Document:

exhibit_10-2.htm

    
      

    

    Exhibit
      10.2

     

    ADDENDUM
      TO LOAN AGREEMENT

    

    August
      1,
      2007

    

    This
      Addendum to the Loan Agreement entered into on July 27, 2007, is hereby agreed
      to
      by                                           
­(hereinafter
      collectively the “Lender”) and Renewable Energy Resources,
      Inc. (hereinafter
      the “Borrower”), for the use of $100,000 of the loan for the Operations of
      Borrower related to its pending SEC 10Q filing and ultimate beneficiary, the
      Springfield Energy Project. This addendum is entered into between the parties,
      being the Lender and the Borrower, only for the purpose and amount stated and
      shall not change any other portion, content, or condition of either party to
      the
      original loan agreement. This addendum does not change the loan amount, term
      of
      the loan, payment of interest, repayment, prepayment, shares from borrower,
      loan
      guarantee with permission of the guarantor, events of default clauses, remedies,
      collections, venue and jurisdiction, right of first refusal of the Lender or
      commitment of the Lender for the loan as set forth in the original agreement
      the
      whole amount of the transaction. This addendum shall include the following
      change as agreed to by the parties to the original agreement:

    

    
      	
              USE
                OF FUNDS AND GUARANTEE

            	
              The
                Lender's funds will be used to fund the Renewable Energy Resources,
                Inc.,
                in the amount of $100,000, for the necessary corporate operations
                as
                described by the parties for the preparation and filing of its quarterly
                report to include audit (legal costs, and other expenditures as described
                between the parties. This first traunche shall be used to the benefit
                of
                RENW in order to directly benefit the primary loan recipient being
                the
                Springfield Energy Project, LLC (“SEP"). SEP shall be the recipient of
                direct investment by Lender for the remaining portion of the monies.
                SEP
                will guarantee this Note as previously set forth in the original
                note.

               

            
	
              FUNDS
                TO BE TRANSMITTED:

               

            	
              Funds
                for the first traunce under this addendum, the initial $100,000 shall
                be
                transmitted to the account of Renewable Energy Resources, Inc., Bank
                of
                America, Tampa, Florida (wiring instructions to be provided under
                separate
                cover). Such funds are agreed to be transmitted to RENW within the
                time
                period discussed. Such other monies will be transmitted to the escrow
                attorney as previously agreed.

               

            

    

    

    IN
      WITNESS WHEREOF, Borrower and Lender, intending to be legally bound, have caused
      their duly authorized representatives to execute and deliver this agreement
      on
      the date first written above.

    

    BORROWER:

     

     

    RENEWABLE
      ENERGY RESOURCES, INC.

     

     

    /s/
      Kenneth P. Brown

    
      

    

    Kenneth
      P. Brown, Chief Executive
      Officerex10_1.htm

  
     

     

    
 

    BORROWING
      BASE LOAN AGREEMENT

    (Syndicated
      Revolving Line of Credit)

     

    between

     

    WILSON
      FAMILY COMMUNITIES, INC.,

    a
      Delaware corporation

    8121
      Bee
      Caves Road, Austin, Texas  78746

    and

    each
      “BORROWER PARTY” (as defined herein and which is a signatory
      hereto)

    

     

    and

     

    RBC
      CENTURA BANK,

    a
      North
      Carolina banking corporation

    11011
      Richmond Avenue, Suite 850, Houston, Texas 77042, Attn: Kenneth
      Shaw

    (as
      lead
      arranger, syndication agent and bookrunner)

    (and,
      as
      a lender and as administrative and collateral agent for all
      lenders)

     

    with

     

    FRANKLIN
      BANK SSB,

    a
      Texas
      state savings bank

    (as
      co-lender)

     

    and

     

    INTERNATIONAL
      BANK OF COMMERCE,
      LAREDO, TEXAS,

    a
      Texas
      state banking association

    (as
      co-lender)

     

    Dated
      As
      Of:  June 29, 2007

     

    Master
      Line of Credit Amount Not to Exceed: $55,000,000.00

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        	
                TABLE
                  OF CONTENTS

              
	
                 

              
	 	
                 

              	
                 

              	
                 

              	
                 

              	
                Page 

              
	
                 

              
	
                1

              	
                . 

              	
                DEFINITION
                  OF TERMS 

              	
                1 

              
	
                 

              
	
                2

              	
                . 

              	
                COMMITMENT
                  AMOUNT; ELIGIBLE COLLATERAL 

              	
                19 

              
	
                 

              
	 	
                 

              	
                 
                     2.1 

              	
                Commitment
                  Amount; Maximum Aggregate Allocations 

              	
                19 

              
	 	
                 

              	
                 
                     2.2 

              	
                Maximum
                  Aggregate Allocation Disbursement Limitations 

              	
                20 

              
	 	
                 

              	
                 
                     2.3 

              	
                Agreement
                  to Lend and Borrow; Ratable Loans 

              	
                21 

              
	 	
                 

              	
                 
                     2.4 

              	
                Commitment
                  Fee; Unused Commitment Fee 

              	
                21 

              
	 	
                 

              	
                 
                     2.5 

              	
                Determination
                  of Eligible Collateral 

              	
                21 

              
	 	
                 

              	
                 

              	
                 
                   2.5.1 

              	
                Lot
                  Term Limitations 

              	
                21 

              
	 	
                 

              	
                 

              	
                 
                   2.5.2 

              	
                Transfer
                  of Lots for Home Construction 

              	
                21 

              
	 	
                 

              	
                 
                     2.6 

              	
                Borrowing
                  Availability Report 

              	
                21 

              
	 	
                 

              	
                 
                     2.7 

              	
                Remargining;
                  Principal Payments; Term-Out Payments 

              	
                21 

              
	 	
                 

              	
                 

              	
                 
                   2.7.1 

              	
                Maximum
                  Outstanding 

              	
                21 

              
	 	
                 

              	
                 

              	
                 
                   2.7.2 

              	
                No
                  Advances 

              	
                21 

              
	 	
                 

              	
                 

              	
                 
                   2.7.3 

              	
                Payments 

              	
                21 

              
	 	
                 

              	
                 
                     2.8 

              	
                Adjustment
                  to Eligible Collateral 

              	
                21 

              
	
                 

              
	
                3

              	
                . 

              	
                THE
                  MASTER LOAN 

              	
                22 

              
	
                 

              
	 	
                 

              	
                 
                     3.1 

              	
                Master
                  Line Commitment 

              	
                22 

              
	 	
                 

              	
                 

              	
                 
                   3.1.1 

              	
                Non-Receipt
                  of Funds by Agent 

              	
                22 

              
	 	
                 

              	
                 

              	
                 
                   3.1.2 

              	
                Lending
                  Installations 

              	
                22 

              
	 	
                 

              	
                 

              	
                 
                   3.1.3 

              	
                Alternate
                  Lending Installations 

              	
                22 

              
	 	
                 

              	
                 

              	
                 
                   3.1.4 

              	
                Affected
                  Lender 

              	
                23 

              
	 	
                 

              	
                 
                     3.2 

              	
                Master
                  Line is a Revolving Line of Credit 

              	
                23 

              
	 	
                 

              	
                 
                     3.3 

              	
                Interest 

              	
                 

              	
                23 

              
	 	
                 

              	
                 
                     3.4 

              	
                Purpose
                  of Master Line Advances 

              	
                24 

              
	 	
                 

              	
                 
                     3.5 

              	
                Limitation
                  on Master Line Advances 

              	
                24 

              
	 	
                 

              	
                 
                     3.6 

              	
                Commitment
                  Fees 

              	
                24 

              
	 	
                 

              	
                 
                     3.7 

              	
                Timing
                  of Master Line Advances 

              	
                24 

              
	 	
                 

              	
                 
                     3.8 

              	
                Voluntary
                  Prepayments 

              	
                24 

              
	 	
                 

              	
                 
                     3.9 

              	
                Partial
                  Release 

              	
                24 

              
	 	
                 

              	
                 

              	
                 
                   3.9.1 

              	
                Payments
                  as the Result of Lot Sales; No Release From Deed of Trust 

              	
                24 

              
	 	
                 

              	
                 

              	
                 
                   3.9.2 

              	
                Payments
                  as the Result of Home Sales 

              	
                25 

              
	 	
                 

              	
                 

              	
                 
                   3.9.3 

              	
                Partial
                  Release Expenses 

              	
                25 

              
	 	
                 

              	
                 

              	
                 
                   3.9.4 

              	
                Acceptance
                  of Reconveyance 

              	
                25 

              
	 	
                 

              	
                 

              	
                 
                   2.9.5 

              	
                Application
                  of Release Prices 

              	
                25 

              
	 	
                 

              	
                 

              	
                 
                   3.9.6 

              	
                No
                  Interference With Ingress/Egress 

              	
                25 

              
	 	
                 

              	
                 

              	
                 
                   3.9.7 

              	
                Adjustment
                  to Borrowing Base 

              	
                25 

              
	 	
                 

              	
                 
                     3.10 

              	
                 General
                  Provisions for the Sale of Homes 

              	
                25 

              
	 	
                 

              	
                 

              	
                 
                   3.10.1 

              	
                 Sale
                  Requirements 

              	
                26 

              
	 	
                 

              	
                 

              	
                 
                   3.10.2 

              	
                 Default 

              	
                26 

              
	 	
                 

              	
                 

              	
                 
                   3.10.3 

              	
                 Buyer
                  Financing 

              	
                26 

              
	 	
                 

              	
                 

              	
                 
                   3.10.4 

              	
                 No
                  Release of Model Homes 

              	
                26 

              
	 	
                 

              	
                 
                     3.11 

              	
                 Swingline
                  Advances 

              	
                26 

              
	 	
                 

              	
                 

              	
                 
                   3.11.1 

              	
                 Swingline
                  Commitment 

              	
                26 

              
	 	
                 

              	
                 

              	
                 
                   3.11.2 

              	
                 Swingline
                  Advance Disbursement 

              	
                26 

              
	 	
                 

              	
                 

              	
                 
                   3.11.3 

              	
                 Swingline
                  Advance Evidenced by the Note; Interest and Repayment; 

              	
                 

              
	 	
                 

              	
                 

              	
                 

              	
                Swingline
                  Advance is a Non-Revolving Line of Credit 

              	
                26 

              
	
                 

              
	
                4

              	
                . 

              	
                LETTER
                  OF CREDIT LINE 

              	
                27 

              

      

      

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                 
                       4.1 

              	
                Letter
                  of Credit Advances 

              	
                27 

              
	
                 

              	
                 
                       4.2 

              	
                Issuance
                  of Letter of Credit 

              	
                27 

              
	
                 

              	
                 
                       4.3 

              	
                Issuance
                  Procedure 

              	
                27 

              
	
                 

              	
                 
                       4.4 

              	
                Purpose
                  of Letter of Credit; General Letter of Credit Terms and Conditions 

              	
                27 

              
	
                 

              	
                 
                       4.5 

              	
                Reimbursement
                  of Lenders for Payment of Drafts Drawn or Drawn and 

              	
                 

              
	
                 

              	
                 

              	
                 
                   Accepted Under the Letter of Credit 

              	
                28 

              
	
                 

              	
                 
                       4.6 

              	
                Reimbursement
                  Obligations 

              	
                28 

              
	
                 

              	
                 
                       4.7 

              	
                Nature
                  of Reimbursement Obligations 

              	
                28 

              
	
                 

              
	
                5 

              	
                DETERMINATION
                  OF ELIGIBLE COLLATERAL 

              	
                29 

              
	
                 

              
	
                 

              	
                 
                       5.1 

              	
                Determination
                  of Eligible Collateral 

              	
                29 

              
	
                 

              	
                 

              	
                 
                   5.1.1 

              	
                Lots;
                  General Term Limitations; Lot Ineligibility 

              	
                29 

              
	
                 

              	
                 

              	
                 

              	
                (a) 

              	
                Lots
                  Under Development 

              	
                29 

              
	
                 

              	
                 

              	
                 

              	
                (b) 

              	
                Developed
                  Lots 

              	
                29 

              
	
                 

              	
                 

              	
                 

              	
                (c)
                  Entitled 

              	
                30 

              
	
                 

              	
                 

              	
                 

              	
                (d)
                  Pods 

              	
                30 

              
	
                 

              	
                 

              	
                 
                   5.1.2 

              	
                Transfer
                  of Lots for Home Construction 

              	
                30 

              
	
                 

              	
                 

              	
                 
                   5.1.3 

              	
                Home
                  Term Limits; Reclassification of Homes 

              	
                30 

              
	
                 

              	
                 

              	
                 

              	
                (a) 

              	
                Sold
                  Homes/Spec Homes 

              	
                30 

              
	
                 

              	
                 

              	
                 

              	
                (b) 

              	
                Model
                  Homes 

              	
                30 

              
	
                 

              	
                 

              	
                 
                   5.1.4 

              	
                Home
                  or Lot Ineligibility 

              	
                30 

              
	
                 

              	
                 

              	
                 
                   5.1.5 

              	
                Effect
                  of Limitations 

              	
                31 

              
	
                 

              	
                 
                       5.2 

              	
                Borrowing
                  Availability Report 

              	
                31 

              
	
                 

              	
                 

              	
                 
                   5.2.1 

              	
                Proposed
                  Borrowing Availability Report 

              	
                31 

              
	
                 

              	
                 

              	
                 
                   5.2.2 

              	
                Form
                  of Report and Certificate 

              	
                32 

              
	
                 

              	
                 

              	
                 
                   5.2.3 

              	
                Approval
                  of Borrowing Availability Report 

              	
                32 

              
	
                 

              	
                 
                       5.3 

              	
                Remargining;
                  Principal Payments 

              	
                32 

              
	
                 

              	
                 

              	
                 
                   5.3.1 

              	
                Maximum
                  Outstanding 

              	
                32 

              
	
                 

              	
                 

              	
                 
                   5.3.2 

              	
                No
                  Advances 

              	
                32 

              
	
                 

              	
                 

              	
                 
                   5.3.3 

              	
                Specific
                  Limitations 

              	
                32 

              
	
                 

              	
                 

              	
                 
                   5.3.4 

              	
                Payments 

              	
                33 

              
	
                 

              	
                 
                       5.4 

              	
                Adjustment
                  to Eligible Collateral 

              	
                33 

              
	
                 

              	
                 
                       5.5 

              	
                Qualification
                  of Lots as Eligible Collateral 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.1 

              	
                No
                  Defaults; Representations and Warranties 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.2 

              	
                Limitations 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.3 

              	
                Located
                  in Approved Subdivision 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.4 

              	
                Construction
                  Contracts 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.5 

              	
                Final
                  Subdivision Map or Plat 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.6 

              	
                Plans
                  and Specifications 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.7 

              	
                Permits 

              	
                33 

              
	
                 

              	
                 

              	
                 
                   5.5.8 

              	
                Budget 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.9 

              	
                Construction
                  Schedule 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.10 

              	
                 Impositions,
                  Assessments and Charges 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.11 

              	
                 Deed
                  of Trust 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.12 

              	
                 Title
                  Insurance 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.13 

              	
                 Appraisal 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.14 

              	
                 Other
                  Items 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.5.15 

              	
                 Other
                  Actions 

              	
                34 

              
	
                 

              	
                 
                       5.6 

              	
                Qualification
                  of Homes as Eligible Collateral 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.6.1 

              	
                No
                  Defaults 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.6.2 

              	
                Located
                  in an Approved Subdivision 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.6.3 

              	
                Limitations 

              	
                34 

              
	
                 

              	
                 

              	
                 
                   5.6.4 

              	
                Construction
                  Contracts 

              	
                34 

              

      

      

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      
        	 	
                 

              	
                 

              	
                 
                   5.6.5 

              	
                Home
                  Plans and Specifications 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.6 

              	
                Permits 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.7 

              	
                Construction
                  Costs Schedule 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.8 

              	
                Home
                  Appraisal 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.9 

              	
                Final
                  Subdivision Map or Plat 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.10 

              	
                 Approved
                  Sales Contract 

              	
                35 

              
	
                 

              
	
                5.6.11
                  35 

              	
                 

              	
                 

              	
                 

              
	
                 

              
	 	
                 

              	
                 

              	
                 
                   5.6.12 

              	
                 Deed
                  of Trust 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.13 

              	
                 Title
                  Insurance 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.14 

              	
                 Other
                  Items 

              	
                35 

              
	 	
                 

              	
                 

              	
                 
                   5.6.15 

              	
                 Other
                  Actions 

              	
                35 

              
	
                 

              
	
                6

              	
                . 

              	
                LIMITATIONS
                  ON ADVANCES 

              	
                35 

              
	
                 

              
	 	
                 

              	
                 
                     6.1 

              	
                Balancing
                  Requirements 

              	
                35 

              
	 	
                 

              	
                 
                     6.2 

              	
                Loan
                  Limitations 

              	
                36 

              
	 	
                 

              	
                 
                     6.3 

              	
                Borrower's
                  Deposit 

              	
                37 

              
	
                 

              
	
                7

              	
                . 

              	
                MASTER
                  LINE ADVANCES 

              	
                37 

              
	
                 

              
	 	
                 

              	
                 
                     7.1 

              	
                Loan
                  Advance Procedure 

              	
                37 

              
	 	
                 

              	
                 
                     7.2 

              	
                Conditions
                  to Initial Advance Under the Master Line 

              	
                38 

              
	 	
                 

              	
                 
                     7.3 

              	
                Conditions
                  to Advances 

              	
                38 

              
	 	
                 

              	
                 
                     7.4 

              	
                Disbursement
                  by Journal Entry or Direct Payment to Third Parties 

              	
                40 

              
	 	
                 

              	
                 
                     7.5 

              	
                Advance
                  Not an Approval 

              	
                40 

              
	 	
                 

              	
                 
                     7.6 

              	
                Time
                  and Place of Advances 

              	
                40 

              
	 	
                 

              	
                 
                     7.7 

              	
                Business
                  Days 

              	
                40 

              
	 	
                 

              	
                 
                     7.8 

              	
                No
                  Third–Party Beneficiaries 

              	
                41 

              
	 	
                 

              	
                 
                     7.9 

              	
                Reallocations
                  of Budget Line Items 

              	
                41 

              
	 	
                 

              	
                 

              	
                 
                   7.9.1 

              	
                Reallocation
                  Among Budget Line Items 

              	
                41 

              
	 	
                 

              	
                 

              	
                 
                   7.9.2 

              	
                Reallocation
                  of Contingency Funds 

              	
                41 

              
	 	
                 

              	
                 
                     7.10 

              	
                 Withholding 

              	
                41 

              
	 	
                 

              	
                 
                     7.11 

              	
                 Inspections 

              	
                41 

              
	 	
                 

              	
                 
                     7.12 

              	
                 First
                  Lien Priority 

              	
                42 

              
	
                 

              
	
                8

              	
                . 

              	
                WARRANTIES
                  AND REPRESENTATIONS 

              	
                42 

              
	
                 

              
	 	
                 

              	
                 
                     8.1 

              	
                Plans
                  and Specifications 

              	
                42 

              
	 	
                 

              	
                 
                     8.2 

              	
                Governmental
                  Requirements 

              	
                42 

              
	 	
                 

              	
                 
                     8.3 

              	
                Utility
                  Services 

              	
                42 

              
	 	
                 

              	
                 
                     8.4 

              	
                Access 

              	
                 

              	
                42 

              
	 	
                 

              	
                 
                     8.5 

              	
                No
                  Commencement 

              	
                43 

              
	 	
                 

              	
                 
                     8.6 

              	
                Financial
                  Statements 

              	
                43 

              
	 	
                 

              	
                 
                     8.7 

              	
                Statements 

              	
                43 

              
	 	
                 

              	
                 
                     8.8 

              	
                Disclaimer
                  of Other Financing 

              	
                43 

              
	 	
                 

              	
                 
                     8.9 

              	
                Interstate
                  Land Sales Act 

              	
                43 

              
	 	
                 

              	
                 
                     8.10 

              	
                 No
                  Other Lending or Debt 

              	
                43 

              
	 	
                 

              	
                 
                     8.11 

              	
                 No
                  Consent 

              	
                44 

              
	 	
                 

              	
                 
                     8.12 

              	
                 Investments
                  and Guaranties 

              	
                44 

              
	 	
                 

              	
                 
                     8.13 

              	
                 Liabilities;
                  Litigation 

              	
                44 

              
	 	
                 

              	
                 
                     8.14 

              	
                 Titles,
                  Etc 

              	
                44 

              
	 	
                 

              	
                 
                     8.15 

              	
                 Defaults 

              	
                44 

              
	 	
                 

              	
                 
                     8.16 

              	
                 Securities
                  Exchange Act of 1934 

              	
                44 

              
	 	
                 

              	
                 
                     8.17 

              	
                 USA
                  Patriot Act Notification 

              	
                44 

              
	
                 

              
	
                9

              	
                . 

              	
                COVENANTS
                  OF BORROWER 

              	
                45 

              

      

      

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      
        	 	
                 

              	
                 
                   7.1 

              	
                Commencement
                  and Completion 

              	
                45 

              
	 	
                 

              	
                 

              	
                 
                     9.1.1 

              	
                A&D
                  Improvements 

              	
                45 

              
	 	
                 

              	
                 

              	
                 
                     9.1.2 

              	
                Commencement
                  and Continuation of Home Construction 

              	
                45 

              
	 	
                 

              	
                 

              	
                 

              	
                (a) 

              	
                Timely
                  Commencement of Construction 

              	
                45 

              
	 	
                 

              	
                 

              	
                 

              	
                (b) 

              	
                Continuation
                  of Construction 

              	
                45 

              
	 	
                 

              	
                 

              	
                 

              	
                (c) 

              	
                Completion
                  of Construction 

              	
                45 

              
	 	
                 

              	
                 

              	
                 

              	
                (d) 

              	
                Breach
                  of Construction Commencement or Continuation 

              	
                 

              
	 	
                 

              	
                 

              	
                 

              	
                 

              	
                Covenants 

              	
                45 

              
	 	
                 

              	
                 
                   9.2 

              	
                No
                  Changes 

              	
                 

              	
                46 

              
	 	
                 

              	
                 
                   9.3 

              	
                Advances 

              	
                 

              	
                 

              	
                46 

              
	 	
                 

              	
                 
                   24.1 

              	
                Right
                  of First Refusal 

              	
                46 

              
	 	
                 

              	
                 
                   9.4 

              	
                Intentionally
                  Omitted 

              	
                46 

              
	 	
                 

              	
                 
                   9.5 

              	
                Surveys 

              	
                 

              	
                 

              	
                46 

              
	 	
                 

              	
                 
                   9.6 

              	
                Defects
                  and Variances 

              	
                46 

              
	 	
                 

              	
                 
                   9.7 

              	
                Inspecting
                  Person 

              	
                46 

              
	 	
                 

              	
                 
                   9.8 

              	
                Personalty
                  and Fixtures 

              	
                47 

              
	 	
                 

              	
                 
                   9.9 

              	
                Compliance
                  With Governmental Requirements 

              	
                47 

              
	 	
                 

              	
                 
                   9.10 

              	
                 
                   Compliance With Restrictive Covenants 

              	
                47 

              
	 	
                 

              	
                 
                   9.11 

              	
                 
                   Payment of Expenses 

              	
                47 

              
	 	
                 

              	
                 
                   9.12 

              	
                 
                   Notices Received 

              	
                47 

              
	 	
                 

              	
                 
                   9.13 

              	
                 
                   Advertising by Agent 

              	
                47 

              
	 	
                 

              	
                 
                   9.14 

              	
                 
                   Intentionally Omitted 

              	
                47 

              
	 	
                 

              	
                 
                   9.15 

              	
                 
                   Certificates of Compliance 

              	
                47 

              
	 	
                 

              	
                 
                   9.16 

              	
                 
                   Taxes and Other Liens 

              	
                48 

              
	 	
                 

              	
                 
                   9.17 

              	
                 
                   Maintenance 

              	
                 

              	
                48 

              
	 	
                 

              	
                 
                   9.18 

              	
                 
                   Further Assurances 

              	
                48 

              
	 	
                 

              	
                 
                   9.19 

              	
                 
                   Costs and Expenses 

              	
                48 

              
	 	
                 

              	
                 
                   9.20 

              	
                 
                   Insurance 

              	
                 

              	
                48 

              
	 	
                 

              	
                 
                   9.21 

              	
                 
                   Right of Inspection 

              	
                49 

              
	 	
                 

              	
                 
                   9.22 

              	
                 
                   Notice of Certain Events 

              	
                49 

              
	 	
                 

              	
                 
                   9.23 

              	
                 
                   Affiliates 

              	
                 

              	
                49 

              
	 	
                 

              	
                 
                   9.24 

              	
                 
                   Notices by Governmental Authority, Fire and Casualty Losses,
                  Etc 

              	
                49 

              
	 	
                 

              	
                 
                   13.2 

              	
                 
                   Arbitration Provisions 

              	
                50 

              
	 	
                 

              	
                 
                   9.26 

              	
                 
                   Payment of Claims 

              	
                50 

              
	 	
                 

              	
                 
                   9.27 

              	
                 
                   Appraisals 

              	
                 

              	
                51 

              
	 	
                 

              	
                 
                   9.28 

              	
                 
                   Plans and Specifications; Change Orders 

              	
                51 

              
	 	
                 

              	
                 
                   9.29 

              	
                 
                   List of Subcontractors, Etc 

              	
                51 

              
	 	
                 

              	
                 
                   9.30 

              	
                 
                   Liens 

              	
                 

              	
                 

              	
                51 

              
	 	
                 

              	
                 
                   9.31 

              	
                 
                   Distributions, Payments, Etc., by Borrower 

              	
                52 

              
	 	
                 

              	
                 
                   9.32 

              	
                 
                   Sales and Leasebacks 

              	
                52 

              
	 	
                 

              	
                 
                   9.33 

              	
                 
                   Nature of Business 

              	
                52 

              
	 	
                 

              	
                 
                   9.34 

              	
                 
                   Annexation 

              	
                 

              	
                52 

              
	 	
                 

              	
                 
                   9.35 

              	
                 
                   Mergers; Ownership of Borrower 

              	
                52 

              
	 	
                 

              	
                 
                   9.36 

              	
                 
                   Minimum Net Worth 

              	
                53 

              
	 	
                 

              	
                 
                   9.37 

              	
                 
                   Maximum Debt–to–Equity Ratio 

              	
                53 

              
	 	
                 

              	
                 
                   9.38 

              	
                 
                   Minimum Working Capital 

              	
                53 

              
	
                 

              
	
                10

              	
                . 

              	
                EVENTS
                  OF DEFAULT 

              	
                53 

              
	
                 

              
	 	
                 

              	
                 
                   10.1 

              	
                 
                   Events of Default 

              	
                53 

              
	 	
                 

              	
                 
                   10.2 

              	
                 
                   Remedies 

              	
                 

              	
                53 

              
	 	
                 

              	
                 
                   10.3 

              	
                 
                   Right of Set–Off 

              	
                55 

              
	
                 

              
	
                11

              	
                . 

              	
                AGENT'S
                  DISCLAIMERS 

              	
                55 

              

      

      

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

      
        	 	
                 

              	
                 
                   11.1 

              	
                No
                  Obligation by Agent To Construct 

              	
                 

              	
                55 

              
	 	
                 

              	
                 
                   11.2 

              	
                No
                  Obligation by Agent To Operate 

              	
                 

              	
                55 

              
	 	
                 

              	
                 
                   11.3 

              	
                No
                  Agency 

              	
                 

              	
                56 

              
	
                 

              
	
                12

              	
                . 

              	
                SPECIAL
                  DEPOSIT 

              	
                 

              	
                56 

              
	
                 

              
	
                13

              	
                . 

              	
                MISCELLANEOUS 

              	
                 

              	
                57 

              
	
                 

              
	 	
                 

              	
                 
                   13.1 

              	
                Successors
                  and Assigns 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.2 

              	
                Headings 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.3 

              	
                Survival 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.4 

              	
                Applicable
                  Law 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.5 

              	
                Notices 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.6 

              	
                Reliance
                  by Lenders 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.7 

              	
                Intentionally
                  Omitted 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.8 

              	
                Controlling
                  Document 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.9 

              	
                Construction
                  of Agreement 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.10 

              	
                 Counterparts 

              	
                 

              	
                57 

              
	 	
                 

              	
                 
                   13.11 

              	
                 Continuing
                  Lien 

              	
                 

              	
                58 

              
	 	
                 

              	
                 
                   13.12 

              	
                 Relationship
                  of Borrower to Agent and Lenders 

              	
                58 

              
	 	
                 

              	
                 
                   13.13 

              	
                 Participations 

              	
                 

              	
                58 

              
	 	
                 

              	
                 
                   13.14 

              	
                 Assignments 

              	
                 

              	
                59 

              
	 	
                 

              	
                 
                   13.15 

              	
                 Dissemination
                  of Information 

              	
                 

              	
                59 

              
	 	
                 

              	
                 
                   13.16 

              	
                 Waiver
                  of Right to Trial by Jury 

              	
                 

              	
                59 

              
	 	
                 

              	
                 
                   13.17 

              	
                 Notice
                  of Indemnification 

              	
                 

              	
                60 

              
	 	
                 

              	
                 
                   13.18 

              	
                 Entire
                  Agreement 

              	
                 

              	
                60 

              
	
                 

              
	
                14

              	
                . 

              	
                SPECIAL
                  TERMS AND PROVISIONS 

              	
                 

              	
                60 

              
	
                 

              
	 	
                 

              	
                 
                   14.1 

              	
                Single–Purpose
                  Entity / Separateness 

              	
                 

              	
                60 

              
	
                 

              
	
                15

              	
                . 

              	
                ANTI-MONEY
                  LAUNDERING AND ANTI-TERRORISM REPRESENTATIONS, 

              
	 	
                 

              	
                 
                   WARRANTIES AND COVENANTS 

              	
                 

              	
                60 

              
	
                 

              
	 	
                 

              	
                 
                   15.1 

              	
                AML
                  Representations and Warranties 

              	
                 

              	
                60 

              
	 	
                 

              	
                 
                   15.2 

              	
                AML
                  Covenant 

              	
                 

              	
                61 

              
	 	 	 	 	 	 
	 EXHIBITS  	 	 	 
	 	 	 	 	 	 
	 Exhibit "A"   	 	 	Reserved 
	 Exhibit "B"  	 	 	Reserved 
	 Exhibit "C"  	 	 	Additional
                Terms Schedule 
	 Exhibit "D" 	 	 	Project
                Disbursement Schedule 
	 Exhibit "E" 	 	 	Closing
                Conditions 
	 Exhibit "F"	 	 	  Form
                of Project Loan Sheet 
	 Exhibit "G" 	 	 	Form
                of Assignment and Assumption Agreement 
	 Exhibit "H" 	 	 	  Reserved 
	 Exhibit "I" 	 	 	Form
                of Borrowing Availability
                Report 

      

    

     

    
      
        
          
            
            

          

          
            v

            
              

            

          

          
            
            

          

        

      

    

     

    BORROWING
      BASE LOAN AGREEMENT

    (Syndicated
      Revolving Line of Credit)

     

    This
      BORROWING BASE LOAN AGREEMENT
      (Syndicated Revolving Line of Credit) ("Agreement"), dated for
      reference purposes as of the date set forth on the cover page of this Agreement,
      is made and entered into by and between WILSON FAMILY COMMUNITIES,
      INC.,  a Delaware corporation, whose address is set forth above
      (“Wilson”) and/or each additional “Borrower
      Party” (as defined below and which is a signatory hereto) (Wilson and
      each and every Borrower Party individually and collectively, as applicable,
      shall be referred to in the singular as “Borrower”), and RBC
      CENTURA BANK, a North Carolina banking corporation, whose address is set forth
      above (individually, as a “Lender,” and as
“Agent” for all “Lenders” [all as defined
      below]), and those certain Lenders listed on the signatures page(s)
      below.  Borrower, Agent, and Lenders, for and in consideration of the
      recitals and mutual promises contained herein, confirm and agree as
      follows.

    

    STATEMENT
      OF LOAN PURPOSE

     

    A.           Borrower
      has applied to Agent for a master line of credit pursuant to which Lenders
      may
      finance the acquisition and/or development of lots within certain subdivisions
      described herein and the construction of homes thereon by Borrower.

     

    B.           Agent
      and Lenders are willing to provide such a borrowing base line of credit upon
      the
      terms and conditions hereinafter set forth.

    

    1.           DEFINITION
      OF TERMS.  As used in this Agreement,
      the following terms shall have the respective meanings indicated
      below:

     

    1.1                 LINE
      OF CREDIT DEFINITIONS.

     

    "A&D
      Budget" shall mean, collectively, those certain budgets for each
      Project attached to each Project Loan Sheet and incorporated herein by
      reference, for the construction of A&D Improvements in connection with Lots
      under Development in each Approved Subdivision approved by Agent.

     

     "A&D
      Improvements" shall mean, for each Project added to the Master Line,
      (i) certain offsite improvements on the Property
      included in such Project (including without limitation curbs, grading, storm
      and
      sanitary sewers, paving, sidewalks, landscaping, hardscaping, sprinklers,
      electric lines, gas lines, telephone lines, cable television lines, fiber optic
      lines, pipelines and other utilities) necessary to make such Property suitable
      for the construction of single family residential homes thereon, and
      (ii) any common area improvements to be constructed on such Property, and
      (iii) any other "site improvements" as described under applicable
      law.

     

    “A&D
      Lot Allocation” shall mean:

     

    (a)            For
      each Lot Under Development included as Eligible Property, the Maximum Allowed
      A&D Lot Allocation for said Lot Under Development reduced by the actual
      construction costs of the A&D Improvements for said Lot Under Development,
      as set forth in the applicable A&D Budget;

     

    (b)           For
      each Developed Lot included as Eligible Property, the Maximum Allowed A&D
      Lot Allocation for said Developed Lot; and

     

    
      
                   

        
        

      

      
        Page
          - 1 

        
          

        

      

      
        
        

      

    

    (c)            For
      Pods and Entitled Land, the Maximum Allowed A&D Lot Allocation for said Pods
      and Entitled Land.

     

    “A&D
      Lot Collateral Value” shall mean:

     

    (a)           For
      each Lot Under Development included as Eligible Property, the sum of (i) the
      A&D Lot Allocation for said Lot Under Development
plus (ii) the result (but not less than zero) obtained
      by subtracting the A&D Lot Allocation for such Lot Under Development from
      the Maximum Allowed A&D Lot Allocation for such Lot Under Development and
      then multiplying the difference by the Percentage of Completion for the
      applicable Lot or Lots Under Development;

     

    (b)           For
      each Developed Lot included as Eligible Property, the A&D Lot Collateral
      Value for said Developed Lot shall equal the Maximum Allowed A&D Lot
      Allocation for such Developed Lot; and

     

    (c)           For
      Entitled Land included as Eligible Property, the A&D Lot Collateral Value
      for said Entitled Land shall equal the Maximum Allowed A&D Lot Allocation
      for such Entitled Land; and

     

    (d)           For
      Pods included as Eligible Property, the A&D Lot Collateral Value for said
      Pods shall equal the “as if complete” discounted value as shown on the
      Appraisal, or at Agent’s sole election, the original purchase price of the Land
      alone.

     

    “A&D
      Lot Eligibility Date” means, with respect to each Lot, the date such
      Lot is first included as Eligible Property in a Borrowing Availability
      Report.

     

    “A&D
      Lot Maturity Date” shall mean, for each Lot included as Eligible
      Property, the date on which said Lot shall cease to be Eligible Property and
      all
      Advances under the Master Line for said Lot shall cease to be made and shall
      be
      due and payable in full, subject to any extension(s) of said date as provided
      herein, which date is set forth on the Additional Terms Schedule.

     

    “A&D
      Lot Sub-limit” shall mean the aggregate Maximum Allowed A&D Lot
      Allocations with respect to Lots (other than Lots that have been reclassified
      as
      Homes) included in Eligible Property as set forth in the Additional Terms
      Schedule.

     

    “Additional
      Financial Covenants” shall mean those certain financial covenants
      defined in the Additional Terms Schedule attached hereto and incorporated
      herein.

     

    “Additional
      Obligations” shall have the meaning given to such term in
      Section 13.11 hereof.

     

    “Additional
      Terms Schedule” shall mean that schedule of additional Master Line
      terms incorporated herein, which schedule shall be attached as Exhibit
“C” hereto.

     

    “Advance”
      shall mean any disbursement by each Lender, whether by journal entry, deposit
      to
      Borrower's account, check to third party or otherwise of any of the proceeds
      of
      the Master Line or any insurance proceeds paid to and to be disbursed by Agent
      and Lenders for any Project included under the Master Line as may be provided
      in
      the Loan Documents.

