecuted, but only if Borrower shall furnish to the Title Company
         such security or indemnity as the Title Company requires to induce the
         Title Company to issue endorsements to the Title Policies insuring over
         the exception created by such lien, and provided further, that Lender
         shall not be required to make any further disbursements of a Loan until
         any mechanics' lien claims have been so insured against by the Title
         Company.

                  7.5 Release by Lender. With respect to the matters set forth
         in Section 7.4 above, if Borrower shall (a) fail promptly to discharge
         any asserted liens or claims, or (b) fail promptly to contest asserted
         liens or claims or to give security or indemnity in the manner provided
         in Section 7.4 above, or (c) having commenced to contest the same, and
         having given such security or indemnity, fail to prosecute such contest
         with diligence, or to maintain such indemnity or security so required
         by the Title Company for its full amount, or (d) upon adverse
         conclusion of any such contest, fail promptly to cause any judgment or
         decree to be satisfied and lien to be released, then Lender may, but
         shall not be required to, procure the release and discharge of any such
         claim and any judgment or decree thereon and, further, may, in its sole
         discretion, effect any settlement or compromise of the same, or may
         furnish such security or indemnity to the Title Company, and any
         amounts so expended by Lender, including premiums paid or security
         furnished in connection with the issuance of any surety company bonds,
         shall be deemed to constitute disbursements of the proceeds of the Loan
         hereunder and shall bear interest from the date so disbursed until paid
         at the Default Rate. In settling, compromising or

                                       26
<PAGE>

         discharging any claims for lien, Lender shall not be required to
         inquire into the validity or amount of any such claim.

                  7.6 Financial Statements; Reports. Borrower shall deliver or
         cause to be delivered to Lender each month, a detailed report showing
         the progress of the Work, the number of reservation deposits for Units
         made, if any, and the number of sales contracts for Units entered into
         by Borrower during the immediately preceding month, if any, and the
         status of all reservation deposits and sales contracts entered into
         prior thereto, if any. In addition to such progress reports and any
         other financial statements required to be delivered to Lender pursuant
         to the provisions of any of the other Loan Documents, Borrower will
         from time to time furnish to Lender such information and reports,
         financial and otherwise, concerning Borrower, the performance of the
         Work and the operation of the Project as Lender reasonably requires,
         including, without limitation, the following:

                           (a) Within ninety days after the end of each calendar
                  year, compiled financial statements of the Property on a form
                  acceptable to Lender, setting forth the information therein
                  required as of December 31 of the immediately preceding year,
                  containing income and expense statements and a balance sheet.
                  The financial statements shall be prepared by Borrower in
                  accordance with generally accepted accounting principles
                  consistently applied and shall be certified by the chief
                  financial officer of Borrower as fairly and accurately
                  presenting the information contained therein.

                           (b) Within ninety days after the end of each calendar
                  year, financial statements and the federal and state income
                  tax returns for Borrower, such financial statements to be on
                  Lender's standard form or another form acceptable to Lender,
                  setting forth the information therein required as of December
                  31 of the immediately preceding year, and certified by
                  Borrower as fairly and accurately presenting the information
                  contained therein.

                           (c) Within ninety days after the end of each calendar
                  year, detailed cash flow statements for the preceding calendar
                  year, on a form acceptable to Lender, for all income producing
                  properties listed on the financial statements of Borrower,
                  certified by the chief financial officer of Borrower, as
                  applicable, as fairly and accurately presenting the
                  information contained therein.

                  7.7 Affirmation of Representations and Warranties. Borrower
         agrees that all representations and warranties of Borrower contained in
         Article 6 hereof shall remain true in all material respects at all
         times until the Loan is repaid in full.

                  7.8 Title. Except for (i) the Mortgage, the Seller Mortgage
         and other security for the Loan, (ii) the lien of general real estate
         taxes payment of which is not yet due, (iii) mechanics' liens which are
         contested in the manner permitted in Paragraph 7.4 above, and (iv) any
         other Permitted Exceptions, Borrower shall keep its fee simple title to
         the

         27
<PAGE>

         Project and shall cause Seller to keep its fee simple title to the
         Project free and clear of all liens, claims and encumbrances, whether
         senior or junior to or at parity with the Mortgage and Seller Mortgage.

