Document:

ex10-12

 

EXHIBIT 10.12

Mr. William W. Boisture

President & Chief Operating Officer

Gulfstream Aerospace Corporation

500 Gulfstream Road

Savannah, GA. 31402

Dear Bill:

Please accept this letter to memorialize our understanding of certain issues
agreed to between you and General Dynamics Corporation.

This letter agreement is predicated on your remaining employed with General
Dynamics Corporation through December 31, 2004. During the term of this
Agreement, you will continue to receive an annual base salary that is no less
than your current base salary. Consistent with our normal practices, your base
salary and bonus will be reviewed annually.

In further consideration, we have agreed to the following:

Relocation from Savannah, Georgia to Ft. Worth, Texas:

General Dynamics Corporation will reimburse you for the cost of moving from
Savannah, Georgia to Ft. Worth Texas. This includes the cost of
packing/unpacking, moving (including transporting one automobile) and storing
(for up to six months, if necessary) your household items and furniture.
General Dynamics Corporation will also reimburse you for the cost of reasonable
real estate commissions and closing costs (including tide charges, settlement
costs and reasonable attorney’s fees) you may incur in the course of selling
your principal residence in Savannah, Georgia.

In the event that your employment terminates prior to December 31, 2004, you
agree to reimburse the Company for the moving expenses and real estate
commissions paid on your behalf.

Retirement Agreement Benefit:

In exchange for devoting your full and exclusive services to General Dynamics
Corporation (and its subsidiaries), effective as of the date below, General
Dynamics Corporation agrees to pay you a “Retirement Agreement Benefit.” Your
Retirement Agreement Benefit shall be calculated as provided below from the
available general assets of the Corporation.

You will continue to participate in the Gulfstream Aerospace Corporation
Pension Plan (the “Savannah Plan”) and accrue benefits thereunder. Your monthly
Retirement Agreement Benefit will be equal to: (l) the benefit calculated in
accordance with the

 

 

general provisions of the General Dynamics Retirement Plan for Salaried
Employees (the “General Dynamics Plan”), as amended, but without regard to the
limitations imposed by Section 415 or 401(a)(17) of the Internal Revenue Code
(as amended) reduced by (2) the monthly retirement benefit you are eligible to
receive under the Savannah Plan (including post-retirement increases as
received). Credited Service used in calculating your Retirement Agreement
Benefit shall reflect both your prior employment with General Dynamics (from
June 26, 1978 to October 9, 1979) and your period of service with Gulfstream.
The General Dynamics Plan benefit is calculated on a single-life basis equal to
the average of your final highest consecutive sixty (60) months of base salary
rates (including amounts eligible to be received in cash, if any, under the
General Dynamics Corporation Executive Compensation Program) times your
Credited Service times 1-1/3 percent. If you retire before age 62, your
Retirement Agreement Benefit will be reduced at the rate of 2-1/2 percent for
each year (or portion thereof) your retirement age is less than 62 years old.
In addition, your Retirement Agreement Benefit shall be reduced (on an
actuarial equivalent basis) for payment in a form other than a single-life
annuity. Your Retirement Agreement Benefit must be paid at the same time and in the
same form that you elect to receive your retirement benefit under the Savannah
Plan.

Your Retirement Agreement Benefit shall be earned site rate of 2-1/12% for each
completed calendar month (starting from January 1, 2001) of active employment
with General Dynamics Corporation. You shall be eligible for the entire benefit
if you maintain active employment with General Dynamics Corporation through and
including December 31, 2004. Your Retirement Agreement Benefit is an unfunded
promise to pay money in the future and shall at all times be subject to the
claims of general creditors of the Corporation.

You shall be eligible for full payment regardless of when you leave employment
if your employment is terminated by reason of your incurring a total and
permanent disability or your employment is terminated without cause. You shall
be deemed totally and permanently disabled if you qualify for a disability
benefit from the Social Security Administration. Your separation of employment
shall be deemed to have terminated without cause as shall be determined within
the sole and absolute discretion of the Compensation Committee of the Board of
Directors.

Your Retirement Agreement Benefit shall be forfeited in full if your employment
with the Corporation is terminated for cause as shall be determined within the sole
and absolute discretion of the Compensation Committee of the Board of Directors.

If you should die prior to retiring from active service, your surviving spouse,
if any, shall receive a monthly benefit payable from the Corporation equal to
the amount determined in the manner described above but reflecting the
pre-retirement surviving spouse provisions of the General Dynamics Plan (50% of
the benefit that you would have received had you retired on the date
immediately prior to your death reduced for commencement prior to age 62, if
applicable, and for form of payment) and reduced by the pre-retirement
surviving spouse’s benefit payable under the Savannah Plan including post-retirement increases.

 

 

I am pleased to provide you with these benefits. If this letter meets with your
approval, please indicate your acceptance by signing and dating below and return
one copy to me.

Sincerely,

General Dynamics Corporation

/s/ Nicholas D. Chabraja

Nicholas D. Chabraja

Chairman of the Board

And Chief Executive Officer

Accepted this 2 day of October, 2001:

/s/ William W. Boisture

William W. Boisture<PAGE>
                                                                    EXHIBIT 4.4

                   SENIOR BORROWING BASE REVOLVING LINE OF CREDIT AGREEMENT
                          Dated as of November 10, 2000

        THE GENESEE COMPANY, a Colorado corporation, and KEYBANK NATIONAL
ASSOCIATION, a national banking association, as Agent and Lead Arranger for the
Banks that are parties to this Agreement for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, hereby agree as
follows:

        1. Definitions. For purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires: the terms defined
in this Section have the meanings assigned to them in this Section, and include
the plural as well as the singular; all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP; all terms not
otherwise defined herein have the meanings assigned to them in the UCC; and if a
term has a meaning assigned to it in accordance with GAAP and in the UCC, the
UCC definition shall apply.

                a. "Accrual Date" shall have the meaning set forth in SECTION
        6(B) below.

                b. "Advance" shall mean an advance to Borrower by Lender under
        the Revolving Line of Credit at the Interest Rate as provided herein.

                c. "Advance Rate" shall mean the Advance Rates established
        below, by property type, based upon the following Gross Margins (as
        defined herein) established by the lesser of: (i) Borrower's immediately
        preceding quarterly consolidated financial statements; or (ii)
        Borrower's consolidated financial statements for the trailing twelve
        (12) months:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                            ADVANCE RATES
---------------------------------------------------------------------------------------
PROPERTY TYPE       GROSS MARGIN 17%      GROSS MARGIN LESS      GROSS MARGIN LESS THAN
                       AND HIGHER        THAN 17% BUT 13% OR     13% BUT 10% OR GREATER
                                               GREATER
---------------------------------------------------------------------------------------
<S>                      <C>                   <C>                      <C>
Pre-Sold                   95%                   90%                      85%
---------------------------------------------------------------------------------------
Specs                      90%                   85%                      80%
---------------------------------------------------------------------------------------
Models                     90%                   85%                      80%
---------------------------------------------------------------------------------------
Finished Lots              75%                   70%                      65%
---------------------------------------------------------------------------------------
</TABLE>

Advance Rates are also subject to compliance with all financial covenants
contained in Section 14 of this Agreement.

                d. "Affiliate" shall mean any Person controlling, controlled by,
        or under common control with another Person, including without
        limitation, any Subsidiary of such Person. For purposes of this
        definition, "control", when used with respect to any specified Person,
        shall

<PAGE>

        mean the power to direct the management and policies of such Person,
        directly or indirectly, whether through the ownership of voting
        securities, by contract or otherwise.

                e. "Agent" shall mean and refer to KeyBank National Association
        in its capacity as agent and "Lead Arranger" and any successor Agent
        appointed hereunder.

                f. "Agreement" shall mean this Borrowing Base Revolving Line of
        Credit Agreement, and all amendments, modifications, replacements, and
        substitutions thereto.

                g. "Anniversary Date" shall have the meaning set forth in
        SECTION 2 below.

                h. "Annual Review" shall have the meaning set forth in SECTION 2
        below.

                i. "Applicable Law" shall mean all applicable provisions of all
        constitutions, statutes, rules, regulations, and orders of any
        governmental authorities; all orders, decisions, and decrees of any
        judicial authorities; and all authorizations, consents, permits,
        approvals, and licenses issued by any governmental or quasi-governmental
        authority.

                j. "Approved Filing" shall mean a residential subdivision Filing
        located in Arizona or Colorado, and owned or optioned in whole or in
        part by Borrower, in which Borrower intends to actively and continuously
        conduct the construction and marketing of single family residential
        properties for sale to individual purchasers and which has been approved
        by Lenders in their sole discretion (which shall not be unreasonably
        withheld) for purposes of including Pre-Sold Units, Spec Units, Model
        Units and Finished Lots in the Borrowing Base.

                k. "Architect" shall mean any Person that acts as the architect
        for the construction of the Improvements.

                l. "Assignment of Plans and Specifications" shall mean the
        Assignment of Plans and Specifications, Architect's and Engineer's
        Agreements, and Construction Contracts executed by Borrower as security
        for the Revolving Line of Credit, as evidenced by the Promissory Note.

                m. "Banking Day" shall mean a day other than a Saturday or
        Sunday on which banks are generally open for business in Denver,
        Colorado.

                n. "Banks" shall mean and refer to a syndicate of banks
        acceptable to Borrower and Agent, including Agent, who are parties to
        and who shall fund this Facility.

                o. "Borrower" shall mean THE GENESEE COMPANY, a Colorado
        corporation.

                p. "Borrowing Base" shall mean Borrower's ability to obtain
        Advances under the Loan Documents during the Term of the Facility
        (availability) subject to the limitations of Section 10(b), (c) and (d)
        hereof based upon the lesser of:

                                        2
<PAGE>

                i.      the Maximum Facility Amount, minus all outstanding
                        Advances to Borrower; or

                ii.     the sum of the aggregate of Borrower's unit costs for
                        the Eligible Pre- sold, Spec and Model Units multiplied
                        by the applicable Advance Rate for each property type;
                        plus the aggregate of Borrower's Lot Costs for Eligible
                        Finished Lots multiplied by the applicable Advance Rate
                        for Finished Lots.

                q. "Borrowing Base Certificate" shall mean the certificate in
        the form of EXHIBIT A attached hereto and incorporated herein by this
        reference.

                r. "Borrowing Base Collateral" shall mean, individually or
        collectively, those parcels of real property owned by Borrower and
        pledged to Lender hereunder as of the Closing Date of the Facility
        (including, without limitation, any Improvements thereon and personal
        property associated therewith) described on EXHIBIT B, plus additional
        parcels of real property owned by Borrower and mortgaged to Lender after
        the date hereof, provided all of such real property consists of Finished
        Lots or Units (a) located within an Approved Filing, (b) against which
        Lender has a perfected first mortgage lien, and (c) for which all the
        requirements set forth in this Agreement for becoming Borrowing Base
        Collateral have been satisfied and which have not under the terms of
        this Agreement ceased to be Borrowing Base Collateral. In the event any
        Finished Lot or Unit or Approved Filing becomes the subject of any
        action by any governmental authority which adversely affects the timely
        substantial completion of the construction of Improvements, or use or
        occupation of such Improvements, or prevents the intended use of such
        Improvements, such Finished Lot, Unit or Approved Filing shall not
        qualify as Borrowing Base Collateral.

                s. "Builder" shall mean any Person that acts as a general
        contractor for the construction of the Improvements.

                t. "Capitalized Lease Obligation" shall mean the amount of the
        obligations under a lease that are required to be capitalized for
        financial reporting purposes in accordance with GAAP.

                u. "Carve-Out Loans" shall mean and refer to individual
        Carve-Out Loans in the form of revolving lines of credit limited to
        Thirteen Million and no/100 Dollars ($13,000,000.00) in the aggregate
        made to Subsidiary Borrowers under the Revolving Line of Credit as
        provided in Section 4 hereof.

                v. "Change" shall mean any change after the date hereof in the
        Risk-Based Capital Guidelines or any adoption of or change in any other
        law or governmental or quasi-governmental rule, regulation, policy,
        guideline, interpretation, or directive (whether or not having the force
        of law) after the date hereof which affects the amount of capital
        required or expected to be maintained by Lender or any corporation
        controlling Lender.

                                        3

<PAGE>

                w. "Closing Date" shall mean the date of this Agreement.

                x. "Collateral" shall mean the Property and all assets of
        Borrower, including, by way of example and not limitation, the following
        types or items of property which are used by Borrower or associated with
        the Property, whether now owned or hereafter acquired and wheresoever
        located, all products and proceeds thereof, all accessions and
        attachments thereto, and all other collateral of any type that may now
        or hereafter be provided to Lender to secure the Obligations or any part
        thereof:

                        i. The Property.

                        ii. All easements and rights-of-way and rights to the
                same belonging or in any way appertaining to the Property.

                        iii. All minerals and mineral rights, including oil,
                gas, gravel, and other minerals, lying in, on, or under the
                surface of the Property.0000000

                        iv. All water and water rights and all ditches and ditch
                rights related or appurtenant to the Property and all water and
                sewer taps belonging to or in any way related to or appurtenant
                to the Property.

                        v. All strips and gores of land lying between the
                Property and streets, roads, highways, or alleys, open or
                proposed.

                        vi. All estates, rights, titles, interests, privileges,
                tenements, hereditaments, and appurtenances of any nature
                whatsoever, in any way belonging, relating, or pertaining to the
                Property.

                        vii. The reversion or reversions, remainder and
                remainders, rents, issues, and profits in any way belonging,
                relating, or pertaining to the Property.

                        viii. All improvements presently located or subsequently
                constructed on the Property.

                        ix. All machinery, apparatus, fixtures, and other
                property of every kind and nature now or hereafter located upon
                the Property and usable in connection with the present or future
                operation of the Property. Borrower shall have the right to
                replace any fixtures or other personal property with comparable
                fixtures or equipment, provided that the Deed of Trust shall
                extend to and represent a lien against all such replacement
                items.

                        x. All deposits, funds, accounts, utility supply
                contracts, contract rights, instruments, documents, marketing
                and sales brochures, general intangibles (including trademarks,
                trade names, and symbols used in connection therewith), and
                notes or chattel paper arising from or by virtue of any
                transaction related to the Property or the

                                        4

<PAGE>

                use thereof and the right to receive and apply the deposits,
                funds, accounts, notes, chattel paper, contract rights,
                instruments, documents, and general intangibles to the payment
                of the Revolving Line of Credit.

                        xi. All permits, licenses, franchises, certificates, and
                other rights and privileges obtained in connection with the
                Property or the use thereof.

                        xii. All contracts for the sale of all or any portion of
                the Property, the proceeds therefrom, and all earnest money
                deposits pertaining thereto, and all proceeds arising from or by
                virtue of the rental or other disposition of all or any of the
                Property and the right to receive and apply all of said proceeds
                to the payment of the Revolving Line of Credit.

                        xiii. All awards or payments, including interest
                thereon, and the right to receive and apply the same to the
                payment of the Revolving Line of Credit, which may be made with
                respect to the Property, whether from the exercise of the right
                of eminent domain (including any transfer made in lieu of the
                exercise of said right) or for any other injury to or decrease
                in the value of the Property.

                        xiv. All leases, sales contracts, and other agreements
                affecting the sale, use, or occupancy of the Property now or
                hereafter entered into, and the right to receive and apply the
                rents, issues, and profits of the Property to the payment of the
                Revolving Line of Credit.

                        xv. Any insurance policies required to be maintained
                hereunder and all proceeds of and any unearned premiums on any
                insurance policies required to be maintained hereunder or
                otherwise covering the Property, including, without limitation,
                the right to receive and apply the proceeds of any insurance,
                judgments, or settlements made in lieu thereof for damage to the
                Property to the payment of the Revolving Line of Credit.

                        xvi. The right, in the name and on behalf of Borrower
                (but without prejudice to the right of Borrower to same), to
                appear in and defend any action or proceeding brought with
                respect to the Property and to commence any action or proceeding
                to protect the interest of Lender in the Property.

                        xvii. All rents, issues, and profits in any way
                belonging, relating, or pertaining to the Property.

                        xviii. All plans, specifications, and drawings for the
                construction of improvements on the Property, whether presently
                existing or subsequently prepared.

                        xix. All other interests of every kind and character
                which Borrower now has or at any time thereafter acquires in and
                to the real and personal property described herein and all
                property which is used or useful in connection therewith,
                including, but

                                        5

<PAGE>

                not limited to, rights of ingress or egress and all reversionary
                rights or interests of Borrower therein.

                        xx. All agreements between Borrower and any Builder or
                between Borrower and any other person or entity approved by
                Lender for work to be performed or materials to be delivered in
                connection with the construction of the Improvements.

                        xxi. All contracts and agreements between Borrower and
                any Architect for the design of any Improvements on the
                Property.

                        xxii. All other agreements and contracts including but
                not limited to land option deposits between Borrower and other
                persons and entities pertaining to the Property.

                y. "Cost of Goods Sold" shall mean and refer to land and land
        development costs, direct and certain indirect construction costs,
        capitalized interest during the period of development through the
        completion of construction, real estate taxes and related improvements.
        Direct construction costs include permits, labor, subcontractors,
        material costs, other unit-specific construction costs, and interim
        financing costs excluding commissions. Indirect construction costs
        include: jobsite and non-unit specific construction costs, including job
        supervision, estimating, purchasing and design personnel, warranty
        costs, construction vehicles, tools and any other indirect costs.

                z. "Debt" shall mean with respect to a Person, without
        duplication: (i) all items which constitute liabilities on the liability
        side of a balance sheet of such Person as of the applicable date of
        determination, including, without limitation, Capitalized Lease
        Obligations; and (ii) all obligations of other Persons which such Person
        has guaranteed.

                aa. "Debt to Tangible Net Worth Ratio" shall mean the ratio
        determined by comparing Borrower's Debt to Borrower's Tangible Net Worth
        on the applicable date of determination.

                bb. "Deeds of Trust" shall mean the Deeds of Trust to be
        executed by Borrower as security for the Revolving Line of Credit, as
        evidenced by the Promissory Notes. The Deeds of Trust shall be and at
        all times during the term of the Revolving Line of Credit remain a first
        priority lien against the Collateral encumbered thereby subject only to
        the Permitted Encumbrances.

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

                dd. "Default Rate" shall mean at any time the lesser of (i)
        three percent (3.0%) over the highest non-default Interest Rate, which
        Default Rate shall change when and as the Interest Rate changes or (ii)
        the highest non-usurious interest rate permitted by applicable law.

                                        6

<PAGE>

                ee. "Dollars" or the sign "$" shall mean lawful money of the
        United States of America.

                ff. "Eligible Finished Lots" shall mean all Finished Lots of
        Borrower except the following:

                        i.      Finished Lots held in Borrower's inventory for
                                more than eighteen (18) months.

                        ii.     Finished Lots that are not located in an
                                Approved Filing.

                        iii.    Finished Lots that are not subject to a first
                                priority lien and security interest in favor of
                                Lender subject only to the Permitted
                                Encumbrances.

                gg. "Eligible Model Units" shall mean all Model Units of
        Borrower except the following:

                        i.      Model Units held in Borrower's inventory for
                                more than twenty-four (24) months.

                        ii.     Model Units that are not located in an Approved
                                Filing.

                        iii.    Model Units that are not subject to a first
                                priority lien and security interest in favor of
                                Lender subject only to the Permitted
                                Encumbrances.

                hh. "Eligible Pre-Sold Units" shall mean all Pre-Sold Units of
        Borrower except the following:

                        i.      Pre-Sold Units held in Borrower's inventory for
                                more than twelve (12) months.

                        ii.     Pre-Sold Units that are not located in an
                                Approved Filing.

                        iii.    Pre-Sold Units that are not subject to a first
                                priority lien and security interest in favor of
                                Lender subject only to the Permitted
                                Encumbrances.

                ii. "Eligible Spec Units" shall mean all Spec Units of Borrower
        except the following:

                        i.      Spec Units held in Borrower's inventory for more
                                than eighteen (18) months.

                                        7

<PAGE>

                        ii.     Spec Units that are not located in an Approved
                                Filing.

                        iii.    Spec Units that are not subject to a first
                                priority lien and security interest in favor of
                                Lender subject only to the Permitted
                                Encumbrances.

                jj. "Engineer" shall mean any Person approved by Lender that
        acts as an engineer for Borrower.

                kk. "Equity Investment" shall mean the amount of capital
        investment by Fortress in Borrower from time to time, as shown on
        Borrower's books and records and in the financial statements delivered
        to Lender.

                ll. "ERISA" shall mean the Employee Retirement Income Security
        Act of 1974, and all amendments, modifications, replacements, and
        substitutions thereto.

                mm. "ERISA Affiliate" shall mean Borrower and each person under
        common control with Borrower or otherwise treated as a single employer
        under IRC Section 414.

                nn. "Event of Default" has the meaning specified in SECTION 16
        below.

                oo. "Facility" shall mean and refer to the Revolving Line of
        Credit provided to Borrower by Lenders pursuant to this Agreement and
        the Loan Documents.

                pp. "Filing" shall mean any lot or lots platted together under a
        single filing number, which plat has received final subdivision approval
        under the Applicable Laws of the governing jurisdiction as evidenced by
        recordation of the final approved plat for the subdivision filing with
        all applicable governmental authorities.

                qq. "Final Term" shall have the meaning set forth in SECTION 2
        below.

                rr. "Finished Lot" shall mean a platted and developed lot
        located within a Filing, upon which development of infrastructure has
        been completed which infrastructure shall include but not be limited to
        (i) paved road access, (ii) water, sewer, and other utility services
        (except telephone service which shall be available upon substantial
        completion of the Unit) available at the lot line, (iii) curbs and
        gutters, and (iv) sidewalks if required in connection with site
        development. Once a Finished Lot becomes a Unit, such Finished Lot shall
        no longer be considered a Finished Lot for the purposes of this
        Agreement.

                ss. "Fortress" shall mean THE FORTRESS GROUP, INC., a Delaware
        corporation, its successors and assigns.

                tt. "GAAP" shall mean generally accepted accounting principles
        in effect in the United States of America, applied on a consistent
        basis.