     

     

    
      
            

        
        

      

      
        Page
          - 2

        
          

        

      

      
        
        

      

    

    
      "Affiliate"
        shall mean, as to any Person, any other Person which directly or indirectly
        controls, or is under common control with, or is controlled by, such Person
        and,
        if such Person is an individual, any member of the immediate family (including
        parents, spouse and children) of such individual and any trust whose principal
        beneficiary is such individual or one or more members of such immediate family
        and any Person who is controlled by any such member or trust.  As used
        in this definition, "control" (including, with correlative
        meanings, "controlled by" and "under common control with") shall mean
        possession, directly or indirectly, of power to direct or cause the direction
        of
        management or policies (whether through ownership of securities or partnership
        or other ownership interest, by contract or otherwise).

    

     

    “Agency
      Fee" shall have the meaning given to such term in the Fee
      Letter.

     

    "Agent"
      shall mean RBC CENTURA BANK, a North Carolina banking corporation, in its
      capacity as contractual representative of Lenders as the administrative and
      collateral agent, and not in its individual capacity as a Lender, and any
      successor Agent.

     

    “Agreement”
      shall mean this Borrowing Base Loan Agreement (Syndicated Revolving Line of
      Credit), as the same may from time to time be amended or supplemented by any
      written agreement between the parties.

     

    "Allocations"
      shall mean the line items set forth in each applicable Budget for which Advances
      of the Master Line proceeds will be made, which shall mean (a) for the Lots
      Under Development, Developed Lots, Pods and Entitled Land, the applicable
      A&D Lot Allocations, and (b) for all Spec, Model and Presold Homes, the
      applicable Home Loan Allocations.

     

    “Appraisal”
      shall mean:

     

    (a)            With
      respect to the A&D Improvements for Lots included as Eligible Property, an
      appraisal or evaluation obtained for Agent (at Borrower’s sole cost) of the
      Property by itself and the Property and the A&D Improvements (as they will
      exist upon the completion of construction thereof), all in form and substance
      reasonably satisfactory to Agent;

     

    (b)            With
      respect to each Lot and Home included as Eligible Property, a current
      fair–market value appraisal or evaluation obtained for or prepared by Agent (at
      Borrower's sole cost) of said Lot and Home (as it will exist upon the completion
      of construction thereof), all in form and substance reasonably satisfactory
      to
      Agent;

     

    (c)           With
      respect to each Entitled Land or Pod included as Eligible Property, a current
      fair–market value appraisal or evaluation obtained for or prepared by Agent (at
      Borrower's sole cost) of said Entitled Land or Pod, all in form and substance
      reasonably satisfactory to Agent; and

     

    (d)            Subject
      to clause (a) above, with respect to each Project financed hereunder, an
      appraisal or evaluation obtained for Agent (the cost of which shall be borne
      by
      Borrower) or prepared by Agent (at Borrower’s sole cost) of the Property and the
      Improvements (as they will exist upon the completion of construction
      thereof).

     

    Each
      Appraisal shall be prepared in accordance with the Uniform Standards of
      Professional Appraisal Practice applicable to Federally Related Transactions
      as
      set out in Appendix A to the real estate appraisal regulations adopted by the
      Office of the Comptroller of the Currency pursuant to the Financial Institutions
      Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
      (Sub-part C of 12 C.F.R. 34).

     

    
      
                   

        
        

      

      
        Page
          - 3

        
          

        

      

      
        
        

      

    

                "Appraised
      Value" shall mean (a) with respect to the Pods and Entitled Land,
      a current fair–market value for said Property, (b) with respect to the Lots and
      A&D Improvements, a current fair–market value for the Lots and said A&D
      Improvements (as they will exist upon the completion of construction thereof),
      and (c) with respect to each Lot and Home, the current fair–market value
      for said Lot and Home (as it will exist upon the completion of construction
      thereof).

     

    "Approved
      Subdivision" shall mean each and every residential subdivision financed
      hereunder.

     

    "Approved
      Sales Contract" shall mean a bona fide, legally binding, enforceable
      contract for the sale of a Lot and its related Home in the Project to be
      financed under the Master Line, which contract shall be between Borrower, as
      seller, and a Non-Related Party, as buyer, with respect to which (a)  an
      earnest money deposit not less than the Minimum Earnest Money Deposit has been
      delivered to either an independent escrow agent or to Borrower; and
      (b) Borrower has undertaken a preliminary screening of the creditworthiness
      of such buyer and has concluded that such buyer should qualify for a mortgage
      loan commitment for the financing of the acquisition of the completed Lot and
      Home or such buyer is otherwise able to perform its obligations under the
      contract; and (c) the sale price is equal to or greater than the Minimum
      Sale Price.  Unless prohibited by law, upon request of Agent, Borrower
      shall furnish to Agent the name, telephone number and loan officer of any
      mortgage lender issuing a permanent loan covering any Sold Home, and Borrower
      shall request that said permanent lender cooperate with Agent in providing
      evidence of loan status of the permanent loan covering any Sold
      Home.  In addition, upon request of Agent, Borrower shall provide a
      copy of any loan approval issued by said permanent lender.

     

    “Arranger”
      shall mean RBC CENTURA BANK, a North Carolina banking corporation.

     

    “Assignment
      and Assumption Agreement” shall mean an Assignment and Assumption
      Agreement in the form of Exhibit ”G”.

     

    "Assignment
      of Agreements" shall mean that certain Assignment of Agreements,
      Permits, Licenses and Approvals of even date herewith executed by Borrower
      (with
      the executed consents of the Contractor, the Project engineer and the Design
      Professional for the Project if required by Agent) for the benefit of
      Lenders.

     

    "Assurance
      Agreements" shall have the meaning given to such term in
      Section 13.11 below.

     

    “Borrower”
      or “Wilson” shall mean WILSON FAMILY COMMUNITIES,
      INC.,  a Delaware corporation, and each and every Borrower Party that
      has executed the Loan Documents, including without limitation a Project Loan
      Sheet

     

     “BorrowingAvailability”
      means, at any time with respect to the Master Line, the lesser of (a) the
      Commitment Amount, or (b) the aggregate Borrowing Availability Value of the
      Eligible Property, as reflected in the most recent Borrowing Availability
      Report, less in either case any
      Remargining Payment required hereunder, but not yet paid.

     

    “Borrowing
      Availability Report” means a report prepared by Borrower and approved
      by Agent as provided in this Agreement setting forth the Entitled Land, Lots
      and
      Homes then constituting the Eligible Property, the Borrowing Availability Value
      of the Eligible Property, and certain other information, in the format
      prescribed by Agent from time to time.

     

    “Borrowing
      Availability Value” means from time to time, the aggregate total
      of:

     

    
      
                   

        
        

      

      
        Page
          - 4

        
          

        

      

      
        
        

      

    

    (a)           The
      Maximum Allowed Home Allocations for all Lots and Homes included as Eligible
      Property at the time the Maximum Allowed Home Allocations of said Lots and
      Homes
      is determined;

     

    (b)           The
      Maximum Allowed A&D Lot Allocations for all Lots included as Eligible
      Property at the time the Maximum Allowed A&D Lot Allocation of said Lots is
      determined; and

    

    (c)           The
      Maximum Allowed A&D Lot Allocations for all Entitled Land and/or
      Pods.

    

    “Borrower
      Party” shall mean any entity (a) that is approved by Agent to be a
      Borrower hereunder, (b) for which Wilson or an Affiliate of Wilson is the
      managing general partner, if said Borrower Party is a partnership, or the
      manager or managing member, if said Borrower Party is a limited liability
      company, and (c) in which Wilson and/or an Affiliate of Wilson owns one hundred
      percent (100%) of the legal and economic interests of said
      entity.  Agent shall approve or disapprove in its sole discretion of
      any Borrower Party becoming a Borrower hereunder (i) based on Agent’s receipt,
      review and approval of all financial and other information requested by Agent
      in
      its discretion concerning such Borrower Party, and (ii) subject to the terms
      and
      conditions set forth in the Project Loan Sheet for the applicable
      Project.  In connection with any Project included under the Master
      Line in which a Borrower Party becomes a “Borrower” as provided
      herein, said Borrower Party and Wilson shall execute a Project Loan Sheet
      agreeing to be bound by this Agreement and all other Loan Documents required
      by
      Agent in connection with the applicable Project.

     

    “Borrower's
      Deposit” shall mean such cash amounts as Agent may deem necessary for
      Borrower to deposit with it in accordance with the provisions of this
      Agreement.

     

    “Budget”
      shall mean the A&D Budget for the Lots Under Development to be improved and
      the Construction Costs Schedule for the Homes to be constructed.

     

    “Business
      Day” shall mean any day other than a Saturday, Sunday or legal holiday
      observed by the Federal Reserve Bank of Dallas, Texas (Houston
      Branch).

     

    “Calendar
      Month” shall mean any one (1) of the twelve (12) calendar months of the
      year.  With respect to any payment or obligation that is due or
      required to be performed within a specified number of Calendar Months, then
      such
      payment or obligation shall become due on the day in the last of such specified
      number of Calendar Months that corresponds numerically to the date on which
      such
      payment or obligation was incurred or commenced; provided, however, that with
      respect to any obligation that was incurred or commenced on the 29th, 30th
      or
      31st day of any Calendar Month, and if the Calendar Month in which such payment
      or obligation would otherwise become due does not have a numerically
      corresponding date, such obligation shall become due on the first day of the
      next succeeding Calendar Month.

     

    “CC&Rs”
      shall mean, for any Project to be financed under the Master Line, any covenants,
      conditions, restrictions, maintenance agreements and/or reciprocal easement
      agreements affecting such Project or the Property included in such
      Project.  For purposes of this Agreement, all CC&Rs for each and
      every Project funded under the Master Line shall be referred to individually
      and
      collectively in the singular.

     

    "Change
      Order" shall mean a change order evidencing and instructing a change to
      the applicable Plans and Specifications for the A&D Improvements and/or the
      Homes in the Project.

     

    
      
              

        
        

      

      
        Page
          - 5

        
          

        

      

      
        
        

      

    

    "Closing
      Costs" shall mean the usual and customary costs of the closing of a
      Home sale transaction as approved by Agent (including without limitation
      recording costs, tax prorations, title insurance premiums, escrow fees and
      charges, costs and fees related to the purchaser's acquisition loan, brokerage
      commissions and fees and other similar costs approved by Agent), which costs
      shall be approved by Agent in its reasonable discretion.

     

    "Closing
      Conditions" shall mean collectively (a)  the conditions set forth
      in Exhibit "E", (b)  the conditions for disbursement
      of the initial Advance for any approved Project as set forth in Section 7.1
      of this Agreement, (c) the Title Company's issuance of the Title Commitment
      for the Master Line, and (d) Borrower's delivery to Agent of the Loan
      Documents.

     

    "Closing
      Date" shall mean the date upon which the Deed of Trust relating to such
      Project is recorded in the Official Records of the County in which such Project
      is located.

     

    “Co-Lending
      Agreement” shall mean an Intercreditor Agreement to be executed by
      Agent and each Lender hereunder in form and content required by
      Agent.

     

    “Collateral”
      means the property, interests in property, and rights to property securing
      any
      or all Obligations from time to time.

     

    “Collateral
      Value” means from time to time, the aggregate total of:

     

    (a)           The
      Home Collateral Values for all Homes included as Eligible Property at the time
      the Collateral Value of said Homes is determined; and

    

    (b)           The
      A&D Lot Collateral Values for all Lots, Entitled Land and/or Pods included
      as Eligible Property at the time the Collateral Value of said Lots is
      determined.

    

    “Commitment”
      shall mean, for each Lender, the amount set forth opposite its signature on
      this
      Agreement or on its respective Assignment and Assumption Agreement, as the
      same
      may be reduced from time to time by Borrower pursuant to this Agreement, or
      by
      further assignment by such Lender pursuant to the
      terms hereof.

     

    “Commitment
      Amount” shall mean the aggregate Commitments of all Lenders, which
      amount shall not exceed as of the Closing Date Fifty-Five Million Dollars
      ($55,000,000.00), and which amount may be reduced or increased from time to
      time
      pursuant to this Agreement; provided, however, that the Commitment Amount shall
      be reduced during the Term-Out Period as provided hereinbelow.

     

    “Commitment
      Fee” shall mean that certain non-refundable facility fee in the amount
      set forth in the Fee Letter to be paid by Borrower as set forth in the Fee
      Letter.

     

    “Commitment
      Percentage” or “Pro Rata Share” means, with respect to
      any Lender, the percentage obtained by dividing the Commitment of such Lender
      (excluding the Swingline Exposure) by full amount of the Master Line (excluding
      the Swingline Exposure), plus, in the case of Swingline Lender, the Swingline
      Exposure.  The Lenders acknowledge that the percentages and amounts
      may be adjusted from time to time after the Closing Date pursuant to the terms
      contained herein.

     

    "Completion
      Date" shall mean for each Home included as Eligible Property, the
      Home Completion Date.

     

    
      
        
                          

        

        
        

      

      
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          - 6

        
          

        

      

      
        
        

      

    

    "Compliance
      Certificate" shall mean that certain certificate executed by Borrower
      and delivered to Agent as of the closing of the Master Line in the form required
      by Agent.

     

    "Construction
      Contract" shall mean any and all contracts and agreements entered into
      between Borrower and Contractor pertaining to the development, construction
      and
      completion of the Improvements.

     

    "Construction
      Costs Schedule" shall mean that certain schedule showing, for each Home
      to be constructed in the Project, the budgeted construction costs for each
      such
      Home and other costs and expenses incident thereto, all as approved by
      Agent.

     

    “Contractor”
      shall mean any person or entity with whom Borrower contracts for the
      development, construction and completion of the Improvements or any portion
      thereof.

     

    "Contract
      Price" shall mean the purchase price for the sale of a Lot and Home in
      the Project, as set out in an Approved Sales Contract, which price shall not
      be
      less than the Minimum Sale Price.

     

    “County”
      shall mean, with respect to any Project to be financed under the Master Line
      the
      county in which such Project is located.

     

    “Debt”
      shall mean any and all notes, guaranties and other evidence of indebtedness
      (fixed or contingent), accounts payable, contingent liabilities, lease
      obligations, to the extent same are considered liabilities in accordance with
      GAAP, and any and all other obligations treated as liabilities in accordance
      with GAAP.

     

    "Debt–to–Equity
      Ratio" shall mean the ratio of (a) liabilities (excluding
      contingent liabilities and less any other subordinated debt included as equity
      in the definition of Net Worth) to (b) Net Worth.

     

    “Deed
      of Trust” shall mean, for each Project to be financed under the Master
      Line, a Construction Deed of Trust, Assignment of Leases and Rents, Security
      Agreement and Fixture Filing pursuant to which Borrower encumbers a Project
      to
      secure the Obligations in a form reasonably required by Agent.  For
      purposes of this Agreement, all such deeds of trust securing any and all notes
      executed hereunder shall be referred to individually and collectively in the
      singular as the “Deed of Trust.”

    

    (a)           Upon
      the entry of each Project into the Master Line, a separate Deed of Trust shall
      encumber all of the Lots in such Project.

    

    (b)           
      If required by Agent, all Lots in a Project shall be subject to a recorded
      Final
      Map, and Agent shall have no obligation to make any Advances for any Project
      included in the Master Line unless and until it receives evidence satisfactory
      to Agent in its discretion of the recording of such Final
      Map.  Borrower’s failure to acquire free and clear title, subject to
      those exceptions and encumbrances approved by Agent, to all of the Property
      for
      a Project as provided herein shall constitute an Event of Default
      hereunder.

    

    (c)           As
      Lots in a Project are added to the Collateral, the applicable Deed of Trust
      shall be amended to secure such Lots in the form reasonably required by Agent,
      and Borrower shall pay all costs and expenses incurred by Agent and Lenders
      in
      connection with encumbering all of said Lots with the Deed of Trust, including
      without limitation the payment of title insurance and endorsement costs, closing
      and recording fees, legal fees and all other related charges.

    
      
            

        
        

      

      
        Page
          - 7

        
          

        

      

      
        
        

      

    

    

    (d)           All
      Lots encumbered by a Deed of Trust for a Project, as it may be amended from
      time
      to time, shall be covered by a Title Policy as described below.  All
      references to each Deed of Trust shall refer to said Deed of Trust as it may
      be
      amended from time to time.

    

    "Default"
      shall mean the occurrence of an event which, with the giving of notice or the
      passage of time or both, would constitute an Event of Default.

     

    "Delinquent
      Lender" shall mean: (a) any Lender that has failed to fund an Advance
      within one (1) business day after such funding is required pursuant to this
      Agreement; or (b) any Lender that has (i) breached any other term or condition
      of this Agreement or (ii) failed to make any other payment to Agent (whether
      such payment is a reimbursement for costs, expenses or attorneys' fees, an
      indemnity payment, the repayment of erroneously paid funds, a portion of any
      set-off to be turned over to Agent or otherwise) when such payment is due and
      payable under this Agreement or any other Loan Document, if such breach or
      failure has not been cured or paid within twenty (20) days after notice thereof
      from Agent to such Lender.

     

    "Design
      Professional" shall mean the design professional set forth in the
      Additional Terms Schedule hereto, together with any other person or entity
      with
      whom Borrower contracts for the providing of planning, design, architectural,
      engineering or other similar services relating to the Improvements, if
      any.

     

    “Design
      Services Contract” shall mean all contracts and agreements entered into
      between Borrower and each Design Professional pertaining to the design,
      development, and construction of the Improvements, if any.

     

    “Developed
      Lots” means those certain Lots in a Project for which all A&D
      Improvements have been constructed and completed and said Lots are in condition
      for the construction of Homes thereon.

     

    "Disclosure
      Certificate" shall mean that certain certificate executed by Borrower
      and delivered to Agent as of the closing of the Master Line made hereunder
      and
      from time to time as may be required by Agent in the form required by
      Agent.

     

    "Draw
      Request Form" shall mean the form for submission by Borrower to Agent
      as a condition precedent for an Advance , in the form as may be approved by
      Agent.

     

    “Eligible
      Property” means Entitled Land, Pods, Homes and/or Lots that meet the
      requirements of this Agreement for financing under the Master Line and
      calculation of the Borrowing Availability.  No Raw Land shall be
      included as Eligible Property.

     

    “Entitled
      Land” means Raw Land with respect to which all of the following is
      correct:

     

    (a)           Borrower
      has received a vested zoning classification that is consistent with Borrower’s
      actual and proposed use of such Raw Land; 

     

    (b)           A
      preliminary subdivision plat or tentative map has been completed and has been
      approved by all applicable Governmental Authorities; and

     

    (c)           Agent
      has confirmed to its satisfaction that there are adequate utility capacities
      (water, sanitary sewer, storm drainage, electricity, natural gas and telephone)
      to provide service to said Raw Land as fully developed and that such capacities
      are reserved for said Raw Land on terms that are acceptable to the Agent, and
      other matters that Agent deems to be appropriate with respect to the intended
      development of the Raw Land.

    
      
           

        
        

      

      
        Page
          - 8

        
          

        

      

      
        
        

      

    

     

    “Equity”
      shall have the meaning used in accordance with GAAP.

     

    "Event
      of Default" shall mean any happening or occurrence described in the
      Deed of Trust.

     

    "Excepted
      Lien" shall mean Liens:

     

    (a)           for
      ad valorem taxes, assessments, or other governmental charges or levies
      not yet delinquent or which are being contested in good faith by appropriate
      action;

     

    (b)           in
      connection with workmen's compensation, unemployment insurance or other social
      security, old age pension or public liability obligations;

     

    (c)           vendors',
      carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
      construction or other similar Liens arising by operation of law in the ordinary
      course of business or incident to the construction or improvement of any
      Property in respect of obligations permitted under the terms of this Agreement
      which are:

     

    (i)           in
      all cases subordinate to the Liens created by the Deed of Trust,
      and

     

    (ii)           not
      yet due or which are being contested in good faith by appropriate proceedings
      by
      or on behalf of Borrower in accordance with the procedures and requirements
      set
      forth in Section 9.26 of this Agreement; and

     

    (d)           customary
      Liens in the Approved Subdivision, including customary restrictive covenants
      and
      utility easements, which do not and will not unreasonably interfere with the
      construction, operation, maintenance and sale of Homes; and

     

    (e)           Liens
      shown in the Title Commitment and approved by Agent as of the Closing
      Date.

     

    "Excess
      Costs" shall have the meaning given to such term in the Project
      Disbursement Schedule.

     

    "Federal
      Funds Effective Rate" shall mean, for any day, an interest rate per
      annum equal to the weighted average of the rates on overnight Federal funds
      transactions with members of the Federal Reserve System arranged by Federal
      funds brokers on such day, as published for such day (or, if such day is not
      a
      Business Day, for the immediately preceding Business Day) by the Federal Reserve
      Bank of New York, or, if such rate is not so published for any day which is
      a
      Business Day, the average of the quotations at approximately 10:00 a.m.
      (Houston, Texas time) on such day on such transactions received by Agent from
      three (3) Federal funds brokers of recognized standing selected by Agent in
      its
      sole discretion.

     

    “Fee
      Letter” shall mean that certain Loan Fee Agreement of even date
      herewith between Borrower and Agent with respect to certain loan fees and other
      amounts payable to Agent and to be retained in full by Agent, except to the
      extent Agent from time to time elects to enter into one
      or
      more separate agreements with a Lender or other Person to allocate any of the
      fees described in the Fee Letter.

    
      
            

        
        

      

      
        Page
          - 9

        
          

        

      

      
        
        

      

    

     

    “Final
      Map" shall mean the final tract map, parcel map or subdivision plat for
      the Property and, if required by Agent, said map shall have been duly recorded
      prior to the recordation of the Deed of Trust in the Official Records of the
      County.

     

    "Financing
      Statement" shall mean that certain financing statement or financing
      statements (on a Standard Form UCC–1 or otherwise) delivered by Borrower to
      Agent in connection with the Loan Documents.

     

    "First
      Right of Refusal" shall mean Lender shall have the first right of
      refusal for (a) providing the financing for all Collateral for the Master Line,
      and (b) providing financing for any and all other Property owned and developed
      by Borrower.

     

    "Force
      Majeure Event" shall mean acts of God or the elements, including, but
      not limited to, fire, flood, windstorm, hailstorm, earthquake, lightning, acts
      of war, riot or civil insurrection, strikes, labor disputes, delays in delivery
      of material and disruption of shipping (to the extent such strikes, labor
      disputes, delays in delivery of material and disruption of shipping affect
      not
      only Borrower but also similarly situated real estate owners and/or contractors
      in the vicinity of the Property, or are otherwise not the result of an
      intentional or grossly negligent act or failure to act by Borrower); provided,
      however, that inclement weather shall be considered a Force Majeure Event only
      to the extent it is significantly more severe than typical for the location
      and
      time of year in which such inclement weather occurred.

     

    “Future
      Project” shall mean each Project for which approval for inclusion as
      Eligible Property has been obtained after the initial Closing Date, subject
      to
      the approval conditions set forth herein.

     

    "GAAP"
      shall mean the generally accepted accounting principles consistently applied
      throughout the periods covered by the applicable financial
      statements.

     

    "Geographic
      Limitation":  Such term shall have the meaning set forth in
      the Additional Terms Schedule.

     

    "Governmental
      Authority" shall mean the United States of America, the State of
      Delaware, the state, county, city and political subdivisions in which any
      Property of Borrower is located or which exercises jurisdiction over any such
      Property, and any agency, department, commission, board, bureau, homeowners
      association, utility district, flood control district, improvement district,
      or
      similar district, court, grand jury or instrumentality or any of them which
      exercises jurisdiction over any such Property.

     

    "Governmental
      Requirement" shall mean any law, statute, code, ordinance, order, rule,
      regulation, judgment, decree, injunction, franchise, permit, certificate,
      license, authorization, or other direction or requirement (including but not
      limited to any of the foregoing which relate to zoning and planning standards
      or
      controls, environmental standards or controls, energy regulations and
      occupational, safety and health standards or controls) of any Governmental
      Authority.

     

    "Guarantor"
      shall mean WILSON HOLDINGS INC., a Nevada corporation.

     

    
      
            

        
        

      

      
        Page
          - 10

        
          

        

      

      
        
        

      

    

    "Guaranty"
      shall mean that certain Continuing Guaranty Agreement dated as of the date
      hereof executed by Guarantor for the benefit of Agent and Lenders, pursuant
      to
      which, among other things, Guarantor has guaranteed (a) the timely
      repayment of all loans made hereunder, and (b) the lien–free completion of
      the construction of all Improvements constructed for all Projects financed
      hereunder pursuant to this Agreement and the applicable Plans and
      Specifications.  By execution of this Agreement, Borrower approves of
      the form and content of the Guaranty and agrees to abide by its provisions,
      to
      the extent same apply to Borrower.

    

    "Home"
      shall mean a single–family residential structure and related amenities for the
      Project.

    

    “Home
      Collateral Value” means a valuation of each Home based upon the Home’s
      stage of construction.  The Home Collateral Value for a particular
      Home equals the sum of (a) the A&D Lot Allocation for the Lot on which
      such Home is to be constructed plus (b) the
      result obtained by subtracting the A&D Lot Allocation for the Lot from the
      Home Loan Allocation for the Home and then multiplying the difference by the
      Percentage of Completion for the Home.

    

    "Home
      Completion Date" shall mean, for any Home to be constructed in the
      Project and financed under the Master Line, one hundred eighty (180) days (or
      such other time period as may be permitted by Agent in its reasonable
      discretion) from Home Eligibility Date relating to such Home; provided, however,
      such date may be extended at Agent's sole discretion for conditions beyond
      the
      control of Borrower, including, without limitation, as a result of a Force
      Majeure Event (but no such extension as a result of one (1) or more Force
      Majeure Event(s) shall extend such date in the aggregate more than ninety (90)
      days, but in no event beyond the Home Initial Due Date for said
      Home).

    

    “Home
      Eligibility Date” means, with respect to each Home and Lot included as
      Eligible Property, the date on which that Home is first included in Eligible
      Property as a Home pursuant to this Agreement, as reflected on the Borrowing
      Availability Report, and regardless of whether periods exist during which such
      Home is not included as Eligible Property.

     

    “HomeInitial
      Due Date” shall mean, for each Home and Lot included as Eligible
      Property, the date on which said Home and Lot shall cease to be Eligible
      Property, which date is set forth on the Additional Terms Schedule.

     

    “Home
      Loan Allocation” shall mean, for each Home and Lot included as Eligible
      Property, the maximum amount which is allocated for said Lot and Home being
      financed thereunder, in the maximum sum set forth in the Additional Terms
      Schedule.

     

    “Home
      Release Price”:  For each Home and Lot included as Eligible
      Property, such term shall have the meaning given to such term in the Additional
      Terms Schedule.

     

    “Improvements”
      shall mean, collectively and individually, (a) the A&D
      Improve­ments, (b) the Model Homes, (c) the production Homes, and
      (d) such other related facilities and appurtenances to be constructed on
      the Property, all of which are to comprise the Project and the Approved
      Subdivision.

     

    “Indebtedness”
      shall mean, for the Advances to be made hereunder, any and all amounts owing
      or
      to be owing by Borrower or Guarantor to Agent and Lenders in connection with
      the
      Note or any other Loan Documents, including this Agreement, and all other
      liabilities of Borrower to Agent and Lenders from time to time
      existing.

     

    "Indemnity
      Agreement" shall mean that certain agreement executed by Borrower and
      Guarantor for the benefit of Agent and Lenders relating to certain environmental
      and other matters for each Project to be financed hereunder.

     

    
      
            

        
        

      

      
        Page
          - 11

        
          

        

      

      
        
        

      

    

    "Inspecting
      Person" shall mean a third party designated by Agent from time to time
      who may inspect the Improvements from time to time for the benefit of Agent
      and
      Lenders.

     

    "Interim
      Advance" shall mean any Advance of Master Line proceeds after the
      initial Advance under the Master Line is made.

     

     “Interest
      Rate”  shall have the meaning given to such term in the
      Note.

     

    "Inventory
      Status Report" shall mean, for each and every Project to be financed
      hereunder, a monthly report with respect to the Lots or other property acquired
      and the completion status of each residence under construction by Borrower
      (or
      by any additional reporting person) (whether or not financed by Lenders),
      properly completed by Borrower and such other party and in form and substance
      reasonably satisfactory to Agent.

     

    "Land"
      or "Property" shall mean any real property or any interest
      therein owned by Borrower.

     

    "Lender"
      shall mean any one (1), and "Lenders" shall mean more than one
      (1), of those Persons who have become a party to this Agreement as a co-lender,
      their respective successors and assigns, each having executed an assignment
      and
      assumption agreement, and each said party’s successors and assigns, in order to
      become a co-lender under this Agreement.  

     

    “Lending
      Installation” shall mean, with respect to a Lender or Agent, any
      office, branch, subsidiary or affiliate of such Lender or Agent that is selected
      by such Lender or Agent pursuant to this Agreement.

     

    “Lien”
      shall mean, for any Project to be financed under the Master Line, any interest
      in Property that is the subject of such Project securing an obligation owed
      to,
      or a claim by, a Person other than the owner of the Property, whether such
      interest is based on the common law, statute or contract, and including but
      not
      limited to the lien or security interest arising from a mortgage, encumbrance,
      pledge, security agreement, conditional sale or trust receipt or a lease,
      consignment or bailment for security purposes.  The term
“Lien” shall include reservations, exceptions, encroachments,
      easements, rights of way, covenants, conditions, restrictions, leases and other
      title exceptions and encumbrances affecting Property.  For the
      purposes of this Agreement, Borrower shall be deemed to be the owner of any
      Property which it has acquired or holds subject to a conditional sale agreement,
      financing lease or other arrangement pursuant to which title to the Property
      has
      been retained by or vested in some other Person for security
      purposes.

     

    "Loan
      Deficiency" shall have the meaning given to such term under
      Section 6.2 below.

     

    "Loan
      Documents" shall mean the Note, the Deed of Trust, this Agreement, the
      Security Agreement, the Assignment of Agreements, the Financing Statement,
      the
      Indemnity Agreement, the Guaranty and any and all other documents now or
      hereafter executed by Borrower, or any other person or party in connection
      with
      the Master Line, the indebtedness evidenced by the Note, and/or the covenants
      contained in this Agreement.

     

    “Lot”
      shall mean each lot which is on Entitled Land as shown on the duly recorded
      subdivision plat of the subject Land, or applicable portion thereof, with the
      location and configuration of each such lot and of the subdivision plat being
      reasonably acceptable to Agent, which Lot may be either a Developed Lot or
      a Lot
      Under Development.

     

    
      
            

        
        

      

      
        Page
          - 12

        
          

        

      

      
        
        

      

    

    “Lot
      Under Development” shall mean a Lot which is not a Developed Lot, which
      may include lots which comprise Entitled Land and/or Pods.

     

    “Master
      Line” shall mean the master revolving line of credit facility, which
      includes the Letter of Credit Line and the Swingline.

     

    “Master
      Line Termination Date” shall have the meaning given to such term in the
      Additional Terms Schedule attached hereto, which date shall be the date after
      which:

     

    (a)           no
      new Advance under the Master Line will be made by Lenders; and

     

    (b)           no
      new Letters of Credit will be issued by any Letter of Credit
      Provider.

     

    “Master
      Line Maturity Date” shall have the meaning given to such term in the
      Additional Terms Schedulel.

     

    "Material
      Adverse Effect" shall mean, as to any Person, any material and adverse
      effect on (a) the assets, liabilities, financial condition, business or
      operations of said Person taken as a whole, from those reflected in the
      financial statements or from the facts represented or warranted in this
      Agreement or any other Loan Document, or (b) the ability of said Person
      taken as a whole, to carry out its business as at the date of this Agreement
      or
      as proposed at the date of this Agreement to be conducted or meet said Person's
      obligations under the Note, this Agreement, or the other Loan Documents on
      a
      timely basis, as determined by Agent in its sole discretion.

     

    “Maximum
      Allowed A&D Lot Allocation” shall mean for each Lot and all
      Entitled Land and/or Pods included as Eligible Property, such term shall have
      the meaning given to such term in the Additional Terms Schedule.

     

    "Minimum
      Earnest Money Deposit" shall have the meaning given to such term in the
      Additional Terms Schedule.

     

    "Minimum
      Sale Price" shall be a sale price for a Lot and Home not less than the
      sum of (i) the Home Release Price plus (ii) the Closing Costs to be paid by
      Borrower in connection with the sale of said Home and Lot.

     

    "Model
      Home" shall mean any Home owned by Borrower which, when fully
      completed, shall be used as a model for display to prospective purchasers of
      Homes built by Borrower in the Approved Subdivision.

     

    “Net
      Sales Proceeds” shall mean, for each Home and Lot sold in an Approved
      Subdivision to be financed under the Master Line, the Contract Price
less the Closing Costs to be paid by Borrower in
      connection with the sale of said Home and Lot.

     

    "Net
      Worth" shall mean "tangible net worth," as such term is used in
      accordance with GAAP, except that in computing Net Worth (a) any intangible
      assets (i.e., goodwill) shall be excluded, (b) any notes or
      obligations either receivable from Affiliates (other than those specifically
      approved by Agent in writing) or which are deemed by Agent to be inadequately
      secured shall be given no value as assets, (c) any "step-up" in value of
      assets that results from a transaction with an Affiliate or between Affiliates,
      or recognition of a gain or profit from a sale or contribution of an asset
      to an
      Affiliate or a transaction between Affiliates will not be recognized unless
      Agent specifically approves, and (d) any subordinate debt approved by
      Lender, shall be included, all as determined on a consolidated
      basis.

     

    
      
            

        
        

      

      
        Page
          - 13

        
          

        

      

      
        
        

      

    

    "Non–Related
      Party" shall mean a person or entity that is not a partner, member or
      other owner of Borrower, nor an officer of, or parent or subsidiary corporation
      of, any of Borrower's partners, members or owners or Affiliate, or a person
      or
      entity otherwise controlled, directly or indirectly, by Borrower or any of
      Borrower's partners, members or owners or Affiliate, or a parent or subsidiary
      corporation of any of Borrower's partners, members or owners or
      Affiliate.

     

    "Note"
      shall mean, individually and collectively, those certain promissory notes which
      are  executed by Borrower and payable to each Lender, together with
      any and all additional promissory notes executed after the date hereof (which
      note(s) shall be in form and substance substantially similar to the notes
      executed as of the date herewith) in favor of other Persons that become Lenders
      in accordance with the terms hereof, in each case, evidencing Borrower’s
      indebtedness hereunder, as amended, modified, extended, renewed or supplemented
      from time to time, and in the aggregate principal amount equal to the Commitment
      Amount.

     

    "Obligations"
      shall mean any and all of the covenants, conditions, warranties,
      representations, and other obligations (other than to repay the Indebtedness)
      made or undertaken by Borrower or Guarantor, or any other person or party to
      the
      Loan Documents to Agent and Lenders, the trustee of the Deed of Trust, or others
      as set forth in (a) the Loan Documents, (b) any other deed, lease,
      sublease, or other form of conveyance, or (c) any other agreement pursuant
      to which Borrower is granted a possessory interest in the Land.

     

    “Outstanding
      Loan Borrowings” means the average daily aggregate amount of the
      outstanding and unpaid Advances under the Master Line (including any Swingline
      Exposure) for a specified period of time.

     

    "Organizational
      Documents" shall mean, for any Person which is not an individual, those
      documents which have been executed and/or filed or recorded in connection with
      (a) the formation of said entity and the maintenance of the good standing
      of such entity in each jurisdiction in which said entity is lawfully doing
      business, and (b) the ownership, management and operation of the business
      affairs of said entity.

     

    "Partial
      A&D Release Price" shall mean the sum set forth in the Additional
      Terms Schedule (as such amount may be changed pursuant to Section 6.1
      hereof) to be paid by Borrower to Agent (a) for a partial release of a
      Developed Lot either from the lien of the Deed of Trust of a portion of the
      Land
      and the Improvements related thereto if Agent has not converted said finished
      Lot into a Home to be included as Eligible Property as provided herein, or
      (b) to convert the Lot into a Home to be included as Eligible Property
      (which will not include a release from the lien of the Deed of Trust that
      secures the Master Line).  If the Partial A&D Release Price is
      being paid in connection with the partial release of any Lot and the conveyance
      of the Lot to any Person, accrued interest shall also be paid
      thereon.

    

    “Pay–Off
      Date” shall have the meaning given to such term in Section 13.11
      below.