                  7.9 Proceedings Affecting Property. If any proceedings are
         filed seeking to enjoin or otherwise prevent or declare invalid or
         unlawful the occupancy, use, maintenance or operation of the Property,
         or any portion thereof, Borrower shall cause such proceedings to be
         vigorously contested in good faith, and in the event of an adverse
         ruling or decision, prosecute all allowable appeals therefrom, and
         shall, without limiting the generality of the foregoing, resist the
         entry or seek the stay of any temporary or permanent injunction that
         may be entered, and use its best efforts to bring about a favorable and
         speedy disposition of all such proceedings. All such proceedings,
         including without limitation, all of Lender's costs, and fees and
         disbursements of Lender's counsel in connection with any such
         proceedings, whether or not Lender is a party thereto, shall be at
         Borrower's expense. To the extent that Lender incurs any such expenses,
         including attorneys' fees and fees and charges for court costs, bonds
         and the like, Borrower shall reimburse Lender for such expenses and the
         amount due Lender shall bear interest from the date so incurred by
         Lender until repaid to Lender at the Default Rate and shall be payable
         to Lender on demand.

                  7.10 Disposal and Encumbrance of Property. Except as expressly
         permitted pursuant to Article 12 below, Borrower shall not and shall
         cause Seller not to, without Lender's prior written consent, suffer,
         permit or enter into any agreement for any sale, lease, transfer, or in
         any way encumber or dispose of or grant or suffer any security or other
         assignment (collateral or otherwise) of or in all or any portion of the
         Project. Any consent given by Lender or any waiver of default under
         this Section, shall not constitute a consent to, or waiver of any
         right, remedy or power of Lender under any subsequent default
         hereunder.

                  7.11 Insurance. Borrower shall pay all premiums on all
         insurance policies required from time to time under this Agreement, and
         thirty days prior to expiration of any such policies, Borrower shall
         furnish to Lender, with premiums prepaid, additional and renewal
         policies in form, and with companies, coverage, deductibles and amounts
         satisfactory to Lender. In the event of failure by Borrower to provide
         such insurance, Lender may, but shall not be required to, place
         insurance and treat the amounts expended therefor as disbursements of
         Loan proceeds and such amounts from the date so expended by Lender
         until repaid to Lender shall bear interest at the Default Rate.

                  7.12 Performance of Obligations; Notice of Default. Borrower
         shall promptly and fully perform and comply in all respects with the
         obligations, terms, agreements, provisions and requirements of this
         Agreement and the other Loan Documents and all other documents and
         instruments relating thereto and will not permit to occur any default
         or breach hereunder or thereunder. Borrower shall promptly give to
         Lender notice of the occurrence of any Unmatured Default or of any
         event that could have a material adverse

                                       28
<PAGE>

         effect on any security for the Loan or on Borrower's ability to perform
         its obligations under this Agreement or any of the other Loan
         Documents.

                  7.13 Subcontracts. Within ten days after being executed,
         Borrower shall deliver to Lender a copy of each Subcontract entered
         into by the Contractor.

                  7.14 Restrictions Affecting Borrower. Borrower covenants and
         agrees that, without the prior written consent of Lender, there shall
         not occur: (i) any amendment or modification of the Borrower's
         operating agreement or the certificate of formation of Borrower, and
         (ii) the admission of any new members to Borrower. At all times prior
         to the repayment of the Loan, (A) the Sole Member shall be the sole
         member of Borrower; (B) Borrower shall not make or permit any
         distributions of cash flow or cash proceeds to Sole Member or any
         partner, subpartner, member, shareholder, officer, director or
         affiliate of Borrower or Sole Member and all positive cash flow from
         the Project shall be paid to Lender and applied to the repayment of the
         Principal Balance; (C) Borrower shall not enter into any contract or
         agreement for the provision of services or otherwise with respect to
         the Project with any partner, subpartner, member, shareholder, officer,
         director or affiliate of any partner of Borrower or Sole Member unless
         such contract or agreement is an arms-length, market rate agreement and
         is cancelable upon thirty days written notice from any owner of the
         Project; (D) neither Borrower nor Sole Member shall be dissolved or its
         existence terminated; and (E) Borrower shall not own any other real
         property other than the Project.