                                        8

<PAGE>

                uu. "Genesee" shall mean THE GENESEE COMPANY, a Colorado
        corporation (Tax Identification Number 841166364), its permitted
        successors and assigns.

                vv. "Gross Margin" shall mean and refer to Borrower's
        consolidated Gross Profit divided by Borrower's consolidated Total
        Revenue.

                ww. "Gross Profit" shall mean and refer to Borrower's
        consolidated Total Revenue less Cost of Goods Sold.

                xx. "Improvements" shall mean the improvements constructed or to
        be constructed on the Property.

                yy. "Indemnified Liabilities" shall have the meaning set forth
        in SECTION 19 below.

                zz. "Indemnitees" shall have the meaning set forth in SECTION 19
        below.

                aaa. "Insurer" shall mean Land Title Guarantee Company as to the
        Colorado property, and Fidelity National Title Insurance Company as to
        the Arizona property.

                bbb. "Interest Rate" shall mean the KeyBank Prime Rate as it is
        defined herein.

                ccc. "Inventory Auditor" shall mean RE-TECH, Inc.

                ddd. "IRC" shall mean the United States Internal Revenue Code of
        1986, and all amendments, modifications, replacements, and substitutions
        thereto.

                eee. "KeyBank Prime Rate" shall mean the higher of the rate of
        interest determined and publicly announced by Agent from time to time at
        its principal office as its "prime rate" or the federal funds effective
        rate, plus one-half of one percent (.50%). The Prime Rate is not
        necessarily the lowest rate charged by Agent on its loans; may or may
        not be the best or most favorable interest rate charged by Agent for
        commercial or other loans; and is set by Agent in its sole discretion.
        If Agent shall cease to determine and announce a Prime Rate during the
        term hereof, Agent may designate a substitute prime rate announced or
        quoted by another bank of its choosing after notifying Borrower. Agent
        will advise Borrower of the current Prime Rate upon Borrower's request.

                fff. "Key Capital" shall mean KEY CAPITAL MARKETS, INC., its
        successors and assigns.

                ggg. "Lenders" shall mean KEYBANK NATIONAL ASSOCIATION, a
        national banking association, and the Banks.

                hhh. "Loan Documents" shall mean the Commitment, this Agreement,
        the Revolving Notes, any other promissory notes, deeds of trust,
        mortgages, pledge or security agreements, guaranties, and other loan
        documents related to or given in connection with the transactions

                                        9

<PAGE>

        contemplated herein, and all amendments, modifications, replacements,
        and substitutions thereto.

                iii. "Loan Fees and Costs" shall mean all loan fees to be paid
        by Borrower to Lenders pursuant to the terms of the Commitment and this
        Agreement, together with all reasonable and necessary costs and expenses
        paid to third parties by Lenders in connection with the Revolving Line
        of Credit, which shall be reimbursed to Lender by Borrower, including,
        by example and not limitation, surveys of the Property and title
        insurance policies insuring title to the Property; inspection fees; and
        all attorney's fees incurred by Lender arising out of, as a result of,
        or in connection with the Revolving Line of Credit.

                jjj. "Lot Cost" shall mean the Dollars actually expended by
        Borrower for the hard costs necessary to acquire a Finished Lot. The
        Dollars expended by Borrower for sales commissions shall not be included
        in the determination of the Lot Cost for any Lot.

                kkk. "Maintenance Agreement" shall mean and refer to the
        Maintenance and Subordination Agreement between The Fortress Group, Inc.
        and Agent pertaining to maintenance of Borrower's net worth, prohibition
        on Loans to Borrower and other matters as reflected therein.

                lll. "Master Budgets" shall mean the master budgets for each
        Filing and each Finished Lot and Unit therein prepared by Borrower and
        acceptable to Lenders in their sole discretion, and all amendments,
        modifications, replacements, and substitutions thereto.

                mmm. "Maturity Date" shall mean February 1, 2002.

                nnn. "Maximum Facility Amount" shall mean Fifty Million and
        No/100 Dollars ($50,000,000.00).

                ooo. "Model Unit" shall mean a Unit that (a) is not subject to a
        Sale Contract, (b) has been or is being constructed as a model for
        display to and inspection by potential purchasers of other Units in the
        Filing, and (c) incorporates typical construction and features of the
        other Units.

                ppp. "Net Worth" shall mean Borrower's net worth as determined
        in accordance with GAAP. Notwithstanding the foregoing, the term "Net
        Worth" shall include, without duplication, the Restricted Equity
        Investment to the extent the Restricted Equity Investment has been
        subordinated to the Revolving Line of Credit and shall not include any
        notes or accounts receivable owing to Borrower from Fortress, any
        shareholder, officer, director, Affiliate, or Subsidiary of Borrower,
        Fortress, or any other Person related to Borrower or Fortress. Loans to
        Fortress from Borrower shall be debited against Borrower's Net Worth.

                qqq. "Obligations" shall mean each and every debt, liability,
        and obligation of every type and description which Borrower may now or
        at any time hereafter owe to Lenders,

                                       10
<PAGE>

        whether such debt, liability, or obligation now exists or is hereafter
        created or incurred, whether it arises in a transaction involving
        Lenders alone or in a transaction involving other creditors of Borrower,
        and whether it is direct or indirect, due or to become due, absolute or
        contingent, primary or secondary, liquidated or unliquidated, or sole,
        joint, several, or joint and several, and including, but not limited to,
        all indebtedness of Borrower arising under this Agreement, the Revolving
        Note, or any other loan or credit agreement or guaranty between Borrower
        and Lenders, whether now in effect or hereafter executed.

                rrr. "Outstanding Principal Balance" shall mean the aggregate
        principal amount outstanding under the Revolving Line of Credit.

                sss. "PBCG" shall mean the Pension Benefit Guaranty Corporation,
        and any successor thereof.

                ttt. "Permitted Encumbrances" shall mean the liens, security
        interests, and encumbrances against the Collateral that have been
        disclosed on the Commitment for title insurance to the Collateral, or
        otherwise agreed to in writing by Lender.

                uuu. "Person" shall mean any individual, corporation,
        partnership, joint venture, limited liability company, limited liability
        partnership, association, joint-stock company, trust, unincorporated
        organization, or governmental or quasi-governmental authority or any
        agency or political subdivision thereof.

                vvv. "Plan" shall mean an employee benefit plan or other plan
        maintained for employees of Borrower or any ERISA Affiliate and covered
        by Title IV of ERISA.

                www. "Plans and Specifications" shall mean the plans and
        specifications for construction of the Improvements.

                xxx. "Pre-Sold Unit" shall mean a Unit that is subject to a Sale
        Contract and does not constitute a Spec Unit.

                yyy. "Property" shall mean the real property owned by Borrower
        located in Arizona and Colorado, more particularly described on EXHIBIT
        B attached hereto and incorporated herein by this reference and all
        other real property of Borrower, whether now owned or hereafter
        acquired, that is pledged to Lender as collateral for the Revolving Line
        of Credit, including, without limitation real property acquired by
        Borrower using Advances.

                zzz. "Regulation D" shall mean Regulation D of the Board of
        Governors of the Federal Reserve System, all amendments, modifications,
        replacements, and substitutions thereto or other regulation or official
        interpretation of said Board of Governors relating to reserve
        requirements applicable to member banks of the Federal Reserve System.

                aaaa. "Regulatory Change" shall mean (i) the enactment after the
        date hereof of any new Applicable Law, (ii) the enactment or other
        effectuation of any change in any existing

                                       11
<PAGE>

        Applicable Law, (iii) the adoption after such date of any new, or the
        adoption or other effectuation of any change in any existing,
        interpretation, directive, or request (whether or not having the force
        of law), or (iv) any change in the administration or enforcement of any
        Applicable Law, provided however, a general increase in the tax rate
        applicable to taxable income earned by Lender shall not constitute a
        Regulatory Change.

                bbbb. "Reportable Event" shall have the meaning assigned to that
        term in Title IV of ERISA.

                cccc. "Restricted Equity Investment" shall mean the amount of
        Equity Investment which is necessary, when added to Borrower's Tangible
        Net Worth, to avoid a breach of Borrower's Debt to Tangible Net Worth
        Ratio or Net Worth requirements set forth in this Agreement.

                dddd. "Revolving Line of Credit" shall mean the revolving line
        of credit in the maximum aggregate principal amount of the Maximum Loan
        Amount being made available to Borrower by Lenders pursuant to the
        Commitment and this Agreement.

                eeee. "Revolving Notes" shall mean the master Revolving
        Promissory Notes to Lenders evidencing their respective interests in
        this Facility in the aggregate principal amount of Fifty Million and
        no/100 Dollars ($50,000,000.00) in the form of EXHIBIT C attached hereto
        and incorporated herein by this reference, and all amendments,
        modifications, replacements, and substitutions thereto.

                ffff. "Risk-Based Capital Guidelines" shall mean the risk-based
        capital guidelines in effect in the United States on the date hereof,
        including transition rules, and the corresponding capital regulations
        promulgated by regulatory authorities outside the United States of
        America, including transition rules, in effect on the date hereof.

                gggg. "Sale Contract" shall mean a binding, written, bona fide
        contract for the construction and sale of a completed Unit that (i) has
        been fully executed by Borrower and an unaffiliated purchaser on terms
        conforming to Borrower's ordinary practices in the sale of such Units,
        (ii) provides for an earnest money deposit, (iii) provides for a closing
        within twelve (12) months from the date of the contract, and (iv)
        contains no contingencies or cancellation rights in favor of the
        purchaser other than for (a) Borrower's default, (b) the purchaser's
        inability to obtain financing as provided in the Sale Contract (provided
        that purchaser has obtained and delivered to Borrower a
        pre-qualification letter for a permanent loan issued by a recognized
        lender and Borrower has delivered same to Lender immediately after the
        date of execution of such Sale Contract), (c) material title defects not
        acceptable to the purchaser, and (d) the sale of the purchaser's current
        residence.

                hhhh. "Security Agreements" shall mean the Security Agreements
        executed by Borrower as security for the Revolving Line of Credit, as
        evidenced by the Revolving Notes. The Security Agreements shall be and
        at all times during the term of the Revolving Line of

                                       12
<PAGE>

        Credit remain a first priority lien against the Collateral encumbered
        thereby subject only to the Permitted Encumbrances.

                iiii. "Security Instruments" shall mean the Deeds of Trust; the
        Security Agreements; the Assignment of Plans and Specifications; and
        such other documents as may be reasonably required by Lender to fully
        encumber the Collateral with a first priority lien and security interest
        and secure the Revolving Line of Credit.

                jjjj. "Senior Indenture" shall mean the Indenture dated as of
        May 21, 1996 and as modified as of May 27, 1997 between Fortress and IBJ
        Schroder Bank & Trust Company, a banking organization under the law of
        New York, as trustee.

                kkkk. "Spec Unit" shall mean either (i) a Unit that is not
        subject to a Sale Contract, (ii) a Unit that is subject to a Sale
        Contract that has been rejected by Lender, or (iii) a Unit that has been
        the subject of two (2) prior Sale Contracts which have been accepted by
        Lender but which have not closed and fully funded in accordance with
        their terms.

                llll. "Subcontractor" shall mean any person performing services
        and providing material in connection with the Improvements other than
        Borrower or any Builder.

                mmmm. "Subsidiary" shall mean any corporation, partnership,
        limited liability company or partnership, or other entity of which more
        than fifty percent (50%) of the outstanding ownership interests are
        directly or indirectly owned by a Person, by a Person and one or more
        entities of which more than fifty percent (50%) of the outstanding
        ownership interests are directly or indirectly owned by that Person, or
        by one or more corporations, partnerships, limited liability companies
        or partnerships, or other entities of which more than fifty percent
        (50%) of the outstanding ownership interests are directly or indirectly
        owned by a Person.

                nnnn. "Subsidiary Borrowers" shall mean and refer to Genesee
        Communities II, IV, V, VI, VII and VIII each of which is a Colorado
        corporation and an affiliate of Borrower.

                oooo. "Tangible Net Worth" shall mean Borrower's Net Worth minus
        the aggregate book value of all intangible assets included in
        determining Borrower's Net Worth.

                pppp. "Tax" shall mean any federal, state, or foreign tax,
        assessment, or other governmental charge or levy (including any
        withholding tax) upon assets, revenues, income, or profits (other than
        income and franchise taxes) imposed upon Lenders by the jurisdictions
        (or any political subdivision thereof) in which Lenders are located.

                qqqq. "Term" shall mean November 1, 2001.

                rrrr. "Total Revenue" shall mean and refer to all of Borrower's
        consolidated revenue from all of its operations including but not
        limited to home and lot sales.

                                       13
<PAGE>

                ssss. "UCC" shall mean the Colorado Uniform Commercial Code or
        the Arizona UCC with respect to Arizona Collateral as in effect from
        time to time.

                tttt. "Unit" shall mean a Finished Lot (including, without
        limitation, the improvements thereon and personal property associated
        therewith) or a Pre-Sold Unit, Spec Unit, or Model Unit that has been or
        is being constructed, provided that the building permit and taps for
        utility services have been obtained and the fees therefor and other
        governmental or quasi- governmental fees which are required to be paid
        at the time of and as a condition to issuance of the building permit
        have been paid.

                uuuu. "Unit Costs" shall mean those reasonable and necessary
        Dollars actually expended by Borrower for hard costs and approved by
        Lenders in connection with the construction of a Unit, including the
        costs of governmental permits and utility taps specifically associated
        with the Unit or with obtaining a building permit therefor, excluding,
        however, all of the following:

                        i. general and administrative expenses of Borrower;

                        ii. marketing costs and sales commissions incurred to
                generate sales;

                        iii. fees and other expenses pertaining to permanent
                financing (or commitments therefor) for purchasers of Units;

                        iv. amounts paid to Affiliates for goods, services, real
                estate, or other items in excess of the amounts which
                independent third parties would charge for comparable goods,
                services, real estate, or other items;

                        v. profit on transfers of real property, Finished Lots,
                and Units by and among Borrower and any shareholders,
                Affiliates, or Subsidiaries of Borrower or Fortress;

                        vi. the costs of interior decorating, wallpaper, window
                coverings, furniture provided for a Unit, sidewalks installed in
                connection with a Model Unit not otherwise required by
                governmental regulation, or any other Model Unit upgrades from
                base product unit;

                        vii. landscaping, fencing, sprinkler systems not
                otherwise included in the purchase price of the Unit;

                        viii. any other costs of Borrower not directly
                associated with the construction of the Unit; and

        2. Term of Revolving Line of Credit. The Term of the Revolving Line of
Credit shall be for a period of twelve (12) months to and including November 1,
2001. Not later than Ninety (90) days prior to the anniversary of the Closing
Date ("Anniversary Date") Borrower shall deliver to

                                       14
<PAGE>

Lenders a written request to consider the extension of the Term of this Facility
for an additional Twelve (12) months. On or before November 1, 2001, Lenders
shall determine, by unanimous approval, in their sole discretion, whether or not
they will consider extending this Facility for an additional Twelve (12) months.
If Lenders unanimously decide, in their sole discretion, to consider extension
of this Facility, Lenders shall thereafter offer to Borrower the terms and
conditions and the Interest Rate upon which any such extension shall be made.
Borrower shall have to and including December 14, 2001, within which to
unconditionally accept, in writing, Lenders' commitment letter containing all of
the terms and conditions, and the Interest Rate upon which such extension may be
made. In the event Lenders' commitment letter is accepted by Borrower, as
provided herein, Borrower shall have to and including February 1, 2002, within
which to execute and deliver to Lenders all Loan Documents required by Lenders
to extend this Facility for an additional Twelve (12) months.

        If Lenders, in their sole discretion, decide not to extend the Facility,
following Borrower's timely written request therefore, the Facility shall
possess an additional term of Three (3) months from November 1, 2001 to February
1, 2002. The final Three (3) month period shall be referred to as the "Final
Term." The last day of the Final Term shall be referred to herein as the
Maturity Date.

        During the Final Term, Borrower shall have full availability under the
Facility. All outstanding amounts under the Facility, including the Carve-Out
Loans, shall be due and payable in full together with accrued interest thereon
at the Maturity Date.

        3.     Advances.

               a. Maximum Amount. Provided that no Default or Event of Default
        has occurred and is continuing under this Agreement or any other Loan
        Document and that all fees provided in this Agreement have been paid by
        Borrower, Lenders agree to provide Borrower with Advances from the date
        hereof to the Maturity Date pursuant to the terms and conditions set
        forth in EXHIBIT G of this Agreement. The aggregate outstanding amount
        of all Advances shall not exceed the lesser of the Maximum Facility
        Amount of Fifty Million and no/100 Dollars ($50,000,000.00); or the
        Borrowing Base at any time. All Advances under the Revolving Line of
        Credit shall accrue interest under the terms and conditions set forth in
        this Agreement and such Advances together with any interest, fees,
        expenses, and other amounts owing to Lenders in connection therewith
        shall be secured by the Collateral. In the event the Outstanding
        Principal Balance exceeds the Maximum Facility Amount, Borrower shall
        pay Lenders, on demand, the amount of Advances in excess of the Maximum
        Facility Amount together with interest thereon (from the date of the
        disbursement thereof to Borrower until repayment to Lenders) at the
        Default Rate. Notwithstanding anything to the contrary herein, the
        Borrowing Base shall be reduced by the following: i. any Unit which is
        materially damaged by fire, accident or other hazard; or ii. any Unit or
        Units located in an Approved Filing which is subsequently disapproved by
        Lenders due to material and negative adverse financial changes to any
        special district in which such Approved Filing is located.

               b. Minimum Weekly Advances. Borrower may request advances of not
        less than One Hundred Thousand and No/100 Dollars ($100,000.00) for each
        week during the Term of the Revolving Line of Credit, provided, however,
        that in no instance shall Borrower request

                                       15
<PAGE>

        any Advances that would cause the outstanding amount of the Revolving
        Line of Credit to exceed the Maximum Facility Amount.

               c. Requests for Advances. Each request for an Advance shall be
        made in writing, specifying the date of the requested Advance and the
        amount thereof. Advances may be requested by any agent authorized in
        writing by Borrower. Any request for an Advance shall be deemed to be a
        representation by Borrower that the terms and conditions for such
        Advance that are described in this Agreement have been satisfied in a
        complete manner.

                d. Timing of Requests. Any request for an Advance shall be
        provided to Lenders no later than 11:00 a.m. (Denver, Colorado time)
        three Business Days prior to the date of disbursement.

                e. Disbursement of Monies to Borrower. So long as no Default or
        Event of Default has occurred and is continuing upon the date of
        disbursement and all the conditions precedent described in this
        Agreement have been satisfied in a complete manner, Lenders shall
        provide Borrower with any requested Advance in accordance with EXHIBIT G
        hereof by crediting such Advance to Borrower's demand deposit account
        maintained with Agent.

        4. Carve-Out Loans to Subsidiary Borrowers. Lenders shall make available
to the following Subsidiary Borrowers, each of whom is an affiliate of Borrower,
individual revolving lines of credit not to exceed Thirteen Million and no/100
Dollars ($13,000,000.00) in the aggregate for construction of attached
single-family residences by Subsidiary Borrowers in approved Filings within the
State of Colorado: Genesee Communities II, Genesee Communities IV, Genesee
Communities V, Genesee Communities VI, Genesee Communities VII, and Genesee
Communities VIII, all of which are Colorado corporations. Within the aggregate
Carve-Out Loan limit of $13,000,000.00, Lenders may make revolving lines of
credit available to such Subsidiary Borrowers as is requested by Borrower. The
Carve-Out Loans shall be evidenced by separate Promissory Notes and Loan
Agreements and shall be secured by such deeds of trust, security instruments and
such other Loan Documents related to the Property and the Subsidiary Borrower
which is the subject of each Carve-Out Loan as Lenders shall require. Advances
under the Carve-Out Loans to Subsidiary Borrowers shall reduce availability to
Borrower under the Borrowing Base established by this Agreement. As each of the
revolving Carve-Out Loans is repaid and not renewed by the Subsidiary Borrower,
availability under the Borrowing Base of this Facility shall be restored to
Borrower. The Collateral pledged for the Carve-Out Loans will be encumbered by
first priority liens not to exceed the Maximum Facility Amount as defined in the
Carve-Out Loan Agreements. Only the Subsidiary Borrower which executes the
Carve-Out Loan Documents in favor of Lenders shall be liable for the amounts
advanced under the specific Carve-Out Loan; provided, however, Borrower shall
guarantee all of the obligations and all indebtedness of Subsidiary Borrowers
under the Carve-Out Loans. In addition, each of the Carve-Out Loans shall be
cross-defaulted with this Loan.

        5. Interest Rate. The principal of the Advances outstanding from time to
time during any month shall bear interest (computed on the basis of actual days
elapsed in a 360-day year) at the applicable Interest Rate; provided, however,
that from the first day of any month during which any Default or Event of
Default occurs or exists at any time, in Lenders' discretion and without waiving

                                       16
<PAGE>

any of its other rights and remedies, the principal of the Advances outstanding
from time to time shall bear interest at the Default Rate; and provided,
further, that in any event no rate change shall be put into effect which would
result in a rate greater than the highest rate permitted by Applicable Law.

        6. Payments.

                a. Interest. Borrower shall pay to Lenders interest on the
        Outstanding Principal Balance on the first day of each month beginning
        on December 1, 2000.

                b. Default Interest and Late Charges. In the event that any
        payment (except payment of principal and accrued and unpaid interest on
        the Maturity Date) is not received by Lenders within fifteen (15) days
        after the due date of such payment, Borrower shall pay to Lenders a late
        charge in an amount equal to five percent (5%) of the amount of such
        delinquent payment. In addition to the late charge referred to above, in
        the event that any monthly payment of interest payable hereunder is not
        made by the fifteenth (15th) day after the due date of such payment
        ("Accrual Date"), or the Outstanding Principal Balance and accrued and
        unpaid interest thereon due on acceleration hereof or on the Maturity
        Date are not paid when due, then such amounts shall bear interest from
        the Accrual Date, Maturity Date or effective date of acceleration
        hereof, as applicable, until paid at the Default Rate. Nothing set forth
        in this section shall imply any obligation on the part of Lenders to
        accept any payment not made when due, and acceptance by Lenders of any
        such late payment together with any late charge and/or default interest
        shall not be deemed to extend the due date of any other payment or waive
        Lenders' rights to declare a default hereunder if any such other payment
        is not made when due. Borrower acknowledges that it would be extremely
        difficult and impracticable to determine Lenders' actual damages
        resulting from any late payment and the aforementioned late charge and
        default interest are reasonable estimates of those damages

                c. Maturity Date. Borrower shall pay to Lenders all outstanding
        amounts with respect to the Revolving Line of Credit (including without
        limitation, any outstanding Advances and all accrued but unpaid
        interest, fees, expenses, and charges with respect to the Revolving Line
        of Credit) on the Maturity Date at which time Lenders' obligation to
        provide Borrower with any additional Advances shall be terminated.

                d. Prepayment Fees. Without limiting any other amounts required
        to be paid by Borrower to Lenders pursuant to this Agreement, Borrower
        shall be entitled to prepay any Advance or the Revolving Line of Credit
        at any time; provided, however that (i) if Borrower makes any prepayment
        that causes or is caused by a reduction in the Maximum Loan Amount,
        Borrower shall pay to Lenders all accrued but unpaid interest, costs,
        fees, and expenses pertaining to the amount prepaid along with the
        prepayment.

                e. Application of Payments. For so long as there does not exist
        a Default or an Event of Default hereunder, all payments received by
        Lenders under this Agreement, the Promissory Note, the Deed of Trust, or
        any other Loan Document shall be applied as follows, regardless of any
        designation of such payments as principal, interest, or other charges:
        first, to the repayment of sums advanced or incurred by Lenders pursuant
        to the terms of any of the

                                       17
<PAGE>

        Loan Documents, including, without limitation, sums advanced for the
        payment of taxes, assessments, insurance premiums, late charges, or
        other charges against the Collateral (together with interest thereon
        from the date of advance until the date repaid at the Default Rate),
        then to the payment of the interest then due and payable, and then to
        the payment of principal. From and after an Event of Default, all
        payments received by Lenders hereunder or under any other Loan Document
        shall be applied by Lenders to principal, interest, and/or other charges
        due hereunder or under the other Loan Documents in such order as Lenders
        shall determine in their sole subjective discretion including, without
        limitation, the application of payments to the Obligations in the
        inverse order of maturity.

               f. Form of Payments. All payments with respect to the Revolving
        Line of Credit and the other amounts to be paid to Lenders under this
        Agreement and the other Loan Documents shall be made to Lenders in
        Dollars and in immediately available funds. Following the occurrence and
        during the continuance of an Event of Default, Borrower hereby
        authorizes Lenders, in their discretion, to charge such amounts and any
        other amounts owing by Borrower to Lenders against Borrower's depository
        and other accounts (except for trust accounts) with Lenders and further
        authorizes Lenders, in its discretion, to make an Advance under the
        Revolving Line of Credit to the extent necessary to pay any amounts
        owing under this Agreement and the other Loan Documents.

                g. Place of Payment. All payments with respect to this Facility
        shall be made in care of Agent at:

                      KeyBank National Association
                      1675 Broadway, Suite 400
                      Denver, CO 80202
                      Attn: Paul Holden, Vice President

               h. Payment on Non-Banking Days. Whenever any payment to be made
        hereunder shall be stated to be due on a day which is not a Banking Day,
        such payment may be made on the next succeeding Banking Day, and such
        extension of time shall in such case be included in the computation of
        interest on the Advances or the fees hereunder, as the case may be.

                i. Other Payments. In its sole discretion, Lenders may make
        Advances to pay, either to itself or a third party, as applicable, any
        of the following:

                        i. Loan Fees and Costs;

                        ii. Any amounts necessary to clear title to the Property
                or to pay liens and encumbrances upon the Property prior to the
                lien of the Security Instruments;

                        iii. Any other amounts Lenders may reasonably determine
                are due and payable in connection with the terms and provisions
                hereof or of the Loan Documents, or are due and payable to
                preserve any Collateral for Lenders; and

                                       18
<PAGE>

                        iv. Interest on the Revolving Line of Credit.

                j. Revolving Notes; Ledgers and Other Records. All Advances
        shall be evidenced by and accounted for, cumulatively under the
        Revolving Notes executed by Borrower in favor of Lenders in the amount
        of their respective interests in this Facility. The principal amount of
        all Advances outstanding shall be evidenced by the Revolving Notes or
        any ledger or other record of Lenders. The ledgers and other records of
        Lenders shall be conclusive and binding evidence of the amounts owing
        and unpaid on the Revolving Notes absent manifest error.