     

    “Percentage
      of Completion” means (a) for any Home included as Eligible Property,
      the current percentage of construction completed as reflected in each Borrowing
      Availability Report based upon the stages of construction set forth in
Exhibit ”D”, and (b) for any Lot or groups of Lots,
      included as Eligible Property, the current percentage of completion of A&D
      Improvements in the applicable Approved Subdivision as reasonably determined
      by
      Agent based on its review of the current Borrowing Availability Report and
      inspections of the Collateral made pursuant to this Agreement.

     

    
      
            

        
        

      

      
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      “Permitted
        Expenses” shall mean, for any fiscal year of Borrower for a Project
        financed under the Master Line, all costs and expenses incurred by Borrower
        for
        such Project duringsuch year in the ordinary course of Borrower's
        business, including but not limited to (a) payroll, (b) business
        income, and other taxes and real and personal property taxes and assessments,
        and fees and expenses, (c) insurance premiums, (d) all other costs and
        expenses, including capital expenditures and overhead allocations approved
        by
        Agent, required to be made by Borrower in the ordinary course of business,
        and
        (e) payments during such fiscal year into reserve funds and accounts for
        future costs, expenses and payments referred to in clauses (a)–(d) above, in
        accordance with prudent business practices.  Permitted Expenses shall
        in no event include any dividends or any other payments or distributions
        of any
        nature to any member, stockholder, venturer or partner, and/or any intercompany
        advances or loans by Borrower to any Affiliate.

    

     

    “Person”
      shall mean any individual, limited liability company, corporation, partnership,
      joint venture, association, joint stock company, trust, unincorporated
      organization, government or any agency or political subdivision thereof, or
      any
      other form of entity.

     

    "Plans
      and Specifications" shall mean the plans and specifications for the
      development and construction of the A&D Improvements and/or the Homes, as
      applicable and as included as part of the Project, prepared by Borrower or
      the
      Design Professional and approved by Agent, by all applicable Governmental
      Authorities, by any party to a purchase or construction contract with a right
      of
      approval, all amendments and modifications thereof approved in writing by the
      same, and all other design or engineering work, test reports, surveys, shop
      drawings and related items.

     

    "Pod"
      shall mean a
      tract of Entitled Land for which Borrower has incurred or will incur through
      the
      funding of Advances both soft and hard master infrastructure costs (including
      without limitation engineering, utility formation, offsite improvement, spinal
      paving and other similar costs) which develop such infrastructure for said
      Property so that future development phases will only need phase specific
      improvements in order to be converted to Developed Lots.

    

    "Production
      Home" shall mean a Home that is either a Sold Home or a Spec Home (but
      shall not include a Model Home).

     

    “Project”
      shall mean, collectively, the Land, any Improvements and all other real and
      personal property comprising a residential subdivision owned and to be developed
      by any Borrower.

     

    “Project
      Approval Requirements” shall mean, for each Project to be financed
      hereunder, the general conditions and requirements that Borrower must satisfy
      in
      order to enter a Project into the Master Line, which conditions and requirements
      are set forth in Section 5.5 (for entry of Lots) and/or Section 5.6 (for the
      entry of Homes) and the Additional Terms Schedule.

     

    “Project
      Loan Amount” shall mean the maximum Allocations for any Project
      included as Eligible Property included under the Master Line as shown on the
      Project Loan Sheet.

     

    “Project
      Loan Sheet” shall mean each term sheet for any Project for which
      Borrower is seeking admission as an Approved Subdivision under the Master
      Line.  For purposes of this Agreement, all such term sheets shall be
      referred to individually and collectively in the singular.  The form
      of Project Loan Sheet to be used for each Project Loan made hereunder shall
      be
      in the form attached hereto as Exhibit “F”.

     

     “Project
      Disbursement Schedule” shall mean that certain schedule attached hereto
      as Exhibit “D”.

     

    
      
            

        
        

      

      
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    "Property"
      shall mean any interest in any kind of property or asset, whether real, personal
      or mixed, or tangible or intangible, including without limitation the Land
      and
      the Improvements.  Only Entitled Land, and no Raw Land, shall be
      included as Eligible Property in the Master Line.

     

    “Raw
      Land” means unimproved land owned and held by Borrower for development
      into subdivisions which is not yet Entitled Land.

     

    “Release
      Price” shall have the meaning given to such term in the Additional
      Terms Schedule.

     

    “Remaining
      Property” shall have the meaning given to such term in Section 13.11
      hereof.

     

    "Renewal
      Fee" shall mean that certain non-refundable facility fee in the amount
      set forth in the Fee Letter to be paid by Borrower to Agent on the Master Line
      Termination Date if the Master Line is renewed or extended as provided
      herein.

     

    “Required
      Lenders” shall mean Lenders having, in the aggregate, at least sixty
      percent (60%) of the total Commitments, but no fewer than two (2) Lenders to
      the
      extent there are more than two (2) Lenders or, if all of the Commitments have
      been terminated, Lenders holding, in the aggregate, at least sixty percent
      (60%)
      of the unpaid Advances under the Master Line, but no fewer than two (2) Lenders
      to the extent there are more than two (2) Lenders.

     

    “Security
      Agreement” shall mean all security agreements, whether contained in the
      Deed of Trust, a separate security agreement or otherwise creating a security
      interest in all personal property and fixtures of Borrower (including
      replacements, substitutions and after–acquired property) now or hereafter
      located in or upon the Land or Improvements, or used or intended to be used
      in
      the operation thereof, to secure the Master Line.

     

    "Sold
      Home" shall mean a Home with respect to which a Non–Related Party has
      executed a valid and enforceable Approved Sales Contract for the purchase
      thereof and any Home reserved under the reservation program of Borrower for
      the
      Approved Subdivision (which program has been reviewed and approved by Agent),
      provided that upon the rescission or cancellation of any such contract for
      any
      reason, the Home shall be a Spec Home.

     

    "Spec
      Home" shall mean a Home that is not a Sold Home (and shall not include
      a Model Home).

     

    “Special
      Account” shall mean an account established by Borrower at a federally
      insured bank of Borrower's choice into which all Advances made directly to
      Borrower will be deposited.

     

    "Special
      Deposit" shall have the meaning given to such term in Section 12
      hereof.

     

    "Spec
      or Model Subdivision Limitation" shall have the meaning set forth in
      the Additional Terms Schedule.

     

    "Subordinate
      Debt" shall mean individually and collectively that certain secured or
      unsecured subordinate debt that has been or will be reviewed and approved by
      Agent in its sole discretion for Borrower and/or any Project.  Agent
      shall be provided with any and all documents evidencing and relating to said
      Subordinate Debt (collectively "Subordinate Debt Documents")
prior
      to
      granting its approval of such debt.  Borrower and the holder of the
      Subordinate Debt ("Subordinate Lender") shall execute a
      subordination agreement ("Subordination Agreement") as may be
      required by Agent in its discretion (a) subordinating all rights, title,
      interest and charges relating to or arising in favor of Subordinate Lender
      under
      such subordinate debt to the rights, title, interest, lien or charge in favor
      of
      Agent or Lenders under the Loan Documents, and (b) subordinating all
      payment and other obligations of Subordinate Lender under such subordinate
      debt
      to the payment of the Indebtedness and other Obligations of Borrower under
      the
      Master Line (such rights under subsections (a) and (b) of this provision
      collectively shall be referred to as the "Subordinate Debt Holder
      Rights").

     

    
      
            

        
        

      

      
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    "Swingline"
      shall mean that certain revolving line of credit up to a maximum sum of Five
      Million Dollars ($5,000,000.00).

     

    "Swingline
      Advance" shall mean a short-term maturity loan made by Swingline Lender
      as an advance under the Master Line.

     

    "Swingline
      Advance Maturity Date" shall mean a date five (5) business days after
      the advance of a Swingline Advance.

     

    "Swingline
      Commitment" shall mean, with respect to Swingline Lender, the
      commitment of Swingline Lender to make Swingline Advances hereunder in an
      aggregate amount not to exceed Five Million Dollars
      ($5,000,000.00).

     

    "Swingline
      Exposure" shall mean, at any time, the aggregate principal amount of
      all Swingline Advances outstanding at such time.

     

    "Swingline
      Lender" shall mean RBC CENTURA BANK, a North Carolina banking
      corporation, in its capacity as Swingline Lender.

     

    "Title
      Commitment" shall mean the Title Company's unconditional commitment
      prior to the Closing Date to issue the Title Insurance.

     

    "Title
      Company" shall mean the Title Company (and its issuing agent, if
      applicable) issuing the Title Insurance, which shall be acceptable to Agent
      in
      its sole and absolute discretion.

     

    "Title
      Insurance" shall mean one or more title insurance commitments, binders
      or policies, as Agent may require, issued by the Title Company, on a coinsurance
      or reinsurance basis (with direct access endorsement or rights) if and as
      required by Agent, in the maximum amount of the Master Line insuring or
      committing to insure that the Deed of Trust constitutes a valid first lien
      covering the Land and Improvements subject only to those exceptions which Agent
      may approve.

     

    “Tentative
      Map” shall mean a tentative tract map or preliminary plat map for each
      Property proposed to be included in Eligible Property, which shall have received
      tentative or preliminary approval by all Governmental Authorities having
      jurisdiction and which map shall be in form and content reasonably acceptable
      to
      Agent in its discretion.

     

    “Term-Out
      Period” shall mean that certain twelve (12) Calendar Month period
      between the Master Line Termination Date and the Master Line Maturity
      Date.

     

    “Type
      of Home” shall mean each of the various types or styles of homes being
      constructed by Borrower, the Plans and Specifications of which have been
      approved by Agent, in its reasonable judgment, and shall be referenced as
      between Agent and Borrower by a name or number to be agreed upon that describes
      each such Type of Home.

     

    
      
            

        
        

      

      
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    “Unanimous
      Lenders” shall mean Lenders having, in the aggregate, one hundred
      percent (100%) of the total Commitments under the Master Line.

     

    “Working
      Capital” shall mean (A) Wilson’s total assets (cash or cash equivalents
      plus all inventory) less (B) the sum of Wilson’s trade payables plus accounts
      receivable from officers and stockholders plus investments in and due from
      related or affiliated entities, all as determined in compliance with
      GAAP.

     

    1.2                           LETTER
      OF CREDIT DEFINITIONS.  “Letter of
      Credit” shall mean any irrevocable standby letter of credit to be
      issued by a Letter of Credit Provider under the Letter of Credit
      Line.

     

    “Letter
      of Credit Advance” shall mean each and every Advance to be made by
      Lenders pro rata based on Lenders’ respective Commitment Percentages if there is
      any draw upon any Letter of Credit issued pursuant to this Agreement; each
      Letter of Credit Advance may be immediately repaid by Borrower upon the making
      of such Advance or may be converted to a Letter of Credit Loan, as provided
      in
      Section 4.5 below.

     

    “Letter
      of Credit Fee” means that certain fee due and payable by Borrower on
      each Letter of Credit issued hereunder, which fee shall be calculated at the
      rate of one percent (1.00%) per annum on the face amount of the Letter of Credit
      plus a ten (10) basis point administrative fee payable to the Letter of Credit
      Provider, and said fees shall be payable as a condition to the issuance of
      each
      Letter of Credit and on each twelve-month anniversary of the issuance date
      of
      said Letter of Credit, if said Letter of Credit is to be extended beyond a
      twelve-month term as provided herein.

     

    “Letter
      of Credit Line” shall mean that certain revolving sublimit within the
      Master Line in an amount up to a maximum sum of Ten Million Dollars
      ($10,000,000.00), which line of credit shall be extended by Lenders for the
      purposes of issuance of one (1) or more Letter(s) of
      Credit.  Notwithstanding any provision of this Agreement to the
      contrary, in no event shall the sum of the Advances under the Master Line made
      or committed and not yet disbursed for (i) the aggregate Maximum Allowed Lot
      Allocations, (ii) the Maximum Allowed Letter of Credit Line Allocations, and
      (iii) the aggregate Home Loan Allocations exceed the lesser of the Commitment
      Amount or the Borrowing Availability

     

    “Letter
      of Credit Loan” shall mean each and every Letter of Credit Advance not
      repaid by Borrower at or about the time of any draw upon a Letter of Credit
      issued pursuant to this Agreement, which Letter of Credit Loan shall be repaid
      within twelve (12) Calendar Months after the making of same (“Letter of
      Credit Loan Maturity Date”) and shall bear interest at the Interest
      Rate; provided, however, in any event all Letter of Credit Loans shall be repaid
      on the Master Line Maturity Date.

     

    “Letter
      of Credit Obligations” shall mean, collectively and individually, all
      of Borrower's obligations in connection with the issuance of each Letter of
      Credit to repay any Advances under the Letter of Credit, including without
      limitation the Letter of Credit Advances, Letter of Credit Loans and/or any
      Reimbursement Amount.

     

    “Letter
      of Credit Provider” shall mean RBC CENTURA BANK, a North Carolina
      banking corporation, or any Lender or Affiliate of such Lender so designated
      by
      Agent, which Lender or Affiliate accepts such designation.

     

    “Letter
      of Credit Request” means each and every request by Borrower for the
      issuance of a Letter of Credit hereunder, which request shall be in the form
      required by Letter of Credit Provider.

     

    
      
            

        
        

      

      
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          - 18

        
          

        

      

      
        
        

      

    

    “Letter
      of Credit Termination Date” shall mean the termination date of each
      Letter of Credit, as set forth in the Letter of Credit Request, which shall
      not
      be later than the earlier of (a) twelve (12) Calendar Months from the date
      of
      issuance of the Letter of Credit or (b) ten (10) days prior to the Master Line
      Maturity Date.

     

    “Maximum
      Allowed Letter of Credit Line Allocations” shall mean the sum of (a)
      aggregate amount of the undrawn face amounts of all outstanding Letters of
      Credit plus (b) the amount drawn under Letters of
      Credit for which the Letter of Credit Provider and Lenders, or any one (1)
      or
      more of them, have not yet received payment or reimbursement.

     

    2.           COMMITMENT
      AMOUNT; ELIGIBLE PROPERTY.

     

    2.1                 Commitment
      Amount; Maximum Aggregate Allocations.  Subject to the
      terms and conditions of this Agreement, Lenders agree to make Advances under
      the
      Master Line and/or issue Letters of Credit (up to but not in excess of the
      maximum amount of the Letter of Credit Line) from time to time until the Master
      Line Maturity Date up to the maximum amount of the lesser of (a) the Commitment
      Amount or (b) the Borrowing Availability.

     

    2.1.1           Optional
      Increase to Commitment Amount.

     

    (a)
      Subject
      to the limitations set forth in this Section, during the period beginning on
      the
      Effective Date and ending six months prior to the Master Line Termination Date,
      if no Default or Event of Default then exists, Borrower may from time to time
      request in writing that the Commitment Amount be increased to an aggregate
      amount that is not greater than One Hundred Million Dollars ($100,000,000.00)
      (“Maximum Aggregate Commitment”). Any such increase shall be
      accomplished by (i) the addition of one or more new Lenders who qualify as
      eligible assignees (“Eligible Assignee”) hereunder that are
      reasonably acceptable to Agent (each, a “New Bank”) or (ii) one
      or more of the existing Lenders increasing its Commitment in accordance with
      the
      provisions of this Section.  Each such increase shall be effective, if
      at all, prior to the Master Line Termination Date.

    

    (b)
      Any
      request under this Section shall be submitted by Borrower to Agent, shall
      specify the proposed effective date and amount of such increase and be
      accompanied by  a certificate signed by an authorized officer of
      Borrower, stating that no Default or Event of Default exists as of the date
      of
      the request or will result from the requested increase. Agent shall prepare
      and
      circulate to Borrower and Lenders a new schedule of each Lender’s Commitment
      after each increase in the Commitment Amount.

    

    (c)
      No
      Lender
      shall be obligated to increase the amount of its Commitment, nor shall any
      Lender have the right to do so unless designated by Borrower.

    

    (d)
      Each
      New
      Bank designated by Borrower and reasonably acceptable to Agent shall become
      an
      additional party hereto as a New Bank concurrently with the effectiveness of
      the
      proposed increase in the Commitment Amount upon its execution of an instrument
      of joinder to this Agreement which is in form and substance acceptable to the
      Agent and which, in any event, contains the representations, warranties,
      indemnities and other promises applicable to each Lender under this
      Agreement.

    

    (e)
      Subject
      to the foregoing, any increase to the Commitment Amount requested under this
      Section shall be effective as of the effective date proposed by Borrower (but
      prior to the Master Line Termination Date) and shall be in the principal amount
      equal to the lesser of the amount of the requested increase or the sum of (i)
      the amount that consenting Lenders
      have agreed to assume as increases to the amount of their respective Commitments
      plus (ii) the amount that any New Banks have agreed to be the amount of their
      respective Commitments.

    
      
            

        
        

      

      
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          - 19

        
          

        

      

      
        
        

      

    

     

    (f)
      Concurrently
      with the effectiveness of any increase to the Commitment Amount under this
      Section, (i) the participation interest of each Lender in each outstanding
      Letter of Credit shall be adjusted, and (ii) each New Bank and each existing
      Lender which has increased its Commitment shall make additional Advances
      available to Agent in the amount required to result in the aggregate outstanding
      Advances of each Lender being equal to its pro rata share of the Commitment
      Amount, as so increased.

    

    (g)
      Notwithstanding
      any other provision of this Agreement, Borrower has no right to increase the
      Commitment Amount under this Section, except in multiples of $10,000,000.00,
      or
      in the remaining amount necessary to reach the Maximum Aggregate Commitment
      hereunder.

    

    (h)
      In
      no
      event shall Borrower have any right to increase the Commitment Amount under
      this
      Section until Borrower has: (i) paid any fees to Agent with respect to the
      increased Commitment Amount; and (ii) received the consent of each
      Lender.

    

    2.2                           Maximum
      Aggregate Allocation Disbursement Limitations.  In
      connection with the disbursement limitations described herein, Borrower
      acknowledges and agrees that:

     

    2.2.1           Although
      Agent’s approval on behalf of Lenders of the inclusion of Lots and/or Homes as
      Eligible Property under the Master Line may result at any given time in total
      Lots and Homes included as Eligible Property having maximum aggregate
      Allocations in excess of the Commitment Amount, such approval by Agent on behalf
      of Lenders shall not be deemed or construed as an increase in the Commitment
      Amount and/or the Borrowing Availability in excess of the current then-current
      maximum sum.

     

    2.2.2           Borrower
      shall not be entitled to request, nor shall Lender be required to make, an
      Advance if the making of such Advance would result in the
      Outstanding Loan Borrowings under the Master Line to be in excess of the lesser
      of the Commitment Amount or the Borrowing Availability.  If, upon the
      funding of a Letter of Credit Advance, the sum of the Outstanding Loan
      Borrowings plus the Letter of Credit Advance exceeds the lesser of (i) the
      Commitment Amount or (ii) the Borrowing Availability, Borrower will be required
      to pay the amount of such excess on or before five (5) days after written notice
      from Agent to Borrower.

     

    
      
        
        

      

      
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          - 20

        
          

        

      

      
        
        

      

    

     

    2.3                           Agreement
      to Lend and Borrow; Ratable
      Loans.  Subject to the terms, provisions
      and conditions contained in this Agreement and in reliance upon the
      representations and warranties set forth herein, each of Lenders severally
      (and
      not jointly) agrees to lend to Borrower an amount not to exceed such Lender’s
      Commitment.  Each Advance under the Master Line hereunder shall
      consist of Advances made from the several Lenders ratably in proportion to
      their
      respective Commitment Percentages.  

     

    2.4                           Commitment
      and Agency Fees.  Borrower shall pay the applicable
      Commitment Fee to Agent on the date hereof and on each Closing Date as each
      Project is entered into the Master Line as provided herein.  In
      addition, Borrower shall pay the applicable Agency Fees to Agent as provided
      in
      the Fee Letter.  All such Commitment and Agency Fees are deemed fully
      earned and nonrefundable when paid.

     

    2.5                           Determination
      of Eligible Property.  Eligible Property will be
      determined by Agent from time to time as set forth in Sections
      2.6-2.7.  The Eligible Property
      will consist of Lots and Homes which are available for calculation of the
      Borrowing Availability under the Master Line, as determined from time to time
      in
      accordance with this Agreement and subject to the limitations set forth in
      this
      Section 2.5.

     

    2.6                      Lot
      Term Limitations.  Lots shall be included in the Eligible
      Property for the periods set forth in Section 5.1.1 below.

     

    (a)           

     

    2.7                 Home
      Term Limitations.  Homes (and the underlying Lots) shall
      be included in the Eligible Property for the periods set forth in Sections
      5.1.2-5.1.4 below.

     

    2.8                 Intentionally
      omitted.

     

    2.9                           Remargining;
      Principal Payments; Term-Out Payments.

     

    2.9.1           Maximum
      Outstanding.  Anything in the Loan Documents to the
      contrary notwithstanding, the total Outstanding Loan Borrowings shall not at
      any
      time exceed the lesser of the Commitment Amount or the Borrowing
      Availability.

     

    2.9.2           No
      Advances.  Borrower shall not be entitled to any Advances
      if the effect thereof would be to cause the test in Section 2.9.1 to be
      violated.

     

    2.9.3           Payments.  If
      for any reason (a) a payment is required in order to comply with the provisions
      of Section(s) 2.9.1 and/or 2.9.2 above, or (b) at any time the Outstanding
      Loan
      Borrowings exceed the Borrowing Availability (including, without limitation,
      by
      reason of Commitment Amount reductions, exclusion of Eligible Property,
      adjustments to the Eligible Property or Borrowing Availability Value, or
      otherwise), Borrower shall be obligated to make a payment equal to the amount
      of
      such excess (“Remargining Payment”).

     

    2.9.4           Repayment
      During the Term-Out Period.  During the Term-Out Period,
      Borrower shall make quarterly payments to reduce the Outstanding Loan Borrowings
      in an amount equal to one-fourth (1/4th) of the
      then-outstanding principal balance of the Master Line as of the Master Line
      Termination Date (“Required Principal Payment”), which
      quarterly Required Principal Payments shall be due and payable during the
      Term-Out Period on October 1, January 1, April 1 and the Master Line Maturity
      Date.  During the Term-Out Period, the maximum Commitment Amount shall
      be reduced by twenty-five percent (25%) of the full sum of the Commitment Amount
      upon the payment by Borrower of each Required Principal Payment.

     

    
      
        
        

      

      
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    2.10                 Adjustment
      to Eligible Property.  Any Lot or Home deemed ineligible
      to be Eligible Property after inclusion as Eligible Property, and the Borrowing
      Availability Value of such ineligible Lot or Home shall be immediately and
      automatically eliminated from the calculation of the Borrowing
      Availability.

     

    3.           THE
      MASTER LINE.

     

    3.1                           Master
      Line Commitment.  Lenders severally, but
      not jointly, hereby agree to make Advances under the Master Line in accordance
      with their respective Commitments to Borrower under one (1) or more Advances
      up
      to, but not in excess of, the Commitment Amount, and Borrower hereby agrees
      to
      borrow such sums from Lenders, all upon and subject to the terms and provisions
      of this Agreement, such sums
      to
      be evidenced by the Note and any Project Loan Sheet executed in connection
      with
      any Approved Subdivision financed hereunder.

     

    3.1.1           Non-Receipt
      of Funds by Agent.  Unless any Lender notifies Agent
      prior to the date on which it is scheduled to make any payment required under
      the Loan Documents to Agent of the proceeds of the Master Line that it does
      not
      intend to make such payment, Agent may assume that such payment has been
      made.  Agent may, but shall not be obligated to, make the amount of
      such payment available to the intended recipient in reliance upon such
      assumption.  If such Lender, as the case may be, has not in fact made
      such payment to Agent, the Borrower shall, on demand by Agent, repay to Agent
      the amount so made available together with interest thereon in respect of each
      day during the period commencing on the date such amount was so made available
      by Agent until the date Agent recovers such amount at a rate per annum equal
      to
      the Federal Funds Effective Rate for such day for the first three (3) days
      and,
      thereafter, the Interest Rate applicable to the Master Line.

     

    3.1.2           Lending
      Installations.  Each Lender may book its Advances under
      the Master Line at any Lending Installation selected by such Lender and may
      change its Lending Installation from time to time.  All terms of this
      Agreement shall apply to any such Lending Installation and the Advances made
      by
      each Lender hereunder, and any Note issued to each Lender hereunder, shall
      be
      deemed held by such Lender for the benefit of any such Lending
      Installation.  The initial Lending Installation of each Lender shall
      be the Lending Installation listed on the signature pages hereof or on the
      applicable assignment and assumption agreement.  Each Lender may, by
      written notice to Agent and Borrower, designate replacement or additional
      Lending Installations through which Advances under the Master Line will be
      made
      by it and for whose account payments are to be made.

     

    3.1.3           Alternate
      Lending Installations.  To the extent reasonably
      possible, each Lender shall designate an alternate Lending Installation with
      respect to its Advances under the Master Line to reduce any liability of
      Borrower to such Lender under the Note, so long as such designation is not,
      in
      the reasonable judgment of such Lender, disadvantageous to such
      Lender.  Each Lender shall deliver a written statement of such Lender
      to Borrower (with a copy to Agent) as to the amount due, if any, under the
      Note.  Such written statement shall set forth in reasonable detail the
      calculations upon which such Lender determined such amount and shall be final,
      conclusive and binding on the Borrower in the absence of manifest
      error.  Unless otherwise provided herein, the amount specified in the
      written statement of any Lender shall be payable on demand after receipt by
      Borrower of such written statement.  The obligations of the Borrower
      under this Section shall survive payment of the Obligations and termination
      of
      this Agreement.

     

    
      
        
        

      

      
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    3.1.4           Affected
      Lender.  If Borrower is required pursuant to the Note to
      make any additional payment to any Lender (any such Lender being called an
      “Affected Lender”), Borrower may elect, if such amounts
      continue to be charged or such suspension is still effective, to replace such
      Affected Lender as a Lender party to this Agreement, provided that:

     

    (A)           No
      Event of Default (or no event which, upon the giving of notice or the lapse
      of
      time, or both, shall constitute an Event of Default) shall have occurred and
      be
      continuing at the time of such replacement; and 

     

    (B)           Concurrently
      with such replacement --  

     

    (i)           Another
      bank or other entity which is reasonably satisfactory to Borrower and Agent
      shall agree, as of such date, to (A) purchase for cash the Advances and other
      Obligations due to Affected Lender pursuant to an Assignment and Assumption
      Agreement and the Co-Lending Agreement, (B) become a Lender for all purposes
      under this Agreement,
      (C) assume all of the obligations of Affected Lender under this Agreement as
      of
      such date, and (D) comply with the requirements of this Agreement applicable
      to
      assignments, and 

     

    (ii)           Borrower
      shall pay to such Affected Lender in same day funds on the day of such
      replacement (A) all interest, fees and other amounts then accrued but unpaid
      to
      such Affected Lender by Borrower hereunder to and including the date of
      replacement, including payments due to such Affected Lender under the Note
      (excluding any payment received by such Affected Lender under subsection
      (B)(i)(A) above), and (B) an amount, if any, equal to the payment which would
      have been due to such Lender on the day of such replacement under the Note
      had
      the Advances of such Affected Lender been prepaid on such date rather than
      sold
      to the replacement Lender (excluding any payment received by such Affected
      Lender under subsection (B)(i)(A) above).

     

    3.2                           Master
      Line is a Revolving Line of Credit.

     

    3.2.1           The
      Master Line shall constitute a revolving line of credit.  From the
      date of this Agreement through the Master Line Maturity Date, each Lender will
      make Advances to Borrower under the Master Line from time to time on any
      Business Day in such amounts as Borrower may request up to the maximum amount
      which may be outstanding at any time as hereinafter stated, and the Master
      Line
      may be drawn, repaid and drawn again through individual Advances in repetition,
      subject to the limitations herein.

     

    3.2.2           Upon
      the Master Line Termination Date, no new Lots and/or Homes will be included
      within Eligible Property.  All sums due and owing under the Master
      Line shall be paid in full on or prior to the Master Line Maturity
      Date.

     

    3.2.3           Notwithstanding
      any other provision of this Agreement to the contrary, at no time shall Agent
      be
      permitted to include Lots and/or Homes as Eligible Property which would result
      in the sum of the A&D Lot Sub-limit and the aggregate Home Loan Allocations
      for all said Lots and Homes, as applicable, entered as Eligible Property at
      any
      one time to exceed the then-maximum Commitment Amount.

     

    3.3                 Interest.  Borrower's
      liability for repayment of the interest on the Advances under the Master Line
      shall be limited to and calculated with respect to the proceeds of the Master
      Line actually disbursed pursuant to the terms of this Agreement and only from
      the date or dates of such Advances under the Master Line.

     

    
      
        
        

      

      
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    3.4                 Purpose
      of Master Line Advances.  Borrower shall
      use the Advances under the Master Line only for the purposes set forth in the
      A&D Budget and Construction Costs Schedule, as applicable.

     

    3.5                 Limitation
      on Master Line Advances.  No Advance
      (whether interim or final) under the Master Line shall be made unless all
      conditions precedent to such Advance have been satisfied.  Borrower
      shall be limited to two (2) Advances under the Master Line per Calendar Month;
      provided, however, that Agent may, in its sole discretion, but without any
      obligation to do so, allow more than two (2) Advances under the Master Line
      in
      any Calendar Month.

     

    3.6                 Commitment
      Fees.  On each A&D Lot Eligibility
      Date for Lots in a Project included hereunder, Borrower agrees to pay the
      applicable Commitment Fees with respect to said Lots.  Likewise, on
      each Home Eligibility Date for Lots and Homes in a Project to be included
      hereunder, Borrower agrees to pay the applicable Commitment Fees
      with
      respect to said Lots and Homes (less any Commitment Fees already paid for said
      Lots upon the inclusion of such Lots in the Eligible Property).  All
      said fees shall be fully earned and non–refundable regardless of whether the
      full sum of the Master Line is disbursed with respect to said Lots and/or Homes
      or the outstanding sum of all Advances under the Master Line with respect to
      said Lots and/or Homes are paid prior to the applicable A&D Lot Maturity
      Date(s) and/or Home Initial Due Date(s), as applicable.

     

    3.7                 Timing
      of Master Line Advances.  Borrower may
      request Interim Advances under the Master Line during any given Calendar Month
      by submitting to Agent one (1) or more Draw Request Forms at least five (5)
      Business Days prior to the date each such Advance is requested to be
      funded.  Agent shall not be required to fund any Interim Advance
      sooner than five (5) days after the last Advance under the Master Line has
      been
      disbursed.  No Advances shall be made under the Master Line after the
      Master Line Maturity Date.  Each Draw Request Form shall be made at
      the office of Agent.  No Advance under the Master Line shall be made
      unless all conditions precedent to such Advance have been
      satisfied.

     

    3.8                 Voluntary
      Prepayments.  Borrower may at its option
      prepay the principal amount of the Master Line outstanding thereunder at any
      time in whole or from time to time in part without premium or penalty. Upon
      any
      voluntary prepayment of the principal amount of the Master Line or any portion
      thereof, accrued interest on the principal amount prepaid to the date of
      prepayment shall be paid concurrent with such principal prepayment.

     

    3.9                 Partial
      Release.

     

    3.9.1           Payments
      as the Result of Lot Sales; No Release From Deed of
      Trust.  Except as provided below for
      Lots being included as Eligible Property for the construction of Homes thereon,
      upon the close of escrow of the sale of Lot(s) to a Non-Related Party, Agent
      agrees (provided that no Default or Event of Default has occurred and is
      continuing) to release individual Lots from the Lien of the Deed of Trust upon
      payment by Borrower to Agent of the Partial A&D Release Price and all other
      amounts due under this and other any agreements between the parties. Upon the
      close of escrow of the sale of Lots to a Non-Related Party and payment by
      Borrower of the Partial A&D Release Price and any additional sums as
      provided in this Section 3.9.1, Agent will prepare and execute a partial
      release of said Lien and a UCC–3 partial release (if applicable) in the form
      required by Agent.  Notwithstanding anything to the contrary contained
      in this Agreement or the Loan Documents, there shall not be any partial releases
      of Lots from the Deed of Trust upon payment of the Partial A&D Release Price
      for said Lot (a) if the Lot is to be included as Eligible Property for the
      construction of a Home, and (b) until the completed Home and the associated
      Lot are sold to a Non–Related Party pursuant to an Approved Sales
      Contract.

    
      
            

        
        

      

      
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      3.9.2           Payments
        as the Result of Home Sales. Provided that no
        Default or Event of Default has occurred and is continuing under the Master
        Line, Agent agrees to release individual Lots and the Homes from the Deed
        of
        Trust upon the close of escrow of the sale of a completed Home to a Non-Related
        Party pursuant to an Approved Sales Contract and payment by Borrower to Agent
        of
        the Home Release Price and all other amounts due under this Agreement. Upon
        payment by Borrower of the Home Release Price and any additional sums as
        provided in the Loan Documents, Agent will prepare and execute a partial
        release
        of Lien under the Deed of Trust and a UCC–3 partial release (if applicable) in
        the form required by Agent.

       

      3.9.3           Partial
        Release Expenses.  Borrower shall pay
        all costs and expenses reasonably incurred by Agent arising in connection
        with
        any partial release of any Lot and Home from
        the
        Lien of the Deed of Trust, including (but not limited to) the reasonable
        legal
        fees of Agent's counsel, all title insurance premiums arising as a result
        of
        endorsements reasonably required by Agent in connection with such partial
        release and all other costs reasonably incurred by Agent in connection with
        the
        execution and delivery of the partial release of said Lot.

    

     

    3.9.4           Acceptance
      of Reconveyance.  If Agent accepts any
      payment or issues any partial reconveyance, it shall not affect Borrower's
      obligation to repay all amounts which are owing under the Loan Documents or
      any
      portion of the Property secured by the Deed of Trust which is not
      reconveyed.  If Agent does not require satisfaction of all of the
      conditions described above before releasing one or more Lots, that alone shall
      not be a waiver of such conditions, and Agent reserves the right to require
      their satisfaction in full before releasing any further Lots from the Deed
      of
      Trust or before making any further Advances under the Master Line.

     

    3.9.5           Application
      of Release Prices.  All sums so paid for
      reconveyances under the Master Line shall be applied to principal next due
      under
      the Master Line.  To the extent mandatory or voluntary payments are
      made to reduce the amount of indebtedness represented by the Note, and no
      partial reconveyance is requested hereunder at the time of such payments, the
      amount of such payments shall not constitute a credit to Borrower against the
      Release Price specified herein, for future reconveyances should requests
      therefor be made.

     

    3.9.6           No
      Interference With Ingress/Egress.  No
      portion of any Property shall be released from the Deed of Trust which will
      prevent the means of ingress and egress to the portions of said Property not
      yet
      released unless there is provided an easement for access to the unreleased
      property or the property to be released contains streets or roads dedicated
      to
      the public use which would allow access to the portions of said Property not
      yet
      released.

     

    3.9.7           Adjustment
      to Borrowing Base.  Any Lot and/or Home
      released shall no longer be Eligible Property and the Collateral Value of
      Eligible Property shall be immediately and automatically adjusted to reflect
      such release.  Even though an item of Collateral is not included as
      Eligible Property, all conditions precedent to release will continue to apply
      (including payment of any required sale proceeds and release
      prices).  Collateral not eligible to be released pursuant to this
      Section 3.9 will be released only in the sole and absolute discretion of
      Agent and only upon such terms and conditions and for payment of a release
      price
      as is determined from time to time by Agent in its sole and absolute
      discretion.

     

    3.10                 General
      Provisions for the Sale of Homes.

     

    
      
            

        
        

      

      
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    3.10.1                      Sale
      Requirements.  For purposes of this
      Agreement, a sale of a Home is considered to occur only if an Approved Sales
      Contract is executed which meets the requirements of this
      Agreement.  For purposes of this Agreement, a sale is considered to
      close, or close of escrow occurs, only when title to the Home passes to the
      buyer and Borrower receives full payment in cash of all Net Sale Proceeds of
      the
      sale.  Borrower may enter into sales of Homes in the ordinary course
      of business with bona fide third–party buyers without Agent's prior written
      consent if an Approved Sales Contract which conforms to the requirements of
      this
      Agreement is executed.  Notwithstanding any other provision of this
      Agreement to the contrary, Agent shall have no obligation to release any Lot
      and
      Home from the Lien of the Deed of Trust unless and until Borrower is in
      compliance with the sale requirements set forth in this Section 3.10.1 in
      connection with the sale and release of said Lot and Home.