                  7.15 Use of Receipts. Borrower shall cause all rents and other
         income and receipts realized and received by Borrower, if any, from and
         in connection with the Project to be used for the purpose of paying the
         actual costs and expenses incurred by Borrower in connection with the
         ownership, operation, management and repair of the Project, including
         without limitation, operating expenses, real estate taxes, insurance
         premiums and interest and principal owing on the Loan.

                  7.16 Management and Leasing Agreements; Subordination.
         Borrower shall not amend, extend, substitute or enter into any new
         management or leasing agreement covering all or any portion of the
         Property without Lender's prior written consent. In the event that
         Lender grants such consent, Borrower shall cause the tenant, property
         manager or leasing broker under said agreement to enter into an
         agreement with Lender, acceptable in form and substance to Lender,
         pursuant to which said tenant, property manager or broker subordinates
         its liens for unpaid fees to the liens of the Mortgage and the other
         Loan Documents.

                  7.17 Additional Documents. Borrower shall not execute or
         record any document pertaining to, affecting or running with all or any
         portion of the Property without the prior written approval of Lender of
         the form and substance of such documents, which approval shall not be
         unreasonably withheld.

                                       29
<PAGE>

                  7.18 Sale to Investors. Without the prior written consent of
         Lender, which consent may be granted or denied at Lender's sole
         discretion, Borrower shall not knowingly sell any Units to investors or
         syndicators who are acquiring such Units with the intent to resell
         them.

                  7.19 Survey. Within thirty days subsequent to the completion
         of the foundation of each Unit and as a condition to any subsequent
         disbursement by Lender, the Survey shall be updated to show the
         location of such foundation; that such foundation is within all
         applicable lot, side, rear and set-back lines; and that there are no
         encroachments by the improvements over easements or adjoining property.
         Within thirty days subsequent to the completion of the exterior walls
         and roof of each Unit and as a condition to any subsequent disbursement
         by Lender, the Survey shall be updated to show such Unit "as built" and
         to show the location of all utilities and any additional easements or
         other matters of record affecting the Project.

         8. LOAN EXPENSES. Borrower agrees to pay all of the Loan Expenses. Any
Loan Expenses paid by Lender shall bear interest commencing on the date demand
for repayment thereof is made by Lender until repaid to Lender at the Default
Rate and shall be paid by Borrower upon demand, or may be paid by Lender at any
time and shall be deemed a disbursement of proceeds of the Loan. Any Loan
Expenses paid by Lender shall be reimbursed to Lender by Borrower regardless of
whether there shall be any disbursements of the Loan.

         9. LENDER'S REPRESENTATIVES. Lender, at Borrower's expense, shall have
the right to engage personnel in connection with negotiation, documentation,
administration and servicing of the Loan, including without limitation, the
Consultant, to (i) review and approve the Plans and Specifications, (ii) review
and approve Borrower's final construction budgets, (iii) conduct monthly
inspections of the Work and report on the progress of construction thereof, (iv)
review and approve all change orders, (v) review and approve applications for
disbursements and accompanying documents, (vi) issue reports and certificates to
Lender, (vii) determine whether the Work has been completed in accordance with
the Plans and Specifications, and (viii) provide other services as requested by
Lender, and Borrower shall fully cooperate with the Consultant and other
personnel in all reasonable respects in connection therewith.

         10. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default":

                  (a) Failure by Borrower or any other obligor to pay on or
         before the fifth day following the date when due any installment of
         principal or interest or any other amount payable pursuant to the Note,
         this Agreement or any of the other Loan Documents.