        7. Changes; Regulatory Changes.

                a. Changes. If Lenders determine that the amount of capital
        required or expected to be maintained by Lenders or any corporation
        controlling Lenders is increased as a result of a Change, then, within
        fifteen (15) days after demand by Lenders, Borrower shall pay Lenders
        the amount necessary to compensate for any shortfall in the rate of
        return on the portion of such increased capital which Lenders determine
        is attributable to this Agreement or its obligation to make the
        Revolving Line of Credit and charge interest at the LIBOR Rate.

                b. Regulatory Changes. If any Regulatory Change:

                        i. shall subject Lenders to any Tax, duty, or other
                charge determined by Lenders to be applicable to the Revolving
                Line of Credit or any portion thereof, or shall change the basis
                of taxation of payments to Lenders of the principal of or
                interest on the Revolving Line of Credit or any portion thereof;
                or

                        ii. shall impose, increase, modify, or deem applicable
                any reserve, special deposit, assessment, or other requirement
                or condition against the assets of or deposits with Lenders or
                on account of the credit extended by Lenders;

        and the result of the foregoing is (1) to reduce the amount of any sum
        received or receivable by Lenders with respect to the Revolving Line of
        Credit or any portion thereof or the return to be earned by Lenders on
        the Revolving Line of Credit or any portion thereof, (2) to impose a
        cost on Lenders that is attributable to maintaining the Revolving Line
        of Credit or any portion thereof, or (3) to require Lenders to make any
        payment on or calculated by reference to the gross amount of any amount
        received by it hereunder or under the other Loan Documents, then, within
        fifteen (15) days after demand by Lenders, Borrower shall pay to Lenders
        such additional amount or amounts as Lenders reasonably determine will
        compensate Lenders for such reduction, increased cost, or payment.

               c. Notification. Lenders shall promptly notify Borrower of any
        circumstance that would make the provisions of this Section applicable,
        but the failure to give any such notice shall not affect Lenders' rights
        hereunder. Such notice shall set forth the factual basis underlying the
        circumstances giving rise to such notice.

                                       19
<PAGE>

                d. Determinations. In making the determinations contemplated by
        this Section, Lenders may make such estimates, assumptions, allocations,
        and the like that Lenders determine to be appropriate, and Lenders'
        selection thereof and the determinations made by Lenders on the basis
        thereof, shall be final, binding, and conclusive upon Borrower, except,
        in the case of such determinations, for manifest errors in computations
        or transmission.

        8. Borrower's Indemnity of Lenders. The requirements of this Loan
Agreement are for Lenders' sole protection and benefit, and Lenders do not
assume, nor may it be construed or inferred to assume, any obligation to
Borrower to supervise any disbursement process for Borrower's protection and
benefit. Lenders' only responsibility in this regard is to make Advances in
accordance with this Agreement. Lenders may, in their discretion, obtain or
require lien waivers, releases, or other documents to evidence receipt of
payment of the Revolving Line of Credit proceeds from any Builder,
Subcontractor, materialman, laborer, or any other such party. Borrower hereby
specifically acknowledges that said documents shall be obtained for Lenders'
sole and absolute benefit and that Lenders assume no responsibility, express or
implied, in any capacity whatsoever, to obtain such documents for or on behalf
of Borrower. No action taken by Lenders to obtain or require such documents in
any instance shall impose on them any duty to obtain or require such documents
at any future instance. Borrower specifically agrees to hold harmless and
indemnify Lenders from and against all claims, loss, damage, cost, and expense
arising out of the disbursement process, including, but not limited to, loss
resulting from materialmen's or mechanics' liens.

        9. Fees.

               a. Facility Fee. Borrower shall pay to Lenders, pro rata, a
        Facility fee of One- Half of One Percent (.50%) or Two Hundred Fifty
        Thousand and No/100 Dollars ($250,000.00) from the proceeds of the
        Facility at closing and annually thereafter at each Anniversary Date
        during the Term hereof and as it may be extended from time to time
        hereafter in accordance with this Agreement.

               b. Other Costs, Expenses, and Fees. Borrower shall pay or
        reimburse Lenders for their fees and expenses (including, without
        limitation, reasonable legal fees and all accounting, audit, and field
        examination fees and expenses) incurred by Lenders in connection with
        the preparation, negotiation, execution, delivery, filing, recording,
        and administration of this Agreement and the other Loan Documents, the
        protection, collection, enforcement, and exercise of any obligations,
        rights, and remedies under this Agreement and the other Loan Documents,
        and the collection, protection, repossession, storage, preparation,
        processing, manufacture, sale, use, disposition, and foreclosure of any
        Collateral. Borrower also shall pay or reimburse Lenders for all taxes
        (except Lenders' income taxes), fees, duties, imposts, and other charges
        incurred by or imposed upon Lenders in connection with the Revolving
        Line of Credit and other financial accommodations described in this
        Agreement and the other Loan Documents.

        10. Collateral Provisions.

                                       20
<PAGE>

                a. Collateral. The Revolving Line of Credit and all of
        Borrower's Obligations to Lenders under this Agreement and the other
        Loan Documents shall be secured at all times by first priority liens
        against the Collateral.

                b. Spec and Model Unit Limitations. At any time while there
        remain outstanding Obligations under the Loan Documents or the Revolving
        Line of Credit, Borrower shall not maintain more than the following Spec
        Units and Model Units under the Borrowing Base:

                                   -BORROWER-

<TABLE>
<CAPTION>
------------------------------------------------------------------------
                    SINGLE-FAMILY RESIDENTIAL UNITS
------------------------------------------------------------------------
<S>                <C>
Pre-Solds          No Limitation
------------------------------------------------------------------------
Specs              Maximum of 2 Per Approved Filing except Pima
                   County, Arizona with 4 per Approved Filing
------------------------------------------------------------------------
Models             Maximum of 2 Per Approved Filing
------------------------------------------------------------------------
Finished Lots      Lesser of Maximum of 1,000 Finished Lots in
                   Aggregate for Borrower and all Subsidiary Borrowers;
                   or $22,000,000 of the Borrowing Base
------------------------------------------------------------------------
</TABLE>

                             -SUBSIDIARY BORROWERS-

<TABLE>
<CAPTION>
------------------------------------------------------------------------
                      ATTACHED RESIDENTIAL UNITS
------------------------------------------------------------------------
<S>                <C>
Pre-Solds         No Limitation
------------------------------------------------------------------------
Specs             2 Buildings Per configuration Per Approved Filing
------------------------------------------------------------------------
Models            1 Per Plan Model Type Per Approved Filing
------------------------------------------------------------------------
Finished Lots     Included in Lot Limitations of Borrower above
------------------------------------------------------------------------
</TABLE>

                c. Finished Lot Limitations/Total Land Inventory. Borrower may
        not own or possess in the aggregate land inventory on its balance sheet
        in excess of 150% of Borrower's Net Worth, tested quarterly.

                d. Work in Process Limitation. Borrower shall not have work in
        process (property or improvements which are neither a Finished Lot, or a
        completed Unit) which exceeds the lesser of $90,000,000.00 (based on
        completion amount) or 150% of the Borrowing Base at any one time, tested
        monthly.

                                       21
<PAGE>

                e. Inventory Audits. Lenders shall perform sample inventory
        audits of Borrower's inventory of Pre-Sold Units, Spec Units, Model
        Units, and Finished Lots within thirty (30) days of the Closing Date and
        thereafter on a quarterly basis (or at such other intervals as Lenders
        may reasonably require at Borrower's expense, not to exceed
        ________________and No/100 Dollars ($_________) per audit. Lenders
        reserve the right to exceed this limit if changes imposed by regulatory
        authorities or internal Lenders auditors require an audit of greater
        scope.

                f. Cross-Collateralization/Cross-Default. All Advances under the
        Revolving Line of Credit shall be cross-collateralized and
        cross-defaulted as between the Obligations owed to Lenders by Borrower
        and by Subsidiary Borrowers.

        11. Additional Collateral Approval Process. In the event that Borrower
desires to add additional Approved Filings, or additional Property in currently
Approved Filings, to the Collateral for purposes of calculating Advances under
the Borrowing Base, the following procedures shall apply:

               a. Documents to be Filed. Prior to or concurrent with the
        submission of a filing for approval as an Approved Filing, Borrower
        shall submit to Lenders and make available to Lenders the following
        documents in form and substance satisfactory to Lenders (the "Master
        Filing Documents"):

                      i. A current title commitment issued by Insurer committing
               to issue to Lenders a Title Policy in the form and substance
               described in Section 12(a)(xi) which will insure a Deed of Trust
               as a first and prior lien on Lots or Units located in the Filing
               and will insure that merchantable title to the Lots or Units
               located in the Filing is or will be vested in Borrower subject to
               acquisition of title to real property under contract. Title shall
               be subject only to the Deed of Trust and such other exceptions as
               may be acceptable to Lenders. The Insurer shall provide Lenders
               with legible copies of all documents and instruments shown in
               Schedule B-2 as exceptions to title, and, if requested by
               Lenders, all recorded documents and instruments shown in Schedule
               B-1, the releases of which are requirements of Title Policy
               issuance;

                      ii. A copy of the recorded plat delineating the entire
               Filing dimensions and individual lot dimensions and ingress and
               egress to the Filing and each lot therein. The plat must show all
               easements, ditches, streets, lot lines, rights-of-way, any lot,
               block and street delineations or designations affecting the
               Filing and encroachments, if any, onto the Filing and must bear
               the consent of any senior liens of record as of the date of plat
               approval;

                      iii. Evidence of zoning or a copy of the final approved
               Planned Unit Development ("PUD") map or other development plan
               for the Filing of subdivision within which the Filing is located,
               containing all use or building conditions or restrictions
               affecting the Filing;

                        iv. Evidence of availability of Utility Services to the
                Filing boundaries;

                                       22
<PAGE>

                        v. Soils reports prepared by a registered soils
                engineer, indicating that the Filing is suitable for the
                construction of the contemplated improvements;

                        vi. Evidence of comprehensive general public liability
                insurance or "umbrella" coverage with limits of not less than
                Ten Million and No/100 Dollars ($10,000,000.00);

                        vii. Evidence of Workmen's Compensation insurance;

                        viii. Evidence of all-risk course of construction and
                casualty insurance with standard of non-contributing mortgage
                clause, a lender's loss payable endorsement naming Lenders
                and/or assigns, together with a full replacement cost
                endorsement;

                        ix. If required by Lenders, master drainage plan for the
                Filing;

                        x. Evidence satisfactory to Lenders that no Finished
                Lot, nor any portion thereof, lies within any area designated as
                wetlands or is subject to federal, state or local regulations
                restricting the use of the property as a consequence of the
                presence of wetlands or, if any portion of the Finished Lot is
                subject to wetlands restrictions, evidence satisfactory to
                Lenders of compliance of the appropriate party with any permit
                or restrictions;

                        xi. Upon request by Lenders, a copy of any preliminary
                development plan or similar plan ("PDP") for the Filing or in
                which the Filing is located, approved by the appropriate
                governmental or quasi-governmental authorities;

                        xii. A copy of any environmental impact statements for
                the Filing or for property including the Filing, prepared under
                or required by federal law, if any to Borrower's knowledge and
                reasonably available to Borrower without statutory petition;

                        xiii. Copies of any and all CC&R's affecting the Filing;

                        xiv. Identification of any Special Districts affecting
                the Filing and, at the request of Lenders, boundary map of the
                Special District, financial statements and outline of the debt
                structure of the Special District available to the Borrower or
                to the public, and names and telephone numbers of the district
                manager, if any, and officers of the Special District;

                        xv. Copies of any purchase or option contracts affecting
                the Filing or under which Borrower is entitled to acquire title
                to the real property and of any agreements affecting title to or
                a possessory interest in the Filing, or any portion thereof, not
                otherwise recorded in the Official Records;

                        xvi. Copies of any subdivider's agreements or
                subdivision improvement agreements affecting the Filing, and
                copies of any other agreements with governmental

                                       23
<PAGE>

                or quasi-governmental entities in the nature of subdivider's
                agreements or subdivision improvement agreements, pursuant to
                which the Borrower or an Affiliate or Related Entity, as
                developer or owner of property located in the Filing, is
                obligated to pay or perform any obligations regarding
                development, or copies of any other such agreements known and
                available to Borrower pursuant to which a third-party developer
                is obligated to pay or perform development obligations, not
                otherwise recorded in the Official Records;

                        xvii. Copies of any marketing brochures or materials
                regarding the Filing and Units built or to be built in the
                Filing if prepared or otherwise available on the date of request
                for Filing approval, with copies delivered subsequently as and
                when available;

                        xviii. Phase One Environmental Audits and any subsequent
                required audits prepared by an environmental engineering company
                approved by Lenders and in substance satisfactory to Lenders for
                the Filing or the portion thereof which Borrower has the right
                to purchase;

                        xix. At the request of Lenders, copies of construction
                and engineering drawings and specifications, including, but not
                limited to, the following:

                                (1) sanitary sewer lines;

                                (2) storm sewer lines;

                                (3) water lines;

                                (4) cut and grade;

                                (5) curb and gutter;

                                (6) gas and electrical companies' construction
                        drawings or other evidence of the location of these
                        utilities, if available;

                                (7) any off-site improvements;

                        xx. Copies of plans and specifications for each base
                unit product line to be built in the Filing;

                        xxi. Detailed cost breakdown on a cost allocation form
                acceptable to Lenders for each base unit product line to be
                built in the Filing;

                        xxii. Base unit selling price for each product line on a
                standard Lot (without lot premium) in the Filing in which such
                product line is being or will be built;

                                       24
<PAGE>

                        xxiii. The Proforma Absorption Plans for the Filing, if
                not contained in Borrower's report entitled "Budget
                Projections;"

                        xxiv. Evidence satisfactory to Lenders that any
                obligations of Borrower, an Affiliate, or a Related Entity, as
                developer, regarding development in connection with the Filing
                arising under agreements with governmental or quasi-governmental
                entities or providers of utility services or governmental
                regulations which could become a lien against property located
                in the Filing or a restriction against the issuance of building
                permits in the Filing (collectively, "Development Obligations")
                have been satisfied or performance of the Development
                Obligations has been secured by adequate financial security such
                as bonds letters of credit or certificates of deposit pursuant
                to the agreements creating the Development Obligations or the
                requirements of the utility provider and the same evidence of
                satisfaction or performance with respect to a third- party
                developer of a Filing, to the extent available to the Borrower
                upon request;

                        xxv. Evidence satisfactory to Lenders that no portion of
                the Filing, of which Borrower, an Affiliate, or a Related Entity
                is the developer, is subject to restrictions against the
                issuance of building permits as security for performance of the
                Development Obligations and the same evidence with respect to a
                Filing of which a third-party is developer, to the extent
                available to the Borrower upon request.

                        xxvi. Other information and documents which may be
                reasonably requested by Lenders.

                b. Approval of Filing. Lenders shall have the right, in their
        sole discretion (which shall not be unreasonably withheld), to approve
        or disapprove the Filing as an Approved Filing for purposes of Borrowing
        Base eligibility. Lenders shall give Borrower written notice within ten
        (10) Business Days after the later of i. submission of the last to be
        submitted of the Master Filing Documents of its approval or disapproval
        of the Filing, or ii. completion by Lenders of their internal review of
        the Environmental Audit for the Filing. In the event that Lenders
        disapprove a Filing, Borrower may, subject to Lenders' written approval,
        which will not be unreasonably withheld, and further subject to the
        financial covenants and restrictions herein, obtain alternative
        financing from another lender.

        12. Conditions of Lending

                a. Conditions Precedent to the Initial Advance. The obligation
        of Lenders to make the initial Advance under the Revolving Line of
        Credit shall be subject to the condition precedent that Lenders shall
        have received all of the following, each in form and substance
        satisfactory to Lenders in their sole discretion, and/or that all of the
        following shall be true, correct, complete, and acceptable to Lenders in
        their sole discretion on the date thereof:

                        i. A certificate of the Secretary or an Assistant
                Secretary of Borrower, certifying as to (1) the resolutions of
                the directors and, if required, the shareholders, of Borrower
                authorizing the execution, delivery, and performance of this
                Agreement

                                       25
<PAGE>

                and the other Loan Documents, (2) the articles of incorporation
                and bylaws of Borrower, and (iii) the signatures of the officers
                or agents of Borrower authorized to execute and deliver this
                Agreement, the other Loan Documents and other instruments,
                agreements, and certificates, including Advance requests, on
                behalf of Borrower.

                        ii. A current certificate issued by the Secretary of
                State of the state of Borrower's incorporation certifying that
                Borrower is in compliance with all organizational requirements
                of such state.

                        iii. Evidence that Borrower is duly licensed or
                qualified to transact business in all jurisdictions where the
                character of the property owned or leased or the nature of the
                business transacted by it makes such licensing or qualification
                necessary.

                        iv. This Agreement, the Revolving Notes, and the other
                Loan Documents, fully and properly executed by Borrower and all
                other parties thereto;

                        v. A subordination agreement from Fortress, in form and
                substance acceptable to Lenders in their sole discretion,
                whereby Fortress, among other things, subordinates all
                indebtedness and Restricted Equity Investment to the liens of
                Lenders.

                        vi. the Maintenance Agreement with The Fortress Group.

                        vii. A Borrowing Base Certificate dated as of November
                6, 2000.

                        viii. Current searches of appropriate filing offices
                showing that no state or federal tax liens have been filed and
                remain in effect against Borrower and Lenders have duly filed
                all Security Instruments necessary to perfect the liens and
                security interests in favor of Lenders.

                        ix. Financing statements and UCC filings as requested
                and required by Lenders, in its sole discretion.

                        x. ALTA Mortgagee's Title Insurance Policies (or
                unconditional commitments for title insurance acceptable to
                Lenders and letters confirming the irrevocable and imminent
                issuance of such policies) from all applicable title insurance
                companies insuring the Property in the amount of not less than
                $50,000,000.00 and any related endorsements required by Lenders,
                properly executed by the applicable title insurance companies.

                        xi. Lenders, at their sole option, may require a notice
                of title continuation or an endorsement to their mortgagee's
                title insurance policies indicating that since the last
                preceding Advance, there has been no change in the state of
                title adverse to Lenders.

                                       26
<PAGE>

                        xii. Releases and terminations of all claims,
                encumbrances, liens, and security interests against the
                Collateral (other than the Permitted Encumbrances and those
                belonging to Lenders) properly executed by the lienholders and
                secured parties.

                        xiii. Certificates of Insurance and endorsements to
                insurance policies required hereunder.

                        xiv. Payment of any unpaid fees or other amounts owing
                to Lenders as of the Closing Date.

                        xv. An opinion of counsel to Borrower and Fortress in
                form and substance acceptable to Lenders addressed to Lenders,
                their participants, successors, and assigns, and their
                attorneys.

                        xvi. All of the conditions to the closing of the
                Revolving Line of Credit contained in the Commitment and this
                Agreement have been and remain satisfied.

                        xvii. Borrower shall have materially complied with all
                of its covenants and agreements contained in all of the Loan
                Documents, and Borrower's representations and warranties
                contained in any of the Loan Documents shall be true as of the
                date of disbursement as if first made on that date.

                        xviii. Current Master Budgets and Plans and
                Specifications (including updated list of options) for all
                Filings and all Finished Lots and Units in the Filings, all in
                form and substance acceptable to Lenders in their sole
                discretion.

                        xix. Current surveys or approved Plats for each portion
                of the Property and all documentation regarding the platting of
                each portion of the Property, all in form and substance
                acceptable to Lenders in their sole discretion and, if a survey
                is provided, certified as accurate by a licensed surveyor in the
                state of Colorado, for the benefit of Lenders.

                        xx. The Improvements are being and have been constructed
                substantially in accordance with the Master Budgets and the
                Plans and Specifications approved by Lenders.

                        xxi. Any certifications and lien waivers required by
                Lenders.

                        xxii. Fully executed assignments of all contracts
                between Borrower and Builder with reference to all major
                subcontractors, suppliers, architects, and engineers of
                Borrower.

                        xxiii. Such other agreements, documents, and instruments
                as Lenders in their reasonable discretion may require.

                                       27
<PAGE>

                        xxiv. Tri-Party Agreement with Land Title Guarantee
                Company.

                        xxv. Tri-Party Agreement with Fidelity National Title
                Insurance Company.

                b. Conditions Precedent to All Advances. The obligation of
        Lenders to make each further Advance shall be subject to the further
        conditions precedent that on such date:

                        i. the representations and warranties contained in
                SECTION 13 hereof are correct on and as of the date of such
                Advance as though made on and as of such date, except to the
                extent that such representations and warranties relate solely to
                an earlier date; and

                        ii. no event has occurred and is continuing, or would
                result from such Advance, as the case may be, which constitutes
                a Default or an Event of Default.