     

    3.10.2                      Default.  If
      a Default has occurred and is continuing, Agent may make written demand on
      Borrower to submit all future Approved Sales Contracts together in each instance
      with all accompanying financial statements and other information that Borrower
      may have pertaining
      to the prospective buyer for Agent's approval prior to
      execution.  Borrower shall immediately comply with any such demand by
      Agent so long as such Default is continuing.

     

    3.10.3                      Buyer
      Financing.  Borrower acknowledges that
      neither Agent nor any Lenders have, by this Agreement, committed to provide
      any
      financing to or for any buyers of any individual Lots and/or Homes.

     

    3.10.4                      No
      Release of Model Homes.  Notwithstanding
      the foregoing, any Model Homes (and any adjoining Lots used as the parking
      area
      for the Model Homes complex) shall not be eligible for partial release under
      the
      Deed of Trust as long as said Model Homes are being used for marketing the
      remaining Spec Homes in the Approved Subdivision or if, in Agent's judgment,
      said Model Homes and parking area are reasonably necessary for marketing the
      remaining Spec Homes.

     

    3.11                 Swingline
      Advances.

     

    3.11.1                      Swingline
      Commitment.  Subject to the terms and conditions set
      forth herein, Swingline Lender may, but shall not be obligated to, make
      Swingline Advances to Borrower from time to time on any Business Day during
      the
      period from the date hereof until the date ten (10) Business Days prior to
      the
      Master Line Maturity Date, and Borrower hereby agrees to borrow such sums under
      said Swingline from Swingline Lender, subject to the terms and provisions of
      this Agreement and the Loan Agreement; provided, however, in no event shall
      (i)
      the Swingline Exposure exceed the Swingline Commitment, or (ii) the Swingline
      Lender make a Swingline Advance that would cause the outstanding amount of
      its
      Note to exceed its Commitment.

     

    3.11.2                      Swingline
      Advance Disbursement.  Swingline Lender shall not be
      obligated to make any disbursements under the Swingline but may, in its sole
      and
      absolute discretion, make Swingline Advances in the event that Borrower has
      submitted a Draw Request Form to Agent under the Master Line, and Agent requests
      that Swingline Lender fund the amounts set forth in the Draw Request Form as
      a
      Swingline Advance prior to receipt of each Commitment Percentage of the amount
      set forth in said Draw Request Form.  Each Swingline Advance shall be
      an advance under the Master Line.  Upon receipt of each Lender's
      Commitment Percentage of the amounts set forth in the Draw Request Form, Agent
      will forward such amounts to Swingline Lender by promptly crediting or otherwise
      transferring the amounts so received, in like funds, to Swingline Lender for
      the
      purpose of repaying the Swingline Advance.  Notwithstanding the
      foregoing, Swingline Lender shall not be required to make a Swingline Advance
      if
      any Lender shall be a Delinquent Lender.

     

    3.11.3                      Swingline
      Advance Evidenced by the Note; Interest and Repayment
.  Each Swingline Advance shall be an advance under the
      Master Line. Each Swingline Advance shall be evidenced by the Note held by
      Swingline Lender and shall be secured by the Deed of Trust.  Each
      Swingline Advance (or portion thereof) shall accrue interest at the
“Applicable Interest Rate” (as defined in the Note) and be
      payable as provided in the Note.  All principal due and owing under
      each Swingline Advance shall be paid in full on or before the applicable
      Swingline Advance Maturity Date for said Swingline Advance.

     

    
      
            

        
        

      

      
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    4.           LETTER
      OF CREDIT LINE.

     

    4.1                 Letter
      of Credit Advances. Borrower shall be entitled to receive Letter of
      Credit Advances upon Borrower’s compliance with the terms, conditions and
      procedures set forth in this Article 4.

     

    4.2                 Issuance
      of Letter of Credit.  Subject to the terms and conditions
      of this Agreement and each Letter of Credit Request, and subject to the
      policies, procedures, and
      requirements of Letter of Credit Provider in effect from time to time for the
      issuance of any letter of credit (including without limitation payment of letter
      of credit fees), Letter of Credit Provider, acting for and on behalf of all
      Lenders, shall issue on or before the Master Line Termination Date one (1)
      or
      more Letter(s) of Credit upon request by and for the account of the Borrower,
      provided that Borrower has delivered to Agent and Letter of Credit
      Provider:

     

    (a)           A
      completed and executed Letter of Credit Request, and

     

    (b)           Payment
      of the required Letter of Credit Fee;

     

    and
      provided further that (i) the Letter of Credit shall not be required to be
      issued for a term expiring later than ten (10) days prior to the Master Line
      Maturity Date, (ii) the Letter of Credit shall not be required to be issued
      for
      an amount in excess of the Letter of Credit Line, (iii) the amount of the Letter
      of Credit, together with the undrawn face amount of all existing Letters of
      Credit previously issued hereunder, shall not in the aggregate exceed the Letter
      of Credit Line, and (iv) in any event, the date that is the last date for
      payment of a draft drawn under the Letter of Credit shall be before ten (10)
      days prior to the Master Line Maturity Date.

     

    4.3                 Issuance
      Procedure. To obtain a Letter of Credit, Borrower shall complete
      and execute a Letter of Credit Request and submit it to the letter of credit
      department of Letter of Credit Provider.  Upon receipt of a completed
      and executed Letter of Credit Request, Letter of Credit Provider will process
      the application in accordance with the policies, procedures, and requirements
      of
      Letter of Credit Provider then in effect (including without limitation the
      policies, procedures and requirements applicable to the form of the Letter
      of
      Credit).  If the application meets the requirements of Letter of
      Credit Provider and is within the policies of Letter of Credit Provider then
      in
      effect, Letter of Credit Provider, acting for and on behalf of Lenders, will
      issue the requested Letter of Credit.  Each Lender shall be liable
      under each Letter of Credit issued hereunder and for any Letter of Credit
      Advances and/or Letter of Credit Loans ratably in accordance with each Lender’s
      respective Commitment Percentage.

     

    4.4                 Purpose
      of Letter of Credit; General Letter of Credit Terms and
      Conditions.

     

    4.4.1           Each
      Letter of Credit shall be issued to provide a good faith deposit in connection
      with any Project, support for unfunded Project costs or any other purpose
      approved by Letter of Credit Provider, acting for and on behalf of Lenders,
      in
      connection with the acquisition and/or development and marketing of a
      Project.  Upon occurrence of an Event of Default and so long such
      Event of Default continues, Letter of Credit Provider, in its sole and absolute
      discretion and without notice, may refuse to renew or extend the commitment
      to
      issue the Letter of Credit, and may exercise any and all remedies provided
      for
      in the Loan Documents, including without limitation advancing the full sum
      of
      any issued and outstanding Letter of Credit into an account held by Agent,
      which
      funds shall be Letter of Credit Advances hereunder and which funds shall be
      held
      by Agent in said account unless and until a draw is made by the beneficiary
      of
      any such Letter of Credit.

    
      
            

        
        

      

      
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    4.4.2           The
      Letter of Credit shall be drawn under the conditions set forth in each Letter
      of
      Credit issued hereunder.

     

    4.5                 Reimbursement
      of Lenders for Payment of Drafts Drawn Under the Letter of
      Credit.  The obligation of Borrower to reimburse Lenders
      for payment by Lenders, based on their respective Commitment Percentages of
      all
      of Letter of Credit Advances under the Letters of Credit shall be as provided
      in
      the Letter of Credit Request and
      in
      this Agreement.  Agent, acting for and on behalf of Letter of Credit
      Provider and Lenders, will notify Borrower of payment by Lenders of a Letter
      of
      Credit Advance under the Letter of Credit and of the respective Reimbursement
      Obligations and will give Borrower five (5) Business Days notice that the
      Reimbursement Obligations shall be due and payable in full.  If
      Borrower does not pay any such Reimbursement Obligations with said five (5)
      Business Day period, then said obligations shall convert to a Letter of Credit
      Loan payable on the applicable Letter of Credit Loan Maturity
      Date.  Borrower shall also pay to Lender interest at the Interest Rate
      on the Letter of Credit Loans from and including the date Lender pays the Letter
      of Credit Advance at the Interest Rate until said Letter of Credit Loans and
      such interest are paid in full.  A Letter of Credit Advance shall be
      made to repay Lender for any funds disbursed in connection with a draft drawn
      under any Letter of Credit, at which time said Advance shall be used to
      calculate the Borrowing Availability or, if said advance shall result in the
      Borrowing Availability having a negative balance, then Borrower shall make
      any
      Remargining Payment required hereunder.

     

    4.6                 Reimbursement
      Obligations.  Borrower’s obligations under this Article 4
      and the Letter of Credit Request to reimburse Lender with respect to a drawing
      under a Letter of Credit (such obligations are collectively referred to as
      the
“Reimbursement Obligations”) are absolute and unconditional
      under any and all circumstances and irrespective of any setoff, counterclaim,
      or
      defense to payment which Borrower may have or have had against Lenders or any
      beneficiary of the Letter of Credit, including any defense based upon the
      occurrence of any Event of Default, any draft, demand, certificate or other
      document presented under a Letter of Credit proving to be forged, fraudulent,
      invalid or insufficient, the failure of any payment by Letter of Credit Provider
      to conform to the terms of said Letter of Credit (if, in Letter of Credit
      Provider’s good faith opinion, such payment is determined to be appropriate) or
      any non­application or misapplication of the Letter of Credit or the
      proceeds of such payment, or the legality, validity, form, regularity or
      enforceability of the Letter of Credit; provided, however, that nothing herein
      will adversely affect the right of Borrower to commence a proceeding against
      Letter of Credit Provider for any wrongful payment under the Letter of Credit
      made by Letter of Credit Provider as the result of acts or omissions
      constituting gross negligence or willful misconduct on the part of Letter of
      Credit Provider.

     

    4.7                 Nature
      of Reimbursement Obligations.  Borrower assumes all risks
      of the acts, omissions, or misuse of any Letter of Credit by any Person to
      whom
      a Letter of Credit is issued.  Letter of Credit Provider (except to
      the extent of its own gross negligence or willful misconduct) will not be
      responsible for: (a) the form, validity, sufficiency, accuracy, genuineness
      or
      legal effect of the Letter of Credit or any document submitted by any party
      in
      connection with the issuance of any Letter of Credit, or any drawing(s)
      thereunder, even if such document or drawing should in fact prove to be in
      any
      or all respects invalid, insufficient, inaccurate, fraudulent or forged; (b)
      the
      form, validity, sufficiency, accuracy, genuineness or legal effect of any
      instrument transferring or assigning or purporting to transfer or assign any
      Letter of Credit or the rights or benefits thereunder or proceeds thereof in
      whole or in part, which may prove to be invalid or ineffective for any reason;
      (c) failure of any Person to comply fully with the conditions required in order
      to demand payment under the Letter of Credit; (d) errors, omissions,
      interruptions or delays in transmission or delivery of any messages, by mail,
      cable, telegraph, telex or otherwise; or (e) any loss or delay in the
      transmission or otherwise of any document or draft required by or from any
      Person in order to make a disbursement under the Letter of Credit or the
      proceeds thereof.  None of the foregoing will affect, impair or
      prevent the vesting of any of the rights or powers granted to Letter of Credit
      Provider.  In furtherance and extension and not in limitation or
      derogation of any
      of
      the foregoing, any act taken or omitted to be taken by Agent in good faith
      will
      be binding on Borrower and, except for gross negligence or willful misconduct,
      will not put Letter of Credit Provider under any resulting liability to
      Borrower.
       

    

    
      
            

        
        

      

      
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    4.8                 Annual
      Fees.  On each twelve-month anniversary of the date of
      the issuance of any Letter of Credit that is outstanding on such anniversary
      date, Borrower shall pay to Agent the Letter of Credit Fee with respect to
      such
      Letter of Credit.

     

    5.           DETERMINATION
      OF ELIGIBLE COLLATERAL.

     

    5.1                 Determination
      of Eligible Property.  Eligible Property will be
      determined by Lender from time to time as set forth in this Section
      5.1.  The Eligible Property will consist of Lots and Homes which are
      available for calculation of the Borrowing Availability, as determined from
      time
      to time in accordance with this Agreement and subject to the limitations set
      forth in this Section 5.1.  Lots and Homes which are encumbered by a
      Deed of Trust hereunder, but which cease to be included as Eligible Property
      prior to the sale of any such Lot or Home, shall remain as Collateral and shall
      not be released from the lien of said Deed of Trust.  Notwithstanding
      any other provision of this Agreement to the contrary, at no time shall Agent
      be
      permitted to include Lots and/or Homes as Eligible Property which would result
      in the sum of the A&D Lot Sub-limit and the aggregate Home Loan Allocations
      for all said Lots and Homes, as applicable, entered as Eligible Property at
      any
      one time to exceed the then-maximum Commitment Amount.

     

    5.1.1           Lots;
      General Term Limitations; Lot Ineligibility.

     

    (a)           Lots
      Under Development.  Each Lot Under Development shall be
      included in Eligible Property for the period commencing on the A&D Lot
      Eligibility Date and ending on the applicable A&D Lot Maturity Date for each
      said Lot.  After the expiration of the applicable A&D Lot Maturity
      Date, such Lot shall continue to be included as Collateral for the Master Line,
      unless released as provided for herein, but shall be excluded from Eligible
      Property.

     

    (b)           Developed
      Lots.  Each Developed Lot shall be included in Eligible
      Property for the period commencing on the A&D Lot Eligibility Date and
      ending on the applicable A&D Lot Maturity Date for each said
      Lot.  After the expiration of the final A&D Lot Maturity Date,
      such Lot shall continue to be included as Collateral for the Master Line, unless
      released as provided for herein, but shall be excluded from Eligible
      Property.

     

    
      
            

        
        

      

      
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    (c)           Entitled
      Land.  Each Lot included in Entitled Land shall be
      included in Eligible Property for the period commencing on the A&D Lot
      Eligibility Date and ending on the applicable A&D Lot Maturity Date for each
      said Lot.  After the expiration of the final A&D Lot Maturity
      Date, such Lot shall be excluded from Eligible Property; provided, however,
      that
      upon the conversion of any Lot that is Entitled Land to either a Developed
      Lot
      or a Lot Under Development, such converted Lot shall be included in Eligible
      Property for an additional period commencing on the A&D Lot Eligibility Date
      and ending on the applicable A&D Lot Maturity Date for each said Developed
      Lot or Lot Under Development.

     

    (d)           Pods.  Each
      Lot included in any Pod shall be included in Eligible Property for the period
      commencing on the A&D Lot Eligibility Date and ending on the applicable
      A&D Lot Maturity Date for each said Lot. After the expiration of the final
      A&D Lot Maturity Date, such Lot(s) in a Pod shall be excluded from Eligible
      Property.

    5.1.2           Transfer
      of Lots for Home Construction.  Borrower may transfer a
      Lot for Home construction upon inclusion of the Lot in the Home cost component
      of a Borrowing Availability Report, identifying the specific Lot that is being
      converted, with such converted Lot thereafter to be classified as a Model Home,
      Spec Home or a Sold Home, as appropriate, and to be subject to the provisions
      of
      this Agreement relating to Homes; provided, however, that before any Lot is
      included in Eligible Property as a Home, the conditions set forth herein must
      have been satisfied with respect to each such Lot.  Effective upon
      such a transfer, there will be deducted from the Collateral Value that portion
      of the Collateral Value allocated to the Lot and the Lot will continue in the
      Eligible Property as a Home having an initial Home Collateral Value equal to
      the
      A&D Lot Allocation applicable to such Lot on which such Home is to be
      constructed. Upon the conversion of any Lot to either a Model, Spec or Sold
      Home, such converted Home and Lot shall be included in Eligible Property for
      an
      additional period commencing on the Home Eligibility Date and ending on the
      applicable Home Initial Due Date for each said Model, Spec or Sold Home as
      set
      forth in Section 5.1.3 below.

     

    5.1.3           Home
      Term Limits; Reclassification of Homes.

     

    (a)           Sold
      Homes/Spec Homes.  Each Spec or Sold Home and Lot shall
      be included in Eligible Property for the period commencing on the applicable
      Home Eligibility Date and ending on the applicable Home Initial Due Date for
      each said Spec or Sold Home and Lot, unless Agent, in its sole and absolute
      discretion, elects to extend said Home Initial Due Date.  After the
      expiration of the applicable Home Initial Due Date (unless extended by Agent
      in
      its sole and absolute discretion), such Spec or Sold Home and Lot shall continue
      to be included as Collateral, unless released as provided for herein, but shall
      be excluded from Eligible Property.

     

    (b)           Model
      Homes.  Each Model Home and Lot shall be included in
      Eligible Property for the period commencing on the applicable Home Eligibility
      Date and ending on the applicable Home Initial Due Date for each said Model
      Home
      and Lot, unless Agent, in its sole and absolute discretion, elects to extend
      said Home Initial Due Date.  After the expiration of the applicable
      Home Initial Due Date unless extended by Agent in its sole and absolute
      discretion), such Model Home and Lot shall continue to be included as
      Collateral, unless released as provided for herein, but shall be excluded from
      Eligible Property.

     

    5.1.4           Home
      or Lot Ineligibility.  Homes and/or Lots will no longer
      be Eligible Property upon (a) sale and release in compliance with the provisions
      of this Agreement, (b) upon expiration of the maximum term in accordance with
      the provisions of this Section 5.1, or (c) upon such Homes and/or Lots becoming
      ineligible, as the case may be.  However, a Home and/or Lot that is no
      longer Eligible Property because of expiration of the term during which such
      Home and/or Lot was entitled to be Eligible Property or because of its becoming
      ineligible pursuant to any provision of this Agreement will nevertheless remain
      part of the Collateral until released as permitted by this
      Agreement.

    
      
            

        
        

      

      
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    5.1.5           Effect
      of Limitations.  If any of the limitations on Eligible
      Property, Collateral Value, Borrowing Availability, or outstanding Advances
      set
      forth in this Section 5.1 or elsewhere in this Agreement are exceeded, Agent
      may
      at its option either delete Homes and/or Lots from Eligible Property until
      such
      requirements are met, adjust the applicable Home Collateral Values and Lot
      Collateral Values in order that such requirements are not exceeded, or require
      Borrower to make a Remargining Payment pursuant hereto.

    5.2           Borrowing
      Availability Report.

     

    5.2.1           Proposed
      Borrowing Availability Report.  On or before the
      fifteenth (15th) day of each Calendar Month, Borrower will separately prepare
      and submit to Agent a proposed Borrowing Availability Report , including each
      Lot and Home to be included in Eligible Property, which report shall include,
      among other things that Lender may require from time to time, the
      following:

     

    (a)           the
      name of the Approved Subdivision;

     

    (b)           the
      Lot number as indicated on the recorded plat of the Approved
      Subdivision;

     

    (c)           if
      applicable, whether the Lot is Entitled Land and/or included in a Pod, a
      Developed Lot or a Lot Under Development;

     

    (d)           if
      applicable, the Home plan type;

     

    (e)           if
      applicable, whether the Home is a Sold Home, a Spec Home, a Model Home, or
      ineligible Property;

     

    (f)           the
      applicable Budget for the Lot and/or Home;

     

    (g)           the
      Percent of Completion of each Lot and Home;

     

    (h)           the
      listing price of the Home or the amount of the Approved Sales Contract, as
      applicable;

     

    (i)           the
      date of the first Advance against the Lot and/or Home in Eligible Property
      and
      the applicable A&D Lot Eligibility Date and/or Home Eligibility Date for
      each applicable Lot and/or Home;

     

    (j)           the
      A&D Lot Collateral Value, the applicable A&D Lot Allocation and the
      Maximum Allowed Lot Allocation for each Lot;

     

    (k)           the
      Home Collateral Value, the Home Loan Allocation and the Maximum Allowed Home
      Allocation for each Home;

     

    (l)           the
      status of construction of the A&D Improvements in Approved Subdivisions, a
      detailed breakdown of the costs of the various phases of construction of the
      A&D Improvements showing the amounts expended to date for such construction,
      the Maximum Allowed A&D Lot Allocation for the Lots, and an itemized
      estimate of the amount necessary to complete construction of the A&D
      Improvements in their entirety; and

     

    
      
            

        
        

      

      
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          - 31

        
          

        

      

      
        
        

      

    

     

    (m)           Borrower’s
      certification that the Lots and Homes included in the Eligible Property do
      not
      violate the covenants contained in Section 1.1 of the Additional Terms
      Schedule.

     

    5.2.2           Form
      of Report and Certificate.  The proposed Borrowing
      Availability Report will be in written form and on computer disk formatted
      to
      Lender’s specifications as set forth in Exhibit
“I”.

     

    5.2.3           Approval
      of Borrowing Availability Report.  Each proposed
      Borrowing Availability Report shall be subject to approval and adjustment by
      Agent in its reasonable discretion based upon:

     

    (a)           Agent's
      review of such report;

     

    (b)           Agent's
      inspections made pursuant to Section 7.11 (as such inspections may result in
      any
      adjustments to reflect any variance between the Borrowing Availability Report
      and the results of such inspections by Agent); and

     

    (c)           such
      other information as Agent may reasonably require in order to verify the
      Eligible Property, the Borrowing Availability, and all other items relating
      thereto.

     

    The
      Borrowing Availability Report will also take into account the sale of Lots
      and/or Homes and all other adjustments and limitations permitted or required
      by
      this Agreement.  Each determination by Agent of the Eligible Property,
      the Borrowing Availability, and the amount of each Advance under the Master
      Line
      (and all other amounts and items entering into such determinations), will be
      final, conclusive and binding upon Borrower.  Agent will approve or
      reject each Borrowing Availability Report within five (5) Business Days of
      receipt of the proposed Borrowing Availability Report and, if rejected, Borrower
      shall make such revisions and adjustments to the proposed Borrowing Availability
      Report as Lender may reasonably request.

    

    5.3                 Remargining;
      Principal Payments.

     

    5.3.1           Maximum
      Outstanding.  Anything in the Loan Documents to the
      contrary notwithstanding, the total Outstanding Loan Borrowings shall not at
      any
      time exceed the Borrowing Availability.

     

    5.3.2           No
      Advances.  Borrower shall not be entitled to any Advances
      under the Master Line if the effect thereof would be to cause the test in
      Section 5.3.1 to be violated.

     

    5.3.3           Specific
      Limitations.  Lenders shall have no obligation to make
      Advances for any Lot or Home or include as Eligible Property any Lot and/or
      Home
      if the effect of such action would cause the violation of:

     

    (i)           The
      A&D Lot Sub-Limit;

    

    (ii)           The
      Spec or Model Subdivision Limitation;

    

    (iii)           The
      Geographic Limitation; or

    

    (iv)           The
      Borrowing Availability.

     

    
      
            

        
        

      

      
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    5.3.4           Payments.  If
      for any reason (a) a payment is required in order to comply with the provisions
      of Section(s) 5.3.1, 5.3.2 and/or 5.3.3 above, or (b) at any time the
      Outstanding Loan Borrowings exceed the Borrowing Availability (including,
      without limitation, by reason of Commitment Amount reductions, changes in
      Appraised Values, exclusion of Eligible Property, adjustments to the Eligible
      Property or Collateral Value, or otherwise), Borrower shall be obligated to
      make
      a Remargining Payment.

     

    5.4                 Adjustment
      to Eligible Property.  Any Collateral deemed ineligible
      to be Eligible Property after inclusion in Eligible Property, and the Collateral
      Value of such ineligible Collateral shall be immediately and automatically
      eliminated from the

    calculation
      of the Borrowing Availability.  Even though an item of Collateral is
      not included as Eligible Property, all conditions precedent to release from
      such
      Collateral from the Lien of the Deed of Trust will continue to apply (including
      payment of any required release prices, if applicable).

     

    5.5                 Qualification
      of Lots as Eligible Property.  Borrower
      may include and maintain Lots (whether Lots Under Development or Developed
      Lots)
      as Eligible Property only if the following conditions precedent are satisfied,
      at all times that such Lots are included in Eligible Property:

     

    5.5.1           No
      Defaults; Representations and
      Warranties.  No Event of Default shall
      have occurred and be continuing and all of the representations and warranties
      in
      this Agreement and the other Loan Documents shall be true and correct in all
      material respects.

     

    5.5.2           Limitations.  After
      giving effect to the addition of such Lots to Eligible Property, the provisions
      of this Agreement are not violated.

     

    5.5.3           Located
      in Approved Subdivision.  The Improved
      Lots are located in the Approved Subdivision.

     

    5.5.4           Construction
      Contracts.  If requested by Agent,
      Borrower shall have provided Agent an executed contract for construction of
      the
      A&D Improvements between Borrower and the licensed contractor(s) retained by
      Borrower to construct the A&D Improvements.  Also, if requested by
      Agent, Borrower shall have provided to Agent a copy of each construction
      subcontract, architectural agreement, engineering agreement, and other
      agreements, documents, and instruments relating to construction of the A&D
      Improvements together with assignments of such contracts and agreements to
      the
      extent required by Agent.  The contract price in each such agreement,
      document, and instrument must be within the budgeted amount in the applicable
      A&D Budget.  Such contracts and agreements shall be in form and
      content reasonably satisfactory to Agent.

     

    5.5.5           Final
      Subdivision Map or Plat.  If not
      previously provided, Borrower shall have delivered to Agent the Final
      Map.

     

    5.5.6           Plans
      and Specifications.  If requested by
      Agent, Borrower shall have provided Agent and Agent shall have approved the
      final Plans and Specifications for the A&D Improvements.

     

    5.5.7           Permits.  If
      requested by Agent, Borrower shall have provided evidence that Borrower has
      obtained all approvals and permits necessary to permit the construction of
      the
      A&D Improvements and the construction and sale of Homes in the Approved
      Subdivision, provided that Borrower may not have obtained all of the Approvals
      and Permits necessary for construction of the A&D Improvements or the
      construction and sale of Home to the extent such approvals and permits are
      not
      yet necessary and Borrower has not requested Advances to pay the costs of
      Improvements for which Approvals and Permits have not been
      obtained.

     

    
      
            

        
        

      

      
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          - 33

        
          

        

      

      
        
        

      

    

     

    5.5.8           Budget.  If
      requested by Agent, Borrower shall have provided Agent a final A&D Budget
      for Lots Under Development.

     

    5.5.9           Construction
      Schedule.  If requested by Agent,
      Borrower shall have provided Agent the construction schedule for the completion
      of the A&D Improvements.

    5.5.10         Assessments
      and Charges.  If requested by Agent,
      Borrower shall have provided, and Agent shall have approved, evidence that
      all
      water, sewer, and other charges assessed against the Lots which are then due
      and
      payable have been paid in the amount required.

     

    5.5.11         Deed
      of Trust.  If the Lots have not
      previously been encumbered pursuant to a Deed of Trust, Borrower shall have
      provided to Agent a first lien Deed of Trust, subject only to Permitted
      Exceptions, duly executed, acknowledged, delivered and recorded.

     

    5.5.12         Title
      Insurance.  If the Lots have not
      previously been encumbered pursuant to a Deed of Trust, Borrower shall have
      provided to Agent Title Insurance in form satisfactory to Agent.

     

    5.5.13         Appraisal.  Agent
      shall have received, reviewed and approved an Appraisal of the Lots in question
      in accordance with the terms of this Agreement.

     

    5.5.14         Other
      Items.  Borrower shall have provided
      Agent such other agreements, documents, and instruments as Agent may reasonably
      require.

     

    5.5.15         Other
      Actions.  Borrower shall have performed
      such other actions as Agent may reasonably require.

     

    5.6      Qualification
      of Homes as Eligible Property.  Borrower
      may include and maintain a Home in Eligible Property only if the following
      deliveries have been approved by Agent and if the following conditions precedent
      are satisfied, at all times that such Home is included in Eligible
      Property:

     

    5.6.1           No
      Defaults.  No Event of Default or
      Default shall have occurred and be continuing.

     

    5.6.2           Located
      in an Approved Subdivision.  Such Home
      is located on a Lot that is legally described as a Lot on a final subdivision
      plat or map, or subdivision filing and is in an Approved
      Subdivision.

     

    5.6.3           Limitations.  After
      giving effect to the addition of such Home to Eligible Property, the provisions
      of this Agreement shall not be violated.

     

    5.6.4           Construction
      Contracts.  If requested by Agent,
      Borrower shall have provided and Agent shall have approved copies of all
      executed contracts between Borrower and the licensed contractors retained by
      Borrower to construct the Home.  Also, if requested by Agent, Borrower
      shall have provided to Agent a copy of each construction subcontract,
      architectural agreement, engineering agreement, and other agreements, documents
      and instruments relating to construction of the Home, together with assignments
      of such contracts and agreements to the extent required by Agent.  The
      contract price in each such agreement, document and instrument must be within
      the budgeted amount in the applicable Construction Costs
      Schedule.  Such contracts and agreements shall be in form and content
      reasonably satisfactory to Agent.

     

    
      
            

        
        

      

      
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      5.6.5           Home
        Plans and Specifications.  If requested
        by Agent, Borrower shall have provided and Agent shall have approved Plans
        and
        Specifications for the type of Home in question.

       

      5.6.6           Permits.  If
        requested by Agent, Borrower shall have provided, and Agent shall have approved,
        evidence that Borrower has obtained all Approvals and Permits necessary to
        permit the construction and sale of the Home, including, without
        limitation, all applicable public reports, architectural committee approvals,
        and any other approvals required under the CC&Rs.

    

     

    5.6.7           Construction
      Costs Schedule.  Borrower shall have
      provided and Agent shall have approved Construction Costs Schedule for the
      type
      of Home in question.

     

    5.6.8           Home
      Appraisal.  Agent shall have approved
      the Appraisal for the type of Home.  The Appraised Value for the type
      of Home shall have been approved by Agent.

     

    5.6.9           Final
      Subdivision Map or Plat.  Borrower shall
      have delivered to Agent the Final Map for the Home and Lot.

     

    5.6.10        Approved
      Sales Contract.  If such Home is a Sold
      Home and if requested by Agent, Borrower shall have provided and Agent shall
      have approved a copy of the fully executed Approved Sales Contract for such
      Home.

     

    5.6.11        Assessments
      and Charges.  If requested by Agent,
      Borrower shall have provided and Agent shall have approved evidence that all
      water, sewer, and other charges assessed against the Home which are then due
      and
      payable have been paid in the amount required.

     

    5.6.12        Deed
      of Trust.  If the Lot on which the Home
      is to be constructed has not previously been encumbered by a Deed of Trust,
      Borrower shall have provided a first lien Deed of Trust, subject only to
      Permitted Exceptions, duly executed, acknowledged, delivered and
      recorded.

     

    5.6.13        Title
      Insurance.  If the Home has not
      previously been encumbered pursuant to a Deed of Trust, Borrower shall have
      provided and Agent shall have approved the Title Insurance for said Lot and
      Home, in form satisfactory to Agent.

     

    5.6.14        Other
      Items.  Borrower has provided to Agent
      such other agreements, documents, and instruments as Agent may reasonably
      require.

     

    5.6.15        Other
      Actions.  Borrower has performed such
      other actions as Agent may reasonably require.

     

    6.           LIMITATIONS
      ON ADVANCES.

     

    6.1                 Balancing
      Requirements.  Notwithstanding any other
      provisions of this Agreement, if:

     

    (a)           Borrower
      fails to pay: (i) any charges for labor or material or other items that may
      result in a claim or lien against any part of the Property included as Eligible
      Property (regardless of whether any portion thereof has been released from
      the
      lien of the Deed of Trust), or (ii) any taxes on any part of said Property
      before they are delinquent (except in the instance where Borrower contests
      such
      charges or taxes as authorized in the Deed of Trust), or (iii) any other
      charges, expenses or claims required to be paid pursuant to the Master
      Line;

     

    
      
            

        
        

      

      
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    (b)           if
      any mechanic's lien or other claims are filed against any portion of the
      Property included as Eligible Property (regardless of whether any portion
      thereof has been released from the lien of the Deed of Trust), which lien or
      claim has not been bonded as provided in Section 9.26 of this
      Agreement;

    (c)           Borrower
      makes any distribution or pays any dividend or other sums to any owner, partner
      or member of Borrower, or makes any intercompany advance or loan to any
      Affiliate of Borrower, as prohibited herein and in violation of any covenant
      in
      any of the Loan Documents;

     

    (d)           Borrower
      fails to comply at all times with the covenants set out in the Loan Documents
      with respect to Borrower's maintaining its Net Worth or Debt–to–Equity Ratio at
      any specified level; or

     

    (e)           Borrower
      otherwise defaults under any term or provision of this Agreement or any other
      Loan Documents (the deficiencies described in clauses (a) through (e) of this
      provision being hereinafter collectively referred to as the "Trailing
      Construction Costs");

     

    then,
      at
      its option, Agent may require, as a condition to Borrower's right to obtain
      a
      partial release of any portion of the Property, and in addition to the payment
      to Agent of the applicable Release Price, that Borrower pay to Agent either:
      (A) an amount in cash equal to the gross proceeds from the sale of the
      Lot(s) and/or Home(s) being released in the Project minus such Release Price
      and
      such reasonable costs and expenses incurred in connection with such sale as
      are
      approved by Agent in its sole discretion, or (B) such greater amount as
      Agent may determine in its sole and absolute discretion, to be necessary to
      pay
      any such lien and such Trailing Construction Costs.  Any excess
      amounts paid to Agent over and above the applicable Release Price may be used
      or
      disbursed by Agent under the Master Line in such manner as Agent may determine
      in payment of any charge, claim, lien or expense related to any Lot or Home
      under the Master Line, or to apply against any amounts then due to Agent under
      the terms of any of the Loan Documents, or to create or increase Borrower's
      Deposit, all as Agent determines to be appropriate in its sole
      discretion.

     

    6.2                 Master
      Line Advance Limitations.   Agent
      shall not be required to disburse any amount under the Master Line, as
      applicable, which, in Agent's reasonable opinion, will either (a) reduce
      the total undisbursed Commitment Amount below the amount necessary to pay for
      the balance of the work, labor and materials necessary to fully complete
      construction of the applicable Improvements and the payment of all costs in
      connection therewith, or (b) reduce the undisbursed amount of Allocations
      under the applicable Budget below the amount which Agent, in Agent's reasonable
      opinion, deems sufficient to pay in full the costs to which such amount is
      allocated (the deficiencies described in clauses (a) and (b) of this sentence
      being hereinafter collectively referred to as a "Loan
      Deficiency").

     

    6.2.1           Borrower
      hereby agrees that if Agent determines that a Loan Deficiency exists, Borrower
      shall, upon ten (10) Business Days' written notice from Agent,
      either:

     

    (a)           deposit
      with Agent pursuant to Section 6.3 below the amount that Agent, in its
      reasonable opinion, deems necessary to cure said Loan Deficiency,
      or

    
      
            

        
        

      

      
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          - 36

        
          

        

      

      
        
        

      

    

     

    (b)           furnish
      Agent with paid invoices, bills and receipts indicating that Borrower has paid,
      from Borrower's own funds, the costs of balancing said loan and curing the
      Loan
      Deficiency thereunder.

     

    6.2.2           All
      amounts deposited by Borrower pursuant to this Section 6.2 shall be
      disbursed in accordance with the terms of this Agreement for the payment of
      the
      cost of construction of the Improvements for the Project prior to any further
      disbursement of any applicable loan funds.  Notwithstanding anything
      to the contrary set forth in this section, in determining whether a Loan
      Deficiency exists, Agent, at its option, may determine what sums are available
      by reallocating between
      specific Allocations, and Agent may also review the amount of any holdback
      before requesting that any sum be paid by Borrower under this
      section.

     

    6.3                 Borrower's
      Deposit.  If at any time Agent shall in
      its reasonable discretion deems that:

     

    (a)           Any
      Loan Deficiency exists,

     

    (b)           Trailing
      Constructions Costs for the Project are unpaid,

     

    (c)           Excess
      Costs for the Project are unpaid,

     

    (d)           the
      undisbursed proceeds of the Master Line, as applicable, are insufficient to
      meet
      the costs of completing construction of any Improvements under the Project
      financed by said Master Line, or

     

    (e)           Borrower
      has failed or is unable to pay the costs of insurance, ad valorem taxes
      and other normal costs of the Project,

     

    Agent
      may
      refuse to make any additional Advances to Borrower until Borrower shall have
      deposited with Agent sufficient additional funds ("Borrower's
      Deposit") to cover the deficiency which Agent deems to exist in
      connection with said Master Line.  Such Borrower's Deposit will be
      disbursed by Agent to Borrower pursuant to the terms and conditions hereof
      as if
      they constituted a portion of the Master Line being made
      hereunder.  Borrower agrees upon ten (10) days' written demand by
      Agent to deposit with Agent such Borrower's Deposit.  Unless required
      by Governmental Requirements, Agent shall not be required to pay interest on
      Borrower's Deposit.