                  (b) Failure by Borrower to promptly perform or cause to be
         performed any non-monetary obligation or observe any non-monetary
         condition, covenant, term, agreement or provision required to be
         performed or observed by Borrower under this Agreement, the Note or any
         of the other Loan Documents; provided, however, that if

                                       30
<PAGE>

         such failure by its nature can be cured, then so long as the continued
         operation and safety of the Property, and the priority, validity and
         enforceability of the lien created by the Mortgage or any of the other
         Loan Documents and the value of the Property are not imminently
         impaired, threatened or jeopardized, then Borrower shall have a period
         (the "Cure Period") of thirty days after written notice from Lender of
         any such failure of performance or observance to cure or cause the cure
         of the same, and an Event of Default shall not be deemed to exist
         during the Cure Period, provided further that if Borrower commences to
         cure such failure during the Cure Period and is diligently and in good
         faith attempting to effect such cure, the Cure Period shall be extended
         until such failure is cured, but in no event shall the Cure Period be
         longer than 90 days in the aggregate.

                  (c) Failure by Borrower to promptly perform or cause to be
         performed any obligation, or observe any condition, covenant, term,
         agreement or provision required to be performed or observed by Borrower
         under the Option Agreement beyond any applicable cure period for
         Borrower.

                  (d) The existence of any material inaccuracy or untruth in any
         representation, or warranty contained in this Agreement or any other
         Loan Documents, or of any statement or certification as to facts
         delivered to Lender by or on behalf of Borrower.

                  (e) At any time Borrower or Seller files a voluntary petition
         in bankruptcy, or is adjudicated a bankrupt or insolvent, or institutes
         (by petition, application, answer, consent or otherwise) any
         bankruptcy, insolvency, reorganization, arrangement, composition,
         readjustment, dissolution, liquidation or similar proceedings under any
         present or future federal, state or other statute or law, or admits in
         writing to its inability to pay its debts as they mature, or makes an
         assignment for the benefit of its creditors, or seeks or consents to
         the appointment of any receiver, trustee or similar officer for all or
         any substantial part of its property.

                  (f) The commencement of any involuntary petition in bankruptcy
         against either Borrower, Seller or the institution against either
         Borrower or Seller of any reorganization, arrangement, composition,
         readjustment, dissolution, liquidation or similar proceedings under any
         present or future federal, state or other statute or law, or the
         appointment of a receiver, trustee or other officer for all or any
         substantial part of the property of Borrower or Seller which remains
         undismissed or undischarged for a period of sixty days.

                  (g) Any sale, transfer, lease, assignment, conveyance,
         financing, lien, encumbrance or other transaction made in violation of
         Section 7.8 or 7.10 above.

                  (h) Failure of Borrower for a period of thirty days after
         Lender's demand to procure the reversal, dismissal or disposition to
         Lender's satisfaction of any order enjoining or otherwise preventing or
         declaring invalid or unlawful the occupancy, maintenance, operation or
         use of the Property, or any portion thereof, in the manner

                                       31
<PAGE>

         required by the terms of this Agreement, or of any proceedings which
         could or might affect the validity or priority of the lien of the
         Mortgage or any of the other security for the Loan, or which could
         materially affect Borrower's ability to perform its obligations under
         this Agreement or the other Loan Documents, except that Borrower shall
         have the right to contest by appropriate proceedings the validity of
         such order if and only if Borrower shall, within thirty days after
         Lender's demand aforesaid, (i) places a bond with Lender in an amount,
         form, content and issued by a surety reasonably acceptable to Lender
         for adequate security from such order, or, if acceptable to Lender (ii)
         cause the Title Company to issue an endorsement to the Loan Policy
         insuring against loss or damage on account of any such order.

                  (i) The attachment, seizure, levy upon or taking of possession
         by any receiver, custodian or assignee for the benefit of creditors of
         all or a substantial part of the property of Borrower which is not
         stayed or dismissed within thirty days after the occurrence thereof.

                  (j) the assignment or attempted assignment of this Agreement
         by Borrower without Lender's prior written consent.

                  (k) The filing of formal charges under any federal, state or
         local law, statute or ordinance for which Seller's or Borrower's
         forfeiture of all or any portion of the Property is a potential
         penalty.

                  (l) The occurrence of an Event of Default under any of the
         other Loan Documents.