        13. Representations and Warranties. Borrower represents and warrants to
Lenders as follows:

                a. Existence and Power; Name; Chief Executive Office; Locations.
        The Genesee Company is a corporation duly incorporated, validly
        existing, and in good standing under the laws of the State of Colorado.
        Borrower is duly licensed or qualified to transact business in all
        jurisdictions where the character of the property owned or leased or the
        nature of the business transacted by it makes such licensing or
        qualification necessary. Borrower has all requisite power and authority,
        corporate, organizational, or otherwise, to conduct its business, to own
        its properties, and to execute and deliver, and to perform all of its
        obligations under, the Loan Documents. During its existence, Borrower
        has done business solely under the names set forth in EXHIBIT E attached
        hereto and incorporated herein by this reference. The chief executive
        offices and principal places of business of Borrower are located at the
        addresses set forth in EXHIBIT D, and all of Borrower's records relating
        to its business or the Collateral are kept at those locations.

                b. Authorization of Borrowing; No Conflict as to Law or
        Agreements. The execution, delivery, and performance by Borrower of the
        Loan Documents and the borrowings from time to time hereunder have been
        duly authorized by all necessary corporate or organizational action and
        do not and shall not: i. require any consent or approval of the
        stockholders or constituent members of Borrower; ii. require any
        authorization, consent or approval by, or registration, declaration or
        filing with, or notice to, any governmental or quasi- governmental
        department, commission, board, bureau, agency, or instrumentality,
        domestic or foreign, or any third party, except such authorization,
        consent, approval, registration, declaration, filing, or notice as has
        been obtained, accomplished, or given prior to the date hereof; iii.
        violate any provision of any law, rule, or regulation (including without
        limitation, Regulation X of the Board of Governors of the Federal
        Reserve System) or of any order, writ, injunction, or decree presently
        in effect having applicability to Borrower or of the articles of
        incorporation, bylaws, articles of organization, or operating agreement
        (as applicable) of Borrower; iv. result in a breach of or constitute a
        default under any indenture

                                       28
<PAGE>

        or loan or credit agreement or any other material agreement, lease, or
        instrument to which Borrower is a party or by which it or its properties
        may be bound or affected; or v. result in or require the creation or
        imposition of any mortgage, deed of trust, pledge, lien, security
        interest, or other charge or encumbrance of any nature upon or with
        respect to any of the properties now owned or hereafter acquired by
        Borrower (except those in favor of Lenders).

                c. Legal Agreements. This Agreement constitutes and, upon due
        execution by Borrower, the other Loan Documents shall constitute the
        legal, valid, and binding obligations of Borrower, enforceable against
        Borrower in accordance with their respective terms.

                d. Subsidiaries. Except as set forth in EXHIBIT F attached
        hereto and incorporated herein by this reference, Borrower has no
        Subsidiaries.

                e. Financial Condition; No Adverse Change. Borrower has
        heretofore furnished to Lenders audited financial statements of Borrower
        and Fortress for their fiscal years ended December 31, 1999 and
        internally prepared unaudited quarterly financial statements of Borrower
        and Fortress for the quarter ended June 30, 2000, and those statements
        fairly present the financial condition of Borrower and Fortress on the
        dates thereof and the results of their operations and cash flows for the
        periods then ended and were prepared in accordance with GAAP. Since the
        date of the most recent financial statements, there has been no material
        adverse change in the business, properties, or condition (financial or
        otherwise) of Borrower or Fortress.

                f. Litigation. Except as disclosed to Lenders prior to Closing,
        there are no actions, suits, or proceedings pending or, to the knowledge
        of Borrower, threatened against or affecting Borrower, Fortress, or any
        of Borrower's Affiliates or the properties of Borrower, Fortress, or any
        of Borrower's Affiliates before any court or governmental department,
        commission, board, bureau, agency, or instrumentality, domestic or
        foreign, which, if determined adversely to Borrower, Fortress, or any of
        Borrower's Affiliates, would have a material adverse effect on the
        financial condition, properties or operations of Borrower, Fortress, or
        any of Borrower's Affiliates.

                g. Regulation U. Borrower is not engaged in the business of
        extending credit for the purpose of purchasing or carrying margin stock
        (within the meaning of Regulation U of the Board of Governors of the
        Federal Reserve System), and no part of the proceeds of any Advance
        shall be used to purchase or carry any margin stock or to extend credit
        to others for the purpose of purchasing or carrying any margin stock.

                h. Taxes. Borrower and its Affiliates have paid or caused to be
        paid to the proper taxing authorities when due all federal, state, and
        local taxes and assessments of every kind and character required to be
        paid and/or withheld by each of them, provided, however, that Borrower
        shall not be required to pay such taxes or assessments if Borrower is
        contesting the amount, applicability, or validity of such taxes and
        assessments in good faith by appropriate proceedings diligently pursued
        by Borrower and has established unencumbered cash reserves for the
        payment of the foregoing in an amount acceptable to Lenders, in their
        sole discretion.

                                       29
<PAGE>

        Borrower and its Affiliates have filed all federal, state, and local tax
        returns which to the knowledge of the officers of Borrower or any
        Affiliate, as the case may be, are required to be filed.

                i. Titles and Liens. Borrower has good and absolute title to all
        Collateral and all other properties and assets reflected in the latest
        balance sheet referred to in SECTIONS 14(H)(I), (II) and (III) hereof
        and all proceeds thereof, free and clear of all mortgages, security
        interests, liens, and encumbrances, except for the liens and security
        interests in favor of Lenders and the Permitted Encumbrances. No
        financing statement naming Borrower as debtor is on file in any office
        except to perfect only security interests permitted by this Agreement.

                j. Plans. Except as disclosed to Lenders in writing prior to the
        date hereof, neither Borrower nor any ERISA Affiliate maintains or has
        maintained any Plan. Neither Borrower nor any ERISA Affiliate has
        received any notice or has any knowledge to the effect that it is not in
        full compliance with any of the requirements of ERISA. No Reportable
        Event or other fact or circumstance which may have an adverse effect on
        the Plan's tax qualified status exists in connection with any Plan.
        Neither Borrower nor any of its ERISA Affiliates has:

                        i. Any accumulated funding deficiency within the meaning
                of ERISA; or

                        ii. Any liability or knows of any fact or circumstances
                which could result in any liability to the PBGC, the Internal
                Revenue Service, the Department of Labor, or any participant in
                connection with any Plan (other than accrued benefits which or
                which may become payable to participants or beneficiaries of any
                such Plan).

                k. Default. Borrower is in compliance with all provisions of all
        agreements, instruments, decrees, and orders to which it is a party or
        by which it or its property is bound or affected, the breach or default
        of which could have a material adverse effect on the financial
        condition, properties, or operations of Borrower.

                l. Submissions to Lenders. All financial and other information
        provided to Lenders by or on behalf of Borrower in connection with
        Borrower's request for the credit facilities contemplated hereby is true
        and correct in all material respects and, as to projections, valuations,
        or proforma financial statements, present a good faith opinion as to
        such projections, valuations, and proforma condition and results.

                m. Financing Statements. Borrower has provided to Lenders signed
        financing statements sufficient when filed to perfect the liens and
        security interests against Borrower's personal property required by the
        Loan Documents. When such financing statements are filed in the offices
        noted therein, Lenders shall have a valid and perfected security
        interest in all personal property Collateral described in the Loan
        Documents which is capable of being perfected by filing financing
        statements. None of the Collateral is or shall become a fixture on real
        estate, unless a sufficient fixture filing is in effect with respect
        thereto.

                                       30
<PAGE>

               n. Rights to Payment. Each right to payment and each instrument,
        document, chattel paper, and other agreement constituting or evidencing
        Collateral is (or, in the case of all future Collateral or such other
        collateral, shall be when arising or issued) the valid, genuine, and
        legally enforceable obligation of the account debtor, any other obligor
        named therein, and any other obligor named in Borrower's records as
        being obligated thereon, subject to no defense, setoff, or counterclaim.

                o. Accurate Information. All information and documents furnished
        by Borrower and Guarantor to Lenders in connection with the Revolving
        Line of Credit are accurate and complete in all material respects.

                p. Special Improvement Districts. Except as disclosed to Lenders
        prior to Closing, the Property is not situated within any metropolitan,
        local improvement or special improvement district, and Borrower has no
        knowledge of any proposal under which the Property is to be placed in
        any metropolitan, local improvement or special improvement district.
        Additionally, Borrower has no knowledge of any material adverse change
        in the financial condition of any disclosed special improvement district
        or otherwise having assessment authority over the Property.

                q. Condemnation. Borrower has not received any notice of the
        exercise of eminent domain or condemnation which in any way affects the
        Property, and to the best of Borrower's knowledge, no such action is
        pending or threatened.

                r. Zoning and Restrictive Covenants. The Property and all
        improvements presently located thereon comply with all applicable
        federal, state, city, and county zoning, subdivision, environmental, and
        building codes, rules, and regulations and all restrictive covenants
        affecting the Property.

                s. Compliance. Borrower and Guarantor have conducted and will
        continue to conduct their business in a lawful manner and in compliance
        with all applicable federal, state, and local laws, ordinances, rules,
        regulations, and orders and shall pay, before delinquent, all lawfully
        imposed taxes and assessments upon the Collateral and its income.

                t. Misrepresentations. This Agreement, the financial statements
        furnished by Borrower and Fortress to Lenders, and all other statements
        made by Borrower and Guarantor to Lenders in connection with the
        Revolving Line of Credit contain no untrue statement of a material fact
        and omit no material fact necessary to make the statements contained
        therein not misleading. Neither Borrower or Fortress has failed to
        disclose in writing to Lenders any fact that materially and adversely
        affects or is reasonably likely to materially and adversely affect
        Borrower or Fortress, the Collateral, or Borrower's ability to perform
        its obligations under the Loan Documents.

                u. Bankruptcy. No petition has been filed by or against Borrower
        or Fortress for protection under the United States Bankruptcy Code.

                                       31
<PAGE>

                v. Plans and Specifications; Master Budgets. The Plans and
        Specifications and the Master Budgets have been approved by Borrower.
        The Plans and Specifications have been approved by the Engineer: to
        comply with all applicable laws and ordinances, including the Americans
        With Disabilities Act; to be complete and contain all detail requisite
        for the construction of the Improvements which, when constructed in
        accordance with the Plans and Specifications, shall be suitable for use
        for their intended purpose in compliance with all applicable laws; and
        to be prepared in a manner consistent with accepted architectural
        practices.

                w. Government Approvals. The Plans and Specifications have been
        submitted to all governmental authorities, property owners associations,
        or architectural control committees whose approval of construction of
        the Improvements or the use of the Improvements for their intended
        purpose is required under any applicable law, statute, rule, regulation,
        code, or restrictive covenant and the necessary approvals and permits
        (with exception of building permits which shall be obtained prior to the
        commencement of construction), have been obtained from such authorities
        and remain effective.

                x. Utilities. All public utilities existing for the operation of
        all or any part of the Property, if any, enter the Property through
        adjoining public streets or, if they pass through adjoining public or
        private land, do so in accordance with valid public easements; and all
        utility lines and mains serving the Property, if any, have been properly
        dedicated to, and are serviced and maintained by, the appropriate public
        or quasi-public entity.

                y. Access. The Property has full and free access to and from
        public highways, streets, and/or roads, and Borrower has no knowledge of
        any fact or condition which would result in the termination of such
        access and use.

                z. Assignability of Plans, Specifications and Contracts. All
        plans, specifications, architects' and engineers' agreements, and
        construction contracts, are fully assignable without the acknowledgment
        or approval of any third party engineer, architect, or contractor.

        14. Affirmative Covenants of Borrower. So long as the Revolving Notes
shall remain unpaid and the Revolving Line of Credit shall be outstanding,
Borrower shall comply with the following requirements, unless Lenders shall
otherwise consent in writing:

                a. Minimum Tangible Net Worth. Borrower shall maintain a Minimum
        Tangible Net Worth of at least Twenty Million and No/100 Dollars
        ($20,000,000.00) at all times during the Term of the Revolving Line of
        Credit tested as of the end of each fiscal quarter of Borrower occurring
        during the term of the Revolving Line of Credit. Any loans from Borrower
        to Fortress shall be debited against Borrower's Tangible Net Worth in
        calculating Borrower's compliance with this Section.

                b. Debt to Tangible Net Worth Ratio. Borrower shall maintain a
        maximum Debt to Tangible Net Worth ratio of no more than 3.0 to 1.0 at
        closing and for the first twelve (12) months of the Loan, with maximum
        ratio to be no greater than 2.75:1 as of the first

                                       32
<PAGE>

        Anniversary Date and maintained thereafter during the Term, tested as of
        the end of each fiscal quarter of Borrower occurring during the Term of
        the Revolving Line of Credit.

                c. Gross Margin. Borrower shall maintain a Gross Margin of at
        least a 10% at all times during the term hereof (tested on rolling four
        quarters).

                d. Net Profit Margin. Borrower shall maintain a minimum pre-tax
        net profit margin of 3% (tested on rolling four quarters).

                e. Work In Process Limitation. Borrower's work in process
        (property or improvements which are neither a Finished Lot, or a
        completed Unit) shall not exceed the lesser of $90,000,000.00 (based on
        completion amount) or 150% of Borrowing Base on a global basis at any
        one time, tested monthly.

                f. Land Inventory Limitation. Borrower's total land inventory on
        its balance sheet shall not exceed 150% of Borrower's Tangible Net Worth
        at any one time, tested quarterly.

                g. Consecutive Quarter Net Losses. Borrower shall not sustain
        two (2) consecutive quarters of cumulative net pre-tax losses from its
        operations.

                h. Reporting Requirements. Borrower shall deliver, or cause to
        be delivered, to Lenders each of the following, which shall be in form
        and detail acceptable to Lenders:

                        i. Annually, not later than one hundred twenty (120)
                days after the end of each fiscal year of Borrower, Borrower
                shall deliver to Lenders audited consolidated financial
                statements of Fortress with the unqualified opinion of
                independent certified public accountants selected by Borrower
                and acceptable to Lenders, which financial statements shall
                include the balance sheet of Borrower as at the end of such
                fiscal year and the related statements of income, retained
                earnings, and cash flows of Borrower for the fiscal year then
                ended, prepared on a consolidating and consolidated basis to
                include any Affiliates, all in reasonable detail and prepared in
                accordance with GAAP, together with (1) a report signed by such
                accountants stating that in making the investigations necessary
                for said opinion they obtained no knowledge, except as
                specifically stated, of any Default or Event of Default
                hereunder and all relevant facts in reasonable detail to
                evidence, and the computations as to, whether or not Borrower is
                in compliance with the requirements set forth in SECTIONS 13(j),
                (k), AND (l) and SECTION 14(t) hereof; and (2) a certificate of
                the chief financial officer of Borrower stating that such
                financial statements have been prepared in accordance with GAAP
                and whether or not such officer has knowledge of the occurrence
                of any Default or Event of Default hereunder and, if so, stating
                in reasonable detail the facts with respect thereto;

                        ii. Quarterly, not later than sixty (60) days after the
                end of each quarter, internally prepared balance sheets,
                statements of income and statements of retained

                                       33
<PAGE>

                earnings of Borrower as at the end of and for such quarter and
                for the year to date period then ended, prepared on a
                consolidating and consolidated basis to include any Affiliates,
                in reasonable detail and stating in comparative form the figures
                for the corresponding date and periods in the previous year, all
                prepared in accordance with GAAP, subject to year-end audit
                adjustments; and accompanied by a certificate of the chief
                financial officer of Borrower, substantially in the form of
                EXHIBIT G attached hereto and incorporated herein by this
                reference and stating (1) that such financial statements have
                been prepared in accordance with GAAP, subject to year-end audit
                adjustments, (2) whether or not such officer has knowledge of
                the occurrence of any Default or Event of Default hereunder not
                theretofore reported and remedied and, if so, stating in
                reasonable detail the facts with respect thereto, and (3) all
                relevant facts in reasonable detail to evidence, and the
                computations as to, whether or not Borrower is in compliance
                with the requirements set forth in SECTIONS 13(j), (k), AND (l)
                and SECTION 14(t) hereof;

                        iii. Annually, not later than fifteen (15) days after
                the beginning of each fiscal year of Borrower, the projected
                balance sheets and income statements for each quarter of such
                year, each in reasonable detail, representing the good faith
                projections of Borrower and certified by Borrower's chief
                financial officer as being the most accurate projections
                available and identical to the projections used by Borrower for
                internal planning purposes, together with such supporting
                schedules and information as Lenders may in their discretion
                require;

                        iv. Monthly, as soon as available and in any event not
                later than sixteenth day of each month, a Borrowing Base
                Certificate, together with such supporting schedules and
                information as Lenders may in their discretion require.

                        v. Monthly Work in Process Reports from Borrower and
                Subsidiary Borrowers, as applicable, on or before the sixteenth
                day of each month with respect to all construction activity in
                subdivisions approved under the Borrowing Base.

                        vi. Monthly Sold Unit Reports on or before the sixteenth
                day of each month reflecting on a cumulative basis all Unit
                sales including contract price, gross sales proceeds, Unit type,
                address and subdivision for all Borrowing Base Units on a
                cumulative basis.

                        vii. immediately after the commencement thereof, notice
                in writing of all litigation and of all proceedings before any
                governmental or regulatory agency affecting Borrower which seek
                a monetary recovery against Borrower in excess of Two Hundred
                Fifty Thousand and No/100 Dollars ($250,000.00).

                        viii. as promptly as practicable (but in any event not
                later than five (5) Banking Days) after an officer of Borrower
                obtains knowledge of the occurrence of any breach, default, or
                event of default under any Loan Document or any event which
                constitutes a Default or Event of Default hereunder, a notice of
                such occurrence,

                                       34
<PAGE>

                together with a detailed statement by a responsible officer of
                Borrower of the steps being taken by Borrower to cure the effect
                of such breach, default, or event;

                        ix. as soon as possible and in any event within thirty
                (30) days after Borrower knows or has reason to know that any
                Reportable Event with respect to any Plan has occurred, the
                statement of the chief financial officer of Borrower setting
                forth details as to such Reportable Event and the action which
                Borrower or its ERISA Affiliates proposes to take with respect
                thereto, together with a copy of the notice of such Reportable
                Event to the PBGC;

                        x. as soon as possible, and in any event within ten (10)
                days after Borrower fails to make any quarterly contribution
                required with respect to any Plan under Section 412(m) of the
                Internal Revenue Code of 1986, as amended, the statement of the
                chief financial officer of Borrower setting forth details as to
                such failure and the action which Borrower proposes to take with
                respect thereto, together with a copy of any notice of such
                failure required to be provided to the PBGC;

                        xi. promptly upon knowledge thereof, notice of (1) any
                disputes or claims by customers of Borrower; and (2) any change
                in the persons constituting the senior officers and directors of
                Borrower;

                        xii. promptly upon knowledge thereof, notice of any loss
                of or material damage to any Collateral or of any material
                adverse change in any Collateral;

                        xiii. promptly upon their distribution, copies of all
                financial statements, reports, and proxy statements which
                Borrower shall have sent to its stockholders;

                        xiv. promptly after the sending or filing thereof,
                copies of all regular and periodic financial reports which
                Borrower shall file with the Securities and Exchange Commission
                or any national securities exchange;

                        xv. promptly upon knowledge thereof, notice of the
                violation by Borrower of any law, rule, or regulation, the
                non-compliance with which could materially and adversely affect
                its business or its financial condition;

                        xvi. promptly deliver to Lenders upon the receipt
                thereof, copies of any notices received by Borrower with respect
                to any material events or circumstances affecting the financial
                viability and/or condition of any special district in which the
                Property is located; and

                        xvii. from time to time, with reasonable promptness, any
                and all receivables schedules, collection reports, deposit
                records, copies of invoices, shipment documents, and delivery
                receipts, and such other material, reports, records, or
                information as Lenders may request.

                                       35
<PAGE>

                i. Books and Records; Inspection and Examination. Borrower shall
        keep accurate books of record and account for itself pertaining to the
        Collateral and pertaining to Borrower's business and financial condition
        and such other matters as Lenders may from time to time request in which
        true and complete entries shall be made in accordance with GAAP. At the
        request of Lenders, on a quarterly basis, Borrower shall permit any
        officer, employee, attorney, or accountant for Lenders to audit, review,
        make extracts from, or copy any and all corporate and financial books
        and records of Borrower. In the event of a default hereunder, Lenders
        reserve the right to make such inspections and audits as set forth
        above, upon twenty- four (24) hours notice. Borrower shall make
        available to Lenders and Lenders' agents any and all documents and
        records during ordinary business hours, and to make available Borrower's
        directors, officers, employees and agents to discuss the affairs of
        Borrower with Lenders or Lenders' agents. Borrower shall permit Lenders,
        or its employees, accountants, attorneys, or agents, to examine and
        inspect any Collateral or any other property of Borrower at any time
        during ordinary business hours.

                j. Account Verification. Borrower shall, upon request of
        Lenders, and Lenders may, upon the occurrence of a Default or Event of
        Default, send requests for verification of accounts or notices of
        assignment to account debtors and other obligors.

                k. Compliance with Laws. Borrower shall i. comply with the
        requirements of applicable laws and regulations, the non-compliance with
        which would materially and adversely affect its business or its
        financial condition, and ii. use and keep the Collateral, and shall
        require that others use and keep the Collateral, only for lawful
        purposes, without violation of any federal, state, or local law,
        statute, or ordinance.

                l. Payment of Taxes and Other Claims. Borrower shall pay or
        discharge, when due, i. all taxes, assessments, and governmental charges
        levied or imposed upon it or upon its income or profits, upon any
        properties belonging to it (including without limitation, the
        Collateral) or upon or against the creation, perfection, or continuance
        of the liens and security interests granted by the Security Instruments
        prior to the date on which penalties attach thereto, ii. all federal,
        state, and local taxes required to be withheld by it, and iii. all
        lawful claims for labor, materials, and supplies which, if unpaid, might
        by law become a lien or charge upon any properties of Borrower;
        provided, however, Borrower shall not be required to pay any such tax,
        assessment, charge, or claim if Borrower is contesting the amount,
        applicability, or validity thereof in good faith by appropriate
        proceedings diligently pursued by Borrower and has established
        unencumbered cash reserves for the payment of the foregoing in an amount
        acceptable to Lenders, in their sole discretion.

                m. Maintenance of Properties.

                        i. Borrower shall keep and maintain the Collateral and
                all of its other properties necessary or useful in its business
                in good condition, repair, and working order (normal wear and
                tear excepted) and shall from time to time replace or repair any
                worn, defective, or broken parts; provided, however, that
                nothing in this Section shall prevent Borrower from
                discontinuing the operation and maintenance of any of its

                                       36
<PAGE>

                properties if such discontinuance is, in the judgment of
                Lenders, desirable in the conduct of Borrower's business and not
                disadvantageous in any material respect to Lenders.

                        ii. Borrower shall defend the Collateral against all
                claims or demands of all persons (other than Lenders) claiming
                the Collateral or any interest therein.

                        iii. Borrower shall keep all Collateral free and clear
                of all claims, encumbrances, liens, and security interests
                except the liens and security interests in favor of Lenders and
                the Permitted Encumbrances, except as otherwise provided for in
                this Agreement.

                n. Insurance. Borrower shall obtain and at all times maintain
        insurance with insurers chosen by Borrower and acceptable to Lenders in
        their sole discretion in such amounts and against such risks as may from
        time to time be required by Lenders, but in all events in such amounts
        and against such risks as is usually carried by companies engaged in
        similar business and owning similar properties in the same general areas
        in which Borrower operates. Without limiting the generality of the
        foregoing, Borrower shall at all times keep all tangible Collateral
        insured against risks of fire (including so-called extended coverage),
        theft, collision (for Collateral consisting of motor vehicles), floods
        and such other risks and in such amounts as Lenders may reasonably
        request, with any loss payable to Lenders to the extent of its interest,
        and all policies of such insurance shall contain a lender's "loss payee"
        and/or "mortgagee" endorsement for the benefit of Lenders. All policies
        of liability insurance required hereunder shall name Lenders as an
        additional insured.

                o. Preservation of Corporate Existence. Borrower shall preserve
        and maintain its existence as a corporation and all of its rights,
        privileges, and franchises necessary or desirable in the normal conduct
        of its business and shall conduct its business in an orderly, efficient,
        and regular manner.

                p. Preservation of Public Corporate Existence-Fortress. Fortress
        shall preserve and maintain its existence as a publicly-held corporation
        and all of its rights, privileges, and franchises necessary or desirable
        in the normal conduct of its business and shall conduct its business in
        an orderly, efficient, and regular manner.

                q. Delivery of Instruments, etc. Upon request by Lenders,
        Borrower shall promptly deliver to Lenders in pledge all chattel papers,
        documents, instruments, and investment property constituting Collateral,
        duly endorsed or assigned by Borrower.

                r. Additional Restricted Equity Investment. If Borrower fails to
        satisfy the Minimum Net Worth or Debt to Tangible Net Worth Ratio
        covenants, Borrower shall cause Fortress to provide Borrower with
        additional subordinated Restricted Equity Investment or other equity, in
        form and substance acceptable to Lenders, in its sole discretion,
        sufficient to permit Borrower to comply with the Minimum Net Worth and
        the Debt to Tangible Net Worth Ratio covenants.