    

    7.           MASTER
      LINE ADVANCES.

     

    7.1                 Master
      Line Advance Procedure.  Advances may be
      made by Lenders at the written request of the Person or Persons designated
      by
      Borrower from time to time a Draw Request Form and an updated Borrowing
      Availability Report.  Subject to the terms and conditions of this
      Agreement (including those hereinafter set forth), such Person or Persons are
      hereby authorized by Borrower to direct the disposition of the proceeds of
      Advances until written notice of the revocation of such authority is received
      from Borrower by Lenders, and Lenders have had a reasonable time to act upon
      such notice.  Lenders have no duty to monitor for Borrower, or to
      report to any such Person, the use of proceeds of Advances.  Subject
      to the satisfaction of all applicable terms and conditions, with respect
      to:

     

    7.1.1           each
      Draw Request Form submitted on or before 5:00 p.m. (Houston Time) on any
      Business Day, Lender will make the requested Advance on or before Noon on the
      fifth (5th)
      Business Day; and

     

    
      
            

        
        

      

      
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    7.1.2           a
      Draw Request Form received by Lender after 5:00 p.m. (Houston Time) on any
      Business Day, Lender will make the requested advance on or before Noon on the
      sixth (6th)
      Business Day thereafter.

    7.2           Conditions
      to Initial Advance Under the Master
      Line.  The obligation of Agent to make
      the initial Advance under the Master Line is subject to the prior or
      simultaneous occurrence of each of the following conditions:

     

    7.2.1           Agent
      shall have received from Borrower all of the Loan Documents duly executed by
      Borrower and Guarantor.

     

    7.2.2           Agent
      shall have received evidence from Borrower of Borrower's satisfaction of the
      Closing Conditions set forth in Exhibit "E" applicable to
      the Master Line.

     

    7.2.3           Agent
      shall have received the Title Commitment, at the sole expense of
      Borrower.

     

    7.2.4           As
      applicable, Agent shall have received payment of any and all commitment fees
      due
      and payable.

     

    7.3                 Conditions
      to Advances.  The obligation of Agent to
      make any Advance under the Master Line, shall be subject to the prior or
      simultaneous occurrence or satisfaction of each of the following
      conditions.  It is expressly provided that Agent may, in its sole and
      absolute discretion waive, delay or postpone the satisfaction of any of the
      following conditions either as to any specific Advance or as to all Advances;
      provided, however, that Agent's agreement to waive, delay or postpone the
      satisfaction of any condition shall not prejudice Agent's right to thereafter
      reinstate such condition or conditions as to any subsequent Advance. Agent
      may
      impose additional requirements as conditions to its consent to waive, delay
      or
      postpone satisfaction of any of the following conditions as Agent may, in its
      sole discretion, deem appropriate or prudent at the time.

     

    7.3.1           The
      Loan Documents shall be and remain outstanding and enforceable in accordance
      with their terms.

     

    7.3.2           The
      representations and warranties made by Borrower in this Agreement and in all
      other Loan Documents shall be true and correct as of the date of each Advance;
      and, if requested by Agent, Borrower shall give to Agent a certificate to that
      effect.

     

    7.3.3           The
      covenants made by Borrower and Guarantor in this Agreement and in all other
      Loan
      Documents shall have been fully complied with, except to the extent such
      compliance may be limited by the passage of time or the completion of
      construction of the applicable Improvements under the Master Line.

     

    7.3.4           Agent
      shall not have received or been served with a stop notice, whether or not
      accompanied by a bond as may be provided for under applicable law, which has
      not
      been released, withdrawn or for which Borrower has not furnished any bond that
      may be provided for under applicable law satisfactory to Agent to indemnify
      Lenders from all material loss, cost or expense with respect to such lien or
      stop notice, nor shall Agent have received any notice of any proceedings,
      whether administrative, judicial or otherwise, against the Borrower or the
      Property that could reasonably be expected to have a Material Adverse
      Effect.

     

    
      
            

        
        

      

      
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      7.3.5           If
        requested by Agent and avaible under applicable law, Borrower shall furnish
        Agent (at Borrower's cost and expense) a CLTA Form 122 endorsement (or any
        available equivalent acceptable to Agent) under the Title Insurance for the
        Deed
        of Trust.

       

      7.3.6           If
        requested by Agent, Agent shall have received satisfactory evidence of bonding
        with respect to the obligations of each contractor and any subcontractors,
        and
        Agent shall  have received a performance bond and a labor and material
        payment bond, both naming Agent and Lenders as co–obligee, in a penal sum equal
        to the amount of the construction contract and/or subcontract and containing
        such other provisions as may be required by Agent.  All bonds required
        hereby for the Project shall be issued by a surety company duly licensed
        and
        authorized to do business in the State in which the Property is located and
        otherwise acceptable to Agent.  Agent shall have received evidence
        satisfactory to it that such bonds with respect to the construction contract
        and/or subcontract have been properly recorded in the Office of the County
        Recorder of the county.  The bonding requirements set forth herein
        shall in no way affect or alter any of the other liabilities and
        responsibilities of Borrower, including without limitation the duty to provide
        a
        lien–free Project.

    

     

    7.3.7           Agent
      shall have received a Draw Request Form for such Advance, completed, executed
      and sworn to by Borrower.

     

    7.3.8           If
      required by Agent, each Draw Request Form shall be accompanied by (a) a
      "Conditional Waiver and Release Upon Progress Payment" or a "Conditional Waiver
      and Release Upon Final Payment", as appropriate, in the prescribed statutory
      form and approved by Agent, executed by each architect, subcontractor, supplier
      and materialman to be paid pursuant to such Draw Request Form and covering
      all
      labor, services, equipment and materials to be paid thereunder, and (b) an
      "Unconditional Waiver and Release Upon Progress Payment" or an "Unconditional
      Waiver and Release Upon Final Payment", as appropriate, in the prescribed
      statutory form and approved by Agent, executed by each architect, subcontractor,
      supplier and materialman intended to be paid from the immediately preceding
      Draw
      Request Form, covering all labor, services, equipment and materials performed
      or
      supplied by such subcontractor or materialman, as appropriate.  If
      requested by Agent, Borrower shall also submit copies of statements, bills
      or
      invoices from any contractors, subcontractors, laborers or materialmen, as
      Agent
      may require, to verify the accuracy of the Draw Request Form.  If the
      applicable Budget reflects a line item or category for general and
      administrative expenses, project management or supervision fees, or other
      amounts to be funded to Borrower or an Affiliate, and which amounts are not
      supported by invoices or other instruments reflecting an obligation or payment
      to a third party, Borrower shall furnish to Agent a separate written request
      specifically requesting the funding of the requested amount out of the
      appropriate line item or budget category, and said items will be disbursed
      monthly or on another periodic basis as reflected in the
      Budget.  Unless specifically approved by Agent in writing, no advance
      of general and administrative expenses, project management or supervision fees
      or similar amounts, whether established as a monthly allowance or reimbursement
      of expenses on an item by item basis, will be allowed or made with respect
      to
      periods preceding the date of execution of the Loan Documents and the recording
      of the Deed of Trust.

     

    7.3.9           There
      shall exist no Default or Event of Default.

     

    7.3.10         The
      Improvements for the Project shall not have been materially injured, damaged
      or
      destroyed by fire or other casualty, nor shall any material part of the Project
      be subject to condemnation proceedings or negotiations for sale in lieu
      thereof.

     

    7.3.11         All
      work typically done at the stage of construction when the Advance is requested
      for the Project shall have been done, and all materials, supplies, chattels
      and
      fixtures typically furnished or installed at such stage of construction shall
      have been furnished or installed.

     

    
      
               

        
        

      

      
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    7.3.12        
      All personal property not yet incorporated into the Improvements for the
      Project, but which is to be paid for out of such Advance, must then be located
      upon the Land for said Project, secured in a method acceptable to Agent, and
      Agent shall have received evidence thereof.

    7.3.13         Borrower
      shall have complied with all requirements of the Inspecting Person and all
      Governmental Authorities for the Project, and Agent shall have received (in
      form
      and content satisfactory to Agent) an inspection report prepared by the
      Inspecting Person with respect to the requested Advance.

     

    7.3.14         Prior
      to any initial Advance for any Lot included in the Eligible Property, each
      such
      Lot shall have been pre-sold under an Approved Sales Contract.

     

    7.4                 Disbursement
      by Journal Entry or Direct Payment to Third
      Parties.  Agent and Lenders may, in
      Agent's discretion, upon the occurrence of a Default, or an Event of Default,
      disburse Master Line proceeds by journal entry to pay interest and financing
      costs for the Master Line and to pay any other amounts payable by Borrower
      to
      Agent (including any Partial A&D Release Price that is payable upon the
      conversion of a Lot to a Home) or for any other purpose set out in the
      applicable Budget, and Agent may disburse Master Line proceeds directly to
      third
      parties to pay costs or expenses required to be paid by Borrower in connection
      with the construction of Improvements financed under the applicable loan or
      for
      any other purpose set forth in the applicable Budget.  Master Line
      proceeds disbursed by Agent by journal entry to pay interest or financing costs,
      and Master Line proceeds disbursed directly by Agent to third parties to pay
      costs or expenses required to be paid by Borrower shall constitute Advances
      to
      Borrower.

     

    7.5                 Advance
      Not An Approval.  The making of any
      Advance or part thereof under the Master Line shall not be deemed an approval
      or
      acceptance by Agent of the work theretofore done for the
      Project.  Agent shall have no obligation to make any Advance or part
      thereof under the Master Line after the happening of any Event of Default,
      but
      shall have the right and option so to do; provided, however, that if Agent
      elects to make any such Advance, no such Advance shall be deemed to be either
      a
      waiver of the right to demand payment of the Master Line, or any part thereof,
      or an obligation to make any other Advance under the Master Line.

     

    7.6                 Time
      and Place of Advances.  Except as set
      forth in this Agreement, all Advances under the Master Line are to be made
      by
      direct deposit into the Special Account.  In the event Borrower shall
      part with or be in any manner whatever deprived of Borrower's interests in
      and
      to the Land made hereunder, Agent may, at Agent's option but without any
      obligation to do so, continue to make Advances under the Master Line, and
      subject to all of the terms and conditions of the Loan Documents, to such person
      or persons as may succeed to Borrower's title and interest and all sums so
      disbursed shall be deemed Advances under the Master Line and secured by the
      Deed
      of Trust and all other liens or security interests securing the Master
      Line.

     

    7.7                 Business
      Days.  If the date for any payment or
      prepayment hereunder falls on a day which is not a Business Day, then for all
      purposes of the Note and this Agreement the same shall be deemed to have fallen
      on the next following Business Day, and such extension of time shall in such
      case be included in the computation of payments of interest.

     

    
      
            

        
        

      

      
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      7.8                 No
        Third–Party Beneficiaries.  The benefits
        of this Agreement shall not inure to any third party, nor shall this Agreement
        be construed to make or render Agent or Lenders liable to any materialmen,
        subcontractors, contractors, laborers or others for goods and materials supplied
        or work and labor furnished in connection with the construction of any
        Improvements for the Project or for debts or claims accruing to any such
        persons
        or entities against Borrower.  Agent or Lenders shall not be liable
        for the manner in which any Advances under the Master Line may be applied
        by
        Borrower, any Contractor
        and any of Borrower's other contractors or
        subcontractors.  Notwithstanding anything contained in the Loan
        Documents, or any conduct or course of conduct by the parties hereto, before
        or
        after signing the Loan Documents, this Agreement shall not be construed as
        creating any rights, claims or causes of action against Agent or Lenders,
        or any
        of its officers, directors, agents or employees, in favor of any contractor,
        subcontractor, supplier of labor or materials, or any of their respective
        creditors, or any other person or entity other than Borrower.  Without
        limiting the generality of the foregoing, Advances made to any contractor,
        subcontractor or supplier of labor or materials, pursuant to any requests
        for
        Advances, whether or not such request is required to be approved by Borrower,
        shall not be deemed a recognition by Agent or Lenders of a third–party
        beneficiary status of any such person or entity.

       

    

    7.9                 Reallocations
      of Budget Line Items.  All changes in
      the Allocations in any Budget, as applicable, are subject to the limitations
      set
      forth in the Project Disbursement Schedule attached hereto as Exhibit
“D”.

     

    7.9.1           Reallocation
      Among Budget Line Items.  Agent reserves
      the right, at its option, to disburse Advances requested for any of the
      Allocations in the applicable Budget for such other purposes, or in such
      different proportions, relating to the Project as Agent may deem necessary
      or
      advisable.  Borrower shall not be entitled to require that Agent
      reallocate funds among the Allocations in any Budget.

     

    7.9.2           Reallocation
      of Contingency Funds.  Any amount
      allocated in any Budget for "contingencies" or other non–specific purposes may,
      in Agent's discretion, be disbursed by Agent to pay future contingent costs
      and
      expenses as Agent shall approve.  Under no circumstances shall
      Borrower have the right to require Agent to disburse any amounts so
      allocated.  Agent may impose such requirements and conditions as it
      deems prudent and necessary should it elect to disburse all or any portion
      of
      the amounts so allocated.

     

    7.10           Withholding.  Agent
      may (a) withhold from any Advance, or (b) on account of subsequently
      discovered evidence, withhold from a later Advance, or (c) require Borrower
      to repay to Agent the whole or any part of any earlier Advance such sum as
      may
      be necessary to protect Agent from loss on account of (i) defective work
      not remedied or requirements of this Agreement not performed, (ii) liens
      filed or reasonable evidence indicating probable filing of liens,
      (iii) failure of Borrower to make payments to subcontractors for material
      or labor, or (iv) a reasonable doubt that the construction can be completed
      or the purpose of each Allocation set forth in the applicable Budget can be
      accomplished from the balance of the Master Line then
      undisbursed.  When all such grounds are removed, payment shall be made
      of any amount so withheld because of them.

     

    7.11            Inspections.  Borrower
      shall submit to Agent a Draw Request Form when funding is requested under the
      Master Line.  Agent will inspect the Improvements for which a Draw
      Request Form has been received for purposes of evaluating the status of
      construction and expenses incurred, of determining whether work has been
      performed in accordance with the applicable Plans and Specifications and the
      Loan Documents, and of determining that construction and expenses are
      progressing within the applicable Budget.  Based upon the inspection
      by Agent and Agent's evaluation, Agent shall, subject to satisfaction of all
      conditions precedent with respect thereto, fund said Draw Request Form for
      the
      Improvements financed under the applicable Project for which a Draw Request
      Form
      has been received.

     

    
      
        
        

      

      
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    7.12                 First-Lien
      Priority.  In addition to any and all
      rights of Agent and obligations of Borrower hereunder, Borrower acknowledges
      and
      agrees that:

     

    7.12.1                      All
      Master Line proceeds to be disbursed for the construction of the Improvements
      shall be applied solely for the payment of claims of lien claimants, and
      Borrower shall have no right to be paid any Master Line proceeds to be applied
      for any other use or purpose unless and until Borrower has provided Agent with
      evidence satisfactory to Agent in its reasonable discretion that all such claims
      have been paid in full or that the time for the recording of such claims has
      expired with no liens pursuant to such claims having been recorded;
      and

     

    7.12.2                      Agent
      shall be permitted to take any actions or require Borrower to comply with any
      requirements reasonably determined by Agent to be necessary to protect the
      first-lien priority of the Deed of Trust, including without
      limitation:

     

    (a)           disbursing
      Master Line proceeds directly to Contractor and/or any
      subcontractors;

     

    (b)           requiring
      lien waivers from all lien claimants who have performed work, provided services
      or furnished labor, equipment or materials in connection with the construction
      of the Improvements as a condition to disbursing any Advances to or for the
      benefit of any said party; and/or

     

    (c)           instituting
      additional disbursement controls to make certain that loan funds are disbursed
      in accordance with applicable legal requirements.

     

    8.           WARRANTIES
      AND REPRESENTATIONS.  Borrower hereby
      unconditionally warrants and represents to Agent and Lenders, as of the date
      hereof and at all times during the term of the Agreement, as
      follows:

     

    8.1                 Plans
      and Specifications.  The respective
      Plans and Specifications for the A&D Improvements and for the Homes are in
      compliance with all Governmental Requirements and, to the extent required by
      Governmental Requirements or any

    effective
      restrictive covenant, have been approved by each Governmental Authority and/or
      by the beneficiaries of any such restrictive covenant affecting the
      Project.

     

    8.2                 Governmental
      Requirements.  No violation of any
      Governmental Requirements exists or will exist with respect to the Project
      and
      Borrower is not, nor will it be, in default with respect to any Governmental
      Requirements, in each case except to the extent that such violation could not
      reasonably be expected to have a Material Adverse Effect.

     

    8.3                 Utility
      Services.  Unless the A&D
      Improvements include the extension of utility services and provision of utility
      capacities to serve the Project to the property line(s) of the Land, all utility
      services of sufficient size and capacity necessary for the construction of
      the
      Improvements and the use thereof for their intended purposes are available
      at
      the property line(s) of the Land for connection to the Improvements, including
      potable water, storm and sanitary sewer, gas, electric and telephone
      facilities.

     

    8.4                 Access.  All
      roads (except for roads, streets and alleys within the Project) necessary for
      the full utilization of the Improvements for their intended purposes have been
      completed and have been dedicated to the public use and accepted by the
      appropriate Governmental Authority.

     

    
      
        
        

      

      
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    8.5                 No
      Commencement.  Except as disclosed to
      Agent and the Title Company in writing, as of the date of this Agreement, no
      steps to commence construction on the Land, including steps to clear or
      otherwise prepare the Land for construction thereon or the delivery of material
      for use in construction of the Improvements, have been taken, nor has any
      contract or other agreement for construction thereon been entered into, for
      furnishing materials for such construction or for any other purpose, the
      performance of which by the other party thereto would give rise to a lien on
      the
      Land.

     

    8.6                 Financial
      Statements.  Each financial statement of
      Borrower and Guarantor delivered heretofore, concurrently herewith or hereafter
      to Agent was and will be prepared in conformity with GAAP, or other good
      accounting principles approved by Agent, applied on a basis consistent with
      that
      of previous statements and fairly present in all material respects the financial
      condition of Borrower and Guarantor (including all contingent liabilities)
      as of
      the date thereof and for the period covered thereby, and there has been no
      material adverse change in either Borrower's and Guarantor’s financial condition
      subsequent to the date of the most recent financial statement of Borrower and
      Guarantor delivered to Agent.

     

    8.7                 Statements.  No
      certificate, statement, report or other information other than
“Projections” (as defined below) delivered heretofore,
      concurrently herewith or hereafter by Borrower to Agent in connection herewith,
      or in connection with any transaction contemplated hereby, contains any untrue
      statement of a material fact or fails to state any material fact necessary
      to
      keep the statements contained therein from being misleading, and same were
      true,
      complete and accurate as of the date thereof.  All financial
      projections concerning Borrower and Guarantor that have been or are hereafter
      available to Agent and Lenders (“Projections”) have been or, in
      the case of Projections made available after the date hereof, will be prepared
      in good faith based upon assumptions believed to be reasonable at the time
      of
      preparation thereof (it being understood that the Projections are subject to
      significant uncertainties and contingencies, many of which are beyond the
      control of Borrower and Guarantor and that no assurance can be given that such
      Projections will be realized)

    8.8                 Disclaimer
      of Other Financing.  Borrower
      acknowledges and agrees that Agent has not made any commitments, either express
      or implied, to extend the term of the Master Line (unless otherwise expressly
      set forth herein) past its stated maturity date or to provide Borrower with
      any
      other financing other than the Master Line described in this
      Agreement.

     

    8.9                 Interstate
      Land Sales Act.  Borrower's development
      of the Project and the sale or lease of the Project by Borrower are exempt
      from
      the registration and any requirements of the Interstate Land Sales Full
      Disclosure Act and the regulations promulgated thereunder.

     

    8.10                 No
      Other Lending or Debt.  Except as
      disclosed to Agent in writing, and approved by Agent, or except as set forth
      in
      the Budget, there shall be no third–party debt on the Property or in Borrower,
      other than trade debt and Excepted Liens, and Borrower shall not make loans
      or
      advances of its funds or Master Line funds to any third party or to any
      Affiliate or any distributions or return of capital or investment to any member
      or shareholder of Borrower if such distribution or return of capital or
      investment would result in the violation of any covenant contained in this
      Agreement.

     

    
      
        
        

      

      
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    8.11                 No
      Consent.  Except as disclosed in the
      Disclosure Certificate, Borrower's execution, delivery and performance of the
      Note and the Loan Documents, including this Agreement, to which Borrower is
      a
      party do not require the consent or approval of any owner, member, venturer,
      partner, or of any stockholder of or partner in any of the owners, members,
      venturers or partners, or of any other Person which has not been obtained,
      including but not limited to any Governmental Authority, except where the
      failure to obtain such consent or approval would not have a Material Adverse
      Effect.

     

    8.12                 Investments
      and Guaranties.  At the date of this
      Agreement, Borrower has not made material investments in, advances to or
      guaranties of the obligations of any Person, except as reflected in the
      Financial Statements or disclosed to the Agent in the Disclosure Certificate
      and
      except as otherwise permitted by this Agreement.

     

    8.13                 Liabilities;
      Litigation.  Except for liabilities
      incurred in the normal course of business, Borrower has no material
      (individually or in the aggregate) liabilities, direct or contingent, except
      as
      disclosed or referred to in the financial statements or as disclosed to the
      Agent in the Disclosure Certificate. As of the date of this Agreement there
      is
      no litigation, legal, administrative or arbitral proceeding, investigation
      or
      other action of any nature pending or, to the knowledge of Borrower, threatened
      against or affecting Borrower which (a) challenges the validity of this
      Agreement, the Note or any of the other Loan Documents or (b) involves the
      possibility of any judg­ment or liability not fully covered by insurance,
      and which could reasonably be expected to have a Material Adverse
      Effect.

     

    8.14                 Titles,
      Etc.  Borrower has good title to its respective material
      (individually or in the aggregate) Property, free and clear of all Liens except
      (a) Liens referred to in the Financial Statements, (b) Liens and minor
      irregularities in title which do not interfere with the occupation, use, or
      enjoyment by Borrower of any of the Property in the normal course of business
      as
      presently conducted or impair the value thereof for such business, except where
      such interference or impairment could not reasonably be expected to have a
      Material Adverse Effect, (c) Liens disclosed to the Agent in
      the
      Disclosure Certificate or the Title Commitment, (d) Liens otherwise
      permitted or contemplated by this Agreement or the other Loan Documents, or
      (e) Excepted Liens.

     

    8.15                 Defaults.  Borrower
      is not in material default nor has any event or circumstance occurred which,
      but
      for the passage of time or the giving of notice, or both, would constitute
      a
      material default under any material loan or credit agreement, indenture,
      mortgage, deed of trust, security agreement or other agreement or instrument
      evidencing or pertaining to any Debt of Borrower, or under any material
      agreement or other instrument to which Borrower is a party or by which Borrower
      is bound if such default could reasonably be expected to have a Material Adverse
      Effect.  No Default hereunder has occurred and is
      continuing.

     

    8.16                 Securities
      Exchange Act of 1934.  None of Advances
      will be used directly or indirectly to fund a personal loan to or for the
      benefit of a director or executive officer of a Borrower.

     

    8.17                 USA
      Patriot Act Notification.  Borrower
      agrees to provide evidence of the identity of Borrower that Agent may request
      from time to time to permit Agent to verify the identity of Borrower or to
      otherwise comply with applicable governmental laws and regulations, including
      without limitation Section 326 of the USA Patriot Act of 2001, 31
      U.S.C. 5318.

     

    
      
        
        

      

      
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    9.           COVENANTS
      OF BORROWER.  Borrower hereby
      unconditionally covenants and agrees with Agent and Lenders, until the
      Indebtedness shall have been paid in full, the Commitments shall have terminated
      and all Letters of Credit shall have expired or terminated or fully
      collateralized with cash deposited with the Letter of Credit Issuer, as
      follows:

     

    9.1                 Commencement
      and Completion.  Except as disclosed in
      writing by Borrower to Agent (and in all events only if the Title Insurance
      insures the same in a manner satisfactory to Agent), prior to the recordation
      of
      the Deed of Trust, no construction contract shall have been recorded with
      respect to each Lot to be covered thereby, no work of any kind (including but
      not limited to the destruction or removal of any existing improvements, site
      work, clearing, grubbing, draining, or fencing of each such Lot by Borrower
      or
      its agents) shall have commenced or shall have been performed on any such Lot,
      no equipment or material shall have been delivered to or upon any such Lot
      for
      any purpose whatsoever, no contract (or memorandum or affidavit thereof) for
      the
      supplying of labor, materials or services for the construction of the
      improvements thereto shall have been recorded by any Person in the mechanic's
      lien or other appropriate records in the county where any such Lot is located,
      and no specially fabricated materials or equipment shall have been ordered
      or
      received.

     

    9.1.1           A&D
      Improvements.  Borrower will cause the
      construction of the A&D Improvements to be completed free and clear of Liens
      or claims for Liens for material supplied and for labor services performed
      in
      connection with the construction of the A&D Improvements,  other
      than Excepted Liens.

     

    9.1.2           Commencement
      and Continuation of Home
      Construction.  Borrower will comply at
      all times with the following covenants regarding the commencement and
      continuation of construction.

     

    (a)           Timely
      Commencement of
      Construction.  Construction shall be
      commenced within thirty (30) days after the Home Eligibility Date, except in
      the
      event of any one
      or
      more Force Majeure Event, in which event, within ninety (90) days after said
      Home Eligibility Date.

     

    (b)           Continuation
      of Construction.  Borrower shall not
      cease construction of any Home for more than fifteen (15) days without the
      consent of Agent for any cause not a Force Majeure Event (or for any period
      up
      to, in the aggregate, ninety (90) consecutive days as a result of one or more
      Force Majeure Events).

     

    (c)           Completion
      of Construction.  Construction of each
      Home shall be fully completed and ready for occupancy not later than the Home
      Completion Date.  Borrower shall secure the issuance of a permanent
      certificate of occupancy or its equivalent by the requisite Governmental
      Authority on or before such Home Completion Date.

     

    (d)           Breach
      of Construction Commencement or Continuation
      Covenants.  In the event Borrower fails
      to commence construction of improvements on any Lot within the time period
      specified in this Section 9.1.2 or ceases construction for a period in
      excess of the limitations provided herein, said event shall constitute a breach
      of the covenant contained in this Section 9.1.2 unless Agent otherwise
      agrees in writing  or the same is resulting from one or more Force
      Majeure Event, in which case said delay shall not be for more than ninety (90)
      consecutive days.

     

    
      
        
        

      

      
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    9.2                 No
      Changes.  Except as provided in
      Section 9.28 below, Borrower will not amend, alter or change (pursuant to
      change order, amendment or otherwise) the Plans and Specifications unless the
      same shall have been approved in advance in writing by Agent, and by all
      applicable Governmental Authorities.

     

    9.3                 Advances.  Borrower
      will receive the Advances and will hold same as a trust fund for the purpose
      of
      paying the cost of construction of the Improvements and related non–construction
      costs related to the Project as provided for herein.  Borrower will
      apply all Advances for payment of costs of labor, material, and services
      supplied for the acquisition and development of the Land and/or the construction
      of the Improvements and such other costs and expenses incident thereto and
      will
      not use any part thereof for any other purpose.

     

    9.4                 First
      Right of Refusal.  Borrower agrees to give Lender the
      First Right of Refusal to provide financing through the Master Line for all
      Collateral and other Property owned and developed by Borrower and/or its
      Affiliates.  Borrower may choose alternative financing options only
      after Agent has determined not to include any Future Project into the Master
      Line under the terms hereof or has failed to present to Borrower a commercially
      reasonable proposal for financing within thirty (30) days after request to
      do
      so.

     

    9.5                 Surveys.  Prior
      to the inclusion of a Project under the Master Line and/or following the
      occurrence of any Default related to any Project currently financed under the
      Master Line, Borrower will furnish Agent, from time to time at the request
      of
      Agent and at Borrower's expense a survey prepared by a registered engineer
      or
      surveyor reasonably acceptable to Agent, showing the location of the
      Improvements, and certifying that same are entirely within the property lines
      of
      the Land, do not encroach upon any easement, setback or building line, are
      placed in accordance with the Plans and Specifications, all Governmental
      Requirements and all restrictive covenants affecting the Land and/or
      Improvements, and showing no state of facts objectionable to
      Agent.  All surveys shall be in form and substance and from a
      registered public surveyor reasonably acceptable to Agent.

    9.6                 Defects
      and Variances.  Borrower will, upon
      demand of Agent and at Borrower's sole expense, correct any structural defect
      in
      the Improvements or any variance from the Plans and Specifications not approved
      in writing by Agent.

     

    9.7                 Inspecting
      Person.  Borrower will pay the fees and
      expenses reasonably incurred by, and cooperate with, the Inspecting Person
      and
      will cause the Design Professional, the Contractor, each contractor and
      subcontractor and the employees of each of them to cooperate with the Inspecting
      Person and, upon request, will furnish the Inspecting Person whatever the
      Inspecting Person may consider necessary or useful in connection with the
      performance of the Inspecting Person's duties.  Without limiting the
      generality of the foregoing, Borrower shall furnish or cause to be furnished
      such items as working details, Plans and Specifications and details thereof,
      samples of materials, licenses, permits, certificates of public authorities,
      zoning ordinances, building codes and copies of the contracts between such
      person and Borrower (if applicable).  Borrower will permit Agent, the
      Inspecting Person and their representative to enter the Project during normal
      business hours and upon reasonable prior notice for the purposes of inspecting
      same.  Borrower acknowledges that the duties of the Inspecting Person
      run solely to Agent and that the Inspecting Person shall have no obligations
      or
      responsibilities whatsoever to Borrower, Contractor, the Design Professional,
      or
      to any of Borrower's or Contractor's agents, employees, contractors or
      subcontractors.

     

    
      
        
        

      

      
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    9.8                 Personalty
      and Fixtures.  Borrower will deliver to
      Agent, on demand, any contracts, bills of sale, statements, receipted vouchers
      or agreements under which Borrower claims title to any materials, fixtures
      or
      articles incorporated in the Improvements or subject to the lien of the Deed
      of
      Trust or to the security interest of the Security Agreement.

     

    9.9                 Compliance
      With Governmental Requirements.
  Borrower will comply promptly with all Governmental
      Requirements.

     

    9.10                 Compliance
      With Restrictive Covenants.  Borrower
      will comply with all restrictive covenants, if any, affecting the
      Project.  Construction of the Improvements will be performed in a good
      and workmanlike manner, within the perimeter boundaries of the Land and within
      all applicable building and setback lines in accordance with all Governmental
      Requirements and the Plans and Specifications.

     

    9.11                 Payment
      of Expenses.  Borrower shall pay or
      reimburse to Agent and Lenders all costs and expenses relating to the Project
      and for which an Advance is made, including (without limitation), title
      insurance and examination charges, survey costs, insurance premiums, filing
      and
      recording fees, and other expenses payable to third parties incurred by Agent
      or
      Lenders in connection with the consummation of the transactions contemplated
      by
      this Agreement.

     

    9.12                 Notices
      Received.  Borrower will promptly
      deliver to Agent a true and correct copy of all notices received by Borrower
      from any person or entity with respect to Borrower, the Project, or any or
      all
      of them, which in any material way relates to or affects the Master Line or
      the
      Project.

     

    9.13                 Advertising
      by Agent.  If required by Agent,
      Borrower agrees that during the term of the Master Line, Borrower shall erect
      and thereafter shall maintain on the Project one or more advertising signs
      furnished by Agent indicating that the financing for the Project has been
      furnished by Agent.

    9.14                 Intentionally
      Omitted.

     

    9.15                 Certificates
      of Compliance.  If requested by Agent,
      Borrower will furnish or cause to be furnished to Agent within five (5) days
      after a request therefor, a certificate signed by the principal financial
      officer of Borrower stating that:

     

    (a)           a
      review of the activities of Borrower has been made under his supervision with
      a
      view to determining whether Borrower has fulfilled all of its obligations under
      this Agreement, the other Loan Documents and the Note;

     

    (b)           stating
      that Borrower has fulfilled its obligations under such instruments and that
      all
      representations made herein continue to be true and correct in all material
      respects (or specifying the nature of any change), or if there shall be a
      Default or Event of Default, specifying the nature and status thereof and
      Borrower's proposed response thereto;

     

    (c)           demonstrating
      in reasonable detail compliance (including but not limited to showing all
      calculations) as at the end of such fiscal year, and with such other provisions
      hereof as Agent may reasonably request; and

     

     

    
      
        
        

      

      
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    (d)           containing
      or accompanied by such financial or other details, information and material
      as
      Agent may reasonably request to evidence such compliance.

     

    9.16                 Taxes
      and Other Liens.  Borrower will pay and
      discharge promptly all material taxes, assessments and governmental charges
      or
      levies imposed upon Borrower or upon the income or the Property of Borrower
      as
      well as all material claims of any kind (including claims for labor, materials,
      supplies and rent) which, if unpaid, might become a Lien upon any or all of
      the
      Property of Borrower; provided, however, that Borrower shall not be required
      to
      pay any such tax, assessment, charge, levy or claim if the amount, applicability
      or validity thereof shall currently be contested in good faith by appropriate
      proceedings diligently conducted by or on behalf of Borrower, and if Borrower
      shall have set up reserves therefor adequate under GAAP.

     

    9.17                 Maintenance.  Borrower
      will maintain its limited liability company, joint venture, partnership,
      corporate or other entity, as the case may be, existence, rights and
      franchises.

     

    9.18                 Further
      Assurances.  Borrower will cure promptly
      any defects in the creation and issuance of the Note and the execution and
      delivery of the Loan Documents, including this Agreement.  Borrower at
      its expense will promptly execute and deliver to Agent upon request all such
      other and further documents, agreements and instruments in compliance with
      or
      accomplishment of the covenants and agreements of Borrower in the Loan
      Documents, including this Agreement, or to further evidence and more fully
      describe the collateral intended as security for the Note, or to correct any
      omissions in the Loan Documents, or more fully to state the security obligations
      set out herein or in any of the Loan Documents, or to perfect, protect or
      preserve any Liens created pursuant to any of the Loan Documents, or to make
      any
      recordings, to file any notices, or obtain any consents, all as may be
      reasonably necessary or appropriate in connection therewith.

     

    9.19                 Costs
      and Expenses.  Borrower will reimburse
      Agent for all expenses of Agent, including attorneys' fees, reasonably incurred
      in connection with the preparation, execution, delivery, administration and
      performance of the Loan Documents.  Borrower will also pay all
      reasonable invoices presented by Agent and all reasonable
      out–of–pocket expenses of Agent in connection with the administration of this
      Agreement and the other Loan Documents including, but not limited to, fees
      charged by Agent or its independent or internal inspectors, reasonable
      attorneys' fees, appraisal fees, recording fees, survey costs, title endorsement
      premiums and premiums for the Title Insurance.  Borrower will, upon
      request, promptly reimburse Agent for all amounts reasonably expended, advanced
      or incurred by Agent or Lender to satisfy any obligation of Borrower under
      this
      Agreement or any other Loan Document, which amounts will include all court
      costs, attorneys' fees, fees of auditors and accountants, and investigation
      expenses reasonably incurred by Agent in connection with any such matters,
      together with interest at the post–maturity rate specified in the Note on each
      such amount from the date of written demand or request by Agent for
      reimbursement until the date of reimbursement to Agent.

     

    9.20                 Insurance.  Borrower
      now maintains and will continue to maintain, with financially sound and
      reputable insurers, insurance with respect to its Property and business against
      such liabilities, casualties, risks and contingencies and in such types and
      amounts as reasonably required by Agent and is commercially
      available.  All such insurance to be written in form and with
      companies reasonably approved by Agent with loss made payable to Agent and/or
      its successors and assigns, without contribution, and Borrower shall have
      delivered the corresponding certificates of insurance to Agent with evidence
      of
      payment of premiums thereon.  No such policy shall be canceled,
      endorsed or amended to any extent unless the issuer thereof shall have first
      given Agent at least thirty (30) days' prior written notice.  Upon
      reasonable request of Agent, Borrower will furnish or cause to be furnished
      to
      Agent from time to time (a) a summary of the insurance coverage of Borrower
      in form and substance satisfactory to Agent and if requested will furnish Agent
      copies of the applicable policies and (b) a copy of any completion status
      report provided by Borrower to any insurance company.  In the case of
      any fire, accident or other casualty causing loss or damage to any Property
      of
      Borrower securing the payment of the Indebtedness, the proceeds of such policies
      shall be used either (i) to repair or replace such damaged Property, or
      (ii) to prepay the Indebtedness, such election to be made by
      Agent.