                  (m) A discontinuance of the construction of the Work for a
         period of fifteen consecutive days (unless otherwise approved by
         Lender), other than a discontinuance resulting from strikes, acts of
         God, adverse weather conditions or other occurrences beyond the
         reasonable control of Borrower (it being understood that a delay caused
         by an insufficiency of funds shall not be deemed to be beyond the
         control of Borrower), or any delay in the Work, regardless of cause,
         the result of which may be, in Lender's sole judgment, that the Work
         will not be substantially completed prior to the date that is two
         months prior to Maturity Date, as the same may be extended pursuant to
         the terms of this Agreement.

                  (n) Borrower intentionally causes or knowingly permits any of
         the Work to be performed in a manner which is materially contrary to
         the Plans and Specifications or any provisions of this Agreement or the
         other Loan Documents.

         11. REMEDIES. Upon the occurrence of any Event of Default, Lender, in
addition to availing itself of any remedies conferred upon it at law or in
equity and by the terms of the Note, the Mortgage and the other Loan Documents,
may pursue any one or more of the following remedies first, concurrently or
successively with each other and with any other available

                                       32
<PAGE>

remedies, it being the intent hereof that none of such remedies shall be to the
exclusion of any others:

                  (a) Take possession of the Project and complete the Work and
         do anything necessary or desirable in Lender's sole judgment to fulfill
         the obligations of Borrower hereunder, including either the right to
         avail itself of and procure performance of the Construction Contract,
         any Subcontracts or any other contract entered into for the performance
         of all or any portion of the Work (or any substitute therefor), or to
         let new or additional contracts with the same contractors or
         subcontractors or others, and to employ watchmen to protect the Project
         from injury. Without restricting the generality of the foregoing and
         for the purposes aforesaid, Borrower hereby appoints and constitutes
         Lender its lawful attorney-in-fact with full power of substitution (i)
         to complete the Work in the name of Borrower upon an Event of Default;
         (ii) to, upon an Event of Default, use portions of the Loan or other
         funds which may be reserved, escrowed or set aside for any purposes
         hereunder at any time to complete the Work; (iii) to, upon an Event of
         Default, make changes in the Plans and Specifications which shall be
         reasonably necessary or reasonably desirable to complete the Work; (iv)
         to, upon an Event of Default, retain or employ new general contractors,
         subcontractors, architects, engineers and inspectors as shall be
         required for such purposes; (v) to, upon an Event of Default, pay,
         settle or compromise all existing bills and claims, which may be liens
         or security interests or to avoid such bills and claims becoming liens
         or security interests against the Project, or as may be necessary or
         desirable for the completion of the Work or for the clearance of title;
         (vi) to, upon an Event of Default, execute all applications and
         certificates in the name of Borrower which may be required by any of
         the Loan Documents; (vii) to, upon an Event of Default, prosecute and
         defend all actions or proceedings in connection with the Work; (viii)
         to, upon an Event of Default, take such action and require such
         performance as it deems necessary under any of the bonds to be
         furnished pursuant to the provisions hereof and to make settlements and
         compromises with the surety or sureties thereunder, and in connection
         therewith, to execute instruments of release and satisfaction; it being
         understood that the foregoing power of attorney is coupled with an
         interest and cannot be revoked. All sums expended by Lender pursuant to
         this Article 11 shall be deemed to have been paid to Borrower and
         secured by the Mortgage and the other Loan Documents, and shall bear
         interest at the Default Rate until repaid to Lender.

                  (b) Declare the unpaid indebtedness evidenced by the Note to
         be immediately due and payable.

                  (c) Apply the balance of any deposits made with Lender toward
         the repayment of the Loan.

                  (d) Withhold further disbursements of proceeds of the Loan.

                                       33
<PAGE>

         12.      SALES OF UNITS; PARTIAL RELEASES.
                  --------------------------------

                  12.1 Sales Prices. Provided that no Event of Default or
         Unmatured Default then exists under the Note, this Agreement or any of
         the other Loan Documents, Borrower shall have the right to enter into
         and perform sales contracts with creditworthy third party purchasers of
         the Units on the form contract submitted to Lender pursuant to Section
         4.19 above, provided that (a) Lender has approved all sales materials
         relating to the Units, (b) the consideration for any such sale consists
         solely of cash, and (c) the gross sales price for any such Unit is not
         less than the budgeted amount for the construction of Improvements plus
         the cost paid or to be paid to Seller for the underlying Parcel for
         such Unit.