                                       37
<PAGE>

                s. Signage. Borrower shall permit Lenders to display suitable
        Lenders signage on the Property during the term of this Agreement.

                t. Bond for Liens. Borrower shall promptly after the filing of a
        lien against the Collateral, notify Lenders of such lien and, upon
        written request from Lenders, post a surety bond in such amount and in
        form and with sureties satisfactory to Lenders, or provide other
        assurance of payment or removal of said lien, and of all costs and
        expenses resulting therefrom, acceptable to Lenders.

                u. Protection of Property. Borrower shall protect the Property
        and all materials stored on the Property for installation on the
        Property from removal, destruction, and damage.

                v. Notice of Changes. Borrower shall give Lenders prior written
        notice of all material changes to the Plans and Specifications.

                w. Subordinations. Borrower shall obtain and deliver to Lenders
        such subordination agreements as may be required to establish and
        preserve Lenders' first priority lien position in the Collateral
        including but not limited to Johnson-Eagle Ridge LLC.

        15. Negative Covenants. So long as the Revolving Note shall remain
unpaid or the Revolving Line of Credit shall be outstanding, Borrower agrees
that, without the prior written consent of Lenders:

                a. Liens. Borrower shall not create, incur, or suffer to exist
        any mortgage, deed of trust, pledge, lien, security interest, assignment
        for security purposes, or other encumbrances (collectively "Liens")
        against any of the Collateral whether now owned or hereafter acquired
        securing Debt in excess of Two Hundred Fifty Thousand and No/100 Dollars
        ($250,000.00) in the aggregate; excluding, however, from the operation
        of the foregoing:

                        i. the liens and security interests in favor of Lenders;

                        ii. the Permitted Encumbrances; and

                        iii. liens for taxes, worker's compensation premiums and
                the like that are not yet due and payable.

                b. No Debt to Fortress. Borrower shall not obtain from Fortress
        and Fortress shall not grant to Borrower any loan until such time as
        Borrower has repaid and satisfied all of its obligations to Lenders
        under the Loan Documents and Lenders' obligation to provide Borrower
        with any advances or other financial accommodations under the Loan
        Documents has been terminated. Any Loan from Borrower to Fortress shall
        be disclosed to Lenders at the time it is made and shall be debited
        against Borrower's Tangible Net Worth for purposes of calculating
        Borrower's compliance with Section 14(a) hereof.

                                       38
<PAGE>

                c. Debt. Borrower shall not incur, create, assume, or permit to
        exist any debt or other liability except:

                        i. Debt arising hereunder or otherwise owing to Lenders
                or their affiliates;

                        ii. Debt of Borrower in existence on the date hereof;

                        iii. Debt relating to Permitted Encumbrances; and

                        iv. Four (4) acquisition and development loans currently
                in process at First National Bank of Fort Collins.

                d. Guaranties. Borrower shall not assume, guarantee, endorse, or
        otherwise become directly or contingently liable in connection with any
        obligations of any other Person, except:

                        i. the endorsement of negotiable instruments by Borrower
                for deposit or collection or similar transactions in the
                ordinary course of business;

                        ii. guaranties, endorsements, and other direct or
                contingent liabilities in connection with the obligations of
                other Persons in existence on the date hereof as disclosed to
                and approved by Lenders; and

                        iii. guaranties for the Obligations to Lenders.

                e. Investments and Subsidiaries. Borrower shall not purchase or
        hold beneficially any stock or other securities or evidences of
        indebtedness of, make or permit to exist any loans or advances to, or
        make any investment or acquire any interest whatsoever in, any other
        Person, including without limitation any partnership, joint venture, or
        limited liability company, except:

                        i. investments in direct obligations of the United
                States of America or any agency or instrumentality thereof whose
                obligations constitute full faith and credit obligations of the
                United States of America having a maturity of one year or less,
                commercial paper issued by U.S. corporations rated "A-1" or
                "A-2" by Standard & Poors Corporation or "P-1" or "P-2" by
                Moody's Investors Service or certificates of deposit or bankers'
                acceptances having a maturity of one year or less issued by
                members of the Federal Reserve System having deposits in excess
                of $100,000,000 (which certificates of deposit or bankers'
                acceptances are fully insured by the Federal Deposit Insurance
                Corporation);

                        ii. advances in the form of progress payments, prepaid
                rent, or security deposits.

                                       39
<PAGE>

                        iii. investments in Subsidiaries in existence on the
                date hereof and listed in EXHIBIT F.

                        iv. Investments in subsidiaries created after the date
                of this Facility for the purpose of acquiring a new Filing.

                f. Sale or Transfer of Assets; Suspension of Business
        Operations. Borrower shall not sell, lease, assign, transfer, or
        otherwise dispose of (i) the stock or other ownership interest of any
        Subsidiary without thirty (30) days advance prior written notice to and
        approval by Lenders which shall not be unreasonably withheld, (ii) all
        or a material part of its assets, or (iii) any Collateral or any
        interest therein (whether in one transaction or in a series of
        transactions) to any other Person (including Affiliated Persons) other
        than the sale of Finished Lots and Units in the ordinary course of
        business and shall not liquidate, dissolve, or suspend business
        operations. Borrower shall not in any manner transfer any property
        without prior or present receipt of full and adequate consideration.

                g. Consolidation and Merger; Asset Acquisitions. Borrower shall
        not i. consolidate with or merge into any Person, or permit any other
        Person to merge into it, or ii. acquire (in a transaction analogous in
        purpose or effect to a consolidation or merger) all or substantially all
        the assets of any other Person in one or more transactions without
        thirty (30) days advance prior written notice to and approval by Lenders
        which shall not be unreasonably withheld.

                h. Sale and Leaseback. Other than Model Unit sale and
        leasebacks, as provided herein, Borrower shall not enter into any
        arrangement, directly or indirectly, with any other Person whereby
        Borrower shall sell or transfer any real or personal property, whether
        now owned or hereafter acquired, and then or thereafter rent or lease as
        lessee such property or any part thereof or any other property which
        Borrower intends to use for substantially the same purpose or purposes
        as the property being sold or transferred.

                i. Restrictions on Nature of Business. Borrower shall not engage
        in any line of business materially different from that presently engaged
        in by Borrower and shall not purchase, lease, or otherwise acquire
        assets not related to its business.

                j. Accounting. Borrower shall not adopt any material change in
        accounting principles other than as required by GAAP. Borrower shall not
        adopt, permit, or consent to any change in its fiscal year, which
        currently ends on December 31st.

                k. Defined Benefit Pension Plans. Borrower shall not adopt,
        create, assume, or become a party to any defined benefit pension plan,
        unless disclosed to Lenders pursuant to this Agreement.

                l. Other Defaults. Borrower shall not permit any breach,
        default, or event of default to occur under any note, loan agreement,
        indenture, lease, mortgage, contract for deed,

                                       40
<PAGE>

        security agreement, or other contractual obligation (except contracts
        for the purchase of Units) binding upon Borrower.

                m. Place of Business; Name. Without the prior written consent of
        Lenders which shall not be unreasonably withheld, Borrower shall not:
        (i) transfer its chief executive office or principal place of business,
        or move, relocate, close, or sell any business location; (ii) permit any
        tangible Collateral or any records pertaining to the Collateral to be
        located in any state or area in which a financing statement covering
        such Collateral would be required to be, but has not in fact been, filed
        in order to perfect the liens and security interests in favor of
        Lenders; or (iii) change its name.

                n. Organizational Documents. Borrower shall not amend its
        articles of incorporation, bylaws, articles of organization, or
        operating agreement, as applicable.

                o. Change in Ownership. Borrower shall not issue or sell any
        stock, membership interests, or other form of equity of Borrower so as
        to change the percentage of voting and non-voting stock owned by each of
        Borrower's shareholders and Borrower shall not permit or suffer to occur
        the sale, transfer, assignment, pledge, or other disposition of any or
        all of the issued and outstanding shares of stock of Borrower without
        thirty (30) days advance prior written notice to and approval by Lenders
        which shall not be unreasonably withheld.

                p. Special Improvement Districts. Borrower shall not consent or
        agree to the inclusion of the Property in any metropolitan, local
        improvement, or special improvement district, unless disclosed to
        Lenders in writing.

                q. Master Budgets. Borrower shall not amend, modify, replace, or
        substitute any Master Budget without the prior written consent of
        Lenders, which consent may be withheld by Lenders in their reasonable
        discretion.

                r. Closing of Unit Sales. In no event will Borrower allow any
        purchaser of a Unit to obtain possession or control of such Unit prior
        to closing and payment for the Unit by such purchaser.

                s. Discount Sales Prohibited. Borrower shall not discount the
        sales price of any Unit located in any Approved Filing which is part of
        the Borrowing Base by more than ten percent (10%) as set forth in the
        sales price structure in place as of the Closing Date. In the event
        Borrower elects to reduce the sales price for Units by more than ten
        percent (10%) and amend its sales price structure, Borrower must notify
        Lenders in writing of such sales price change. Upon such notification in
        writing, Lenders reserve the right to review and, in Lenders' sole
        discretion, modify or amend the Advance Rate formula to reflect such
        discounted prices.

        16. Events of Default. The occurrence of any of the following events
shall constitute an event of default hereunder (individually an "Event of
Default" and collectively "Events of Default"):

                                       41
<PAGE>

                a. Borrower shall fail to pay any installment of principal of or
        interest on the Revolving Notes or any other sums of money due and
        payable under this Agreement or any other Loan Document within fifteen
        (15) business days of the due date;

                b. Any representation or warranty made herein or in any written
        statement, certificate, report, or financial statement at any time
        furnished by, or on behalf of, Borrower in connection herewith, is
        incorrect or misleading in any material respect when made or thereafter
        becomes incorrect or misleading in any material respect;

                c. Borrower shall fail to perform or observe any non-monetary
        covenant or agreement contained in this Agreement, other than the
        covenants and agreements specifically described in this Section, and
        such failure remains unremedied for twenty (20) days after the earlier
        of (1) the date Borrower knew or should of known of such failure or (2)
        the date Lenders gives written notice thereof to Borrower (provided,
        however, that such cure period shall not apply to any failure that is
        not capable of being cured);

                d. Borrower shall incur two cumulative net losses over any two
        consecutive fiscal quarters, calculated by aggregating net profits or
        losses over such quarters.

                e. Borrower or any other party to any other Loan Document (other
        than Lenders) shall breach any material representation, warranty, or
        covenant or fail to pay or perform any material indebtedness, liability,
        or obligation contained in the other Loan Documents and such breach is
        not cured within the applicable cure period (if any) or otherwise
        excused under Applicable Law.

                f. Borrower breaches any material representation, warranty, or
        covenant or fails to pay or perform any material indebtedness,
        liability, or obligation to any third party (including, but not limited
        to, those contained in loan agreements, notes, indentures, leases,
        security agreements, mortgages, deeds of trust, and other contracts or
        agreements) when due and such breach or failure is not cured by Borrower
        within the applicable cure period (if any) or otherwise excused under
        Applicable Law; or

                g. Any Loan Document shall at any time or for any reason cease
        to be in full force and effect or be declared null and void or the
        validity or enforceability thereof shall be contested by Borrower or any
        other party thereto (other than Lenders).

                h. Borrower or Fortress shall:

                        i. discontinue its business, be adjudicated a bankrupt
                or insolvent under any law of any existing jurisdiction,
                domestic or foreign, cease, be unable, or admit in writing its
                inability to pay its debts generally as they mature, or make a
                general assignment for the benefit of creditors;

                        ii. apply for or consent to the appointment of any
                receiver, trustee, or similar officer for it or for any
                substantial part of its property, or any such receiver,

                                       42
<PAGE>

                trustee, or similar officer is appointed without the application
                or consent of Borrower, and such involuntary appointment
                continues thereafter undischarged for a period of thirty (30)
                days;

                        iii. institute or consent to the institution of any
                bankruptcy, insolvency, reorganization, arrangement,
                readjustment of debt, dissolution, liquidation, or similar
                proceeding relating to it under the laws of any jurisdiction;
                shall have any such proceeding instituted against it without its
                consent, and such involuntary proceeding continues thereafter
                undischarged for a period of thirty (30) days;

                        iv. assert any claim, defense, setoff, or counterclaim
                against Lenders without merit; or

                        v. permit any judgment, writ, warrant of attachment or
                execution, or similar process to be issued or levied against a
                material portion of the property of Borrower and such judgment,
                writ, or similar process is not effectively stayed within thirty
                (30) days after its issue or levy.

                i. Borrower shall fail, for a period of twenty (20) days after
        written notice from Lenders to Borrower, to i. comply, or proceed with
        all due diligence to comply, with any order of any government department
        claiming jurisdiction of the Collateral; or ii. comply, or proceed with
        all due diligence to comply, with all and singular the statutes,
        requirement, orders, and/or decrees of any federal, state, or municipal
        authority relating to the use of the Collateral or any part thereof.

               j. If Borrower at anytime hereafter sponsors or establishes any
        Plan, and Borrower (a) fails to notify Lenders in writing of such
        occurrence within ten (l0) days after such Plan is authorized by
        Borrower's board of directors or (b) fails to agree within a reasonable
        time to such amendments to this Agreement regarding provisions with
        respect to ERISA as Lenders customarily uses at that time in loan
        agreements with other borrowers.

               k. Borrower shall fail to pay any of its non-contested payables
        within thirty (30) days from the due date thereof and/or shall fail to
        provide to Lenders a monthly payable aging schedule.

               l. Borrower or Fortress shall experience a change in control
        structure during the Term of the Revolving Line of Credit, other than in
        connection with the Second Amended and Restated Stock Purchase Agreement
        dated as of February 19, 1998, by and between Fortress and Prometheus
        Homebuilders LLC, or the securities issued thereunder.

               m. The issuance of an attachment against Borrower or any of its
        properties and Borrower shall fail to obtain a release of the attachment
        within thirty (30) days from the date thereof unless Borrower is
        contesting such attachment in the manner set forth in this Agreement.

                                       43
<PAGE>

                n. Entry of a judgment against Borrower and Borrower shall fail
        to satisfy said judgment prior to the expiration of any applicable stay
        of execution unless Borrower is contesting such judgment in the manner
        set forth in this Agreement.

                o. Borrower shall fail to pay any tax, tax deficiency, insurance
        premium, water rate, sewer rate, assessment, or any other charge or
        payment imposed by any governmental, quasi-governmental, or public
        authority prior to delinquency, or any insurance premium, repair charge,
        rent charge, inspection fee, lien, attorney's fees, or other amount
        properly payable hereunder provided, however, Borrower may contest the
        payment of the amounts to the extent and in the manner set forth in this
        Agreement.

                p. Borrower shall fail after demand to furnish financial
        information or to permit inspection of any books or records as required
        in this Agreement.

                q. The financial condition or affairs of Borrower changes such
        that Lenders, in good faith, regards Borrower's ability to repay the
        Revolving Line of Credit to be impaired.

                r. Fortress shall default upon its outstanding debentures
        including but not limited to debentures in the amount of One Hundred
        Million and No/100 Dollars ($100,000,000) comprising the Senior
        Indenture.

                s. The waste or uninsured destruction of all or any material
        portion of the Collateral.

                t. The sale, transfer, or conveyance of all or any interest in
        all or any material portion of the Collateral without the consent of
        Lenders other than sales of Finished Lots and Units in the ordinary
        course of Borrower's business.

                u. A lien or other encumbrance shall arise and/or be filed
        against the Collateral or any other security for the Revolving Line of
        Credit other than those permitted in this Agreement, and the same shall
        not have been removed, or Borrower shall not have posted adequate
        security therefor in accordance with the applicable provisions of this
        Agreement, within twenty (20) days after either notice thereof shall
        have been given to Borrower or the date of Borrower's actual knowledge
        thereof, whichever shall first occur.

                v. A Stop Work Notice under Arizona Revised Statutes is received
        by Agent, with respect to any Arizona Collateral and Borrower fails to
        either deposit with Lender all amounts sufficient to pay such Notice; or
        present evidence satisfactory to Agent that the claim represented by
        such Notice has been paid in full within ten (10) days from Agent's
        notice thereof to Borrower.

        Borrower shall not make distributions or pay dividends upon the
occurrence of an Event of Default.

        17. Rights and Remedies; Attorney-In-Fact.

                                       44
<PAGE>

                a. Rights and Remedies. Upon the occurrence of an Event of
        Default or at any time thereafter, Lenders may exercise any or all of
        the following rights and remedies:

                        i. Lenders shall have no further obligation to provide
                Borrower with any Advances or financial accommodations of any
                kind under this Agreement or any other Loan Document.

                        ii. Lenders may declare the Revolving Line of Credit to
                be terminated, whereupon the same shall immediately terminate;

                        iii. Lenders may declare the entire unpaid Outstanding
                Principal Balance, all accrued but unpaid interest thereon, all
                amounts payable under this Agreement and the other Loan
                Documents, and all other Obligations to be immediately due and
                payable whereupon all such amounts shall immediately be due and
                payable, without presentment, notice of dishonor or protest, or
                further notice of any kind, all of which are hereby expressly
                waived by Borrower;

                        iv. Lenders may, without further action, apply any and
                all money owing by Lenders to Borrower, including without
                limitation any funds on deposit with Lenders, whether or not
                matured, to the payment of Advances, including interest accrued
                thereon, and of all other sums then owing by Borrower hereunder
                and under any other Loan Document;

                        v. Lenders may exercise and enforce any and all rights
                and remedies available upon default to a secured party under the
                UCC, including without limitation, the right to take possession
                of Collateral, or any evidence thereof, without judicial process
                or by judicial process (without a prior hearing or notice
                thereof, which Borrower hereby expressly waives), and the right
                to sell, lease, or otherwise dispose of any or all of the
                Collateral, and, in connection therewith, Borrower shall on
                demand assemble the Collateral and make it available to Lenders
                at a place to be designated by Lenders which is reasonably
                convenient to both parties;

                        vi. Lenders shall have the right to appraise all
                collateral in the Borrowing Base at Borrower's expense.

                        vii. Lenders may apply the proceeds from any Collateral
                or from any other source against any part of the Revolving Line
                of Credit as and in any order Lenders deem appropriate.

                        viii. Lenders shall have the right, which shall be
                exercised in Lenders' sole and absolute discretion, and without
                any obligation on the part of Lenders to do so, to take
                possession of the Property and to perform any and all work it
                deems advisable or necessary to protect any Improvements made
                prior to the date of possession by Lenders and to complete the
                Improvements.

                                       45
<PAGE>

                        ix. Lenders may proceed with every remedy available at
                law or in equity or provided for in this Agreement or in any of
                the Loan Documents including but not limited to foreclosure and
                sale, repossession and all other creditor's rights, and all
                expenses incurred by Lenders in connection with any remedy shall
                be deemed indebtedness of Borrower to Lenders.

                b. Attorney-In-Fact. Upon the occurrence and during the
        continuance of any Event of Default, Borrower hereby irrevocably
        constitutes and appoints Lenders its attorney-in- fact with full power
        and authority to:

                        i. Take possession of, protect, and complete the
                Improvements.

                        ii. Use any Reserves and any funds not disbursed from
                the Account for the purpose of completing the Improvements and
                payment of other costs related thereto.

                        iii. Make such additions, changes, and correction in the
                Plans and Specifications as deemed necessary or desirable by
                Lenders to complete the Improvements.

                        iv. Pay, settle, or compromise all existing invoices,
                charges, and claims relating to the Improvements as it deems
                necessary for completion of the Improvements and clearance of
                title to the Property for protection of its interest.

                        v. Prosecute and defend all actions and proceedings in
                connection with construction of the Improvements and to apply
                the proceeds of any judgment received by Borrower in any such
                action against the Revolving Line of Credit as it sees fit.

                        vi. Execute, acknowledge, and deliver all instruments
                and documents in Borrower's name and to do and perform all acts
                in Borrower's name Lenders deem necessary or appropriate to
                complete the construction of the Improvements.

                Notwithstanding the foregoing, however, Lenders shall not have
                the authority to settle, compromise, or defend any third party
                claim or action that seeks to impose personal liability on any
                of shareholder of Borrower; provided that Lenders shall have the
                right and authority to settle, compromise, or defend any claim
                or action (or any portion of a claim or action) that relates to
                the Property or the construction of the Improvements. Nothing
                contained in this Section shall prohibit Lenders from changing
                the Plans and Specifications to effect a reduction of the costs
                of any item therein when, in the exercise of good faith
                judgment, Lenders determine that such action is necessary to
                provide for the use, occupancy, operation, marketability, or
                leasability of all or portions of the Property.

                c. No Waiver. No delay or failure of Lenders in the exercise of
        any right or remedy provided for under this Agreement or under any of
        the Loan Documents shall be deemed a waiver of such right by Lenders. No
        exercise or partial exercise or waiver of any

                                       46
<PAGE>

        right or remedy shall be deemed a waiver of any further exercise of such
        right or remedy or of any other right or remedy that Lenders may have
        under this Agreement or under any of the Loan Documents. Enforcement of
        any of Lenders' rights as to any security for the Revolving Line of
        Credit shall not affect Lenders' right to enforce payment of the
        Revolving Line of Credit and to recover judgment for any portion thereof
        remaining unpaid. The rights and remedies set forth in this Agreement
        and in any of the Loan Documents are cumulative and not exclusive of any
        other right or remedy that Lenders may have.

                d. No Responsibility. Lenders assume no responsibility for
        completion of the Improvements, and nothing herein shall be construed as
        establishing a relationship between Lenders and any other party, except
        the lender/borrower relationship between Lenders and Borrower. Lenders
        shall owe no duty to any person by reason of this Loan Agreement to
        construct the Improvements, to apply any undisbursed funds from the
        Account to claims arising out of the construction of the Improvements,
        or to exercise any of its rights hereunder.]

                e. Automatic Acceleration. Notwithstanding the foregoing, upon
        the occurrence of an Event of Default, the entire unpaid principal
        amount of the Revolving Note (whether contingent or funded), all
        interest accrued and unpaid thereon, all other amounts payable under
        this Agreement, the other Loan Documents, and any other Obligations
        shall be immediately due and payable automatically without presentment,
        demand, protest, or notice of any kind.

        18. Certain Notices. If notice to Borrower of any intended disposition
of Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in this Agreement) at least ten calendar days prior to the date
of intended disposition or other action.