     

    
      
        
        

      

      
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    9.21                 Right
      of Inspection.  During normal business
      hours and upon reasonable advance notice (except in the case of an emergency
      as
      reasonably determined by Agent), Borrower will permit any officer, employee
      or
      agent of Agent or Agent to visit and inspect any of the Property of Borrower,
      and examine Borrower's books of record and accounts, take copies and extracts
      therefrom, and discuss the affairs, finances and accounts of Borrower with
      Borrower's officers, accountants and auditors.

     

    9.22                 Notice
      of Certain Events.  Borrower shall
      promptly notify Agent if Borrower obtains knowledge of the occurrence
      of:

     

    (a)           any
      event which constitutes a Default, together with a detailed statement by a
      responsible officer of Borrower of the steps being taken to cure the effect
      of
      such Default; or

     

    (b)           the
      receipt of any notice from, or the taking of any other action by, the holder
      of
      any promissory note, debenture, or other evidence of indebtedness of Borrower
      or
      of any security (as defined in the Securities Act of 1933, as amended) of
      Borrower with respect to a claimed default, together with a detailed statement
      by a responsible officer of Borrower specifying the notice given or other action
      taken by such holder and the nature of the claimed default and what action
      Borrower is taking or proposes to take with respect thereto; or

    (c)           
      any legal, judicial or regulatory proceedings affecting Borrower or any of
      the
      Property of Borrower and involving an amount in controversy equal to One Million
      Dollars ($1,000,000.00) or more individually; or

     

    (d)           any
      dispute between Borrower and any Governmental Authority or any other Person
      which, if adversely determined, would have a Material Adverse Effect;
      or

     

    (e)           any
      event or condition having a Material Adverse Effect.

     

    9.23                 Affiliates.  All
      transactions between Borrower and any Affiliate of Borrower shall be arms length
      transactions undertaken in good faith and in the ordinary course of business,
      unless approved by Agent in its reasonable discretion, but the foregoing shall
      not limit or prohibit payments by the Affiliates to Borrower.

     

    9.24                 Notices
      by Governmental Authority, Fire and Casualty Losses,
      Etc.  Borrower will timely comply with and promptly
      furnish to Agent true and complete copies of any official notice or claim by
      any
      Governmental Authority pertaining to any Lot mortgaged to Agent or any Home
      to
      be constructed thereon.  Borrower will promptly notify Agent of any
      fire or casualty or any notice of taking or eminent domain action or proceeding
      affecting any such Lot or Home.  In the event any such Lot or Home is
      taken in an eminent domain action or proceeding, the condemnation proceeds
      resulting from such action or proceeding shall be paid to Agent to be applied
      as
      a prepayment of the Indebtedness.

     

    
      
        
        

      

      
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    9.25                 Arbitration
      Provisions.

     

    9.25.1                      Agent,
      Lenders and Borrower agree that upon the written demand of any party, whether
      made before or after the institution of any legal proceedings, but prior to
      the
      rendering of any judgment in that proceeding, all disputes, claims and
      controversies between them, whether individual, joint, or class in nature,
      arising from this Agreement, the Note any of the other Loan Documents or
      otherwise, including without limitation contract disputes and tort claims,
      shall
      be resolved by binding arbitration pursuant to the Commercial Rules of the
      American Arbitration Association ("AAA").  Any
      arbitration proceeding held pursuant to this arbitration provision shall be
      conducted in the city nearest the Agent's address having an AAA regional office,
      or at any other place selected by mutual agreement of the parties.

     

    9.25.2                      No
      act to take or dispose of any collateral and/or other security for the Master
      Line shall constitute a waiver of this arbitration agreement or be prohibited
      by
      this arbitration agreement.  This arbitration provision shall not
      limit the right of either party during any dispute, claim or controversy to
      seek, use, and employ ancillary, or preliminary rights and/or remedies, judicial
      or otherwise, for the purposes of realizing upon, preserving, protecting,
      foreclosing upon or proceeding under forcible entry and detainer for possession
      of, any real or personal property, and any such action shall not be deemed
      an
      election of remedies.  Such remedies include, without limitation,
      obtaining injunctive relief or a temporary restraining order, invoking a power
      of sale under any deed of trust or mortgage, obtaining a writ of attachment
      or
      imposition of a receivership, or exercising any rights relating to personal
      property, including taking or disposing of such property with or without
      judicial process pursuant to Article 9 of the Uniform Commercial Code or when
      applicable, a judgment by confession of judgment.  Any disputes,
      claims or controversies concerning the lawfulness or reasonableness of an act,
      or exercise of any right or remedy concerning any Collateral, including any
      claim to rescind, reform, or otherwise modify any agreement relating to the
      Collateral, shall also be arbitrated; provided, however that no arbitrator
      shall
      have the right or the power to enjoin or restrain any act of either
      party.

    9.25.3                      Judgment
      upon any award rendered by any arbitrator may be entered in any court having
      jurisdiction.  Nothing in this arbitration provision shall preclude
      either party from seeking equitable relief from a court of competent
      jurisdiction.  The statute of limitations, estoppel, waiver, laches
      and similar doctrines which would otherwise be applicable in an action brought
      by a party shall be applicable in any arbitration proceeding, and the
      commencement of an arbitration proceeding shall be deemed the commencement
      of
      any action for these purposes.  The Federal Arbitration Act
      (Title 9 of the United States Code) shall apply to the construction,
      interpretation, and enforcement of this arbitration provision.

     

    9.26                 Payment
      of Claims.  Borrower shall promptly pay
      or cause to be paid when due all costs and expenses incurred in connection
      with
      all Lots mortgaged to Agent and the construction of the Homes
      thereon.  A discharge of the Deed of Trust and taking of a new deed of
      trust in substitution thereof shall not release or diminish this
      obligation.  Notwithstanding anything to the contrary contained in
      this Agreement, Borrower may contest:

     

    (a)           the
      validity or amount of any claim of any contractor, consultant, architect, or
      other Person providing labor, materials, or services with respect to any Lot
      mortgaged to Agent or the construction of the Home thereon,

     

    
      
        
        

      

      
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    (b)           any
      tax or special assessment levied by any Governmental Authority, or

     

    (c)           the
      enforcement of or compliance with any Governmental Requirements,

     

    and
      any
      such contest on the part of Borrower shall not be a Default hereunder provided
      that during the pendency of any such contest Borrower shall furnish to Agent
      and
      the Title Insurer an indemnity bond with a corporate surety satisfactory to
      Agent and the Title Insurer or other security acceptable to them in an amount
      equal to one hundred fifty percent (150%) of such claim or tax, and provided
      further that Borrower shall pay any amount finally adjudged by a court of
      competent jurisdiction to be due, with all costs, interest, and penalties
      thereon before such judgment creates a Lien on such Lot or the Home to be
      constructed thereon.

    

    9.27                 Appraisals.  Borrower
      shall allow Agent's appraiser access to its Property and records and shall
      cooperate in any other reasonable manner in allowing such Appraisal to be
      prepared and completed on a timely basis.

     

    9.28                 Plans
      and Specifications; Change
      Orders.  Borrower will construct all of
      the Improvements in substantial compliance with the Plans and
      Specifications.  Any change or changes to the Plans and Specifications
      for any of the Improvements resulting in a decrease in the construction costs
      of
      such Improvements or which exceed in the aggregate five percent (5%) of the
      total construction costs of such Improvements shall be disclosed to Agent by
      providing Agent with all change orders instructing and evidencing such
      changes.  Agent’s approval shall not be required for any change or
      changes to the Plans and Specifications for any of the Improvements which does
      not exceed in the aggregate five percent (5%) of the total construction costs
      of
      such Improvements.

     

    9.29                 List
      of Subcontractors, Etc.   Borrower will, if requested by
      Agent, make available to Agent or its representatives, lists identifying all
      contractors, subcontractors, engineers, architects, materialmen and suppliers
      of
      labor or materials in connection with the construction of the Improvements
      (said
      parties being hereinafter referred to as "suppliers" and
      counterparts and/or conditional assignments of any and all construction
      contracts, bills of sale, invoices, statements, conveyances, receipted
vouchers
      or agreements of any nature under which Borrower claims title to any materials
      or supplies used or to be used in the construction of the
      Improvements.  Borrower will, if requested by Agent, provide detailed
      information in connection with such lists and suppliers including but not
      limited to an itemization of:

     

    (a)           the
      stage of construction during which each supplier supplied labor and/or
      materials,

     

    (b)           Borrower's
      account number with each such supplier,

     

    (c)           the
      telephone number, mailing address and physical address of each such supplier,
      and

     

    (d)           such
      other information as Agent may reasonable request to verify Borrower's payment
      and credit history with respect to such suppliers.

     

    9.30                 Liens.  Borrower
      will not create, incur, assume or permit to exist any Lien on any of its
      Property subject to the Deed of Trust, except:

     

    
      
        
        

      

      
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    (a)           Liens
      securing the payment of any Indebtedness and Obligations;

     

    (b)           Liens
      securing the payment of any Subordinate Debt approved by Agent
      hereunder;

     

    (c)           Excepted
      Liens; and

     

    (d)           Liens
      disclosed in the Disclosure Certificate and approved by Agent.

     

    Provided,
      however, that any Lien that is not included in subsections (a) through (d)
      above
      will not trigger a Default hereunder if Borrower is contesting said Lien as
      provided in Section 9.26 above.

     

    9.31                 Distributions,
      Payments, Etc., by Borrower.  Borrower
      will not make distributions, returns of capital, payments of fees or salary
      or
      other payments of any nature whatsoever, which are not payments for Permitted
      Expenses if such payments or distributions would cause Borrower to breach any
      of
      the covenants contained in this Agreement, including, but not limited to, the
      covenants contained in Section 9.36–9.38 hereof.  In the event
      such distribution, return of capital, payment of fees or salaries or other
      payments result in a violation of the other covenants contained in this
      Agreement (including, but not limited to, those covenants specified in
      Section 9.36–9.38 hereof), Borrower shall cause such funds to be repaid in
      order to cure any such breach of the other covenants of the
      Agreement.  If such payment or distribution results in a violation of
      any covenant contained in this Agreement, the making of such payment or
      distribution shall constitute an Event of Default under this
      Agreement.

     

    9.32                 Sales
      and Leasebacks.  Except for transactions
      related to the sale and leaseback of Model Homes that are approved by Agent
      in
      writing (which approval may require the assignment of Borrower’s interests under
      the lease and such other agreements as Agent may require in its sole discretion)
      Borrower will not enter into any arrangement, directly or indirectly, with
      any
      Person whereby Borrower shall sell or transfer any Property, whether now owned
      or hereafter acquired, and whereby Borrower shall then or thereafter rent or
      lease as lessee such Property or any part thereof or other Property which
      Borrower intends to use for substantially the same purpose or purposes
as
      the
      Property sold or transferred.

     

    9.33                 Nature
      of Business.  Except as disclosed to
      Agent in writing prior to the Closing Date and approved by Agent, Borrower
      will
      not engage in any business other than the home building business or in the
      acquisition of real property and the development of such property into Lots
      for
      the purpose of the construction of Homes thereon primarily by Borrower and
      its
      Affiliates.

     

    9.34                 Annexation.  Borrower
      will not execute or file any subdivision plat, tentative map, final map, or
      lot-line adjustment or effect the annexation of all or part of any such Lot
      to
      any city or other political unit without the prior written consent of Agent
      (which consent shall not be unreasonably withheld, conditioned or
      delayed).

     

    9.35                 Mergers;
      Ownership of Borrower.  Borrower will
      not merge or consolidate with or sell, assign, lease or otherwise dispose of
      (whether in one transaction or in a series of related transactions) all or
      substantially all of its Property (whether now owned or hereafter acquired)
      to
      any Person. Borrower will not permit any Affiliate to take any of the actions
      set forth in the preceding sentence if such action would have a Material Adverse
      Effect on Borrower.  Without limiting the terms and provisions of the
      Deed of Trust, Borrower will not permit or suffer to exist any transaction
      or
      circumstance whereby the Person or Persons who manage and control Borrower
      as of
      the date of execution of this Agreement shall cease to manage and control
      Borrower.  The term "control" as utilized herein
      means the possession, directly or indirectly, of the power to direct or cause
      direction of the management and policies of Borrower, whether through the
      ownership, by contract, or otherwise. The death, incapacity or disability of
      any
      individual who owns or controls Borrower (whether such ownership or control
      is
      through such individual’s direct ownership or control of the Borrower, or
      through such individual’s ownership or control of one or more intermediary
      entities) shall be considered to be a change of ownership or control of the
      affected entity in violation of this Section 9.35.

     

    
      
        
        

      

      
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    9.36                 Minimum
      Net Worth.  Borrower will not permit (at
      any time) its Net Worth to be less than the amount set forth in the Additional
      Terms Schedule.

     

    9.37                 Maximum
      Debt–to–Equity Ratio.  Borrower will not
      permit (at any time) its Debt–to–Equity Ratio to be greater than the amount set
      forth in the Additional Terms Schedule.

     

    9.38                 Minimum
      Working Capital.  Borrower will not
      permit (at any time) its Working Capital to be less than the amount set forth
      in
      the Additional Terms Schedule.

     

    9.39                 Subordinate
      Debt.  As a condition to Lender's approval of any
      Subordinate Debt, Borrower and Subordinate Lender shall execute and deliver
      to
      Lender the Subordination Agreement required
      hereunder.  Notwithstanding any provision herein to the contrary,
      Borrower and Agent may agree to close the Master Line prior to the approval
      and
      entry of any Projects herein and the execution and delivery to Lender of any
      Subordination Agreement(s) relating to any Subordinate Debt approved by Agent
      as
      provided; provided however, until such time as Borrower has satisfied the
“Deferred Funding Conditions” (as defined below), Agent and
      Lenders shall not be obligated to enter any Project(s) into the Master Line
      and/or disburse any Advances to Borrower.  As used herein, the term
“Deferred Funding Conditions” shall mean the satisfaction of
      the following conditions: (i) Borrower’s satisfaction of the applicable Project
      Approval Requirements
      for entry of the Project into the Master Line, and (ii) either (a) the
      subordination of the Subordinate Debt to the lien of the Deed of Trust and
      the
      obligations of Borrower hereunder pursuant to a Subordination Agreement
      acceptable to Lender, or (b) Agent’s confirmation that any Subordinate Debt is
      subordinated to Borrower’s obligations hereunder pursuant to the terms of the
      Subordinate Debt Documents, which subordination shall be confirmed in writing
      by
      Borrower to Lender’s reasonable satisfaction.

     

    10.           EVENTS
      OF DEFAULT.

     

    10.1                 Events
      of Default.  The term "Event of
      Default" as used herein, shall mean the occurrence or happening, at any
      time and from time to time, of any “Event of Default” set forth
      in the Deed of Trust for each Project included hereunder.

     

    10.2                 Remedies.  Upon
      the happening of an Event of Default, Agent may exercise any or all of the
      following remedies, and the exercise of any one or more of such remedies shall
      not preclude the simultaneous or subsequent exercise of any other remedy for
      the
      Project:

     

    10.2.1                      Agent
      may enter into possession of the Project and perform any and all work and labor
      necessary to complete the Improvements in accordance with the Plans and
      Specifications.  All amounts so expended by Agent shall be deemed to
      have been disbursed to Borrower as Advances and secured by the Deed of
      Trust.  For this purpose, Borrower hereby constitutes and appoints
      (which appointment is coupled with an interest and is therefore irrevocable)
      Agent as Borrower's true and lawful attorney–in–fact, with full power of
      substitution to complete the Improvements in the name of Borrower, and hereby
      empowers Agent, acting as Borrower's attorney–in–fact, as follows:

     

    
      
        
        

      

      
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    (a)           to
      use any funds of Borrower, including any balance which may be held in escrow,
      any Borrower's Deposit and any funds which may remain unadvanced hereunder,
      for
      the purpose of completing the Improvements in the manner called for by the
      Plans
      and Specifications;

     

    (b)           to
      make such additions and changes and corrections in the Plans and Specifications
      which shall be necessary or desirable to complete the Improvements in the manner
      contemplated by the Plans and Specifications;

     

    (c)           to
      continue all or any existing construction contracts or
      subcontracts;

     

    (d)           to
      employ such contractors, subcontractors, agents, design professionals and
      inspectors as shall be required for said purposes;

     

    (e)           to
      pay, settle or compromise all existing bills and claims which are or may be
      liens against the Project, or may be necessary or desirable for the completion
      of the work or the clearing of title;

     

    (f)           to
      execute all the applications and certificates in the name of Borrower which
      may
      be required by any construction contract; and

     

    (g)           to
      do any and every act with respect to the construction of the Improvements which
      Borrower could do in Borrower's own behalf.

     

    10.2.2                      Agent,
      acting as Borrower's attorney–in–fact, shall also have power to prosecute and
      defend all actions or proceedings in connection with the Project and to take
      such action and require such performance as is deemed necessary.  In
      addition, if Agent shall advance any funds or honor any letter of credit which
      it may have issued, on behalf of Borrower, to any Governmental Authority to
      assure completion of the Improvements, Borrower shall pay to Agent all amounts
      advanced by Agent or honored by Agent under such letters of credit, together
      with interest on such amount at the rates provided in the Note, when requested
      by Agent.  The obligations of Borrower pursuant to this section are
      continuing obligations of Borrower notwithstanding that Borrower may have paid
      the Note in full at the time such obligations may arise;

     

    10.2.3                      Agent
      may elect to increase the Partial A&D Release Price and/or the Home Release
      Price and utilize the increase in any said release price over and above the
      full
      sum of said release price stated in the Additional Terms Schedule to:(i) hold
      as
      a part of Borrower's Deposit, (ii) pay any amounts, fees, charges, costs or
      expenses due to Agent under the terms of any of the Loan Documents, (iii) pay
      against the outstanding principal and/or accrued interest balance of the Note,
      or (iv) create a special impound deposit which Agent may use to pay any lien,
      charge, cost, expense or claim against any of the Project that Borrower was
      required to pay pursuant to any other provisions of any of the Loan Documents;
      or

     

    10.2.4                      Agent
      may exercise any other rights or remedies available to it under all other Loan
      Documents.

     

    
      
        
        

      

      
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          - 54

        
          

        

      

      
        
        

      

    

     

    10.3                 Right
      of Set–Off.  Upon the failure of
      Borrower to make full and timely payment of the interest on the Advances under
      the Master Line and/or any fees specified herein or in the Deed of Trust, Agent
      is hereby authorized at any time and from time to time, without notice to
      Borrower (such notice being expressly waived by Borrower notwithstanding any
      provision to the contrary stated in any of the Loan Documents), to make an
      Advance under the Master Line made pursuant to this Agreement on behalf of
      Borrower or adjust the amount of or withhold or apply all or any portion of
      any
      Advance under the Master Line to accomplish the payment of the amount then
      due.   Agent agrees promptly to notify Borrower after any such
      set–off, Advance, adjustment or application under the Master Line, provided that
      the failure to give such notice shall not affect the validity of such set–off,
      Advance, adjustment or application under the Master Line.  If Agent
      elects to make such an Advance for the purposes of paying interest on the Master
      Line or any other amount then payable hereunder, such Advance may be made out
      of
      any applicable Budget category elected by Agent in its sole discretion, or
      out
      of the portion of the Master Line that has been allocated to any Lot or Home,
      as
      Agent may elect.  The rights of Agent under this section are in
      addition to all other rights and remedies which Agent may have, including but
      not limited to the right to require Borrower to make a Borrower's Deposit or
      to
      repay the amount of any such Advance made by Agent.

     

    11.           AGENT'S
      DISCLAIMERS.

     

    11.1                 No
      Obligation by Agent To Construct.  Agent
      has no liability or obligation whatsoever or howsoever in connection with the
      Project financed by the Master Line made hereunder or the development,
      construction or completion thereof or work performed thereon, and has no
      obligation except to disburse the Master Line proceeds for said Project as
      herein agreed.  Neither Agent nor Lenders are obligated to inspect the
      Improvements for the Project, nor are Agent or Lenders liable, and under no
      circumstances whatsoever shall Agent or Lender be or become liable, for the
      performance or default of any contractor or subcontractor, or for any failure
      to
      construct, complete, protect or insure that said Project, or any part thereof,
      or for the payment of any cost or expense
      incurred in connection therewith, or for the performance or nonperformance
      of
      any obligation of Borrower to Agent or Lenders nor to any other person, firm
      or
      entity without limitation.  Nothing, including without limitation any
      disbursement of proceeds of the Master Line made hereunder or Borrower's Deposit
      nor acceptance of any document or instrument, shall be construed as such a
      representation or warranty, express or implied, on Agent or a Lender's
      part.

     

    11.2                 No
      Obligation by Agent To Operate.  Any
      term or condition of any of the Loan Documents to the contrary notwithstanding,
      neither Agent nor Lenders shall have, and by their execution and acceptance
      of
      this Agreement they hereby expressly disclaim, any obligation or responsibility
      for the management, conduct or operation of the business and affairs of
      Borrower.  Any term or condition of the Loan Documents which permits
      Agent and/or Lenders to disburse funds under the Master Line made hereunder,
      whether from the proceeds of the Master Line, Borrower's Deposit or otherwise,
      or to take or refrain from taking any action with respect to Borrower, any
      Project or any other collateral for repayment of the Master Line, shall be
      deemed to be solely to permit Agent and/or Lenders to audit and review the
      management, operation and conduct of the business and affairs of Borrower,
      and
      to maintain and preserve the security given by Borrower to Agent and Lenders
      for
      the Master Line, and may not be relied upon by any other
      person.  Further, neither Agent nor Lenders shall have assumed and by
      their execution and acceptance of this Agreement they hereby expressly disclaim
      any liability or responsibility for the payment or performance of any
      indebtedness or obligation of Borrower and no term or condition of the Loan
      Documents, shall be construed otherwise.  Borrower hereby expressly
      acknowledges that no term or condition of the Loan Documents shall be construed
      so as to deem the relationship between Borrower, Agent and Lenders to be other
      than that of borrower, guarantor, agent and lender, and Borrower shall at all
      times represent that the relationship between Borrower, Agent and Lenders is
      solely that of borrower, guarantor, agent and lender.

     

    
      
        
        

      

      
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          - 55

        
          

        

      

      
        
        

      

    

     

    11.3                 No
      Agency.  Nothing herein shall be
      construed as making or constituting Agent or Lenders as the agent of Borrower
      in
      making payments pursuant to any construction contracts or subcontracts entered
      into by Borrower for construction of any Improvements in connection with any
      Project financed by the Master Line made hereunder or otherwise.  The
      purpose of all requirements of Agent hereunder is solely to allow Agent to
      check
      and require documentation (including, but not limited to, lien waivers)
      sufficient to protect Agent and Lenders and the Master Line contemplated
      hereby.  Borrower shall have no right to rely on any procedures
      required by Agent, Borrower hereby acknowledging that Borrower has sole
      responsibility for constructing the Improvements for each such Project and
      paying for work done in accordance therewith and that Borrower has solely,
      on
      Borrower's own behalf, selected or approved each contractor, each subcontractor
      and each materialman for each such Project, Agent and Lenders having no
      responsibility for any such persons or entities or for the quality of their
      materials or workmanship.

     

    12.           SPECIAL
      DEPOSIT.  If, at any time Borrower seeks
      to obtain a partial release of any of the Property, no unpaid balance of the
      Advances then exists but Additional Obligations are then outstanding or all
      of
      the Advances to be made under said Master Line have not yet been made, then,
      notwithstanding anything contained to the contrary herein or in any other of
      the
      Loan Documents, Borrower shall be entitled to obtain such partial releases
      in
      accordance herewith provided any remaining balance of the Net Sales Proceeds
      following payment to Agent of the Partial A&D Release Price and/or Release
      Price, as applicable, is delivered to Agent as a special deposit
      ("Special Deposit") to be held by Agent as additional
      collateral for the Indebtedness.  To the extent of any Advances
      thereafter made under the Master Line, Agent may apply any sums held as a
      Special Deposit
      to reduce the principal balance then outstanding under the Master
      Line.  Such Special Deposit will be disbursed by Agent to Borrower
      pursuant to the terms and conditions hereof as if they constituted a portion
      of
      the Master Line being made hereunder.  Unless required by Governmental
      Requirements, Agent shall not be required to pay interest on the Special
      Deposit.

     

     

     

    
 

    
      
            

        
        

      

      
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          - 56

        
          

        

      

      
        
        

      

    

    13.           MISCELLANEOUS.

     

    13.1                 Successors
      and Assigns.  This Agreement shall be
      binding upon, and shall inure to the benefit of, Borrower, Agent, Lenders,
      and
      their respective heirs, legal representatives, successors and assigns; provided,
      however, that Borrower may not assign any rights or obligations under this
      Agreement without the prior written consent of Agent.

     

    13.2                 Headings.  The
      section, and subsection entitlements hereof are inserted for convenience of
      reference only and shall in no way alter, modify, define or be used in
      construing the text of such sections or subsections.

     

    13.3                 Survival.  The
      provisions hereof shall survive the execution of all instruments herein
      mentioned, shall continue in full force and effect until the Master Line has
      been paid in full and shall not be affected by any investigation made by any
      party.

     

    13.4                 Applicable
      Law.  THIS AGREEMENT SHALL BE GOVERNED
      BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE PROJECT
      IS
      LOCATED AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

     

    13.5                 Notices.  All
      notices or other communications required or permitted to be given pursuant
      to
      this Agreement shall be in writing and shall be deemed properly given if given
      in accordance with the notice requirements set forth in the Deed of
      Trust.

     

    13.6                 Reliance
      by Lenders.  Lenders are relying and are
      entitled to rely upon each and all of the provisions of this
      Agreement.  Accordingly, if any provision or provisions of this
      Agreement should be held to be invalid or ineffective, then all other provisions
      hereof shall continue in full force and effect notwithstanding.

     

    13.7                 Intentionally
      Omitted.

     

    13.8                 Controlling
      Document.  In the event of a conflict
      between the terms and conditions of this Agreement and the terms and conditions
      of any other Loan Document, the terms and conditions of this Agreement shall
      control.

     

    13.9                 Construction
      of Agreement.  All pronouns, whether in
      masculine, feminine or neuter form, shall be deemed to refer to the object
      of
      such pronoun whether same is masculine, feminine or neuter in gender, as the
      context may suggest or require.  All terms used herein, whether or not
      defined in Section 1.1 hereof, and whether used in singular or plural form,
      shall be deemed to refer to the object of such term, whether such is singular
      or
      plural in nature, as the context may suggest or require.

     

    13.10                 Counterparts.
      This Agreement may be executed in any number of counterparts and by different
      parties hereto on separate counterparts, each of which, when so executed and
      delivered, shall be an original, but all such counterparts shall together
      constitute one and the same instrument.

     

     

    
      
            

        
        

      

      
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          - 57

        
          

        

      

      
        
        

      

    

    
      13.11                 Continuing
        Lien.  In addition to the Indebtedness
        and the Obligations under the Master Line, the indebtedness and performance
        of
        obligations secured by the liens and security interests granted in the Loan
        Documents include all indebtedness and all obligations of whatever kind or
        character arising under the Master Line and/or the Loan Documents, whether
        now
        owing, hereafter arising or hereafter to be performed in connection with
        the
        construction of the Improvements, whether fixed or contingent, and including,
        without limitation: (i) those described in Sections 9.11 and 9.19 hereof,
        (ii) all indebtedness and obligations arising under any agreements
        ("Assurance Agreements") between Borrower or Agent and the
        Governmental Authority having jurisdiction over any of the Project to assure
        the
        Governmental Authority that the Improvements will be constructed in accordance
        with the Plans and Specifications and to the satisfaction of any Governmental
        Authority, (iii) all indebtedness and obligations arising under any set
        aside letter or letters issued by Lenders with respect to the amount of the
        Master Line available for certain construction costs of the Improvements,
        and/or
        (iv) any letters of credit issued on Borrower's behalf by Lenders and/or
        their Affiliates (collectively "Additional
        Obligations").  If, at the time the outstanding Advances
        under the Master Line is fully paid, the Commitments are terminated and any
        outstanding Letters of Credit have been terminated or fully cash collateralized
        as provided herein ("Pay–Off Date"), any of the Additional
        Obligations (other than any such obligations for which no claim has been
        made)
        remain to be paid or are subject to performance by Borrower, Lenders or Lenders'
        Affiliates, Lenders shall not, notwithstanding anything contained to the
        contrary in any of the Loan Documents, be obligated to release that portion
        of a
        Project remaining subject to the Deed of Trust given in connection with the
        Master Line made for said Project ("Remaining Property") as of
        the Pay–Off Date and the Remaining Property shall continue to secure the payment
        and performance of the Additional Obligations then remaining subject to the
        Deed
        of Trust as of the Pay–Off Date.

    

     

    13.12                 Relationship
      of Borrower to Agent and Lenders.  Borrower acknowledges
      that Agent, for itself and Lenders, has the sole and exclusive authority to
      perform this Agreement and each of the other Loan Documents on behalf of itself,
      Lenders and any participants.  Borrower will have no obligation to
      deal directly with any of the parties to this Agreement other than Agent with
      respect to the rights, benefits and Obligations of Borrower under this Agreement
      or any of the other Loan Documents.  Borrower will direct all requests
      for approvals and consents from, and determinations to be made by, Agent or
      Lenders to Agent. All communications by Lenders to Borrower in connection with
      the Master Line shall be made through Agent.  With respect to matters
      under the Loan Documents for which approval, consent, or determination of Agent
      or Lenders is required, Borrower’s request will:  (a) be given in the
      form of a written request to Agent; (b) be accompanied by a reasonably detailed
      description of the matter as to which such determination, approval or consent
      is
      requested; (c) include, to the extent not previously provided to Agent, all
      written materials required to be provided by the Loan Documents and as may
      be
      reasonably requested by Agent; and (d) include such other information as Agent
      may reasonably deem appropriate.  In the event that this provision
      conflicts with any other provision hereunder, this provision shall
      control.

     

    13.13                 Participations.  Any
      Lender may, in the ordinary course of its business and in accordance with
      applicable law, and without cost to Borrower, at any time sell to one or more
      banks or other entities (“Participant” or
“Participants”) participating interests in the Obligations
      owing to such Lender, any Note held by such Lender, any Commitment of such
      Lender or any other interest of such Lender under the Loan
      Documents.  In the event of any such sale by a Lender of participating
      interests to a Participant, (a) such Lender’s obligations under the Loan
      Documents shall remain unchanged, (b) such Lender shall remain solely
      responsible to the other parties hereto for the performance of such obligations,
      (c) such Lender shall remain the owner of its Commitment and its portion of
      the
      Obligations and the holder of any Note issued to it in evidence thereof for
      all
      purposes under the Loan Documents, (d) all amounts payable by Borrower
      under this Agreement shall be determined as if such Lender had not sold such
      participating interests and (e) Borrower and Agent shall continue to deal solely
      and directly with such Lender in connection with such Lender’s rights and
      obligations under the Loan Documents.

     

    
      
            

        
        

      

      
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          - 58

        
          

        

      

      
        
        

      

    

     

    13.14                 Assignments.  Any
      Lender may, in the ordinary course of its business and in accordance with
      applicable law, and without cost to Borrower, at any time assign to one or
      more
      banks or other entities (“Purchaser” or
“Purchasers”) all or any part of its rights and obligations
      in,
      to and under the Obligations, its Commitment and the Loan
      Documents.  Such assignment shall be pursuant to an assignment and
      assumption agreement or in such other form as may be agreed to by the parties
      thereto, with Agent’s approval.  The consent of Borrower shall be
      required prior to an assignment becoming effective with respect to a Purchaser
      which is not a Lender or an Affiliate thereof.

     

    13.15                 Dissemination
      of Information.  Borrower authorizes each Lender to
      disclose to any Participant, any Purchaser or any other Person acquiring an
      interest in the Obligations, any Commitment, the Master Line or the Loan
      Documents (each a “Transferee”), and to any prospective
      Transferee, any and all information in such Lender’s possession concerning the
      Project, Borrower or any of its respective Affiliates. Agent and Lenders agree
      to keep confidential all information provided to Agent or Lenders by Borrower
      pursuant to this Agreement; provided, however, that Lender or Agent may also
      disclose any and all information in such Lender’s possession concerning the
      Project, Borrower, or any of its respective Affiliates to:  (a) its
      Affiliates, the other Lenders, Agent or the Affiliates of Agent or the other
      Lenders; (b) the legal counsel, accountants or other professional advisors
      to
      Agent, any Lender, any Transferee or their respective Affiliates; (c) regulatory
      officials; (d) any Person as requested pursuant to or as required by law,
      regulation, or legal process; (e) any Person in connection with any legal
      proceeding to which such Lender is a party; (f) such Lender’s direct or indirect
      contractual counterparties in swap agreements or to legal counsel, accountants
      and other professional advisors to such counterparties; and (g) rating agencies,
      if requested or required by such agencies in connection with a rating relating
      to the Advances hereunder.  Each participant or assignee shall be
      entitled to receive all information received by Lender regarding the
      creditworthiness of Borrower, any of its principals including (without
      limitation) information required to be disclosed to a participant pursuant
      to
      Banking Circular 181 (Rev., August 2, 1984), issued by the Comptroller of the
      Currency (whether the participant is subject to the circular or
      not).  Borrower shall use reasonable efforts to cooperate with Lender
      in connection with the assignment of interests under this Agreement or the
      sale
      of participations herein.  In order to facilitate the assignments or
      participations, Borrower shall execute, acknowledge and deliver any and all
      instruments reasonably requested by Lender to satisfy such purchasers or
      participants including without limitation any restated promissory notes or
      agreements as Lender may reasonably require; provided, that Borrower shall
      not
      be required (i) to execute any document or agreement which would materially
      decrease its rights, or materially increase its obligations, relative to those
      set forth in this Agreement or any of the other Loan Documents (including
      financial obligations, personal recourse, representations and warranties and
      reporting requirements).

     

    13.16                 Waiver
      of Right to Trial by Jury.  BORROWER
      HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
      ANY
      ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF
      ANY
      OF THE LOAN DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY AGENT IN THE
      ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR THE OTHER
      LOAN DOCUMENTS.

     

    
      
            

        
        

      

      
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          - 59

        
          

        

      

      
        
        

      

    

     

    13.17                 Notice
      of Indemnification.  BORROWER
      ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT CONTAINS CERTAIN INDEMNIFICATION
      PROVISIONS WHICH MAY, IN CERTAIN INSTANCES, INCLUDE INDEMNIFICATION BY BORROWER
      OR OTHERS AGAINST AGENT AND LENDERS' OWN NEGLIGENCE (BUT NOT THE GROSS
      NEGLIGENCE OR WILLFUL ACTS OF AGENT OR A LENDER).

     

    13.18                 Entire
      Agreement.  THIS AGREEMENT AND THE OTHER
      LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
      BE
      CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
      AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
      BETWEEN THE PARTIES.  THIS INSTRUMENT MAY BE AMENDED ONLY BY AN
      INSTRUMENT IN WRITING EXECUTED BY THE PARTIES HERETO.

     

    14.           SPECIAL
      TERMS AND PROVISIONS.

     

    14.1                 Co-Lending
      Agreement.  Each Lender shall enter into the Co-Lending
      Agreement as part of becoming a Lender hereunder.

     

    14.2                 Reserved.

     

    15.           ANTI-MONEY
      LAUNDERING AND ANTI-TERRORISM ("AML") REPRESENT­ATIONS, WARRANTIES AND
      COVENANTS.

     

    15.1                 AML
      Representations and
      Warranties.  Borrower represents and
      warrants to Agent as follows, and acknowledges that such representations and
      warranties shall be continuing representations and warranties from Borrower
      to
      Agent:

     

    15.1.1                      Borrower
      is and shall remain in compliance with the Trading with the Enemy Act, as
      amended, and each of the foreign assets control regulations of the United States
      Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other
      enabling legislation, regulations or executive orders relating thereto, and
      the
      Uniting and Strengthening America By Providing Appropriate Tools Required To
      Intercept and Obstruct Terrorism Act (USA Patriot Act of 2001), as amended,
      and
      any other enabling legislation, regulations or executive orders relating
      thereto;

     

    15.1.2                      Borrower
      is and shall remain in compliance with 31 U.S.C., Section 5313, as amended,
      31
      C.F.R. Section 103.22, as amended, and any similar laws or regulations involving
      currency transaction reports or disclosures relating to transactions in currency
      of more than $10,000.00, or of more than any other minimum amount specified
      by
      any laws or regulations; and

     

    15.1.3                      Borrower
      (i) is not a person whose property or interest in property is blocked or subject
      to blocking pursuant to Section 1 of Executive Order 13224 of September 23,
      2001
      Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
      to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) does not
      engage in any dealings or transactions prohibited by Section 2 of such executive
      order, or is otherwise associated with any such person in any manner violative
      of Section 2, or (iii) is not a person on the list of Specially Designated
      Nationals and Blocked Persons or subject to the limitations or prohibitions
      under any other U.S. Department of Treasury’s Office of Foreign Assets Control
      regulation or executive order.