                  12.2 Release Prices. Provided that all of the conditions
         described in Section 12.1 above have been satisfied in form and
         substance acceptable to Lender and no Event of Default or Unmatured
         Default then exists, Lender will issue a partial release of the lien of
         its Loan Documents covering any Unit upon the payment to Lender of an
         amount equal to the amount of the Loan previously disbursed by Lender
         with respect to such Unit.

         13.      MISCELLANEOUS.
                  -------------

                  13.1 Additional Indebtedness. All advances or payments made by
         Lender pursuant to this Agreement or any other Loan Document shall
         constitute indebtedness secured by the Mortgage and all other security
         for the Loan, and all advances or payments made by Lender, except for
         normal disbursements on the Loan, shall bear interest at the Default
         Rate from the date advanced or paid until repaid to Lender by Borrower.

                  13.2 Additional Acts. Borrower shall, upon request, execute
         and deliver such further instruments and documents and do such further
         acts and things as may be reasonably required to provide to Lender the
         evidence of and security for the Loan contemplated by this Agreement.

                  13.3 Loan Agreement Governs. In the event of any inconsistency
         between any provision of this Agreement and any provision of any other
         Loan Document, the provision of this Agreement shall govern; provided,
         however, that the provisions of all of the Loan Documents shall be
         construed as an integrated set of provisions governing the Loan and,
         accordingly, shall be interpreted and construed liberally to give the
         maximum validity, enforceability and effect to all of such provisions.

                  13.4 Additional Advances. If an Event of Default shall occur,
         Lender may, but shall not be obligated to, take any and all actions to
         cure such default, and all amounts expended in so doing, all Loan
         Expenses and all other amounts paid or advanced by Lender pursuant to
         the Loan Documents, and all other amounts advanced by Lender in
         connection with the performance of the Work or preserving any security
         for the Loan,

                                       34
<PAGE>

         shall constitute additional advances of the Loan, shall be secured by
         the Mortgage and all other security for the Loan, and shall bear
         interest at the Default Rate from the date advanced until paid.

                  13.5 Amendment; Waiver; Approval. This Agreement shall not be
         amended, modified or supplemented without the written agreement of
         Borrower and Lender at the time of such amendment, modification or
         supplement. No waiver of any provision of this Agreement or any of the
         other Loan Documents shall be effective unless set forth in writing
         signed by the party making such waiver, and any such waiver shall be
         effective only to the extent therein set forth. Failure by Lender to
         insist upon full and prompt performance of any provisions of this
         Agreement or any of the other Loan Documents, or to take action in the
         event of any breach of any such provision or upon the occurrence of any
         Event of Default, shall not constitute a waiver of any rights of
         Lender, and Lender may at any time thereafter exercise all available
         rights and remedies with respect to such breach or Event of Default.
         Receipt by Lender of any instrument or document shall not constitute or
         be deemed to be an approval thereof. Any approvals required under any
         of the other Loan Documents must be in writing, signed by Lender and
         directed to Borrower.

                  13.6 Notice. All notices, communications and waivers under
         this Loan Agreement shall be in writing and shall be (i) delivered in
         person or (ii) mailed, postage prepaid, either by registered or
         certified mail, return receipt requested, or (iii) sent by overnight
         express carrier, addressed in each case as follows:

                  To Lender:             Bank One, Illinois, NA
                                         6000 State Street
                                         Rockford, Illinois 61108
                                         Attn: Donald J. Pafford

                           and:          Bank One, Illinois, NA
                                         200 South Wacker Drive - 6th Floor
                                         Chicago, Illinois 60606
                                         Attn: Terrence Rosenberger

                           and           Schwartz, Cooper, Greenberger &
                                         Krauss, Chtd.
                                         180 North LaSalle Street, Suite 2700
                                         Chicago, Illinois  60601
                                         Attn: Jerrold Peven, Esq.