        19. Miscellaneous.

                a. Amendments, Etc. No amendment, modification, replacement,
        substitution, termination, or waiver of any provision of any Loan
        Document or consent to any departure by Borrower therefrom or any
        release of any claim, lien, or security interest in favor of Lenders
        shall be effective unless the same shall be in writing and signed by
        Lenders, and then such amendment, modification, replacement,
        substitution, termination, waiver, or consent shall be effective only in
        the specific instance and for the specific purpose for which given. No
        notice to or demand on Borrower in any case shall entitle Borrower to
        any other or further notice or demand in similar or other circumstances.

                b. Financing Statement. A carbon, photographic, or other
        reproduction of this Agreement or of any financing statements signed by
        Borrower is sufficient as a financing

                                       47
<PAGE>

        statement and may be filed as a financing statement in any state to
        perfect the security interests granted hereby. For this purpose, the
        following information is set forth:

               Name and address of Debtor:

                      The Genesee Company
                      603 Park Point Drive, Suite 201
                      Golden, CO 80401
                      Federal Tax Identification No. 841166364

               Name and address of Secured Party:

                      KeyBank National Association, Agent
                      1675 Broadway, Suite 400
                      Denver, CO  80202
                      Attention: Commercial Residential Client Services

                c. Collateral. This Agreement does not contemplate a sale of
        accounts, contract rights, or chattel paper, and, as provided by law,
        Borrower is entitled to any surplus and shall remain liable for any
        deficiency. Lenders' duty of care with respect to Collateral in their
        possession (as imposed by law) shall be deemed fulfilled if it exercises
        reasonable care in physically keeping such Collateral, or in the case of
        Collateral in the custody or possession of a bailee or other third
        person, exercises reasonable care in the selection of the bailee or
        other third person, and Lenders need not otherwise preserve, protect,
        insure, or care for any Collateral. Lenders shall not be obligated to
        preserve any rights Borrower may have against prior parties, to realize
        on the Collateral at all or in any particular manner or order, or to
        apply any cash proceeds of the Collateral in any particular order of
        application.

                d. Indemnity. In addition to the payment of various costs, fees,
        and expenses pursuant to the terms hereof and the other indemnities set
        forth herein and in the other Loan Documents, Borrower agrees to
        indemnify, defend, and hold harmless Lenders, and any of its
        participants, parent corporations, subsidiary corporations, affiliated
        corporations, successor corporations, and all present and future
        officers, directors, employees, and agents of the foregoing (the
        "Indemnitees"), from and against (i) any and all transfer taxes,
        documentary taxes, assessments, or charges made by any governmental
        authority by reason of the execution and delivery of this Agreement and
        the other Loan Documents or the making of Advances and (ii) any and all
        liabilities, losses, damages, penalties, judgments, suits, claims,
        costs, and expenses of any kind or nature whatsoever (except for those
        arising primarily from the gross negligence or wilful misconduct of the
        Indemnitees) including without limitation the reasonable fees and
        disbursements of counsel in connection with any investigative,
        administrative, or judicial proceedings, whether or not such Indemnitee
        shall be designated a party thereto, which may be imposed on, incurred
        by or asserted against such Indemnitee, in any manner relating to or
        arising out of or in connection with making of the Advances, this
        Agreement and all other Loan Documents or the use or intended use of the
        proceeds of the Advances ("Indemnified Liabilities"). If any
        investigative, judicial, or administrative proceeding arising

                                       48
<PAGE>

        from any of the foregoing is brought against any Indemnitee, upon
        request of such Indemnitee, Borrower, or counsel designated by Borrower
        and satisfactory to the Indemnitee, shall resist and defend such action,
        suit, or proceeding to the extent and in the manner directed by the
        Indemnitee, at Borrower's sole cost and expense. Each Indemnitee shall
        use its best efforts to cooperate in the defense of any such action,
        suit, or proceeding. If the foregoing undertaking to indemnify, defend,
        and hold harmless may be held to be unenforceable because it violates
        any law or public policy, Borrower shall nevertheless make the maximum
        contribution to the payment and satisfaction of each of the Indemnified
        Liabilities which is permissible under Applicable Law. The obligation of
        Borrower under this Section shall survive the termination of this
        Agreement and the discharge of Borrower's Obligations to Lenders.

                e. Execution in Counterparts. This Agreement and other Loan
        Documents may be executed in any number of counterparts, each of which
        when executed and delivered shall be deemed to be an original and all of
        which counterparts when taken together shall constitute one and the same
        instrument.

                f. Headings. Section headings in this Agreement are included
        herein for reference purposes only and shall not constitute a part of
        this Agreement for any other purpose.

                g. Further Assurances and Substituted Performance. Borrower
        shall take or cause any third party to take any actions and execute or
        cause any third party to execute any additional documents (including
        without limitation Uniform Commercial Code filings) deemed necessary by
        Lenders in their reasonable discretion to carry out the intent or
        purposes of this Agreement. Borrower hereby grants to Lenders the power
        of attorney to act on behalf of Borrower and Lenders shall be entitled,
        but not required, to take any action that was required to be, but not,
        taken by Borrower under this Agreement. Such power of attorney is
        coupled with an interest and is irrevocable. Borrower shall reimburse
        Lenders upon demand for any amounts, attorneys' fees, expenses, and
        costs paid by Lenders in connection with such actions together with
        interest thereon at the Default Rate from the date of payment until the
        date of reimbursement. No action taken by Lenders shall be deemed to
        relieve Borrower's obligation to take such action or cure any default
        under this Agreement.

                h. Survival. This Agreement shall remain in full force and
        effect until Lenders have been released from any obligation to provide
        Borrower with any loans or other financial accommodations of any kind
        and all of the Obligations have been indefeasibly paid and satisfied in
        a full and complete manner.

                i. Essence of Time. Time is of the essence with respect to the
        payment and performance of Borrower's indebtedness, liabilities, and
        obligations under this Agreement.

                j. Assignment. Lenders shall be entitled to assign or grant a
        lien or security interest in its obligations, rights, and remedies under
        this Agreement to any third party in its sole discretion. Except as
        permitted by the Loan Agreement, Borrower shall not be entitled to
        assign or grant a security interest in any of its obligations, rights,
        and remedies under this

                                       49
<PAGE>

        Agreement to any third party without the prior written consent of
        Lenders (including any express consent set forth in this Agreement).

                k. Waiver. Lenders shall not be deemed to have waived any of the
        Obligations or any indebtedness, liability, obligation, right, or remedy
        described in this Agreement unless Lenders have executed and delivered
        to Borrower a written waiver thereof. A waiver of a right or remedy on
        one occasion shall not act as a waiver of that or any other right or
        remedy on a future occasion. Without limiting the foregoing, Lenders'
        delay in exercising any right or remedy shall not constitute a waiver of
        that or any other right or remedy described in this Agreement.

                l. Successors and Assigns. This Agreement shall inure to the
        benefit of and be binding upon the successors, assigns, and receivers of
        the parties hereto.

                m. Severability. The invalidity of one or more provisions shall
        not affect the validity of the remaining provisions of this Agreement.

                n. Notice. Any notice or other communication to be provided
        under this Agreement shall be in writing and shall be deemed given when
        sent via fax (with proof of transmission) or overnight, certified,
        registered, or regular mail to the parties thereto at the following
        addresses or such other address as a party may provide the other parties
        with written notice of from time to time:

               If to Borrower:

                      The Genesee Company
                      603 Park Point Drive, Suite 201
                      Golden, CO 80401
                      Attention: Terry T. Kyger
                      Telephone: (303) 526-9000
                      Facsimile: (303) 526-2157

               and:

                      Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
                      950 - 17th Street, Suite 1600
                      Denver, CO 80202
                      Attention: Thomas R. MacDonald, Esq.
                      Phone: (303) 825-8500
                      Fax: (303) 825-6525

               If to Lenders:

                      KeyBank National Association
                      1675 Broadway, Suite 400

                                       50
<PAGE>

                      Denver, Colorado 80202
                      Attention: Commercial Residential Client Services
                      Telephone:  (720) 904-4416
                      Facsimile:   (720) 904-4440

               and:

                      Block Markus Williams, L.L.C.
                      1700 Lincoln Street, Suite 3550
                      Denver, CO 80203
                      Attention: Gregory L. Williams, Esq.
                      Telephone: (303) 830-0800
                      Facsimile:  (303) 830-0809

                                       51
<PAGE>

               and:

                      Compass Bank
                      15 South 20th Street, 15th Floor
                      Birmingham, Alabama 35233
                      Attention: Johanna Duke Paley, Sr. Vice President
                      Telephone: (205) 933-3851
                      Facsimile:  (205) 715-7994

                o. Governing Law; Consent to Jurisdiction and Venue. This
        Agreement shall be governed by the laws of the State of Colorado.
        Borrower consents to the jurisdiction and venue of the United States
        District Court for the District of Colorado and the District Court for
        the City and County of Denver, Colorado, in the event of any litigation
        pertaining to the negotiation, execution, and delivery of this Agreement
        or the other Loan Documents, the enforcement of any indebtedness,
        liability, obligation, right, or remedy described therein, or any claim,
        defense, setoff, or counterclaim in connection therewith.
        Notwithstanding anything to the contrary herein, all Security
        Instruments pertaining solely to Arizona real property shall be governed
        by the laws of the State of Arizona.

                p. Attorneys' Fees and Expenses. Borrower shall pay Lenders
        their attorneys' fees and other costs and expenses incurred before
        trial, at trial, and on appeal in the collection or enforcement of this
        Agreement or the other Loan Documents or in any litigation pertaining to
        the negotiation, execution, or delivery of this Agreement or the other
        Loan Documents, the payment and performance of any indebtedness,
        liability, or obligation or the enforcement of any right or remedy
        described therein, or any claim, defense, setoff, or counterclaim
        arising or asserted in connection therewith.

                q. Entire Agreement. This Agreement and the other Loan Documents
        represent the complete and integrated understanding between the parties
        pertaining to the subject matter hereof and thereof. All other prior and
        contemporaneous discussions, negotiations, and agreements, written or
        oral, express or implied, are of no further force and effect to the
        extent inconsistent therewith.

                r. Americans With Disabilities Act. Borrower expressly assumes
        all liability for any changes or modifications required to be made to
        any Improvements pursuant to the Americans With Disabilities Act.
        Borrower shall indemnify and hold Lenders harmless from any claim which
        may be made against Lenders pursuant to the Americans With Disabilities
        Act. The terms and provisions of this Section shall survive the payment
        of the Revolving Line of Credit or, in the event of the default in the
        payment of the Revolving Line of Credit, shall survive the foreclosure
        of any instrument securing the Revolving Line of Credit. In the event
        Lenders are the high bidder at a sale of all or any portion of the
        Property pursuant to the foreclosure of any of the Loan Documents, then
        the terms and provisions of this section shall survive such sale and the
        acquisition of the Property by Lenders and shall remain in full force
        and effect notwithstanding the foreclosure of any instrument securing
        the Revolving Line of Credit and the cancellation of the Promissory Note
        evidencing the Revolving Line of Credit.

                                       52
<PAGE>

                s. Partial Releases. Lenders agree that they will, from time to
        time, when requested by Borrower, execute partial releases of the lien
        of the Deeds of Trust pertaining to Finished Lots, Pre-Sold Units, Spec
        Units, or Model Units comprising portions of the Property on the
        following terms and conditions:

                        i. Lenders shall be given at least five (5) business
                days' notice of Borrower's request for each partial release.

                        ii. With each request for partial release, Borrower
                shall furnish Lenders with a legal description of the applicable
                Finished Lot, Pre-Sold Unit, Spec Unit, or Model Unit for which
                a release is requested.

                        iii. At any time when a Default or an Event of Default
                has occurred and is continuing hereunder or under any other Loan
                Document, Lenders' obligation to grant partial releases shall
                only apply to Pre-Sold Units, Spec Units, and Model Units which
                have been subject to an acceptable sales contract prior to the
                Default with respect to which notice has been given; the
                construction of such Unit is complete, a certificate of
                occupancy has been issued; and the Unit is ready for delivery of
                possession to a Purchaser. In such case, Lenders shall give
                partial releases for such Pre-Sold Units, Spec Units, and Model
                Units, upon the receipt of Ninety Percent (90%) of the net sales
                proceeds of the final contract price for such Unit. For purposes
                of this section, Net Sales proceeds shall be the gross purchase
                price paid by a bona fide third-party purchaser of the Unit,
                less all customary seller's costs of sale actually paid to third
                parties, including recording fees, taxes, sales commissions,
                title insurance premiums and closing fees not to exceed in the
                aggregate Ten Percent (10%) of the final contract price. The
                final contract price, in all cases, must have been determined
                and agreed to in writing between Borrower and Purchaser on a
                date prior to the Default or Event of Default. Within two (2)
                Business Days of a declaration of default by Lenders, Borrower
                shall deliver to Lenders an updated Borrowing Base Certificate
                which will set forth and identify the Units which are subject to
                this partial release provision.

                        iv. The cost of each partial release, including Lenders'
                reasonable attorneys' fees, if any, shall be paid by Borrower.

                t. Waivers. Borrower hereby expressly waives i. any right of
        contribution, reimbursement, exoneration, or recourse available to
        Borrower as to any of the Obligations, against any person liable
        therefor, or as to any collateral security therefor, ii. any and all of
        its rights in connection with the settlement, compromise or release of,
        or the waiver of any default with respect to, any Obligations, and iii.
        to the greatest extent permitted by applicable law, any and all
        defenses, claims, setoffs and discharges available to a surety,
        guarantor or accommodation co-obligor. With respect to rights of
        subrogation as to any of the Obligations, against any person liable
        therefor, or as to any collateral security therefor, Borrower covenants
        and agrees to defer the enforcement of any such right until such time as
        all Obligations under the Loan are paid in full, or otherwise fully
        performed. Borrower agrees that the amount of

                                       53
<PAGE>

        the Obligations and the liens and security interests created by the Loan
        Documents shall not be diminished and the liability of Borrower
        hereunder shall not be otherwise impaired or affected by any of the
        foregoing.

                u. Syndication Rider. Agent's and Banks' rights, duties and
        obligations with respect to this Facility are as provided in the
        Syndication Rider executed and attached in counterparts as EXHIBIT G
        hereto.

                v. Counterparts. This Agreement may be executed in any number of
        counterparts, all of which taken together shall constitute one
        Agreement, and any of the parties hereto may execute this Agreement by
        signing any such counterpart. This Agreement shall be effective when it
        has been executed by Borrower, Agent and all Banks and each party has
        notified Agent by fax or telephone that it has taken such action and has
        provided Agent with its executed signature page hereof.

                w. WAIVER OF JURY TRIAL. BORROWER AND LENDERS WAIVE THEIR
        RESPECTIVE RIGHTS TO DEMAND A JURY TRIAL IN THE EVENT OF ANY LITIGATION
        PERTAINING TO THE NEGOTIATION, EXECUTION, AND DELIVERY OF THIS AGREEMENT
        OR THE OTHER LOAN DOCUMENTS, THE ENFORCEMENT OF ANY OBLIGATION, RIGHT,
        OR REMEDY DESCRIBED THEREIN, OR ANY CLAIM, DEFENSE, SETOFF, OR
        COUNTERCLAIM IN CONNECTION THEREWITH.

                              THE GENESEE COMPANY

                              By:     _____________________________________
                                      Terry T. Kyger, Vice President

                              KEYBANK NATIONAL ASSOCIATION,
                              For itself and as Agent and Lead Arranger

                              By:     _____________________________________
                                      Paul Holden, Vice President

                                       54
<PAGE>

                              COMPASS BANK

                              By:     _____________________________________
                                      Johanna Duke Paley, Sr. Vice President

                                       55
<PAGE>

                                    EXHIBIT A

                           BORROWING BASE CERTIFICATE

        [To Be Provided]

<PAGE>

                                    EXHIBIT B

                                    PROPERTY

        [To Be Provided]

<PAGE>

                                    EXHIBIT C

                           REVOLVING PROMISSORY NOTES

<TABLE>
<S>                                                <C>
        KeyBank National Association               $35,000,000.00

        Compass Bank                               $15,000.000.00
</TABLE>

<PAGE>

                                    EXHIBIT D

                     BORROWER NAMES, CHIEF EXECUTIVE OFFICE,
                        AND PRINCIPAL PLACES OF BUSINESS

        The Genesee Company
        Genesee Communities II, Inc.
        Genesee Communities IV, Inc.
        Genesee Communities V, Inc.
        Genesee Communities VI, Inc.
        Genesee Communities VII, Inc.
        Genesee Communities VIII, Inc.

        Chief Executive Office:
               603 Park Point Drive, Suite 201
               Golden, CO 80401

        Principal Places of Business:

               Denver Division
               603 Park Point Drive, Suite 201
               Golden, CO 80401

               Fort Collins Division
               4821 Wheaton Drive, Suite 200
               Fort Collins, CO 80525

               Tucson Division
               231 Giaconda Way, Suite 123
               Tucson, AZ 85704

<PAGE>

                                    EXHIBIT E

                                  SUBSIDIARIES

               Genesee Development Company
               The Genesee Company of Michigan, Ltd.
               Genesee Communities II, Inc.
               Genesee Venture Corporation
               The Genesee Company/Castle Pines, Ltd.
               Genesee Communities I, Inc.
               Genesee Communities II, Inc.
               Genesee Communities III, Inc.
               Genesee Communities IV, Inc.
               Genesee Communities V, Inc.
               Genesee Communities VI, Inc.
               Genesee Communities VII, Inc.
               Genesee Communities VIII, Inc.

<PAGE>

                                    EXHIBIT F

                             COMPLIANCE CERTIFICATE

        In accordance with the Revolving Loan Agreement dated November , 2000,
and all amendments, modifications, replacements, and substitutions thereto
(collectively, "Loan Agreement"), attached are the financial statements of THE
GENESEE COMPANY, a Colorado corporation ( the "Borrower") as of and for the
quarter and year-to-date period ended ("Current Financials").

        I certify that the Current Financials have been prepared in accordance
with generally accepted accounting principles, consistently applied, subject to
year-end audit adjustments (with respect to quarterly financial statements
only).

Defaults and Events of Default (check one):

        []     I have no knowledge of the occurrence of any Default or Event of
               Default under the Loan Agreement which has not previously been
               reported to you in writing and remedied.

        []     Attached is a detailed description of all Defaults and Events of
               Default of which I have knowledge and which have not previously
               been reported to you and remedied.

Compliance with Financial Covenants:

        For the date and periods covered by the Current Financials, Borrower is
in compliance with the covenants set forth in SECTIONS 13(J), (K), AND (L) and
SECTION 14(U) of the Loan Agreement, except as indicated below. The calculations
made to determine compliance are as follows:

        Covenant                            Actual        Requirement
        --------                            ------        -----------

                        ---------------------------------
                        President/Chief Financial Officer

<PAGE>

                                    EXHIBIT G

                             SYNDICATION PROVISIONS

        20. Provisions For Syndicated Loans.

                a. Bank Assignments. The following terms used in this Section 20
and Section 21 (and elsewhere if used) shall have the following meanings:

                        i. Agent: KeyBank National Association and any successor
                Agent appointed hereunder.

                        ii. Assignment and Assumption: The written Assignment
                and Assumption Agreement satisfactory to Agent and the Banks.

                        iii. Commitment: The maximum amount each Bank has agreed
                to lend to Borrower as part of the Loan, as set forth below the
                signature line of each Bank, subject to modification by each
                Assignment and Assumption. At closing of this Facility, the
                Banks, and their interests in the Facility are as follows:

                            (1) KeyBank National Association - $35,000,000.00

                            (2) Compass Bank                 -  $15,000,000.00

                        iv. Bank: Each party constituting Lender, as modified by
                each Assignment and Assumption.

                        v. Defaulting Bank: As defined in Section 21(e)(ii).

                        vi. Lenders: KeyBank National Association and Compass
                Bank, an Alabama banking association, and their successors and
                assigns.

                        vii. Percentage: With respect to each Bank, the
                percentage which its Commitment constitutes of the maximum
                amount of the Loan.

                        viii. Required Banks: Banks holding Percentages
                aggregating at least sixty-six and two-thirds percent (66 2/3%).

                b. Several Liability. Anything in this Agreement contained to
the contrary notwithstanding, the obligations of the Banks to Borrower under
this Agreement are several and not

<PAGE>

joint and several; each Bank shall only be obligated to fund its Percentage of
each disbursement to be made hereunder up to the amount of its Commitment.

               c.     Assignments and Participations.

                      i. Each Bank shall have the right to assign, transfer,
               sell, negotiate, pledge or otherwise hypothecate this Agreement
               and any of its rights and security hereunder and under the other
               Loan Documents to any other lending institution (an "Assignee")
               with the prior written consent of the Agent and with the prior
               written consent of Borrower, which consents by the Agent and the
               Borrower shall not be unreasonably withheld, conditioned or
               delayed (provided that no consent of Borrower shall be required
               if the Assignee is also a Bank or if an Event of Default then
               exists) and no consent of the Agent shall be required if the
               Assignee is also a Bank; provided, however, that (i) the parties
               to each such assignment shall execute and deliver to Agent, for
               its approval and acceptance, an Assignment and Assumption, (ii)
               each such assignment shall be of a constant, and not a varying,
               percentage of the assigning Bank's rights and obligations under
               this Agreement, (iii) unless the Agent and, so long as no Event
               of Default exists, Borrower otherwise consent, the aggregate
               amount of the Commitment of the assigning Bank being assigned
               pursuant to each such assignment shall in no event be less than
               Five Million Dollars ($5,000,000), (iv) the Agent shall receive
               from the assigning Bank and/or assignee a processing fee of Three
               Thousand Five Hundred Dollars ($3,500), and (v) if the assignment
               is less than the assigning Bank's entire interest in the Loan,
               the assigning Bank must retain at least a Ten Million and no/100
               Dollar ($10,000,000.00) interest in the Loan. The Agent may
               designate any Assignee accepting an assignment of a specified
               portion of the Loan to be a Co-Agent, an "Arranger" or similar
               title, but such designation shall not confer on such Assignee the
               rights or duties of the Agent. Upon such execution, delivery,
               approval and acceptance, and upon the effective date specified in
               the applicable Assignment and Assumption, (a) the Assignee
               thereunder shall be a party hereto and, to the extent that rights
               and obligations hereunder have been assigned to it and assumed by
               it, as applicable, pursuant to such Assignment and Assumption,
               have the rights and obligations of a Bank hereunder and under the
               other Loan Documents, and Borrower hereby agrees that all of the
               rights and remedies of Banks in connection with the interest so
               assigned shall be enforceable against Borrower by an Assignee
               with the same force and effect and to the same extent as the same
               would have been enforceable but for such assignment, and (b) the
               assigning Bank thereunder shall, to the extent that rights and
               obligations hereunder and under the other Loan Documents have
               been assigned by it pursuant to such Assignment and Assumption,
               relinquish its rights and be released from its obligations
               hereunder and thereunder.

                      ii.    By executing and delivering an Assignment and
               Assumption, the assigning Bank thereunder and the Assignee
               thereunder confirm to and agree with

                                       2
<PAGE>

               each other and the other parties hereto as follows: (i) except as
               provided in such Assignment and Assumption, such assigning Bank
               makes no representation or warranty and assumes no responsibility
               with respect to any statements, warranties or representations
               made in or in connection with this Agreement or any other Loan
               Document or the execution, legality, validity, enforceability,
               genuineness, sufficiency or value of this Agreement or any other
               Loan Document or any other instrument or document furnished in
               connection therewith; (ii) such assigning Bank makes no
               representation or warranty and assumes no responsibility with
               respect to the financial condition of the Borrower or the
               performance or observance by the Borrower of any of its
               obligations under any Loan Document or any other instrument or
               document furnished in connection therewith; (iii) such Assignee
               confirms that it has received a copy of this Agreement together
               with such financial statements, Loan Documents and other
               documents and information as it has deemed appropriate to make
               its own credit analysis and decision to enter into the Assignment
               and Assumption and to become a Bank hereunder; (iv) such Assignee
               will, independently and without reliance upon Agent, the
               assigning Bank or any other Bank, and based on such documents and
               information as it shall deem appropriate at the time, continue to
               make its own credit decisions in taking or not taking action
               under this Agreement; (v) such Assignee appoints and authorizes
               the Agent to take such action as the Agent on its behalf and to
               exercise such powers under this Agreement and the other Loan
               Documents as are delegated to Agent by the terms hereof and
               thereof, together with such powers as are reasonably incidental
               thereto; and (vi) such Assignee agrees that it will perform in
               accordance with their terms all of the obligations which by the
               terms of this Agreement are required to be performed by it as a
               Bank.

                      iii. Agent shall maintain a copy of each Assignment and
               Assumption delivered to and accepted by it and shall record in
               its records the names and address of each Bank and the Commitment
               of, and Percentage of the Loan owing to, such Bank from time to
               time. Borrower, the Agent and Banks may treat each entity whose
               name is so recorded as a Bank hereunder for all purposes of this
               Agreement.

                      iv. Upon receipt of an Assignment and Assumption executed
               by an assigning Bank and an Assignee, Agent shall, if such
               Assignment and Assumption has been properly completed and
               consented to if required herein, accept such Assignment and
               Assumption, and record the information contained therein in its
               records, and the Agent shall use its best efforts to give prompt
               notice thereof to Borrower (provided that neither the Agent nor
               the Banks shall be liable for any failure to give such notice).

                      v. Borrower shall use reasonable efforts to cooperate with
               Agent and each Bank in connection with the assignment of
               interests under this Agreement or the sale of participations
               herein.