     

    
      
            

        
        

      

      
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    15.2           AML
      Covenant. Borrower covenants and agrees with Agent
      that no part of any Advances evidenced by or referenced in this Agreement,
      and
      no part of any other amounts or sums derived from any property which secures
      repayment of such Advances, including, without limitation, any accounts, payment
      intangibles, money, rents, issues or profits, will be used, directly or
      indirectly, for any payments to any governmental official or employee, political
      party, official of a political party, candidate for political office, or anyone
      else acting in an official capacity, in order to obtain, retain or direct
      business or obtain any improper advantage, in violation of the United States
      Foreign Corrupt Practices Act of 1977, as amended.

     

    

     

     

    

     

    

     

     [The
      balance of this page is intentionally left blank.]

     

     

     

     

    
      
            

        
        

      

      
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          - 61

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto
      have executed this Agreement as of the date set forth on the cover page of
      this
      Agreement.

     

    BORROWER

    

    WILSON
      FAMILY COMMUNITIES, INC.,  a 
Delaware corporation

    

    

    
      	
               

            	
              By:

            	
              /s/
                Clark N. Wilson

            	 

    

    Clark
      N.
      Wilson, its President

    

    

    AGENT

    

    RBC
      CENTURA BANK,

    a
      North
      Carolina banking corporation

     

    
      	
               

            	
              By:

            	
              /s/

            	 

    

    ______________________,
      Vice President

    

    

    LENDER

    Commitment
      Amount:

    $20,000,000.00

    RBC
      CENTURA BANK,

    a
      North
      Carolina banking corporation

    

    

    

    
      	
               

            	
              By:

            	
              /s/

            	 

    

    ______________________,
      Vice President

    

     

     

    [Signatures
      continued on the following page.]

     

     

     

    
      
                       

        
        

      

      
        Loan
          Agreement Signature -
          1

        
          

        

      

      
        
        

      

    

    

    LENDER:

    Commitment
      Amount:

    $15,000,000.00

    FRANKLIN
      BANK SSB,

    a
      Texas
      state savings bank

     

    
      	
               

            	
              By:

            	
               

            	 
	 	 	 ______________________,  ______________  	 

    

                                                       

     

    LENDER:

    Commitment
      Amount:

    $20,000,000.00

    INTERNATIONAL
      BANK OF COMMERCE, LAREDO, TEXAS, a Texas state banking association

    

    

    
      	
               

            	
              By:

            	
               

            	 
	 	 	 ______________________,  ______________

    

     

    

    
      
               

        
        

      

      
        Loan Agreement
          Signature - 2

        
          

        

      

      
        
        

      

    

    EXHIBIT "A"

    RESERVED

     

    

    

    

    

    
      
               

        
        

      

      
        EXHIBIT "A" --
          Page 1

        
          

        

      

      
        
        

      

    

    EXHIBIT "B"

    RESERVED

     

    

    

    

    
      
               

        
        

      

      
        EXHIBIT "B" --
          Page 1    

        
          

        

      

      
        
        

      

    

    EXHIBIT "C"

    ADDITIONAL
      TERMS SCHEDULE

     

    The
      following terms and provisions are incorporated by reference to and made a
      part
      of this Agreement:

     

    1.           DEFINITIONS.

     

    1.1           A&D
      Lot and Entitled Land and Pods Limitations.  Until the
      Pay-Off Date, Borrower, on an aggregate basis, shall comply with the following
      covenants, as evidenced by the financial statements provided by Borrower to
      Agent and Lenders pursuant to the provisions of this Agreement:

     

    
      	
               

            	
              §

            	
              Entitled
                Land and Pods: Not more than fifteen percent (15%) of the
                Eligible Property owned by Borrower shall consist in the aggregate
                of
                Entitled Land or Pods.

            

    

     

    
      	
               

            	
              §

            	
              Developed
                Lots: Not more twenty percent (20%) of the Eligible Property
                owned by Borrower shall consist of Developed
                Lots.

            

    

     

    
      	
               

            	
              §

            	
              Entitled
                Land, Pods, Lots Under Development and Developed Lots: Not more
                fifty-five percent (55%) of the Eligible Property owned by Borrower
                shall
                consist in the aggregate of Entitled Land, Pods, Developed Lots and/or
                Lots Under Development.

            

    

     

    
      	
               

            	
              §

            	
              Entitled
                Land, Pods, Lots Under Development, Developed Lots, and Spec
                Homes: Not more sixty percent (60%) of the Eligible Property
                owned by Borrower shall consist in the aggregate of Entitled Land,
                Pods,
                Developed Lots, Lots Under Development and/or Spec
                Homes.

            

    

     

    
      	
               

            	
              §

            	
              All
                Lots and Homes: No property shall be included as a Project under
                the Master Line unless it is located in the greater Austin, Texas
                metropolitan areas (hereinafter “Geographic
                Limitation”).

            

    

     

    
      	
               

            	
              §

            	
              A&D
                Lot Sub-limit: As used herein, the term “A&D Lot
                Sub-limit” shall mean the aggregate Maximum Allowed A&D Lot
                Allocations with respect to Lots (other than Lots that have been
                reclassified as Homes) included in Eligible Property in an amount
                not to
                exceed the least of (a) the Commitment Amount (less the aggregate
                Home
                Loan Allocations for Homes included as Eligible Property), (b) the
                Borrowing Availability for all Lots Under Development, Developed
                Lots,
                Pods and Entitled Land entered into the Master Line as Eligible Property,
                or (c) the aggregate amount required to comply with the limitations
                in
                this Section 1.1.

            

    

     

    1.2           Letter
      of Credit Line.  The sum of all outstanding Letters of
      Credit made under the Letter of Credit Line at any one time shall not exceed
      the
      aggregate amount of Ten Million Dollars ($10,000,000.00).

     

    1.3           Completed
      Spec Home Limitation; Spec or Model Subdivision
      Limitation.

     

    (a)           The
      total number of completed Spec Homes (not including any Model Homes) included
      in
      the Eligible Property shall not exceed more than twelve percent (12%) of the
      total Borrowing Base Availability for Homes then included in the Eligible
      Property.

     

    
      
               

        
        

      

      
        EXHIBIT
          "C" -- Page 1 

        
          

        

      

      
        
        

      

    

    (b)           After
      twelve (12) months of the date initial inclusion as Eligible Property of Spec
      Homes or Sold Homes, Borrower shall not be entitled to receive any initial
      Advance under the Master Line for more Spec Homes and Sold Homes than ninety
      percent (90%) of the aggregate Allocations for all Homes financed under the
      Master Line.  Upon any three (3) month extension of the initial
      twelve-month period, Borrower shall not be entitled to receive aggregate
      Advances under the Master Line for more Spec Homes and Sold Homes than eighty
      percent (80%) of the aggregate Allocations for all Homes financed under the
      Master Line.  Spec Homes and Sold Homes must be removed from the
      Borrowing Base within eighteen (18) months of such initial inclusion
      date.

     

    (c)           After
      twenty-four (24) months of the date initial inclusion of Model Homes, Borrower
      shall not be entitled to receive aggregate Advances under the Master Line for
      more Model Homes than ninety percent (90%) of the aggregate Allocations for
      all
      Homes financed under the Master Line.  Model Homes must be removed
      from the Borrowing Base within thirty-six (36) months of inclusion
      date.

     

    (d)           Borrower
      shall not be entitled to receive any initial Advance under the Master Line
      for
      more than twelve (12) Spec Homes per Approved Subdivision financed under the
      Master Line.

     

    1.4           A&D
      Lot Maturity Dates:

     

    (i)           For
      all Entitled Land and Pods, the A&D Lot Maturity Date shall be twelve (12)
      Calendar Months; provided however, in no event will any A&D Lot Maturity
      Date extend beyond the Master Line Maturity Date; provided further that any
      Entitled Land Lot or Pod Lot converted to a Lot Under Development or Developed
      Lot, the A&D Lot Eligibility Date shall be re-set to the date of such
      conversion, and the A&D Lot Maturity Date for such converted Lot shall be
      measured from the new A&D Lot Eligibility Date.

     

    (ii)           For
      all Lots Under Development, the A&D Lot Maturity Date shall be twenty-four
      (24) Calendar Months (subject to the extension options provided below in
      subsection (iv)); provided however, in no event will any A&D Lot Maturity
      Date extend beyond the Master Line Maturity Date.

     

    (iii)           For
      all Developed Lots, the A&D Lot Maturity Date shall be eighteen (18)
      Calendar Months; provided, however, that in no event will any A&D Lot
      Maturity Date for any A&D Projects  extend beyond the Master Line
      Maturity Date.

     

    (iv)           Notwithstanding
      any other provision of this Agreement to the contrary, A&D Projects shall be
      removed from the Borrowing Base after twenty-four (24) Calendar Months;
      provided, however, that Borrower shall have the option to extend such date
      up to
      two (2) consecutive six (6)-month extensions, but in no event will any A&D
      Lot Maturity Date for any A&D Projects extend beyond the Master Line
      Maturity Date.

     

    (v)           Land
      and Pods shall be removed from the Borrowing Base or converted to Lots Under
      Development within twelve (12) months after inclusion in Eligible
      Property.

     

    1.5           Home
      Initial Due Dates.  For all Advances for a Lot and Home
      approved hereunder, the Home Initial Due Dates shall be defined as
      follows:

     

    (i)           For
      Spec Homes under construction and Sold Homes, the Home Initial Due Date shall
      be
      twelve (12) months from the date of the initial inclusion of said Homes into
      the
      Master Line; provided, however, in no event will a Home Initial Due Date extend
      beyond the Master
      Line Maturity Date; provided further that for any Lot converted to a Home,
      the
      Home Eligibility Date shall be the date of such conversion, and the Home Initial
      Due Date for such converted Lot shall be measured from the new Home Eligibility
      Date.

     

    
      
               

        
        

      

      
        EXHIBIT
          "C" -- Page 2

        
          

        

      

      
        
        

      

    

     

    (i)           For
      Model Homes, the Home Initial Due Date shall be twenty-four (24) months from
      the
      date of the initial inclusion of said Homes into the Master Line; provided,
      however, in no event will a Home Initial Due Date extend beyond the sooner
      of
      the Master Line Maturity Date or a total period of thirty-six (36) months from
      the date of the initial inclusion of said Homes into the Master Line; provided
      further that for any Lot converted to a Home, the Home Eligibility Date shall
      be
      the date of such conversion, and the Home Initial Due Date for such converted
      Lot shall be measured from the new Home Eligibility Date.

     

    1.6           Master
      Line Termination Date: The Master Line Termination Date is
      June 29, 2008, which date shall be reviewed annually, may be extended by
      Unanimous Lenders in their sole and absolute discretion
      for  successive twelve (12) month periods, so long as the following
      items have been satisfied by the Borrower:

     

    (a)           No
      Event of Default shall exist, and no event shall have occurred and no condition
      shall exist which, after notice or lapse of time, or both, would constitute
      an
      Event of Default;

     

    (b)           There
      shall have been no Material Adverse Effect in the financial condition,
      operations, business or management of Borrower or the Project based upon a
      review by Agent of Borrower's most current financial statements to be provided
      pursuant to the terms of this Agreement;

     

    (c)           If
      requested by Agent, Agent shall have received and approved updated Appraisal(s)
      for the Lots and Homes  within the Eligible Property;

     

    (d)           Borrower
      shall pay all costs and expenses of Agent and Lenders in connection with the
      proposed extension; and

     

    (e)           Agent
      shall have received from Borrower any extension fee in an amount determined
      by
      Agent in its sole and absolute discretion.

     

    1.7           Master
      Line Maturity Date.  The Master Line Maturity Date is
      June 29, 2010; provided, however, that (a) if the Master Line Termination
      Date is extended, the Master Line Maturity Date shall be extended to a date
      twelve (12) Calendar Months after then-current Master Line Maturity Date, or
      (b)
      if the Master Line Termination Date is not extended, the Master Line shall
      convert to the Term-Out Period immediately on the date following the
      then-current Master Line Termination Date.

    

    1.8           Reserved.

    

    2.           MAXIMUM
      ALLOWED LOT ALLOCATION.  Entitled Land,
      Pods, Lots Under Development and Developed Lots included in the Eligible
      Property shall be subject to the following limitations:

     

    2.1           Entitled
      Land.  The lesser
      of fifty percent (50%) of the Appraised Value of the
      Entitled Land or fifty percent (50%) of the aggregate of the cost of the
      acquisition of the Entitled Land.

     

    
      2.2           Pods.  The
        lesser of sixty-five percent (65%) of the aggregate of the
        cost of the acquisition of the Pods or sixty-five percent (65%) of the Appraised
        Value of the Pods.

       

    

    
      
               

        
        

      

      
        EXHIBIT
          "C" -- Page 3

        
          

        

      

      
        
        

      

    

    2.3           Developed
      Lots.  The lesser of seventy-five
      percent (75%) of the aggregate of the cost of the acquisition or seventy-five
      percent (75%) of the Appraised Value of the Developed Lots; provided, however,
      that for any Developed Lots that remain in the Master Line for more than
      eighteen (18) months, the Maximum Allowed Lot Allocation for each such Developed
      Lot shall be reduced to the lesser of sixty percent (60%) of the aggregate
      of
      the cost of the acquisition or sixty percent (60%) of the Appraised Value of
      such Developed Lot.  Developed Lots shall be removed from the
      Borrowing Base after twenty-four (24) months.

     

    2.4           Lots
      Under Development.  The lesser
      of seventy-five percent (75%) of the aggregate of the cost
      or seventy-five percent (75%) of the Appraised Value of the acquisition of
      the
      Lots Under Development and seventy-five percent (75%) of the actual costs of
      development costs.

     

    3.           MAXIMUM
      HOME LOAN ALLOCATION.  The maximum Home
      Loan Allocation for each Lot and Home shall mean, with respect to each such
      Lot
      and Home to be constructed, the least of:

     

    3.1           Maximum
      Sum For Each Home.  Four Hundred
      Seventy-Five Thousand Dollars ($475,000.00).

     

    3.2           Payment
      of Actual Costs.  The sum of the costs
      to be advanced by Agent as shown in the Construction Costs Schedule delivered
      to
      Agent with respect to such Home, which schedule shall in all cases include
      the
      lesser of:  (a) the actual costs, expenses, and fees incurred by
      Borrower; and (b) the amounts allocated for such costs, expenses, and fees
      in
      the line items in the Construction Costs Schedule.

     

    3.3           Loan–to–Value
      Ratio.  Seventy-Five percent (75%) of
      the Appraised Value of such Lot and Home; or

     

    3.4           Loan–to–Cost
      Ratio.  One hundred percent (100%) of
      the actual cost to Borrower of such Lot and Home.

     

    4.           CERTAIN
      LIMITATIONS ON ADVANCE AMOUNTS FOR
      HOMES.  Unless agreed to by Agent in its
      sole and absolute discretion, the Advance made to convert any Lot into a Home
      in
      Eligible Property shall not exceed the amount of the Partial A&D Release
      Price for said Lot to be paid with respect thereto pursuant to the terms
      hereof.

     

    5.           ADDITIONAL
      FINANCIAL COVENANTS.  Until the Advances
      for each Project included herein shall have been paid in full and the Lien
      of
      the Deed of Trust shall have been released, Borrower shall satisfy (or cause
      the
      satisfaction of) the following additional financial covenants
      ("Additional Financial Covenants") in the determination of
      Agent:

     

    5.1           Financial
      Statements.  Borrower will promptly
      furnish to Agent from time to time upon request such information regarding
      the
      business and affairs and financial condition of Borrower and the Related Parties
      as Agent may reasonably request, and Borrower will furnish to
      Agent:

     

    
      
        
        

      

      
        EXHIBIT
          "C" -- Page 4

        
          

        

      

      
        
        

      

    

    
       

      
        	
                REPROTING
                  PARTY

              	
                REQUIRED
                  STATEMENT

              	
                TO
                  BE RECEIVED BY

              
	
                1.   Borrower
                  and Guarantor (on a consolidated basis)

              	
                Annual
                  Financial Statement (CPA-audited and certified by the party submitting
                  the
                  statement)

              	
                Within
                  120 days of each fiscal year end

              
	
                3.   Borrower
                  and Guarantor (on a consolidated basis)

              	
                Monthly  Financial
                  Statement (prepared and certified by the party submitting the
                  statement)

                 

              	
                Within
                  25 days of the end of each Calendar Month

              
	
                4.   Borrower

              	
                Monthly
                  Lot Inventory Status Report (prepared and certified by the party
                  submitting the statement)

              	
                Within
                  45 days of the end of each Calendar Month

              
	
                5.   Borrower

              	
                Quarterly
                  covenant compliance certificate signed by an  authorized signing
                  party

              	
                Within
                  45 days of the end of each Calendar Quarter

              
	
                6.   Borrower

              	
                Monthly
                  Borrowing Base Report which shall be used through the 25th
                  day of the
                  subsequent month

              	
                Within
                  25 days of the end of each Calendar Month

              
	
                7.   Borrower

              	
                Federal
                  tax returns

              	
                Upon
                  filing, but no later than the date required for filing by applicable
                  law

                 

              

      

       

    

    5.1.1           Financial
      Statements of Borrower. As soon as available, and
      in any event within the time periods set forth in the chart above, Borrower
      shall deliver to Agent copies of the financial statements of the parties listed
      in the chart above for such fiscal year. All of the foregoing financial
      statements shall be prepared in reasonable detail in accordance with GAAP,
      and
      shall be signed and certified as true and correct by the reporting
      party.

     

    5.1.2           Other
      Reports.

     

    (a)           Monthly
      Lot Inventory Status Reports.  Promptly
      after becoming avail­able and in any event within the time period set forth
      in the chart above, an Inventory Status Report and a sales report by subdivision
      showing (i) sales of residences (whether or not financed by Agent) since
      the last monthly report, (ii) as to completed residences (whether or not
      financed by Agent), whether or not they are subject to a contract for sale,
      (iii) as to residences under construction (whether or not financed by
      Agent), whether or not they are sold, and (iv) such other information as Agent
      may reasonably request with respect to Borrower's business
      operations.

     

    (b)           Tax
      Returns.  Promptly after becoming
      available and in any event no later than the date required for filing by
      applicable law, the tax returns of Borrower.

     

    (c)           Audit
      Reports.  Promptly upon receipt thereof,
      one copy of each other report submitted to Borrower by independent accountants
      in connection with any annual, interim or special audit made by them of the
      books of Borrower.

     

    5.2           Financial
      Covenants.  Financial covenants
      described in this Section 5.2, together with all other financial covenants
      and
      restrictions set forth in this Agreement shall be monitored on a quarterly
      basis
      by Agent:

     

    
      
        
        

      

      
        EXHIBIT
          "C" -- Page 5

        
          

        

      

      
        
        

      

    

    
      	
              COVENANT
                PARTY

            	
              COVENANT
                TYPE

            	
              COVENANT
                REQUIREMENT

            
	
              1.   Borrower

            	
              Minimum
                Net Worth

            	
              Not
                less than $20,000,000.00  (which amount may be reduced one time
                to an amount not less than $17,000,000.00 for a maximum of one fiscal
                quarter during the term of the Master Line)

            
	
              2.   Borrower

            	
              Maximum
                Debt–to–Equity Ratio (commencing on the date hereof and continuing to
                September 29, 2007)

            	
              Not
                more than 1.75:1.00

            
	
              3.   Borrower

            	
              Maximum
                Debt–to–Equity Ratio (commencing on September 30, 2007 and continuing
                until March 30, 2008)

            	
              Not
                more than 1.85:1.00

            
	
              4.   Borrower

            	
              Maximum
                Debt–to–Equity Ratio (commencing on March 31, 2008 and continuing until
                the Master Line is repaid in full and terminated)

            	
              Not
                more than 2.00:1.00

            
	
              5.
                Borrower

            	
              Working
                Capital

            	
              Not
                less than $15,000,000

            
	
              6.  Borrower

            	
              Asset
                Covenants

            	
              As
                set forth in Section 7 of the Additional Terms
                Schedule

            

    

     

    5.3           Certificates
      of Compliance.  Receipt by Agent of
      Certificates of Compliance (in form and content satisfactory to Agent) executed
      by an authorized agent of Borrower and certifying to Agent that each and every
      representation and warranty in this Agreement and the other Loan Documents
      (including, without limitation, the foregoing Additional Loan Covenants)
      continues to be accurate in all material respects and that all covenants
      contained in this Agreement or in any other Loan Document (including, without
      limitation, the foregoing Additional Loan Covenants) have been fully and
      completely complied with by Borrower to the date of such
      certificates.

     

    6.           SPEC
      OR MODEL SUBDIVISION LIMITATION.  Spec
      Homes and Model Homes included in the Eligible Property shall be subject to
      the
      following limitations:

     

    6.1           Borrower
      shall not be entitled to include a Home as Eligible Property unless Borrower
      may
      include all Homes within the Project containing said Home as Eligible
      Property.

     

    6.2           The
      Lots to be used for the construction of the Model Homes, the Model Homes and
      any
      parking areas used for model complex parking shall remain as Collateral for
      the
      Master Line and shall not be eligible for release from the Deed of Trust for
      the
      subject Project until all Homes of each Model Home's respective plan type in
      said Project have been sold.

     

    7.           ASSET
      COVENANTS:

     

    7.1           Commencing
      on September 30, 2007, and continuing to March 30, 2008, total land inventory
      owned by Borrower in the aggregate shall not exceed twenty percent (20%) of
      the
      tangible assets of Borrower; thereafter from March 31, 2008, and during the
      remaining term of the Master Line,
      total land inventory owned by Borrower in the aggregate shall not exceed fifteen
      percent (15%) of the tangible assets of Borrower.
      

        
          
                

            
            

          

          
            EXHIBIT
              "C" -- Page 6

            
              

            

          

          
            
            

          

        

      

    

     

    7.2           Commencing
      on the date hereof and continuing to September 29, 2007, total acquisition
      and
      development costs for all projects owned by Borrower shall not exceed
      twenty-five percent (25%) of the tangible assets of Borrower, which amount
      shall
      be increased to forty percent (40%) of the tangible assets of Borrower from
      September 30, 2007 to December 30, 2007, and which amount shall be further
      increased to forty-five percent (45%) of the tangible assets of Borrower from
      December 31, 2007 to March 30, 2008, and which amount shall be finally increased
      to fifty-five percent (55%) of the tangible assets of Borrower from March 31,
      2008 through the remaining term of the Master Line.

     

    7.3           Commencing
      on the date hereof and continuing to March 30, 2008, total Land, Lots Under
      Development and Developed Lots combined shall not exceed seventy-five percent
      (75%) of the tangible assets of Borrower; provided, however, that commencing
      on
      March 31, 2008 and continuing during the remaining term of the Master Line,
      this
      percentage requirement shall be reduced to seventy percent (70%) of the tangible
      assets of Borrower.

     

    7.4           At
      no time during the term of the Master Line shall total
      investments by Borrower in joint ventures may not exceed fifteen percent (15%)
      of the tangible assets of Borrower, and Borrower shall not enter into any
      transactions with any affiliates, subsidiaries and/or other related entities
      without Agent’s prior approval, which shall not be unreasonably withheld,
      conditioned or delayed.

     

    7.5           At
      no time during the term of the Master Line
      shall Borrower's balance sheet show spec home inventory
      for all projects owned by Borrower in excess of $25,000,000.00.

     

    8.           PARTIAL
      A&D RELEASE PRICE; RELEASE
      PRICE.  The following terms shall have
      the following meanings:

     

    8.1              Partial
      A&D Release Price.   One
      hundred percent (100%) of the sum of the Maximum A&D Lot Allocation with
      respect to the Lot which is being released, plus all accrued and unpaid interest
      on said Advances.

     

    8.2              Home
      Release Price. One hundred percent (100%) of the
      sum of the Home Loan Allocation with respect to the Lot and Home which are
      being
      released, plus all accrued and unpaid interest on said Advances.

     

    8.6.              Release
      Price.  The "Release
      Price" shall be, with respect to a Lot, the Partial A&D Release
      Price, and with respect to a Home, the Home Release Price.

     

    9.           PROCEDURES
      UPON PARTIAL RELEASE OF LOTS AND HOMES; ADDITIONAL AMOUNTS DUE TO
      AGENT.  Upon the partial release of any
      Lot and Home from the liens securing the Master Line, the following amounts
      shall be paid against the closing costs and then to Agent for application
      against the Indebtedness:

     

    9.1           that
      portion of the sale proceeds required to pay the usual and customary costs
      of
      the closing of the transaction as approved by Agent (including without
      limitation recording costs, tax prorations, title insurance premiums, escrow
      fees and charges, costs and fees related to the purchaser's acquisition loan,
      brokerage commissions and fees and other similar costs approved by
      Agent);

     

    9.2           to
      Agent, the Release Price payable;

    
      
            

        
        

      

      
        EXHIBIT
          "C" -- Page 7

        
          

        

      

      
        
        

      

    

    9.5           to
      Agent, any sums to be deposited in the Special Deposit under
      Section 12;

     

    9.6           to
      Agent, any sums to be deposited in the Borrower's Deposit under
      Section 6.3; and

     

    9.7           the
      remaining proceeds from the transaction shall be paid to Borrower or otherwise
      to Borrower's instructions to the escrow agent handling the
      transaction.

     

    BORROWER

    

    WILSON
      FAMILY COMMUNITIES, INC.,  a Delaware corporation

    
       

      
        	
                 

              	
                By:

              	
                 

              	 

      

      ______________________,
        its ______________

    

    

    
      
            

        
        

      

      
        EXHIBIT
          "C" -- Page 8

        
          

        

      

      
        
        

      

    

    EXHIBIT "D"

    PROJECT
      DISBURSEMENT SCHEDULE

     

    Subject
      to the provisions of the Agreement, Agent shall disburse the proceeds of any
      Advances for costs incurred in connection with the subject Improvements to
      Borrower or, at the option of Agent, directly to contractors, materialmen,
      laborers, architects or any other claimants in connection with the Improvements
      in accordance with the applicable Budget on a line item by line item
      basis.  Such disbursement under the Master Line for each Project shall
      be made as follows:

     

    1.           STANDARD
      DRAW PERCENTAGE ENTITLEMENT BASED ON STAGES OF
      COMPLE­TION.  Master Line funds
      shall be disbursed on a percentage of completion basis upon completion of the
      stages of completion set forth below as verified by Agent's inspection. To
      the
      extent items described in any stage are inapplicable, Borrower shall be entitled
      to disbursement upon the completion of the next applicable stage upon
      verification by Agent's inspection.

     

    
      	
              Finished
                Slab with stub plumbing

            	
              14%

            
	
              First
                Floor Walls

            	
              6%

            
	
              Second
                Floor Joists & Walls

            	
              6%

            
	
              Installed
                Trusses

            	
              6%

            
	
              Cornice
                / Soffit

            	
              3%

            
	
              Roof
                Deck & Felt

            	
              3%

            
	
              Installed
                Windows

            	
              3%

            
	
              Exterior
                Siding, Lath

            	
              3%

            
	
              Rough
                HVAC

            	
              3%

            
	
              Top
                Out Plumbing

            	
              3%

            
	
              Rough
                Electrical

            	
              3%

            
	
              Installed
                Roof

            	
              3%

            
	
              Installed
                Insulation

            	
              1%

            
	
              Installed
                Drywall

            	
              4%

            
	
              Tape,
                Textured & Sanded Drywall

            	
              3%

            
	
              Installed
                Trim

            	
              3%

            
	
              Interior
                Painted

            	
              2%

            
	
              Installed
                Stucco

            	
              3%

            
	
              Exterior
                Painted

            	
              2%

            
	
              Installed
                Cabinets

            	
              3%

            
	
              Installed
                Counter Tops

            	
              2%

            
	
              Final
                Electrical

            	
              2%

            
	
              Final
                Plumbing

            	
              3%

            
	
              Final
                HVAC

            	
              3%

            
	
              Installed
                Appliances

            	
              1%

            
	
              Installed
                Hard Flooring

            	
              3%

            
	
              Installed
                Mirrors/Enclosures/Hardware

            	
              1%

            
	
              Installed
                Carpeting

            	
              2%

            
	
              Exterior
                Doors

            	
              1%

            
	
              Flatwork

            	
              2%

            
	
              Finished
                Grading/Landscaping/Irrigation

            	
              2%

            
	
              Final
                Cleaning

            	
              1%

            
	 	 
	
              Total:

            	
              100%

            

    

    

     

    
      
        
        

      

      
        EXHIBIT
          "D" -- Page 1 

        
          

        

      

      
        
        

      

    

     

    2.           LOAN
      DISBURSEMENTS FOR ITEMS OTHER THAN PROJECT HARD
      COSTS.  Funds shown in any Budget for
      "Contingency" shall be disbursed upon receipt by Agent of a
      written request for such funds from Borrower, together with invoices fully
      supporting the requested disbursement of the Contingency funds.  Funds
      shown in any Budget for all other funds, with the exception of Hard Costs,
      shall
      be disbursed by Agent upon receipt by Agent of a request for such funds from
      Borrower together with documentation satisfactory to Agent that the requested
      Advance is for an item in the applicable Budget which has been paid or incurred
      by Borrower.

     

    3.           EXCESS
      PROJECT COSTS.  In the event that the
      actual cost ("Actual Line Item Cost") of any matter covered by
      any given Allocation in a Budget exceeds the amount actually allocated to such
      line item in said Budget ("Approved Line Item Cost"), Agent
      shall have no obligation to disburse any Master Line proceeds
      until:

     

    3.1           Borrower
      has either:

     

    (a)           provided
      Agent with evidence satisfactory to Agent of Borrower's having paid or incurred
      the amount of the Actual Line Item Cost in excess of the Approved Line Item
      Cost
      ("Excess Cost"), or

     

    (b)           deposited
      with Agent an amount equal to the Excess Cost, or

     

    3.2           Agent
      has approved in its reasonable discretion the transfer of a portion of the
      Contingency and/or any "Cost Savings" (as defined below) to
      such line item in an amount equal to such Excess Cost.

     

    4.           OFFSITE
      MATERIALS.  Agent shall not be required
      to advance Master Line proceeds to pay for any materials until they are
      delivered to the Project and installed in the Improvements. If, in Agent’s sole
      discretion, Agent approves any request for an Advance that includes the cost
      of
      materials that are stored or housed at a location other than the Property or
      that have not been installed in the Improvements ("Offsite
      Materials"), such request shall include each of the
      following:

     

    (a)           evidence
      that Borrower has paid for the Offsite Materials or will cause payment to be
      made promptly upon receipt of the Advance;

     

    (b)           if
      the Offsite Materials are stored at the facilities of the supplier of the
      Offsite Materials ("Offsite Supplier"), a written statement
      from the Offsite Supplier that the Offsite Materials have been segregated from
      other materials in the Offsite Supplier's storage facility and have been marked
      with the name of Borrower.  Such statement shall also include the
      Offsite Supplier's acknowledgment of (a) the right of Agent to enter the
      Offsite Supplier's storage facility at reasonable times for the purpose of
      inspecting or removing the Offsite Materials and (b) Lenders' security
      interest in the Offsite Materials;

     

    (c)           if
      the Offsite Materials are stored in a place other than the facilities of the
      Offsite Supplier, a written statement from the bailee or other custodian
      acknowledging (a) the right of Agent to enter the site where the Offsite
      Materials are stored at reasonable times for the purpose of inspecting or
      removing the Offsite Materials and (b) Lenders' security interest in the
      Offsite Materials;

     

    
      
                           

        
        

      

      
        EXHIBIT
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    (d)           certificates
      of insurance showing the Offsite Materials to be insured as required by the
      Agreement and showing Agent, acting for and on behalf of Lenders, as loss payee;
      and

     

    (e)           as
      requested by Agent, evidence that Borrower has paid all personal property taxes
      applicable to the Offsite Materials.

     

    In
      no
      event shall Agent be required to make payment for Offsite Materials until such
      time as Agent has inspected and approved the Offsite Materials or expressly
      waived the requirement for such inspection and approval.

     

    5.           COST
      SAVINGS.  Upon completion of and
      disbursement for all matters covered by any Allocation in a Budget, or upon
      the
      execution by Borrower and an approved subcontractor of a subcontract for the
      performance of work or furnishing of materials for any given line item in an
      amount that is less than the Approved Line Item Cost for that item, any
      remaining undisbursed amounts shown in said Budget as allocated to that line
      item, or any funds allocated to that line item that exceed the amount of the
      subcontract for that line item (collectively "Cost Savings"),
      shall be transferable to a line item as to which Agent believes that a cost
      overrun exists or may exist; provided, however, that if more than one (1) such
      line item exists, such Cost Savings shall be allocated to the line items and
      in
      the amounts as reasonably determined by Agent.  Any Cost Savings not
      otherwise reallocated pursuant to this Paragraph 5 shall be transferable to
      Contingency in Agent's reasonable discretion, and shall thereafter be available
      for disbursement in accordance with the provisions of Paragraph 1
      above.

    

    

    
      
            

        
        

      

      
        EXHIBIT
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    EXHIBIT "E"

    CLOSING
      CONDITIONS

     

    The
      obligations of Lenders to make any Advance for any Project to Borrower and
      to
      perform the remainder of its obligations under the Agreement are expressly
      conditioned upon the receipt and approval by Agent of each of the following
      items and the satisfaction by Borrower of the following conditions prior to
      the
      inclusion of each Project under the Master Line:

     

    1.           AGREEMENTS.  If
      requested by Agent, one true, correct and complete copy of each of Borrower's
      agreements with any other parties providing contracting, architectural, design
      or engineering services for the Approved Subdivision, including without
      limitation, the Architect's Agreement.  In addition, one true, correct
      and complete copy of:

     

    (a)           if
      requested by Agent, each subcontract or other contract relating to the
      construction of the Improvements entered into by Borrower, Contractor or any
      contractor, as the case may be, and

     

    (b)           each
      engineer's and/or architect's agreement with Borrower pertaining to the Approved
      Subdivision.

     

    Each
      agreement described herein shall be in form and substance satisfactory to Agent,
      and the contract price shall be within the budgeted amounts contemplated by
      the
      applicable Budget and otherwise satisfactory to Agent in all
      respects.  The beneficial interest under any and all said agreement
      shall have been assigned to Agent pursuant to the Assignment of
      Agreements.

     

    2.           APPRAISAL.  An
      Appraisal of the Property in form and content satisfactory to
      Agent.

     

    3.           INSPECTION
      REPORTS.  A copy of all inspection and
      test reports made by or for Borrower, including but not limited to geotechnical
      (soils) tests and reports and any environmental site assessments.

     

    4.           AUTHORIZATIONS.  If
      requested by Agent, Agent shall have received evidence:

     

    (a)           of
      compliance with all Governmental Requirements, and

     

    (b)           that
      all authorizations, including building, permits, annexation agreements, plot
      plan approvals, subdivision approvals, environmental approvals (including an
      environmental impact report or negative declarations if required under
      applicable law), sewer and water permits and zoning, and land use entitlements
      which are necessary for the construction of the Project in accordance with
      the
      proposed Plans and Specifications and in accordance with all applicable
      building, environmental, subdivision, land use and zoning laws and for tax
      assessment purposes, and

     

    (c)           that
      all the streets furnishing access to the Project have been dedicated to public
      use and installed and accepted by applicable Governmental
      Authorities.

     

    5.           TITLE
      REPORT.  The Preliminary Title Report
      and evidence satisfactory to Agent that the Title Company is prepared to issue
      the Title Insurance and copies of recorded documents such as easements, liens
      or
      other matters of public record or known to Borrower affecting the
      Property.

     

    6.           INSURANCE.  The
      policies of insurance required by Agent.

     

    
      
                           

        
        

      

      
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    7.           ORGANIZATIONAL
      DOCUMENTS.  With regard to Borrower,
      Borrower shall have submitted to Agent:

     

    (a)           a
      copy of the Organizational Documents, duly certified by Borrower to be true,
      correct and complete in all respects,

     

    (b)           a
      certificate issued by the Secretary of State of each State in which Borrower
      is
      doing business, certifying that Borrower is in good standing under the laws
      of
      each said State,

     

    (c)           a
      consent authorizing the execution and delivery the Loan Documents to which
      Borrower is a party.

