REVOLVING LOAN AGREEMENT

Exhibit 10.3

REVOLVING LOAN AGREEMENT

By and Among

Tradition Development Company, LLC, a Florida limited liability company,
Horizons St. Lucie Development, LLC, a Florida limited liability company,
Horizons Acquisition 7, LLC, a Florida limited liability company,
and
Tradition Mortgage, LLC, a Florida limited liability company
(collectively, “Borrower”)

and

Core Communities, LLC, a Florida limited liability company
(“Guarantor”)

and

Wachovia Bank, National Association
(“Lender”)

Dated: April 8, 2005

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REVOLVING LOAN AGREEMENT

     THIS REVOLVING LOAN AGREEMENT (the “ Loan Agreement ”) is made and executed as of April 8, 2005, by and among TRADITION DEVELOPMENT COMPANY, LLC , a Florida limited liability company; HORIZONS ST. LUCIE DEVELOPMENT, LLC , a Florida limited liability company; HORIZONS ACQUISITION 7, LLC, a Florida limited liability company; and TRADITION MORTGAGE, LLC, a Florida limited liability company (hereinafter collectively referred to as “ Borrower ”), CORE COMMUNITIES, LLC , a Florida limited liability company (“ Guarantor ”), all located at 10521 S.W. Village Station Drive, Suite 201, Port St. Lucie, Florida 34987, and WACHOVIA BANK, NATIONAL ASSOCIATION , located at 200 East Broward Boulevard, Suite 200, Fort Lauderdale, Florida 33301 (hereinafter referred to as “ Lender ”).

B A C K G R O U N D:

     A. Borrower and Lender have negotiated a Forty Million and 00/100 Dollar ($40,000,000.00) revolving line of credit loan (“ Revolving Loan ”) to be used by Borrower for any lawful business activities conducted by Borrower in the normal course of Borrower’s real estate business, including, but not limited to, (i) the acquisition and/or development by Borrower of real property located and being in St. Lucie County, Florida and (ii) issuances of letters by credit by Lender. Subject to the requirements of this Loan Agreement, the Loan will revolve as to the total principal amount of Forty Million and 00/100 Dollar ($40,000,000.00) .

     B. The Revolving Loan shall be evidenced by a Revolving Loan Note of even date herewith (“ Revolving Note ”) in the amount of the Revolving Loan and shall be secured by a Mortgage, Assignment of Rents and Security Agreement (“ Mortgage ”) initially encumbering that certain real property situate in St. Lucie County, Florida, more particularly described in Exhibit “A” (“ Land ”) attached hereto and made part hereof, which Land is owned in fee simple by Borrower. (The Land and the Improvements (as defined below) located or to be located thereon are referred to as the “ Property ”.)

     C. Borrower and Lender wish to enter into this Loan Agreement in order to set forth the terms and conditions of the disbursement of the Loan and other matters with respect thereto.

      NOW, THEREFORE , in consideration of the foregoing, the mutual covenants, representations, warranties and agreements contained herein, the sum of TEN AND 00/100 DOLLARS ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Guarantor and Lender agree as follows:

ARTICLE I.

DEFINITIONS

     1. For the purposes hereof, the following terms shall have the meanings described in this Article:

          “ Application ” means Borrower’s application for payment.

          “ Appraisal ” means the written appraisal report prepared by an independent licensed professional appraiser which has been approved by the Lender. All Appraisals required herein shall be subject to the review of the Lender’s chief appraiser, whose review of the Appraisals must result in findings satisfactory to the Lender, in the Lender’s reasonable discretion.

          “ Appraised Value ” means the value of the Property or any specific parcel or parcels within the Property, as determined by the Appraisal.

           “Assigned Rights” has the meaning as set forth in Article III, Paragraph 1.

          “ Borrower ” shall refer collectively to Tradition Development Company, LLC, a Florida limited liability company; Horizons St. Lucie Development, LLC, a Florida limited liability company; Horizons Acquisition 7, LLC, a Florida limited liability company; and Tradition Mortgage, LLC, a Florida limited liability company.

          “ Borrowing Base ” means the method for determining the availability of funds under the Revolving Loan as set forth in Article V, Paragraph 1.

          “ Borrowing Base Report ” means the report to be submitted by Borrower to Lender on a monthly basis on the first day of each and every month included within the form attached hereto as Composite Exhibit “C” .

           “Capitalized Lease Obligation” means any Indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

          “ Closing Date ” means the date as of which this Loan Agreement is executed by Borrower and Lender.

          “ Collateral ” means the Land and other property rights and security as defined in and encumbered by the Mortgage, this Loan Agreement, the UCC-1 Financing Statements and such other security instruments granted by the Borrower to the Lender in connection with the Loan.