                                       3
<PAGE>

                      vi. Anything in this Agreement to the contrary
               notwithstanding, and without the need to comply with any of the
               formal or procedural requirements of this Agreement, including
               this Section, any Bank may at any time and from time to time
               pledge and assign all or any portion of its rights under all or
               any of the Loan Documents to a Federal Reserve Bank; provided
               that no such pledge or assignment shall release such Bank from
               its obligations hereunder. To facilitate any such pledge or
               assignment, the Agent shall, at the request of such Bank, enter
               into a letter agreement with the Federal Reserve Bank in, or
               substantially in, the form of the exhibit to Appendix C to the
               Federal Reserve Bank of New York Operating Circular No. 12.

                      vii. Anything in this Agreement to the contrary
               notwithstanding, any Bank may assign all or any portion of its
               rights and obligations under this Agreement to another branch or
               affiliate of such Bank without first obtaining the approval of
               any Agent or the Borrower, provided that (i) such Bank remains
               liable hereunder unless the Borrower and Agent shall otherwise
               agree, (ii) at the time of such assignment such Bank is not a
               Defaulting Bank, (iii) such Bank gives the Agent and Borrower at
               least fifteen (15) days prior written notice of any such
               assignment; (iv) the parties to each such assignment execute and
               deliver to Agent an Assignment and Assumption, and (v) the Agent
               receives from the assigning Bank a processing fee of One Thousand
               Five Hundred Dollars ($1,500).

                      viii. Each Bank shall have the right, without the consent
               of the Borrower, to sell participations to one or more other
               Banks (a "Participant") in or to all or a portion of its rights
               and obligations under the Loan and the Loan Documents; provided,
               however, that (i) such Bank's obligations under this Agreement
               (including without limitation its Commitment to Borrower
               hereunder) shall remain unchanged, (ii) such Bank shall remain
               solely responsible to the other parties hereto for the
               performance of such obligations (iii) the Borrower, the Agent and
               the other Banks shall continue to deal solely and directly with
               such Bank in connection with such Bank's rights and obligations
               under this Agreement and with regard to any and all payments to
               be made under this Agreement and (iv) the holder of any such
               participation shall not be entitled to voting rights under this
               Agreement or the other Loan Documents (but such holder may
               contract with the Bank selling such Participant its interest in
               such Bank's share of the Loan as to voting of such Bank's
               interest under Section 21.f(ii) [but not under any other section
               of this Agreement], provided that any such agreement by a Bank
               shall bind only such Bank alone and not Borrower, the other Banks
               or the Agent).

                      ix. No Assignee of any rights and obligations under this
               Agreement shall be permitted to subassign such rights and
               obligations. No participant in any rights and obligations under
               this Agreement shall be permitted to sell subparticipations of
               such rights and obligations.

                                       4
<PAGE>

                      x. Borrower acknowledges and agrees that Banks may provide
               to any Assignee or Participant originals or copies of this
               Agreement, any other Loan Document and any other documents,
               instruments, certificates, opinions, insurance policies, letters
               of credit, reports, requisitions and other materials and
               information of every nature or description, and may communicate
               all oral information, at any time submitted by or on behalf of
               Borrower or received by any Bank in connection with the Loan or
               with respect to Borrower, provided that prior to any such
               delivery or communication, such Assignees or Participants shall
               agree to preserve the confidentiality of any of the foregoing to
               the same extent that such Bank agreed to preserve such
               confidentiality. In order to facilitate assignments to Assignees
               and sales to Participants, Borrower shall execute such further
               documents, instruments or agreements as Banks 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), or
               (ii) to expend more than incidental sums of money or incidental
               administrative time for which it does not receive reasonable
               reimbursement in order to comply with any requests or
               requirements of any Bank in connection with such assignment or
               sale arrangement. In addition, Borrower agrees to cooperate fully
               with Banks in the exercise of Banks' rights pursuant to this
               Section, including providing such information and documentation
               regarding Borrower as any Bank or any potential Assignee or
               Participant may reasonably request and to meet with potential
               Assignees and Participants.

        21.    Agent.

               a.     Appointment.

                      i. Key Bank National Association is hereby appointed as
               Agent hereunder and under each other Loan Document, and the Banks
               hereby irrevocably authorize the Agent to act as agent for
               Lenders and to take such actions as Lenders are obligated or
               entitled to take under the provisions of this Agreement and the
               other Loan Documents and to exercise such powers as are set forth
               herein or therein, together with such other powers as are
               reasonably incidental thereto. Agent agrees to act as such upon
               the express conditions contained in this Article in substantially
               the same manner that it would act in dealing with a loan held for
               its own account. Agent shall not have a fiduciary relationship
               with respect to any Bank by reason of this Agreement.

                      ii.    The provisions of this Article are solely for the
               benefit of the Agent and the Banks, and Borrower shall not have
               any rights to rely on or enforce any of the provisions hereof
               except as provided in Section 21(b) below. In performing its

                                       5
<PAGE>

               functions and duties under this Agreement, the Agent shall act
               solely as agent of Lenders and does not assume, and shall not be
               deemed to have assumed, any obligations toward or relationship of
               agency or trust with or for the Borrower.

               b. Reliance on Agent. All acts of and communications by the
Agent, as agent for the Banks, shall be deemed legally conclusive and binding;
and Borrower or any third party (including any court) shall rely on any and all
communications or acts of the Agent with respect to the exercise of any rights
or the granting of any consent, waiver or approval on behalf of Lenders in all
circumstances where an action by Lenders is required or permitted pursuant to
this Agreement or the provisions of any other Loan Document or by applicable law
without the right or necessity of making any inquiry of any individual Bank as
to the authority of Agent with respect to such matter. In no event shall any of
the foregoing limit the rights or obligations of any Bank with respect to any
other Bank pursuant to this Article 21.

               c. Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental thereto,
and may exercise all other powers of Lenders as are not made subject to the
consent of the Required Banks pursuant to Section 21(f)(i) or to the consent of
all Banks pursuant to Section 21.f(ii). The Agent shall not be considered, or be
deemed, a separate agent of the Banks hereunder, but is, and shall be deemed,
acting in its contractual capacity as Agent, exercising such rights and powers
under the Loan Documents as are specifically delegated to the Agent or Agent is
otherwise entitled to take hereunder. Agent shall have no implied duties to the
Banks, or any obligation to the Banks to take any action except any action
specifically provided by the Loan Documents to be taken by the Agent.

               d.     Disbursements.

                      i. At least one (1) Business Day (by 11:00 a.m. Denver
               time) prior to each date a disbursement of the Loan is to be made
               hereunder pursuant to this Agreement, the Agent shall notify each
               Bank of the proposed disbursement. Each Bank shall make available
               to Agent (or the funding Bank or entity designated by the Agent),
               the amount of such Bank's Percentage of such disbursement (with
               respect to such Bank, such amount being referred to herein as an
               "Advance") in immediately available funds not later than 11:00
               a.m. (Denver time) on the date such disbursement is to be made
               (such date being referred to herein as a "Funding Date"). Unless
               the Agent shall have been notified by any Bank prior to such time
               for funding in respect of any Advance that such Bank does not
               intend to make available to the Agent such Bank's Advance, the
               Agent may assume that such Bank has made such amount available to
               the Agent and the Agent, in its sole discretion, may, but shall
               not be obligated to, make available to Borrower a corresponding
               amount. If such corresponding amount is not in fact made
               available to the Agent by such Bank on or prior to the respective
               Funding Date, such Bank agrees to pay and Borrower agrees to
               repay to Agent forthwith on demand such corresponding amount
               together with

                                       6
<PAGE>

               interest thereon, for each day from the date such amount is made
               available to Borrower until the date such amount is paid or
               repaid to Agent, at (A) in the case of such Bank, the Federal
               Funds Effective Rate, and (B) in the case of Borrower, the
               interest rate applicable at the time to a disbursement made on
               such Funding Date. If such Bank shall pay to Agent such
               corresponding amount, such amount so paid shall constitute such
               Bank's Advance, and if both such Bank and Borrower shall have
               paid and repaid, respectively, such corresponding amount, Agent
               shall promptly return to Borrower such corresponding amount in
               same day funds.

                      ii. Requests by the Agent for funding by the Banks of
               disbursements of the Loan will be made by facsimile. Each Bank
               shall make its Advance available to the Agent in dollars and in
               immediately available funds to such Lenders and account as the
               Agent may designate, not later than Noon (Denver time) on the
               Funding Date. Nothing in this Section 21(d) shall be deemed to
               relieve any Bank of its obligation hereunder to make any Advance
               on any Funding Date, nor shall any Bank be responsible for the
               failure of any other Bank to perform its obligations to make any
               Advance hereunder, and the Commitment of any Bank shall not be
               increased or decreased as a result of the failure by any other
               Bank to perform its obligation to make any Advances hereunder.

                      iii. As soon as practical Agent will promptly forward to
               each Bank copies of the Borrower's telecopy transmittal request
               for Draws and shall cause the Lenders' Consultant to forward to
               each Bank a copy of the Lenders' Consultant's most recent audit
               inspection. Delivery of the Draw request documents and the
               Lenders' Consultant's audit inspection report shall not be a
               condition to funding any Advance. In addition, as soon as
               practical on a monthly basis, Agent shall forward to each Bank a
               copy of the Borrowing Base Certificate and all backup materials
               received from Borrower.

               e.     Distribution and Apportionment of Payments.

                      i. Subject to Section 21(e)(ii), payments actually
               received by Agent for the account of the Banks shall be paid to
               them promptly after receipt thereof by Agent, but in any event
               within one (1) Business Day, provided that, if any such payments
               are not distributed to the Banks within one Business Day after
               Agent's receipt thereof, Agent shall pay to such Banks interest
               thereon, at the lesser of (i) the Federal Funds Effective Rate
               and (ii) if the applicable payment represents repayment of a
               portion of the principal of the Loan, the rate of interest
               applicable to such portion of the Loan, from the date of receipt
               of such funds by Agent until such funds are paid in immediately
               available funds to such Banks provided such funds are received by
               Agent not later than 11:00 A.M. (Denver time) on the date of
               receipt. All payments of principal and interest in respect of the
               Loan, all payments of the fees described in this Agreement (but
               not in any separate fee letter except to the extent expressly set

                                       7
<PAGE>

               forth therein), and all payments in respect of any other
               obligations of Borrower under the Loan Documents shall be
               allocated among such of Banks as are entitled thereto, in
               proportion of their respective Percentages or otherwise as
               provided herein in the other Loan Documents, as the case may be.
               The Agent shall distribute to each Bank at its primary address
               set forth herein or in its Assignment and Assumption, or at such
               other address as a Bank may request in writing, such funds as it
               may be entitled to receive, provided that the Agent shall in any
               event not be bound to inquire into or determine the validity,
               scope or priority of any interest or entitlement of any Bank and
               may suspend all payments and seek appropriate relief (including
               without limitation instructions from the Required Banks, or all
               Banks, as applicable, or an action in the nature of interpleader)
               in the event of any doubt or dispute as to any apportionment or
               distribution contemplated hereby. The order of priority herein is
               set forth solely to determine the rights and priorities of the
               Banks as among themselves and may at any time or from time to
               time be changed by the Banks as they may elect, in writing,
               without necessity of notice to or consent of or approval by
               Borrower.

                      ii. If a Bank (a "Defaulting Bank") defaults in making any
               Advance or paying any other sum payable by it hereunder, such sum
               together with interest thereon at the Default Rate from the date
               such amount was due until repaid (such sum and interest thereon
               as aforesaid referred to, collectively, as the "Bank Default
               Obligation") shall be payable by the Defaulting Bank (i) to any
               Bank(s) which elect, at their sole option (and with no obligation
               to do so), to fund the amount which the Defaulting Bank failed to
               fund or (ii) to Agent or any other Bank which under the terms of
               this Agreement is entitled to reimbursement from the Defaulting
               Bank for the amounts advanced or expended. Notwithstanding any
               provision hereof to the contrary, until such time as a Defaulting
               Bank has repaid the Bank Default Obligation in full, all amounts
               which would otherwise be distributed to the Defaulting Bank shall
               instead be applied first to repay the Bank Default Obligation (to
               be applied first to interest at the Default Rate and then to
               principal) until the Bank Default Obligation has been repaid in
               full (whether by such application or by cure by the Defaulting
               Bank), whereupon such Bank shall no longer be a Defaulting Bank.
               Any interest collected from Borrower on account of principal
               advanced by any Bank(s) on behalf of a Defaulting Bank shall be
               paid to the Bank(s) who made such advance and shall be credited
               against the Defaulting Bank's obligation to pay interest on the
               amount advanced at the Default Rate. If no other Bank makes an
               advance a Defaulting Bank failed to fund, a portion of the
               indebtedness of Borrower to the Defaulting Bank equal to the Bank
               Default Obligation shall be subordinated to the indebtedness of
               Borrower to all other Banks and shall be paid only after the
               indebtedness of Borrower to all other Banks is paid. The
               provisions of this Section shall apply and be effective
               regardless of whether an Event of Default occurs and is then
               continuing, and notwithstanding (i) any other provision of this
               Agreement to the contrary or (ii) any instruction of Borrower as
               to its desired application of payments.

                                       8
<PAGE>

               No Defaulting Bank shall have the right to vote on matters which
               are subject to the consent or approval of Required Banks or all
               Banks and while any Bank is a Defaulting Bank the requisite
               percentage of Banks which constitutes the Required Banks shall be
               calculated exclusive of the Percentage of the Defaulting Bank.
               The Agent shall be entitled to (i) withhold or set off, and to
               apply to the payment of the Bank Default Obligation any amounts
               to be paid to such Defaulting Bank under this Agreement, and (ii)
               bring an action or suit against such Defaulting Bank in a court
               of competent jurisdiction to recover the Bank Default Obligation
               and, to the extent such recovery would not fully compensate the
               Banks for the Defaulting Bank's breach of this Agreement, to
               collect damages. In addition, the Defaulting Bank shall
               indemnify, defend and hold Agent and each of the other Banks
               harmless from and against any and all claims, actions,
               liabilities, damages, costs and expenses (including attorneys'
               fees and expenses), plus interest thereon at the Default Rate,
               for funds advanced by Agent or any other Bank on account of the
               Defaulting Bank or any other damages such persons may sustain or
               incur by reason of or as a direct consequence of the Defaulting
               Bank's failure or refusal to abide by its obligations under this
               Agreement.

                      iii. At least five Business Days prior to the first date
               on which interest or fees are payable hereunder for the account
               of any Bank, each Bank that is not incorporated under the laws of
               the United States of America, or a state thereof, agrees that it
               will deliver to the Agent two duly completed copies of United
               States Internal Revenue Service Form 1001 or 4224, certifying in
               either case that such Bank is entitled to receive payments under
               this Agreement and the Note without deduction or withholding of
               any United States federal income taxes. Each Bank which so
               delivers a Form 1001 or 4224 further undertakes to deliver the
               Agent two additional copies of such form (or a successor form) on
               or before the date that such form expires or becomes obsolete or
               after the occurrence of any event requiring a change in the most
               recent forms so delivered by it, and such amendments thereto or
               extensions or renewals thereof as may be reasonably requested by
               the Agent, in each case certifying that such Bank is entitled to
               receive payments under this Agreement and the Note without
               deduction or withholding of any United States federal income
               taxes, unless an event (including without limitation any change
               in treaty, law or regulation) has occurred prior to the date on
               which any such delivery would otherwise be required which renders
               all such forms inapplicable or which would prevent such Bank from
               duly completing and delivering any such form with respect to it
               and such Bank advises the Agent that it is not capable of
               receiving payments without any deduction or withholding of United
               States federal income tax.

               f.     Consents and Approvals.

                        i. Each of the following shall require the approval or
               consent of the Required Banks:

                                       9
<PAGE>

                        (1) Declaring the Note to be immediately due and payable
                following an Event of Default or any recession of any such
                acceleration;

                        (2) Approval of the exercise of rights and remedies
                under the Loan Documents following an Event of Default;

                        (3) Appointment of a successor Agent;

                        (4) Approval of Post-Default Plan (defined in Section
                21(g)(iv)); and

                        (5) Except as referred to in subsection (ii) below,
                approval of any amendment or modification of this Agreement or
                any of the other Loan Documents, or issuance of any waiver of
                any material provision of this Agreement or any of the other
                Loan Documents;

                ii. Each of the following shall require the approval or consent
        of all the Banks:

                        (1) Extension of the Maturity Date (beyond any extension
                permitted herein) or forgiveness of all or any portion of the
                principal amount of the Loan or any accrued interest thereon, or
                any other amendment of this Agreement or the other Loan
                Documents which would reduce the interest rate options or the
                rate at which fees are calculated or forgive any loan fee, or
                extend the time of payment of any principal, interest or fees;

                        (2) Reduction of the percentage specified in the
                definition of Required Banks;

                        (3) Increasing of the amount of the Loan or any Bank's
                Commitment;

                        (4) Release of any lien on any material collateral
                (except as Borrower is entitled to under the Loan Documents) or
                other release of Collateral; and

                        (5) Amendment of the provisions of this Article 21.

                iii. In addition to the required consents or approvals referred
        to in subsections (i) and (ii) above, the Agent may at any time request
        instructions from the Required Banks with respect to any actions or
        approvals which, by the terms of this Agreement or of any of the Loan
        Documents, the Agent is permitted or required to take or to grant
        without instructions from any Banks, and if such instructions are
        promptly

                                       10
<PAGE>

        requested, the Agent shall be absolutely entitled to refrain from taking
        any action or to withhold any approval and shall not be under any
        liability whatsoever for refraining from taking any action or
        withholding any approval under any of the Loan Documents until it shall
        have received such instructions from the Required Banks. Without
        limiting the foregoing, no Bank shall have any right of action
        whatsoever against any Agent as a result of such Agent acting or
        refraining from acting under this Agreement or any of the other Loan
        Documents in accordance with the instructions of the Required Banks or,
        where applicable, all Banks. The Agent shall promptly notify each Bank
        at any time that the Required Banks have instructed the Agent to act or
        refrain from acting pursuant hereto.

                      iv. Each Bank authorizes and directs the Agent to enter
        into the Loan Documents other than this Agreement for the benefit of the
        Banks. Each Bank agrees that any action taken by the Agent at the
        direction or with the consent of the Required Banks in accordance with
        the provisions of this Agreement or any other Loan Document, and the
        exercise by the Agent at the direction or with the consent of the
        Required Banks of the powers set forth herein or therein, together with
        such other powers as are reasonably incidental thereto, shall be
        authorized and binding upon all Banks, except for actions specifically
        requiring the approval of all Banks. All communications from the Agent
        to the Banks requesting Banks' determination, consent, approval or
        disapproval (i) shall be given in the form of a written notice to each
        Bank, (ii) shall be accompanied by a description of the matter or item
        as to which such determination, approval, consent or disapproval is
        requested, or shall advise each Bank where such matter or item may be
        inspected, or shall otherwise describe the matter or issue to be
        resolved, (iii) shall include, if reasonably requested by a Bank and to
        the extent not previously provided to such Bank, written materials and a
        summary of all oral information provided to the Agent by Borrower in
        respect of the matter or issue to be resolved, and (iv) shall include
        the Agent's recommended course of action or determination in respect
        thereof. Each Bank shall reply promptly, but in any event within ten
        (10) Business Days after receipt of the request therefor from the Agent
        (the "Bank Reply Period"). Unless a Bank shall give written notice to
        the Agent that it objects to the recommendation or determination of the
        Agent (together with a written explanation of the reasons behind such
        objection) within the Bank Reply Period, such Bank shall be deemed to
        have approved of or consented to such recommendation or determination.
        With respect to decisions requiring the approval of the Required Banks
        or all Banks, the Agent shall upon receiving the required approval or
        consent follow the course of action or determination recommended to the
        Banks by the Agent or such other course of action recommended by the
        Required Banks.

               g.     Agency Provisions Relating to Collateral.

                      i. The Agent is hereby authorized on behalf of all Banks,
        without the necessity of any notice to or further consent from any Bank,
        at any time and from time to time, to take any action with respect to
        any collateral for the Loan or any Loan Document which may be necessary
        to preserve and maintain such collateral or to perfect and maintain

                                       11
<PAGE>

        perfected the liens upon such collateral granted pursuant to this
        Agreement and the other Loan Documents.

                      ii. Except as provided in this Agreement, the Agent shall
        have no obligation whatsoever to any Bank or to any other person or
        entity to assure that any collateral exists or is owned by Borrower or
        is cared for, protected or insured or has been encumbered or that the
        liens granted herein or in any of the other Loan Documents or pursuant
        hereto or thereto have been properly or sufficiently or lawfully
        created, perfected, protected or enforced or are entitled to any
        particular priority.

                      iii. Should the Agent commence any proceeding or in any
        way seek to enforce the Agent's or the Banks' rights or remedies under
        the Loan Documents, irrespective of whether as a result thereof the
        Agent shall acquire title to any collateral, each Bank, upon demand
        therefor from time to time, shall contribute its share (based on its
        Percentage) of the reasonable costs and/or expenses of any such
        enforcement or acquisition, including, but not limited to, fees of
        receivers or trustees, court costs, title company charges, filing and
        recording fees, appraisers' fees and fees and expenses of attorneys to
        the extent not otherwise reimbursed by Borrower. Without limiting the
        generality of the foregoing, each Bank shall contribute its share (based
        on its Percentage) of all reasonable costs and expenses incurred by the
        Agent (including reasonable attorneys' fees and expenses) if the Agent
        employ counsel for advice or other representation (whether or not any
        suit has been or shall be filed) with respect to any collateral for the
        Loan or any part thereof, or any of the Loan Documents, or the attempt
        to enforce any security interest or lien on any collateral, or to
        enforce any rights of the Agent or the Banks or any of Borrower's or any
        other party's obligations under any of the Loan Documents, but not with
        respect to any dispute between any Agent and any other Bank(s). It is
        understood and agreed that in the event the Agent determines it is
        necessary to engage counsel for Lenders from and after the occurrence of
        a Default or Event of Default, said counsel shall be selected by the
        Agent and written notice of such selection, together with a copy of such
        counsel's engagement letter and fee estimate, shall be delivered to the
        Banks.

                      iv. In the event that all or any portion of the collateral
        for the Loan is acquired by the Agent as the result of the exercise of
        any remedies hereunder or under any other Loan Document, or is retained
        in satisfaction of all or any part of Borrower's obligations under the
        Loan Documents, title to any such collateral or any portion thereof
        shall be held in the name of the Agent or a nominee or subsidiary of
        Agent, as agent, for the ratable benefit of the Agent and the Banks. The
        Agent shall prepare a recommended course of action for such collateral
        (the "Post-Default Plan"), which shall be subject to the approval of the
        Required Banks. The Agent shall administer the collateral in accordance
        with the Post-Default Plan, and upon demand therefor from time to time,
        each Bank will contribute its share (based on its Percentage) of all
        reasonable costs and expenses incurred by the Agent pursuant to the
        Post-Default Plan, including without limitation, any operating losses
        and all necessary operating reserves. To the extent there is net
        operating income from such