     

    8.           FLOOD
      ZONE.  Evidence satisfactory to Agent as
      to whether:

     

    8.1           the
      Property is located in an area designated by the Department of Housing and
      Urban
      Development as having special flood or mudslide hazards, and

     

    8.2           the
      community in which the Property are located is participating in the National
      Flood Insurance Program.

     

    9.           SOILS
      TESTS.  If requested by Agent, a soils
      test report prepared by a licensed soils engineer, satisfactory to Agent and
      showing the locations of, and containing boring logs for, all borings, together
      with recommendations for the design of the foundations, paved areas and
      underground utilities for the Approved Subdivision.

     

    10.           UTILITIES.  Evidence
      satisfactory to Agent, which may be in the form of letters from local utility
      companies or local authorities, that: (a) telephone service, electric
      power, storm sewer, sanitary sewer and water facilities are available to the
      Property; (b) such utilities are adequate to serve the Approved Subdivision
and exist at the boundary of the Approved Subdivision; and (c) no conditions
      exist to affect Borrower's right to connect into and have unlimited use of
      such
      utilities except for the payment of a normal connection charge and except for
      the payment of subsequent charges for such services to the utility
      supplier.

     

    11.           TAXES,
      ETC.  Evidence satisfactory to Agent that all real estate
      taxes, assessments, water, sewer or other charges levied or assessed against
      the
      Approved Subdivision, except those not yet due or payable, have been paid in
      full.

     

    12.           BANKRUPTCY.  Evidence
      satisfactory to Agent that there is not pending at the time of closing, by
      or
      against Borrower, any petition for reorganization or arrangement under any
      bankruptcy or insolvency law, or any other action brought under such
      law.

     

    13.           ENVIRONMENTAL
      ASSESSMENT.  An environmental assessment
      report for the Property, performed by an environmental engineer that is
      acceptable to Agent, and which assessment shall be in form and substance
      satisfactory to Agent, in Agent's sole discretion.

     

    14.           FINANCIAL
      STATEMENTS.  Current financial
      statements of Borrower.

     

    15.           NON–FOREIGN
      CERTIFICATE.  A certificate of
      Non–Foreign Status for Borrower.

     

    16.           RESERVED.

     

    
      
            

        
        

      

      
        EXHIBIT
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    17.           CLOSING
      COSTS.  The payment of attorneys' fees,
      document review fees, appraisal fees, title insurance premiums and other closing
      costs reasonably incurred by Agent in connection with the closing of the Master
      Line.

     

    18.           COST
      REVIEW.  Agent's receipt, review and
      approval of an independent cost review for the Approved
      Subdivision.

     

    19.           FINAL
      MAP. Agent shall have received a full–size, single
      sheet copy of all recorded subdivision, parcel or plat maps of the Land approved
      (to the extent required by Governmental Requirements) by all Governmental
      Authorities, if applicable, and legible copies of all instruments representing
      exceptions to the state of title to the Project.

     

    20.           LEGAL
      OPINION.  At the option of Agent, Agent
      shall have received from counsel for Borrower, a favorable written opinion
      as to
      all or any of the following (as determined by Agent):

     

    (a)           the
      due execution and delivery of the Loan Documents;

     

    (b)           such
      counsel's knowledge of pending or threatened material litigation or governmental
      or regulatory proceedings against Borrower;

     

    (c)           valid
      formation and existence of Borrower, if applicable, and

     

    (d)           such
      other matters incidental to the formation and continued existence and good
      standing of Borrower or other matters relating to the transactions herein
      contemplated as Agent may request.

     

    21.           COST
      BREAKDOWNS FOR IMPROVEMENTS AND HOMES; PLANS AND
      SPECIFICATIONS.  Agent shall have
      received from Borrower the A&D Budget, the Construction Costs Schedule, the
      final Plans and Specifications and a third party cost review of the same;
      provided, however, that notwithstanding any provision of this Agreement to
      the
      contrary, Agent may agree to include a Project under the Master Line prior
      to
      receipt and approval of the Construction Costs Schedule, Plans and
      Specification, and third party cost review, but Agent shall have no obligation
      to disburse funds for any hard costs which have not been completed prior to
      the
      date hereof, until receipt of said items.  In the event that Borrower
      has not provided the Construction Costs Schedule, Plans and Specification,
      and
      third party cost review in form acceptable to Agent within thirty (30) days
      of
      the Closing Date, Agent in its sole and absolute discretion may declare an
      Event
      of Default under this Agreement.

     

    22.           JOB
      PROGRESS SCHEDULE.  If requested by
      Agent, a schedule of construction progress with the anticipated commencement
      and
      completion dates of each phase of construction and the anticipated date and
      amounts of each Advance for the same.

     

    23.           SITE
      PLAN.  At Agent's request, Borrower
      shall deliver to Agent a site plan showing the location of each Home on its
      respective Lot.

     

    24.           PAYMENT
      OF COSTS.  Agent shall have received
      from Borrower evidence that such sums for insurance, taxes, expenses, charges
      and fees customarily required or recommended by Agent or any Governmental
      Authority, corporation, or person guaranteeing, insuring or purchasing,
      committing to guaranty, insure, purchase or refinance the Master Line or any
      portion thereof.

     

    25.           COMPLIANCE
      CERTIFICATE.  Agent shall have received
      a Compliance Certificate verifying the veracity of certain representations
      and
      warranties of Borrower under this Agreement.

     

    
      
            

        
        

      

      
        EXHIBIT
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    26.           OTHER
      ITEMS.  Such other instruments, evidence
      or certificates as Agent may reasonably request.

     

    

    
      
            

        
        

      

      
        EXHIBIT
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    EXHIBIT ”F”

    FORM
      OF PROJECT LOAN SHEET

    [Project
      Name]

    

    THIS
      PROJECT LOAN SHEET (“Project Loan Sheet” or
“Agreement”) is made as of [DATE], by and among WILSON
      FAMILY
      COMMUNITIES, INC.,  a Delaware
      corporation  (“Wilson”) and [NEW PROJECT ENTITY]
      (“Borrower Party”) (Wilson and Borrower Party collectively are
      referred to as “Borrower”) for
      the benefit of RBC CENTURA BANK, a North Carolina banking corporation
      ((individually, as a co-lender and as administrative agent for all co-agent
      [all
      as defined below “Lender”]).

     

    RECITALS

    

    A.  Lender
      has previously established an unsecured revolving line of credit for Borrower
      pursuant to that certain Borrowing Base Loan Agreement (Syndicated Revolving
      Line of Credit) dated as of June 29, 2007 (as the same has been or may be
      amended from time to time, “Loan Agreement”).  All
      capitalized terms used herein and not otherwise defined shall have the meanings
      set forth in the Loan Agreement.

    

    B.  Borrower
      wishes to apply to include additional “Lots” and
“Homes” as “Eligible Property” within an
“Approved Subdivision”
for
      purposes of calculating the
“Borrowing Availability” under the “Master
      Line” (all as defined in the Loan Agreement), which Lots and Homes are
      more particularly described in the attached Schedule “1”
(“Property”).

    

    C.   Borrower
      is or shall become the owner of the Property that is being pledged and
      encumbered in connection with the making of the Project loan described herein
      (“Project Loan”).  Borrower has agreed to execute
      this Project Loan Sheet in connection with the inclusion of the Lots and Homes
      as Eligible Property, as described herein.

    

    NOW,
      THEREFORE, Borrower represents, warrants and agrees with and for the benefit
      of
      Lender as follows:

    

    AGREEMENT

    

    1.           Joinder
      of Project Under the Loan Documents.

     

    1.1.              By
      its execution hereof, Borrower acknowledges and agrees to be bound by all terms,
      conditions, and covenants set forth in the Loan Agreement, the
“Note” (as defined in the Loan Agreement), and all of the other
      “Loan Documents” (as also defined in the Loan Agreement)
      executed by Borrower in connection with this Project Loan.

     

    1.2.              Borrower
      acknowledges and agrees that its execution hereof is one (1) of the conditions
      precedent to the approval of this Property as Eligible Property under the Master
      Line.  Borrower shall be liable for any and all obligations under the
      Loan Documents pertaining to the acquisition, development and construction
      of
      the Project, as modified and supplemented by this Project Loan
      Sheet.

     

    2.              Representations
      and Warranties.  Borrower represents and warrants to
      Lender that the following statements are true, correct and complete as of the
      date hereof:

     

    (a)              Organization
      and Powers. Borrower is a corporation duly organized and validly
      existing under the laws of the State of Texas.  Borrower has all
      requisite power and authority, rights and franchises to (i) own and operate
      its properties, to carry on its businesses as now conducted and as proposed
      to
      be conducted, and (ii) to enter into and perform under the Loan Agreement
      and other Loan Documents.

    
      
            

        
        

      

      
        EXHIBIT
”F”
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    (b)              Good
      Standing. Each Borrower has made all filings and is in good
      standing in each jurisdiction in which the character of the property it owns
      or
      the nature of the business it transacts makes such filings necessary, or where
      the failure to make such filings could have a materially adverse effect on
      the
      business, operations, assets or condition (financial or otherwise) of
      Borrower.

    

    (c)              Non-Foreign
      Status; Employer Identification Number. Each Borrower is not a
“foreign corporation,” “foreign partnership,” “foreign trust,” or “foreign
      estate,” as those terms are defined in the Internal Revenue Code and the
      regulations promulgated thereunder.

    

    (d)              Additional
      Documents.  Borrower shall execute any and all documents
      required by the Loan Agreement or any of the other Loan Documents as a condition
      to obtaining or effectuating the Master Line, in accordance with the
      requirements of the Loan Agreement.

    

    3.           Other
      Matters.  All other representations and warranties set
      forth in the Loan Agreement are true, complete and accurate as to Borrower
      as of
      the date hereof.  All of the terms and conditions of the Loan
      Agreement shall apply to the Project Loan, except as expressly set forth in
      Schedule “2” attached hereto.

    

    4.           Additional
      Covenants.  Borrower Party covenants and agrees that
      Borrower Party is under common control and ownership with Wilson. In that
      regard, Borrower Party agrees that Lenders’ agreement to make the A&D Loan
      and Construction Loan for the Property is of substantial and material benefit
      to
      Wilson and Borrower Party and further agrees as follows:

     

    (a)              Borrower
      Party shall continue to be liable under this Agreement and the provisions hereof
      shall remain in full force and effect notwithstanding:

     

    (i)            Any
      modification, agreement or stipulation between Borrower, Agent and Lenders,
      or
      their respective successors and assigns, with respect to the Loan Documents
      or
      the obligations encompassed thereby, including without limitation the
      obligations (collectively “Obligations”) secured by the Deed of
      Trust and/or any of the other “Security Documents” (as defined
      in the Loan Agreement) (collectively
“Obligations”);

     

    (ii)            Agent’s
      or any Lender’s waiver of or failure to enforce any of the terms, covenants or
      conditions contained in the Loan Documents or in any modification
      thereof;

     

    (iii)                       Any
      discharge or release of any other Borrower Party (“Other Borrower
      Party”) or any guarantor from any liability with respect to the
      Obligations;

     

    (iv)                       Any
      discharge, release, exchange or subordination of any real or personal property
      then held by Agent and/or Lenders as security for the performance of the
      Obligations;

     

    (v)            Any
      additional security taken for the Obligations, whether real or personal
      property;

     

    
      
            

        
        

      

      
        EXHIBIT
”F”
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          Page 2

        
          

        

      

      
        
        

      

    

     

    (vi)                       Any
      foreclosure or other realization on any security for the Obligations, regardless
      of the effect upon Borrower Party’s subrogation, contribution or reimbursement
      rights against Wilson or any other Borrower Party; or

     

    (vii)                       Any
      additional loans or financial accommodations to Wilson or any other Borrower
      Party.

     

    (b)           Borrower
      Party acknowledges, agrees and affirms that any financial statements, tax
      returns or other documents of Borrower Party heretofore delivered to Agent
      and
      Lenders are true and correct in all material respects.  Such
      statements were prepared in accordance with sound accounting principles
      consistently applied (and with standard accounting principles consistently
      applied) and fairly present the financial position of Borrower Party as of
      the
      date thereof in all material respects.  Borrower Party further
      acknowledges, agrees and affirms that no material adverse change has occurred
      in
      Borrower Party’s financial position since the date of such statements, assuming
      that such financial condition is determined using the same methodology employed
      in preparing the financial statements of Borrower Party heretofore delivered
      to
      Agent and Lenders.

     

    5.           Direct
      Obligations.  The liability of Borrower Party shall be
      direct and immediate as a primary and not a secondary obligation or liability,
      and is not conditional or contingent upon the pursuit of any remedies against
      either Wilson or any Other Borrower Party or any other “Person”
(as defined in the Loan Agreement), or against any other
      ”Collateral” or “Liens” (both as defined in
      the Loan Agreement) held by Agent, acting for and behalf of
      Lenders.  Borrower Party waives any rights which it may have to
      require that (a) Agent, acting for and on behalf of Lenders, first proceed
      against any Other Borrower Party or any other Person with respect to the
      Obligations, or (b) Agent, acting for and on behalf of Lenders, first
      proceed against any specific Collateral held by Agent, acting for and on behalf
      of Lenders, or (c) any pa5ty be joined in any proceeding to enforce the
      Obligations.

    

    6.           Governing
      Law.  This Agreement shall be governed by and construed
      in accordance with the laws of the State of Texas without giving effect to
      conflict of laws principles.

    

    7.           Conditions
      Precedent.  In no event shall Lender have any obligation
      to close this Project Loan unless and until all of the following conditions
      are
      satisfied:

     

    7.1           No
      Defaults.  There shall be no: (a) uncured
“Default” or “Event of Default” (both as
      defined in the Loan Agreement) hereunder or under the Loan Documents; (b)
      continuing representation, covenant or warranty hereunder or under the Loan
      Documents that is false or misleading in any manner; and (c) event currently
      existing which, with the passage of time, will result in a Default or Event
      of
      Default or the falsity of any continuing representation, covenant or warranty
      hereunder or under the Loan Documents.

     

    7.2           No
      Financial Change.  There has been no material adverse
      change in Borrower’s financial condition since the initial delivery by Borrower
      to Lender of financial information for Borrower and/or this
      Property.

     

    7.3           Payment
      Of Costs.  Borrower shall pay all of Lender’s costs and
      expenses reasonably incurred in connection with the documentation and closing
      of
      this transaction, including without limitation all reasonable attorneys’ fees,
      title costs, recording charges and other closing fees and costs.

     

    
      
                           

        
        

      

      
        EXHIBIT
”F”
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          Page 3

        
          

        

      

      
        
        

      

    

    8.           Representations
      and Warranties.  Borrower hereby represents and warrants
      to Lender as follows:

     

    8.1           No
      Default.  No Default or Event of Default under any of the
      Loan Documents has occurred that remains uncured, and no event has occurred
      which, with the giving of notice or the passage of time, or both, would
      constitute a Default or an Event of Default under any of the Loan
      Documents.

     

    8.2           Representations
      and Warranties.  As of the date hereof, all of the
      warranties and representations contained in all of the Loan Documents remain
      true, correct, complete and accurate, and upon the inclusion of the Project,
      all
      of the warranties and representations contained in all of the Loan Documents
      will remain true, correct, complete and accurate.

     

    8.3           No
      Claims or Defenses.  As of the date hereof, neither
      Borrower nor, to the best of Borrower's knowledge, any of its officers,
      directors, employees, members, partners and/or agents has any claims against
      Lender nor defenses to the enforcement of any of the Loan Documents in
      accordance with their respective terms, as amended by this
      Agreement.

     

    8.4           Satisfaction
      of Conditions.  All of the conditions precedent set forth
      above and all of the “Closing Conditions” (as defined in the
      Loan Agreement) set forth in the Loan Agreement, as applicable to this Property,
      have been fully satisfied or waived in writing by Agent.

     

    9.           Further
      Assurances.  Borrower agrees to perform such other and
      further acts, and to execute such additional documents, agreements, notices
      or
      financing statements, as Lender deems reasonably necessary from time to time
      to
      create, preserve, continue, perfect, validate or carry out any of Lender’s
      rights under this Agreement and the other Loan Documents.

     

    10.           Integration.  All
      rights, remedies, powers and interest provided for Lender herein are in addition
      to the rights, remedies, powers and interests provided for Lender in the Loan
      Documents, the terms and provisions of which are incorporated herein by this
      reference and made a part hereof.  If and to the extent any term or
      provision hereof is inconsistent with any term or provision of the Loan
      Documents, the term or provision of this Agreement shall prevail.

     

    11.           Entire
      Agreement; Amendments.  This Project Loan Sheet and the
      other Loan Documents contain the entire agreement between Borrower and Lender
      with respect to this Project, and all prior negotiations, commitments,
      understandings and agreements pertaining to the Project are superseded by this
      Project Loan Sheet and the Loan Documents.  No amendment,
      modification, supplement, extension, termination or waiver of any provision
      of
      this Project Loan Sheet, any Loan Document, or any other agreement executed
      in
      connection with any of the foregoing shall be effective unless in writing and
      signed by Lender and Borrower, and then only in the specific instance and for
      the specific purpose given.

     

    12.           Section
      Headings.  The section headings of this Agreement are
      included for convenience only, and shall not affect the construction or
      interpretation of any provision of this Agreement.

     

    13.           Attorneys’
      Fees.  If any action or other proceeding is brought to
      interpret or enforce any provision of this Project Loan Sheet and the other
      Loan
      Documents, the prevailing party shall be entitled to recover reasonable
      attorneys’ fees and expenses.

     

    
      
                   

        
        

      

      
        EXHIBIT
”F”
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          Page 4

        
          

        

      

      
        
        

      

    

    14.           Binding
      Effect.  This Project Loan Sheet and the other Loan
      Documents shall be binding upon, and shall inure to the benefit of, Borrower
      and
      Lender and their respective successors and assigns, or heirs and personal
      representatives, as applicable, subject to any provision of the Loan Documents
      restricting transfers of the Property.

     

    15.           Severability
      of Provisions.  No provision of this Project Loan Sheet
      or any other Loan Document that is held to be inoperative, unenforceable and
      invalid shall affect the remaining provisions, and all provisions of this
      Project Loan Sheet and the Loan Documents are hereby declared to be
      severable.

     

    16.           Miscellaneous.  No
      reference to this Project Loan Sheet is necessary in any instrument or document
      at any time referring to the Loan Documents.  A reference to the Loan
      Documents shall be deemed a reference to such document as modified
      hereby.

     

    17.           No
      Other Amendments.  Except as may be expressly amended
      herein, the Loan Agreement, Note, Deed of Trust and all of the other Loan
      Documents remain unmodified and in full force and effect.

     

    18.           Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together shall be one and the same
      instrument.

    

    IN
      WITNESS WHEREOF, Borrower has caused this agreement to be executed as of the
      date set forth above.

    

    “Borrower”

    

    WILSON
      FAMILY COMMUNITIES, INC.,  a Delaware corporation

    

    DRAFT
      NOT TO BE SIGNED

    
      
         

        
          	
                   

                	
                  By:

                	
                   

                	 

        

        ______________________,
          its ______________

      

       

    

    “Borrower
      Party”

    

    [BORROWER
      PARTY NAME]

    

    DRAFT
      NOT TO BE SIGNED

    

    
      
         

        
          	
                   

                	
                  By:

                	
                   

                	 

        

        ______________________,
          its ______________

      

    

     

    Acknowledged
      and Approved by Agent:

    

    RBC
      CENTURA BANK, a North Carolina banking corporation

    

    
      
            

        
        

      

      
        EXHIBIT
”F”
--
          Page 5

        
          

        

      

      
        
        

      

    

    
      
        
           

          
            	
                     

                  	
                    By:

                  	
                     

                  	 

          

          ______________________,
            its ______________

 

        

      

    

    
      
            

        
        

      

      
        EXHIBIT
”F”
--
          Page 6

        
          

        

      

      
        
        

      

    

    EXHIBIT ”G”

    FORM
      OF ASSIGNMENT AND ASSUMPTION AGREEMENT

     

    This
      Assignment Agreement (this
“Assignment Agreement”) between RBC CENTURA BANK, a North
      Carolina banking corporation (“Assignor”),
      ________________________ (“Assignee”), and RBC CENTURA BANK, a
      North Carolina banking corporation (“Agent”), and is dated as
      of [DATE].  The parties hereto agree as follows:

    

    1.           Preliminary
      Statement.  Assignor is a party to a Borrowing Base Loan
      Agreement (Syndicated Revolving Line of Credit) dated as of June 29, 2007,
      and Intercreditor Agreement dated as of June 29, 2007 (which, as they may be
      amended, modified, renewed or extended from time to time, collectively is herein
      called the “Loan Agreement”) described in Item 1 of Schedule 1
      attached hereto (“Schedule 1”).  Capitalized terms
      used herein and not otherwise defined herein shall have the meanings attributed
      to them in the Loan Agreement.

     

    2.           Assignment
      and Assumption.  Assignor hereby sells and assigns to
      Assignee, and Assignee hereby purchases and assumes from Assignor, subject
      to
      the terms and conditions herein, (i) all of the Assignor’s rights and
      obligations in its capacity as Lender under the Loan Agreement and any other
      “Loan Documents” (as defined in the Loan Agreement) to the
      extent related to the amount and percentage interest identified in Item 3 of
      Schedule 1 hereto of all of such outstanding rights and obligations of the
      Assignor and (ii) to the extent permitted to be assigned under applicable law,
      all claims, suits, causes of action and any other right of the Assignor (in
      its
      capacity as Lender) against any Person, whether known or unknown, arising under
      or in connection with the Loan Agreement, any other Loan Documents or the loan
      transactions governed thereby or in any way based on or related to any of the
      foregoing, including, but not limited to, contract claims, tort claims,
      malpractice claims, statutory claims and all other claims at law or in equity
      related to the rights and obligations sold and assigned pursuant to clause
      (i)
      above (the rights and obligations sold and assigned pursuant to clauses (i)
      and
      (ii) above being referred to herein collectively as the “Assigned
      Interest”).  Such sale and assignment is without recourse to
      the Assignor and, except as expressly provided in this Assignment Agreement,
      without representation or warranty by the Assignor.

     

    3.           Effective
      Date.  The effective date of this Assignment Agreement
      (“Effective Date”) shall be the later of the date specified in
      Item 5 of Schedule 1 or two (2) Business Days (or such shorter period agreed
      to
      by Agent after this Assignment Agreement, together with any consents required
      under the Agreement, are delivered to Agent). In no event will the Effective
      Date occur if the payments required to be made by Assignee to Assignor on the
      Effective Date are not made on or before the proposed Effective
      Date.

     

    4.           Payment
      Obligations.  In consideration for the sale and
      assignment hereunder, Assignee shall pay Assignor, on the Effective Date, the
      amount agreed to by Assignor and Assignee.  On and after the Effective
      Date, Assignee shall be entitled to receive from Agent all payments of
      principal, interest and fees with respect to the interest assigned
      hereby.  Assignee will promptly remit to Assignor any interest on the
“Advances” (as defined in the Loan Agreement) and fees received
      from Agent which relate to the portion of the Commitment assigned to Assignee
      hereunder for periods prior to the Effective Date and not previously paid by
      Assignee to Assignor.  In the event that either party hereto receives
      any payment to which the other party hereto is entitled under this Assignment
      Agreement, then the party receiving such amount shall promptly remit it to
      the
      other party hereto.

     

    
      
        
                     

        

        
        

      

      
        EXHIBIT
”G”
--
          Page 1 

        
          

        

      

      
        
        

      

    

    5.           Representations
      of Assignor; Limitations on Assignor’s
      Liability.  Assignor represents and warrants that (a) it
      is the legal and beneficial owner of the interest being assigned by it
      hereunder, (b) such interest is free and clear of any adverse claim created
      by
      Assignor, (c) the execution and delivery of this Assignment Agreement by
      Assignor is duly authorized, (d) it has delivered to the Assignee not less
      than
      two Business Days before the date hereof a true and complete copy of the Loan
      Documents, together with all amendments thereto and other modifications thereof
      in effect on the date hereof, (e) it has duly executed and delivered each Loan
      Document to which it is a party, and (f) to the best of Assignor’s actual
      knowledge, all conditions precedent to the making of any Advance before the
      date
      hereof were satisfied without waiver or modification except as heretofore
      disclosed to the Assignee in writing. It is understood and agreed that the
      Assignor makes no other representation or warranty of any kind to the
      Assignee.  Neither the Assignor nor any of its officers, directors,
      employees, agents or attorneys shall be responsible for (i) the due
      execution by any party other than the Assignor, legality, validity,
      enforceability, genuineness, sufficiency or collectability of any Loan Document,
      including, but not limited to, documents granting the Assignor a security
      interest in assets of Borrower, (ii) any representation, warranty or
      statement made in or in connection with any of the Loan Documents, except for
      the Assignor’s own representations and warranties made herein, (iii) the
      financial condition or creditworthiness of Borrower, (iv) Borrower’s
      performance of or compliance with any of the terms or provisions of any of
      the
      Loan Documents, (v) inspecting any of the property, books or records of
      Borrower, (vi) the validity, enforceability, perfection, priority,
      condition, value or sufficiency of any collateral securing or purporting to
      secure the Loan, or (vii) any mistake, error of judgment, or action taken
      or omitted to be taken in connection with the Loan or the Loan
      Documents.

     

    6.           Representations
      and Undertakings of Assignee.  Assignee (a) confirms that
      it has received a copy of the Agreement, together with copies of the financial
      statements requested by Assignee and such other documents and information as
      it
      has deemed appropriate to make its own credit analysis and decision to enter
      into this Assignment Agreement, (b) agrees that it will, independently and
      without reliance upon Agent, Assignor or any other Lender and based on such
      documents and information at it shall deem appropriate at the time, continue
      to
      make its own credit decisions in taking or not taking action under the Loan
      Documents, (c) confirms that the execution and delivery of this Assignment
      Agreement by Assignee is duly authorized, (d) agrees that it will perform in
      accordance with their terms all of the obligations which by the terms of the
      Loan Documents are required to be performed by it as a Lender, (e) agrees that
      its payment instructions and notice instructions are as set forth in the
      attachment to Schedule 1, (f) confirms that none of the funds, monies, assets
      or
      other consideration being used to make the purchase and assumption hereunder
      are
“plan assets” as defined under ERISA and that its rights, benefits and interests
      in and under the Loan Documents will not be “plan assets” under ERISA, and (g)
      if applicable, attaches the forms prescribed by the Internal Revenue Service
      of
      the United States certifying that Assignee is entitled to receive payments
      under
      the Loan Documents without deduction or withholding of any United States federal
      income taxes.

     

    7.           Governing
      Law.  This Assignment Agreement shall be governed by the
      internal law, and not the law of conflicts, of the State of Texas.

     

    8.           Notices.  Notices
      shall be given under this Assignment Agreement in the manner set forth in the
      Loan Agreement.  For the purpose hereof, the addresses of the parties
      hereto (until notice of a change is delivered) shall be the address set forth in
      the Attachment to Schedule 1.

     

    9.           Counterparts;
      Delivery by Facsimile.  This Assignment Agreement may be
      executed in two (2) or more counterparts, all of which shall be deemed an
      original, but all of which together shall constitute one
      agreement.  Transmission by facsimile of an executed counterpart of
      this Assignment Agreement shall be deemed to constitute due and sufficient
      delivery of such counterpart and such facsimile shall be deemed to be an
      original counterpart of this Assignment Agreement.

     

    
      
               

        
        

      

      
        EXHIBIT
”G”
--
          Page 2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the duly authorized
      officers of the parties hereto have executed this Assignment Agreement by
      executing below and Schedule 1 hereto as of the date first above
      written.

     

    ASSIGNEE:

    

    _________________________________________

     

    
      
        
           

          
            	
                     

                  	
                    By:

                  	
                     

                  	 

          

          ______________________,
            its ______________
 

        

      

    

    ASSIGNOR:

    

    RBC
      CENTURA BANK, a North Carolina banking corporation

    

    
      
        
          
             

            
              	
                       

                    	
                      By:

                    	
                       

                    	 

            

            ______________________,
              its ______________
 

          

        

      

    

    AGENT:

    

    RBC
      CENTURA BANK, a North Carolina banking corporation

     

    
      
        
           

          
            	
                     

                  	
                    By:

                  	
                     

                  	 

          

          ______________________,
            its ______________

     

      

    

     

    
      
                   

        
        

      

      
        EXHIBIT
”G”
--
          Page 3

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

    (Assignment
      and Assumption Agreement)

    

    1.           Description
      and Date of Agreement: Borrowing Base Loan Agreement (Syndicated Revolving
      Line
      of Credit) as of June 29, 2007 (“Loan Agreement”) by and
      between WILSON FAMILY COMMUNITIES, INC.,  a Delaware corporation
      (“Wilson”) and [NEW PROJECT ENTITY] (“Borrower
      Party”) (Wilson and Borrower Party collectively are referred to as
“Borrower”), and RBC CENTURA BANK, a North Carolina banking
      corporation (individually, as a "Lender" and as
      "Agent" for all "Lenders" [all as defined in
      the Loan Agreement]).

    

    2.           Date
      of Assignment Agreement: [DATE]

    

    3.           Assigned
      Percentage (As of date of Item 2
      above):      ___%

    

    4.           Assignee’s
      Commitment (or Advances with respect to terminated Commitments)
      purchased

    hereunder:                                                                           $_____________.00

    

    5.           Proposed
      Effective
      Date:                                                                           [DATE]

    

    

    
      	
              Accepted
                and Agreed by Assignor:

               

              RBC
                CENTURA BANK, a North Carolina banking corporation

               

               

              By:____________________________________

              Name:_________________________________

              Title:__________________________________

               

            	
              Accepted
                and Agreed by Assignee:

               

              ___________________________________________

               

               

               

              By:____________________________________

              Name:_________________________________

              Title:__________________________________

               

            
	
              Accepted
                and Consented to by Agent:

               

              RBC
                CENTURA BANK, a North Carolina banking corporation

               

               

              By:____________________________________

              Name:
                ________________________________

              Its:______________________________________

               

            	
              Accepted
                and Consented to by Borrower:

               

              ___________________________________________

               

               

               

              By:____________________________________

              Name:_________________________________

              Title:__________________________________

               

               

            

    

    

    
      
        
               

        

        
        

      

      
        EXHIBIT
”G”
--
          Page 4

        
          

        

      

      
        
        

      

    

     

    ATTACHMENT
      TO SCHEDULE 1

    
      (Assignment
        and Assumption Agreement)

      

      ADMINISTRATIVE
        INFORMATION SHEET

      

      ASSIGNEE
        INFORMATION

       

    

    
      
        	
                Credit
                  Contact: 

              	
                 

              
	 	 
	
                Name: 
                  ____________________________________________

              	
                Telephone
                  No.: ________________________________

              
	
                Fax
                  No.: 
                  ___________________________________________

              	
                Telex
                  No.: ____________________________________

              
	
                 

              	
                Answerback: 
                  _________________________________

              
	
                Key
                  Operations Contacts: 

              	
                 

              
	
                Lending
                  Installation: 
                  _________________________________

              	
                Lending
                  Installation:  ___________________________

              
	
                Name: 
                  ____________________________________________

              	
                Name: 
                  ______________________________________

              
	
                Telephone
                  No.:  _____________________________________

              	
                Telephone
                  No.:  _______________________________

              
	
                Fax
                  No.: 
                  ___________________________________________

              	
                Fax
                  No.:  _____________________________________

              
	
                Telex
                  No.: 
_________________________________________

              	
                Telex
                  No.:  ____________________________________

              
	
                Answerback: 
                  ______________________________________

              	
                Answerback: 
                  __________________________________

              
	
                 

              	
                 

              
	
                Payment
                  Information: 

              	
                 

              
	
                Name
                  & ABA # of Destination
                  Bank: _________________________________________

              	
                 

              
	
                Account
                  Name & Number for Wire Transfer: ___________________________________

              	
                 

              
	
                Other
                  Instructions: 
                  ______________________________________________________

              	
                 

              
	
                 

              	
                 

              
	
                Address
                  for Notices for Assignee: 
                  __________________________________________

              	
                 

              
	
                 

              
	
                RBC
                  CENTURA BANK INFORMATION 

              
	 
	
                 
 
                                 Assignee
                  will be called promptly upon receipt of the signed agreement. 

              
	
                 

              	
                 

              
	
                Initial
                  Funding Contact: 

              	
                Subsequent
                  Operations Contact: 

              
	
                Name:
                  ______________________________________________

              	
                Name: ____________________________________

              
	
                Telephone
                  No.: _______________________________________

              	
                Telephone
                  No.: _____________________________

              
	
                Fax
                  No.: _____________________________________________

              	
                Fax
                  No.: ___________________________________ 

              
	
                RBC
                  Centura Bank Telex
                  No.: _____________________________

              	
                 

              

      

      
        
          
          

        

        
          EXHIBIT
”G”
--
            Page 5

          
            

          

        

        
          
          

        

      

      
        
          	
                  Initial
                    Funding Standards: 

                	
                   

                	
                   

                
	
                   

                	
                   

                
	
                  _______________________________

                	
                   

                
	
                   

                	
                   

                
	
                  RBC
                    Centura Bank Wire Instructions:

                	
                  
                    RBC
                      Centura Bank, ABA # 
                      _____________

                  

                
	 	 
	
                                                                                          
                    Account
                    # __________________

                	
                   

                
	
                   

                
	
                   
                                       
                                       
                                       
                                       
                                                            
                    Ref: WILSON FAMILY COMMUNITIES, INC., a Delaware corporation 

                
	
                   

                	
                   

                	
                   

                
	
                  Address
                    for Notices for RBC Centura Bank: 

                	
                  11011
                    Richmond Avenue, Suite 850, Houston, 

                
	
                   

                	
                   

                	
                  Texas
                    77042 

                
	
                   
                                       
                                       
                                       
                                       
                                       Attn: 
                    ________________________

                	
                   

                
	
                   
                                       
                                       
                                       
                                       
                                       Fax
                    No. _______________________

                	
                   

                

        

      
        
          
          

        

        
          EXHIBIT
”G”
--
            Page 6

          
            

          

        

        
          
          

        

      

SCHEDULE
      2

    (Assignment
      and Assumption Agreement)

    

    LOAN/CREDIT
      RELATED MONEY TRANSFER INSTRUCTION

    

    To
      RBC
      CENTURA BANK, a North Carolina banking corporation, as Agent (the
“Agent”) under the Loan Agreement described below.

    

    
      	
              Re:

            	
              Unsecured
                Revolving Line of Credit Agreement by and between WILSON FAMILY
                COMMUNITIES, INC.,  a Delaware corporation
                (“Wilson”) and [NEW PROJECT ENTITY] (“Borrower
                Party”) (Wilson and Borrower Party collectively are referred to
                as “Borrower”), and RBC CENTURA BANK, a North Carolina
                banking corporation (individually, as a "Lender" and as
                "Agent" for all "Lenders" [all as
                defined below]),.  Capitalized terms used herein and not
                otherwise defined herein shall have the meanings assigned thereto
                in the
                Loan Agreement.

            

    

    

    Agent
      is
      specifically authorized and directed to act upon the following standing money
      transfer instructions with respect to the proceeds of
“Advances” (as defined in the Loan Agreement) or other
      extensions of credit from time to time until receipt by Agent of a specific
      written revocation of such instructions by Borrower; provided, however,
      that Agent may otherwise transfer funds as hereafter directed in writing by
      Borrower.

    

    Facility
      Identification Number(s)
      ______________________________________________________________________________

    

    Customer/Account
      Name ___________________________________________________________________________________                                                     

    

    Transfer
      Funds To
      ________________________________________________________________________________________

     

    For
      Account
      No. _________________________________________________________________________________________                                                         

    

    Reference/Attention
      To
      ____________________________________________________________________________________

    

    ASSIGNEE:

    

    _____________________________________________

    

    

    By: __________________________________________          

    Name:
      ________________________________________                      

    Its: __________________________________________          

    Date: ________________________________________                     

    

    
      
               

        
        

      

      
        EXHIBIT
”G”
--
          Page 7

        
          

        

      

      
        
        

      

    

    EXHIBIT ”H”

    [Reserved]

     

    
      
               

        
        

      

      
        EXHIBIT ”H” --
          Page 1  

        
          

        

      

      
        
        

      

    

    EXHIBIT ”I”

    FORM
      OF BORROWING AVAILABILITY REPORT

     

    

     

    

    EXHIBIT ”I”
--
      Page 1

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