                  To Borrower:           CMC Heartland Partners VII, LLC
                                         547 West Jackson Boulevard
                                         Suite 1510
                                         Chicago, Illinois 60661
                                         Attn:  Lawrence Adelson, Esq.

                                       35
<PAGE>

                  With copy to:          CMC Heartland Partners I, Limited
                                         Partnership
                                         547 West Jackson Boulevard
                                         Suite 1510
                                         Chicago, Illinois 60661
                                         Attn:  Richard P. Brandstatter

         or to any other address as to either of the parties hereto, as such
         party shall designate in a written notice to the other party hereto.
         All notices sent pursuant to the terms of this Section shall be deemed
         received (i) if personally delivered, then on the date of delivery,
         (ii) if sent by overnight, express carrier, then on the next Business
         Day immediately following the day sent, or (iii) if sent by registered
         or certified mail, then on the earlier of the third Business Day
         following the day sent or when actually received.

                  13.7 Benefit; Assignment. The rights, powers and remedies of
         Lender under this Agreement shall inure to the benefit of Lender and
         its successors and assigns. The rights and obligations of Borrower
         under this Agreement may not be assigned and any purported assignment
         by Borrower shall be null and void.

                  13.8 Governing Law. Except with respect to the creation,
         perfection and priority of the liens and security interests created by
         the Loan Documents, which shall be construed in accordance with and
         governed by the laws of the State of North Carolina, the validity and
         interpretation of the Loan Documents shall be construed in accordance
         with the laws and decisions of the State of Illinois.

                  13.9 Indemnity. Borrower agrees to indemnify, defend and hold
         Lender harmless from and against any and all liabilities, obligations,
         losses, damages, claims, costs and expenses (including reasonable
         attorneys' fees and court costs) of whatever kind or nature which may
         be imposed on, incurred by or asserted against Lender at any time which
         relate to or arise from the performance of the Work, the offer for sale
         or sale of any membership interest in Borrower, the acquisition or sale
         or offer for sale of all or any portion of the Property or any Unit
         and/or the ownership, use, operation or maintenance of the Property,
         including, without limitation, (a) any brokerage commissions or
         finder's fees asserted against Lender with respect to the making of the
         Loan, the acquisition of the Property or the sale of any Unit and (b)
         claims by purchasers of a Unit with respect to defects in the Property
         or other matters; provided, however, that the foregoing indemnity shall
         not extend to any liabilities, obligations, claims, losses, costs,
         damages or expenses resulting from the gross negligence or willful
         misconduct of Lender.

                  13.10 Headings. The titles and headings of the articles,
         sections and paragraphs of this Agreement have been inserted as a
         matter of convenience of reference only and shall not control or affect
         the meaning or construction of any of the terms or provisions of this
         Agreement.

                                       36
<PAGE>

                  13.11 No Partnership or Joint Venture. Lender, by executing
         and performing this Agreement shall not become a partner, member or
         joint venturer with Borrower or any partner or member of Borrower, or
         any of their respective associates or affiliates, and all inspections
         of the Property herein provided for are for the sole benefit of Lender.

                  13.12 Time is of the Essence. Time is of the essence of the
         payment of all amounts due Lender under the Loan Documents and
         performance and observance by Borrower of each covenant, agreement,
         provision and term of this Agreement and the other Loan Documents.

                  13.13 Invalid Provisions. In the event that any provision of
         this Agreement is deemed to be invalid by reason of the operation of
         law, or by reason of the interpretation placed thereon by any
         administrative agency or any court, Borrower and Lender shall negotiate
         an equitable adjustment in the provisions of the same in order to
         effect, to the maximum extent permitted by law, the purpose of this
         Agreement and the validity and enforceability of the remaining
         provisions, or portions or applications thereof, shall not be affected
         thereby and shall remain in full force and effect.

                  13.14 Offset. Without limitation of any other right or remedy
         of Lender hereunder or provided by law, any indebtedness relating to
         the Property or its operation and now or hereafter owing to Borrower by
         Lender (including, without limitation, any amounts on deposit in any
         demand, time, savings, passbook or like account maintained by Borrower
         with Lender) may be offset and applied by Lender hereunder, or under
         the Note, the Mortgage or any of the other Loan Documents.