                                       12
<PAGE>

        collateral, the Agent shall, in accordance with the Post-Default Plan,
        determine the amount and timing of distributions to Banks. All such
        distributions shall be made to Banks in accordance with their respective
        Percentages. In no event shall the provisions of this subsection or the
        Post-Default Plan require the Agent or any Bank to take an action which
        would cause such Bank to be in violation of any applicable regulatory
        requirements.

               h. Bank Actions Against Borrower or the Collateral. Each Bank
agrees that it will not take any action, nor institute any actions or
proceedings, against Borrower or any other person hereunder or under any other
Loan Documents with respect to exercising claims against the Borrower or rights
in any Collateral without the consent of the Required Banks. With respect to any
action by the Agent to enforce the rights and remedies of the Agent and Banks
with respect to the Borrower and any collateral in accordance with the terms of
this Agreement, each Bank hereby consents to the jurisdiction of the court in
which such action is maintained.

               i. Assignment and Participation. No Bank shall be permitted to
assign or sell all or any portion of its rights and obligations under this
Agreement to Borrower or any affiliate of Borrower.

               j. Ratable Sharing. Subject to Sections 21(d) and 21(e), Banks
agree among themselves that (i) with respect to all amounts received by them
which are applicable to the payment of the Loan, equitable adjustment will be
made so that, in effect, all such amounts will be shared among them ratably in
accordance with their Percentages, whether received by voluntary payment, by the
exercise of the right of set-off or bankers' lien, by counterclaim or cross
action or by the enforcement of any or all of the Loan Documents or any
collateral and (ii) if any of them shall by voluntary payment or by the exercise
of any right of counterclaim, set-off, bankers' lien or otherwise, receive
payment of a proportion of the aggregate amount of the Loan held by it which is
greater than its Percentage of the payments on account of the Loan, the one
receiving such excess payment shall purchase, without recourse or warranty, an
undivided interest and participation (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in such obligations owed to the
others so that all such recoveries with respect to such obligations shall be
applied ratably in accordance with their Percentages; provided, that if all or
part of such excess payment received by the purchasing party is thereafter
recovered from it, those purchases shall be rescinded and the purchase prices
paid for such participations shall be returned to that party to the extent
necessary to adjust for such recovery, but without interest except to the extent
the purchasing party is required to pay interest in connection with such
recovery. Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of Borrower in the amount of such participation.

               k. General Immunity.  Neither Agent nor any of its directors,
officers, agents or employees shall be liable to Borrower or any Bank for any
action taken or omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith, except for its or their
own gross negligence or willful misconduct. In the absence of gross

                                       13
<PAGE>

negligence, the Agent shall not be liable for any apportionment or distribution
of payments made by it in good faith pursuant to Section 21(e), and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Bank to whom payment was due, but not made, shall
be to recover from the recipients of such payments any payment in excess of the
amount to which they are determined to have been entitled.

               l. No Responsibility for Loan, Recitals, etc. Neither Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any use of the
Loan; (ii) the performance or observance of any of the covenants or agreements
of any party to any Loan Document; (iii) the satisfaction of any condition
specified in this Agreement, except receipt of items purporting to be the items
required to be delivered to any Agent; or (iv) the validity, effectiveness or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith, provided that the foregoing shall not release Agent from
liability for its gross negligence or willful misconduct.

               m. Action on Instructions of Banks. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by all
the Banks (or the Required Banks, if such action may be directed hereunder by
the Required Banks), and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of Banks. Each Bank, severally to
the extent of its Percentage, hereby agrees to indemnify Agent against and hold
it harmless from any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action, provided that the
foregoing shall not release Agent from liability for its gross negligence or
willful misconduct.

               n. Employment of Agents and Counsel. The Agent may undertake any
of its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be liable to Banks,
except as to money or securities received by them or their authorized agents,
for the default or misconduct of any such agents or attorneys-in-fact selected
by it with reasonable care. The Agent shall be entitled to advice of counsel
concerning all matters pertaining to the agency hereby created and its duties
hereunder and under any other Loan Document.

               o. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be an employee of Agent, provided that the foregoing shall not release the
Agent from liability for its gross negligence or willful misconduct. Any such
counsel shall be deemed to be acting on behalf of Bank in assisting the Agent
with respect to the Loan, but shall not be precluded from also representing
Agent in any matter in which the interests of Agent and the other Banks may
differ.

                                       14
<PAGE>

               p. Agent' Reimbursement and Indemnification. Banks agree to
reimburse and indemnify Agent ratably (i) for any amounts (excluding principal
and interest on the Loan and loan fees) not reimbursed by Borrower for which
Agent is entitled to reimbursement under the Loan Documents, (ii) for any other
expenses incurred by Agent on behalf of Bank, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents, if not paid by Borrower, (iii) for any expenses incurred by Agent on
behalf of Bank which may be necessary or desirable to preserve and maintain
collateral or to perfect and maintain perfected the liens upon the collateral
granted pursuant to this Agreement and the other Loan Documents, if not paid by
Borrower, (iv) for any amounts and other expenses incurred by Agent on behalf of
Bank in connection with any default by any Bank hereunder or under the other
Loan Documents, if not paid by such Bank, and (v) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of Agent.

               q. Rights as a Bank. With respect to its Commitment, if any,
Agent shall have the same rights, powers and obligations hereunder and under any
other Loan Document as any Bank and may exercise such rights and powers as
though it were not an Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Agent in its individual capacities. The
Borrower and each Bank acknowledge and agree that Agent and/or its affiliates
may accept deposits from, lend money to, hold other investments in, and
generally engage in any kind of trust, debt, equity or other transaction or have
other relationships, in addition to those contemplated by this Agreement or any
other Loan Document, with Borrower or any of its affiliates in which Borrower or
such affiliate is not restricted hereby from engaging with any other person.

               r. Banks' Credit Decisions. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements and other information prepared by Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Bank also acknowledges that it will, independently and without
reliance upon Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.

               s. Notice of Events of Default. Should Agent receive any written
notice of the occurrence of a default or Event of Default, or should the Agent
send Borrower a notice of Default or Event of Default, the Agent shall promptly
furnish a copy thereof to each Bank.

               t.     Successor Agent.

                                       15
<PAGE>

                      i. Agent may resign from the performance of all its
        functions and duties hereunder at any time by giving at least thirty
        (30) days prior written notice to Banks and Borrower. Such resignation
        shall take effect on the date set forth in such notice or as otherwise
        provided below. Such resignation by Agent as agent shall not affect its
        obligations hereunder, if any, as a Bank.

                      ii. Upon resignation by the Agent, or any successor Agent,
        the Required Banks shall appoint a successor Agent with the consent of
        Borrower, which shall not be unreasonably withheld, conditioned or
        delayed (provided that no consent of Borrower shall be required if the
        successor Agent is also a Bank or if an Event of Default then exists).
        If no successor Agent shall have been so appointed by the Required
        Banks, and shall have accepted such appointment within thirty (30) days
        after the retiring Agent's giving notice of resignation, then the
        retiring Agent may appoint a successor Agent with the consent of
        Borrower, which shall not be unreasonably withheld, conditioned or
        delayed (provided that no consent of Borrower shall be required if the
        successor Agent is also a Bank or if an Event of Default then exists).
        Upon the acceptance of any appointment as an Agent hereunder by a
        successor Agent, such successor Agent shall thereupon succeed to and
        become vested with all the rights, powers, privileges and duties of the
        Agent and the Agent, and the retiring Agent shall be discharged from its
        duties and obligations hereunder and under the other Loan Documents
        other than its liability, if any, for duties and obligations accrued
        prior to its retirement. After any retiring Agent's resignation
        hereunder as an Agent, the provisions of this Article 21 shall continue
        in effect for its benefit in respect of any actions taken or omitted to
        be taken by it while it was acting as an Agent hereunder and under the
        other Loan Documents.

                                       16
<PAGE>

              SECOND NOTE AND DEED OF TRUST MODIFICATION AGREEMENT
                           (THE GENESEE COMPANY, LLC)

               THIS SECOND NOTE AND DEED OF TRUST MODIFICATION AGREEMENT
(Agreement) is made as of this ____ day of September, 2001, between and among
THE GENESEE COMPANY, LLC; KEYBANK NATIONAL ASSOCIATION, a national banking
association, for itself and as Agent and COMPASS BANK ("Lenders").

                                    RECITALS

        A.      WHEREAS, The Genesee Company, LLC, a Colorado limited liability
company ("Borrower") and Lenders entered into that certain Senior Borrowing Base
Revolving Line of Credit Agreement dated as of November 10, 2000 (such
agreement, together with all amendments, modifications, extensions, replacements
and substitutions thereto is hereinafter referred to as the "Loan Agreement");
and

        B.      WHEREAS, Lenders have made available to Borrower a revolving
line of credit in the Maximum Facility Amount of Fifty Million and No/100
Dollars ($50,000,000.00) (the "Loan") pursuant to the Loan Agreement; and

        C.      WHEREAS, pursuant to the terms of the Loan Agreement, Borrower
executed and delivered to Lenders certain instruments, security instruments and
documents in connection with the Loan including, but not limited to, the
following, all of which are dated the date of the Loan Agreement (all of which
are collectively referred to as the "Loan Documents"):

        1.      The Loan Agreement;

        2.      The Revolving Promissory Note to KeyBank National Association in
the original principal amount of Thirty Five Million and No/100 Dollars
($35,000,000.00) (the "KeyBank Note") and the Revolving Promissory Note to
Compass Bank in the original principal amount of Fifteen Million and No/100
Dollars ($15,000,000.00) (collectively the "Notes");

        3.      The Deeds of Trust (the "Deeds of Trust") from Borrower in favor
of Lenders encumbering certain real property and improvements in Adams, Boulder,
Douglas, Jefferson and Larimer Counties, Colorado and Pima County, Arizona,
recorded in the real estate records of such counties and states between October
16, 2000 and the date of this Agreement, which real property and improvements
are more particularly described therein and are incorporated herein by this
reference (the "Property");

        4.      Security Agreements from Borrower in favor of Lenders pledging
certain personal property as security for the Loan;

        5.      Master Assignments of Leases, Rents and Profits from Borrower in
favor of Lenders encumbering the Property;

<PAGE>

        6.      Master Assignment of Plans and Specifications, Architect's and
Engineer's Agreements, and Construction Contracts from Borrower in favor of
Lenders;

        7.      Master Environmental and Hazardous Substance Indemnification
Agreement from Borrower in favor of Lenders;

        8.      UCC-1 Financing Statements executed by Borrower, as
debtor, in favor of Lenders, as secured parties, as security for the Loan;

        9.      Tri-Party Agreements executed by Borrower, Land Title Guaranty
Company and Lenders pertaining to the Colorado Property and by Borrower, Fidelit
National Title Agency, Inc. and Lenders pertaining to the Arizona Property (the
"Tri-Party Agreements");

        10.     Guaranty of the Obligations of Borrower's affiliates, the
Genesee Communities II, IV, V, VI and VII, all of which are Colorado limited
liability companies.

                Such other Loan Documents as were required by Lenders to
evidence the Loan and to provide security for the repayment thereof.

        D.      WHEREAS, as a condition to Lenders' obligations under the Loan
Agreement, Fortress Group, Inc., a Delaware corporation, executed and delivered
to Lenders a Maintenance and Subordination Agreement; and

        E.      WHEREAS, Borrower has requested Lenders to increase the Maximum
Facility Amount of the Loan from Fifty Million and No/100 Dollars
($50,000,000.00) to Fifty-Five Million and No/100 Dollars ($55,000,000.00) on a
one-time, temporary basis through the February 2, 2002 Maturity Date; and

        F.       WHEREAS, Lenders have agreed to make the temporary increase in
the Maximum Facility Amount of the Loan as requested by Borrower but only upon
the following terms and conditions.

                                    AGREEMENT

        NOW THEREFORE, in consideration of the mutual promises, payments,
extensions of credit, forbearances, and modifications contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                                       2
<PAGE>

        1.      Modification of KeyBank Note. The original KeyBank Note is
hereby modified to provide as follows on a one-time, temporary basis through the
February 2, 2002 Maturity Date:

                a.      The principal amount of the KeyBank Note is hereby
        increased from Thirty Five Million and No/100 Dollars ($35,000,000.00)
        to the principal sum of the lesser of:

                        i.      Forty Million and No/100 Dollars
                ($40,000,000.00) or

                        ii.     KeyBank's pro rata interest in the unpaid
                principal balance of the Senior Borrowing Base Revolving Line of
                Credit Facility as increased hereby;

                b.      Borrower hereby agrees to and shall pay interest on the
        Outstanding Principal Balance on the KeyBank Note as modified herein at
        the Interest Rate in accordance with terms of the KeyBank Note and Loan
        Agreement through the February 2, 2002 Maturity Date at which time all
        principal and accrued interest shall be due and payable in full.

        2.      Modification of Loan Agreement. All references to the KeyBank
Note in the Loan Agreement shall be deemed to refer to the original KeyBank Note
as modified by this Agreement. In addition, the following terms and conditions
of the Loan Agreement are hereby modified to provide as follows:

                a.      The references to Fifty Million and No/100ths Dollars
        ($50,000,000.00) shall be changed to Fifty-Five Million and No/100ths
        Dollars ($55,000,000.00).

                b.      Paragraph 10 (b) shall be modified to provide that
        Borrower and all Subsidiary Borrowers shall not construct, maintain or
        hold in inventory Finished Lots comprising more than Twenty-Two Million
        and No/100 Dollars ($22,000,000.00) in the aggregate of the Borrowing
        Base.

                c.      Paragraph 14(a) shall be modified to provide as follows:

                 (a)     Minimum Tangible Net Worth. Borrower shall maintain a
        Minimum Tangible Net Worth of at least $28,000,000.00 as of November 1,
        2001, and at all times during the Term of the Revolving Line of Credit,
        tested monthly. Any loans or advances from Borrower to Fortress or its
        subsidiaries shall be debited against Borrower's Tangible Net Worth in
        calculating Borrower's compliance with this Section.

        3.      Modification of Loan Documents. All references to the KeyBank
Note and the Loan Agreement in the Loan Documents shall be deemed to refer to
the KeyBank Note and the Loan Agreement as modified by this Agreement.

                                       3
<PAGE>

        4.      Reaffirmation of Guaranties. Borrower hereby reaffirms, ratifies
and agrees to absolutely and unconditionally guaranty the payment and
performance of all of the present and future indebtedness, liabilities and
obligations to Lenders of any kind of Genesee Communities, II, IV, V, VI and VII
all of which are Colorado limited liability companies for which Borrower has
executed its guaranty of payment and performance as set forth in the Loan
Documents.

        5.      Conditions Precedent to Closing. Lenders shall receive and
approve all of the following documents and be satisfied, as applicable, as to
each of the following conditions precedent to the closing of this Agreement:

                a.      Borrower shall have a Minimum Tangible Net Worth of at
        least $25,000,000.00 at closing of this Agreement calculated in
        accordance with Paragraph 14(a) of the Loan Agreement.

                b.      All covenants, warranties, representations and
        conditions of the Loan Documents remain in full force and effect and no
        uncured Event of Default thereunder exists as of the date of this
        Agreement.

                c.      The condition of title in and to all real and personal
        property Collateral securing the Loan has not been materially, adversely
        affected during the period November 10, 2000 through the date of this
        Agreement.

                d.      The financial conditions of Borrower, of Genesee
        Communities II, IV, V, VI and VII LLC, and of the Fortress Group, Inc.
        have not been materially, adversely affected during the period November
        10, 2000 through the date of this Agreement.

                e.      The Maintenance and Subordination Agreement between the
        Fortress Group, Inc. and KeyBank National Association has been continued
        and extended to include the Loan as modified herein.

                f.      Borrower shall provide opinions of Borrower's and
        Fortress' counsel in form and substance satisfactory to Lender opining
        as to such matters as Lender may require including but not limited to
        the fact that this Agreement will not constitute an Event of Default
        under existing agreements, restrictions of Borrower or Fortress or the
        Senior Debenture.

        6.      Additional Provisions. At the closing of this Agreement,
Borrower shall:

                a.      Deliver to Lenders an endorsement to Lenders' existing
        title insurance policies in form and substance satisfactory to Lenders,
        insuring the continuing validity and first priority of the Loan
        Documents, as modified herein, following the recording of this Agreement
        (subject only to the matters set forth on Schedule B of said policies
        and approved by Lenders), confirming all previous endorsements thereto,
        and extending the coverage of said policy to the modified Maximum
        Facility Amount of the Loan as provided herein.

                b.      Pay to Lenders all of Lenders' attorneys' fees and all
        other out-of-pocket costs, fees and expenses incurred by or on behalf of
        Lenders for recording expenses, title

                                       4
<PAGE>

        insurance premiums and all other costs incurred in connection with the
        preparation and execution of this Agreement, and all other documents
        necessary and required to effectuate the provisions hereof.

                c.      Pay to KeyBank National Association a .125% Facility Fee
        on the Five Million and No/100 Dollars ($5,000,000.00) temporary
        increase of $6,250.00 plus an arrangement fee of $3,000.00; and

        7.      Defined Terms. Unless otherwise defined herein all capitalized
terms shall have the meanings given to them in the Loan Agreement and the Loan
Documents.

        8.      Release. Borrower hereby releases and forever discharges
Lenders, their affiliates, directors, officers, agents, employees, and attorneys
of and from any and all liability, suits, damages, claims, counterclaims,
demands, reckonings, and causes of action, known and unknown, whether arising in
law or in equity, which Borrower had, now has, or may have in the future against
Lenders by reason of any acts, omissions, cause or thing, arising out of or in
any way related to the Loan Documents or this Agreement existing or accrued as
of the date of this Agreement.

        9.      Further Assurances. Borrower shall execute such amendments and
modifications to the Loan Documents as Lenders shall require to evidence and
reflect the terms of this Agreement. Borrower shall, upon Lenders' request,
immediately provide Lenders with such resolutions, Loan Agreements, Notes,
Security Agreements, UCC filings, Certificates of Title documents, Deeds of
Trust, Guaranties, Opinion Letters, and other documents, and shall take all
other actions reasonably requested by Lenders to evidence its indebtedness,
liabilities and obligations to Lenders hereunder, and to grant Lenders with a
continued lien and security interest in the Collateral in the identical priority
and under the same terms and conditions as are set forth in the Loan Documents
and in this Agreement.

        10.     Reservation of Rights. Nothing in this Agreement shall be
construed as a waiver by Lenders of any Event of Default or impair any of
Lenders' rights in any of their Collateral which shall accrue upon any default
subsequent to this Agreement.

        11.     Miscellaneous.

                a.      No maker, endorser, or guarantor of the Notes, the
        Guaranty or of the Loan Documents shall be released by execution and
        delivery of this Agreement.

                b.      Except as modified herein, all terms, covenants,
        provisions, warranties and conditions of the Notes, Loan Documents, the
        Guaranty and this Agreement shall remain in full force and effect and be
        enforceable in accordance with their terms. Borrower hereby represents
        and warrants to Lenders that all of the representations contained in any
        of the Loan Documents are true and correct as of the date hereof.
        Borrower hereby acknowledges and agrees that no defenses exist as
        against the obligations to Lenders under the Notes, Loan Documents, the
        Guaranty or in this Agreement as of the date of this Agreement.

                                       5
<PAGE>

                c.      This Agreement and all other instruments, documents and
        agreements executed and delivered in connection with this Agreement
        embody the final, entire agreement among the parties hereto, and
        supercede any and all prior commitments, agreements, and representations
        and understandings, whether written or oral, relating to this Agreement,
        and may not be contradicted or varied by evidence of prior,
        contemporaneous or subsequent oral agreements or discussions of the
        parties. This Agreement may only be modified or amended in a writing
        signed by Borrower and Lenders.

                d.      The parties hereto consent to the jurisdiction and venue
        of the United States District Court for the District of Colorado or the
        District Court for the City and County of Denver, Colorado, in the event
        of any litigation pertaining to this Agreement.

                e.      This Agreement shall be construed and governed by the
        laws of the State of Colorado.

        12.     Binding Effect. This Agreement shall be binding upon Borrower,
its successors and assigns, and shall of which taken together shall constitute
one and the same instrument.

        13.     Counterparts. This Agreement may er executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
togther shall be deemed an original and all of which taken together shall
constitute one and the same instrument.

        14.     WAIVER OF JURY TRIAL. BORROWER AND LENDERS WAIVE THEIR
RESPECTIVE RIGHTS TO DEMAND A JURY TRIAL IN THE EVENT OF ANY LITIGATION
PERTAINING TO THE NEGOTIATION, EXECUTION, AND DELIVERY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, THE ENFORCEMENT OF ANY OBLIGATION, RIGHT, OR REMEDY
DESCRIBED THEREIN, OR ANY CLAIM, DEFENSE, SETOFF, OR COUNTERCLAIM IN CONNECTION
THEREWITH.

                Executed as of the date first above written.

                                    BORROWER:

                                    THE GENESEE COMPANY, LLC, a
                                    Colorado limited liability company

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

                                    LENDERS:

                                    KEYBANK NATIONAL ASSOCIATION

                                    By:
                                        ---------------------------

                                        6
<PAGE>

                                    Title:
                                           ---------------------------

                                    COMPASS BANK

                                    By:
                                          ---------------------------
                                            Johanna Duke Paley
                                            Senior Vice President

STATE OF COLORADO                )
       CITY AND                  ) ss
COUNTY OF DENVER                 )

               The foregoing instrument was acknowledged before me this_____
day of September, 2001, by __________________  as Managing Member of The
Genesee Company, LLC, a Colorado limited liability company, on behalf of the
company.

               Witness my hand and official seal.

SEAL

My commission expires:

-----------------------                  ---------------------------
                                         Notary Public

STATE OF COLORADO                )
       CITY AND                  ) ss
COUNTY OF DENVER                 )

               The foregoing instrument was acknowledged before me this _______
day of September, 2001,  by ______________ , as  _____________________ of
KeyBank National Association, a national banking association, on behalf of the
association.

               Witness my hand and official seal.

SEAL

My commission expires

-----------------------                  ---------------------------
                                         Notary Public

STATE OF ALABAMA
                                 )
                                 ) ss

                                       7
<PAGE>

COUNTY OF JEFFERSON              )

                 The foregoing instrument was acknowledged before me this _____
day of September, 2001, by Johanna Duke Paley, as Senior Vice President of
Compass Bank, an Alabama banking corporation, on behalf of the corporation.

                 Witness my hand and official seal.

SEAL

My commission expires:

-----------------------                  ---------------------------
                                         Notary Public

STATE OF ALABAMA             )
) ss.
COUNTY OF JEFFERSON          )

        The foregoing instrument was acknowledged before me this _____ day of
September, 2001, by Johanna Duke Paley, as Senior Vice President of Compass
Bank, an Alabama banking corporation, on behalf of the corporation.

        Witness my hand and official seal.

        SEAL

Notary Public

        My commission expires:

                                       8
<PAGE>

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 520841.2 JTMACD 09/26/01 9:24 AM 8

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520841.2 JTMACD 09/26/01 9:24 AM S

This redlined draft, generated by CompareRite (TM) - The Instant Redliner, shows
the differences between -
original document : C:\DOCS\SHADOW\JTMACD\0520841.01
and revised document: J:\DOCS\JTMACD\REAL\0520841.02

CompareRite found   16 change(s) in the text
CompareRite found    4 change(s) in the notes

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                                       9

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