                  13.15 Acts by Lender. Notwithstanding anything herein
         contained to the contrary, Lender will not be required to make any
         disbursement or perform any other act under this Agreement if, as a
         result thereof, Lender will violate any law, statute, ordinance, rule,
         regulation or judicial decision applicable thereto.

                  13.16 Binding Provisions. The covenants, warranties,
         agreements, obligations, liabilities and responsibilities of Borrower
         under this Agreement shall be binding upon and enforceable against
         Borrower and its legal representatives, administrators, successors and
         permitted assigns.

                  13.17 Counterparts. This Agreement may be executed in
         counterparts, and all said counterparts when taken together shall
         constitute one and the same Agreement.

                  13.18 No Third Party Beneficiary. This Agreement is only for
         the benefit of the parties hereto and their permitted successors and
         assigns. No other person or entity shall be entitled to rely on any
         matter set forth herein without the prior written consent of such
         parties.

                                       37
<PAGE>

                  13.19 Publicity. Subject to compliance with Applicable Laws,
         Lender reserves the right to publicize the making of the Loan in any
         manner it deems appropriate, including, without limitation,
         advertisements in trade journals and newspapers. In addition, Borrower
         agrees that Lender shall have the right to erect and maintain a sign at
         the Project in a prominent location for the duration of the term of the
         Loan stating that Lender is providing the financing for construction of
         the Project. The sign shall be furnished by Lender and the sign shall
         be located in a place selected by Lender, provided that such location
         does not interfere with performance of the Work.

                  13.20 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL
         ACTIONS OR PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR
         INDIRECTLY OUT OF THIS AGREEMENT SHALL BE LITIGATED IN THE CIRCUIT
         COURT OF COOK COUNTY, ILLINOIS, OR THE UNITED STATES DISTRICT COURT FOR
         THE NORTHERN DISTRICT OF ILLINOIS OR, IF LENDER INITIATES SUCH ACTION,
         ANY COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION AND WHICH HAS
         JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
         TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN
         ANY OF SUCH COURTS, AND HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS
         AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES
         THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS
         MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT
         THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO THIS AGREEMENT.
         BORROWER WAIVES ANY CLAIM THAT CHICAGO, ILLINOIS OR THE NORTHERN
         DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM
         BASED ON LACK OF VENUE. SHOULD BORROWER, AFTER BEING SO SERVED, FAIL TO
         APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED
         WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF,
         BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE
         ENTERED BY LENDER AGAINST BORROWER AS DEMANDED OR PRAYED FOR IN SUCH
         SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM
         FOR BORROWER SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE
         THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM
         OR THE TAKING BY LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER
         APPROPRIATE JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT, IF ANY,
         TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.

                                       38
<PAGE>

                  13.21 JURY WAIVER. BORROWER AND LENDER HEREBY VOLUNTARILY,
         KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A
         JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT,
         TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF
         OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR
         ANY RELATIONSHIP BETWEEN BORROWER AND LENDER. THIS PROVISION IS A
         MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE LOAN DESCRIBED HEREIN AND
         IN THE OTHER LOAN DOCUMENTS.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

CMC HEARTLAND PARTNERS VII,               BANK ONE, ILLINOIS, NA, a national
LLC, a Delaware limited liability company banking association

By:      ________________________         By:      ___________________________
Title:   ________________________         Title:   ___________________________

                                       39
<PAGE>

                              Schedule of Exhibits
                              --------------------

                  A        -       Legal Description of the Land
                  B        -       Budget
                  C        -       Required Title Insurance - Endorsements
                  D        -       List of Plans and Specifications
                  E        -       Additional Agreements
<PAGE>

                                   EXHIBIT A

                               Legal Description
<PAGE>

                                   EXHIBIT B

                                     Budget
<PAGE>

                                   EXHIBIT C

                    Required Title Insurance - Endorsements
<PAGE>

                                   EXHIBIT D

                        List of Plans and Specifications
<PAGE>

                                    EXHIBIT E

                              Additional Agreements

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]