          “ Commitment ” means the commitment letter issued by Lender as of August 18, 2004, and executed by Borrower on August 23, 2004.

           “Commitment Fee” has the meaning set forth in Section VIII, Paragraph 30 of this Agreement.

          “ CDD ” means any current or future Community Development Districts which are formed or to be formed for any portions of the Property.

          “ CDD Bond(s) ” means those bonds issued by the CDD to provide for funding for certain infrastructure improvements within the Property.

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          “ Core ” means Core Communities, LLC, a Florida limited liability company.

          “ Cost ” means the purchase price paid by Borrower to acquire the Land (or any portion thereof) plus costs and expenses incurred by Borrower in connection with such purchase including, without limitation, interest payments, all of which shall be subject to Bank’s prior written approval which shall not be unreasonably withheld.

          “ Declaration(s) ” means any and all Declarations of Covenants, Conditions and Restrictions, or any other restrictive covenants governing or imposed solely upon the Property or the Improvements or any portion thereof; including in connection with any property owners or homeowners associations solely governing the Property or the Improvements or any portion thereof.

          “ Default ” or “ Event of Default ” means a violation of any term, covenant, or condition hereunder or a Default as defined under any of the other Loan Documents which remains uncured after any applicable grace period.

          “ Default Rate ” means the interest rate which is three percent (3%) greater than the interest rate stipulated in the Revolving Note.

          “ Development Order ” means the final development orders or approvals issued for the Land, including those with respect to any DRI approval process.

          “ DRI ” means a development of regional impact as defined in Chapter 380, Florida Statutes.

          “ Due Diligence Documents ” means all due diligence documents required to be delivered by Borrower to Lender and described in Exhibit “B” attached hereto and made a part hereof.

          “ Environmental Laws ” means any and all federal, state, or local statutory or common law relating to pollution or protection of the environment, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“ CERCLA ”), 42 USC § 9601, et seq. , the Superfund Amendments and Reauthorization Act of 1986 (“ SARA ”), Public Law 99-499, 100 Stat. 1613, the Resource Conservation and Recovery Act (“ RCRA ”), 42 USC § 6901, et seq. , state and local laws, as the same may be amended from time to time and all ordinances, regulations, codes, plans, orders, and decrees now existing or in the future enacted, promulgated, adopted, entered or issued, both within and outside present contemplation of the Borrower and Lender, and any common law of nuisance or trespass, and any law or regulation relating to emissions, discharges, releases or threatened releases of Hazardous Substances into the environment (including without limitation, ambient air, surface water, groundwater, land surfaced or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances.

          “ Financial Covenants ” means the financial covenants, conditions and requirements set forth in Article VIII, Paragraph 21 of this Loan Agreement.

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          “ Financing Statements ” means the UCC financing statements filed in order to perfect Lender’s lien on certain personal property and fixtures as more particularly described therein.

          “ Florida Lien Law ” means the laws of the State of Florida regarding mechanics’, materialmen’s and suppliers’ liens as provided in Florida Statutes Section 713 et. seq.

           “GAAP” means generally accepted accounting principles in the United States of America in effect from time to time.

          “ Gap ” means the period of time between the effective date of the commitment for mortgagee title insurance and the recording of the Mortgage.

          “ Governmental Authorities ” means any local, state, or federal governmental agency, regulatory body or office, or any quasi-governmental office (including health and environmental), or any officer or official of any such agency, office, or body whose consent or approval is required as a prerequisite to the commencement of the construction of the Improvements or to the operation and occupancy of the Improvements or the Land or to the performance of any act or obligation or the observance of any agreement, provision or condition of whatsoever nature herein contained.

          “ Guarantor” means Core.

           “Guarantor’s Assets” at any date means the amount which, in accordance with GAAP, would be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Guarantor at such date.

           “Guarantor’s Debt” at any date means the aggregate principal amount of all Indebtedness of the Guarantor at such date in accordance with GAAP.

           “Guarantor’s Liabilities” at any date means the amount which, in accordance with GAAP, would be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Guarantor at such date.

          “ Guaranty ” means the Unconditional Guaranty executed by Guarantor in favor of Lender, providing for Guarantor’s payment of all sums due under the Loan Documents and of performance of certain obligations of Borrower thereunder.

          “ Hazardous Substances ” means any substance or material in violation of an Environmental Law, including, but not limited to, (i) as identified in Section 101(14) of CERCLA, 42 USC § 9601 (14), as the same may be amended from time to time, and in any other Environmental Law, or (ii) determined to be toxic, a pollutant or contaminant, under federal, state or local statute, law, ordinance, rule or regulation or judicial or administrative order or decision, as same may be amended from time to time, and further including but not limited to those defined under state and local laws, as same may be amended from time to time.

          “ Improvements ” means the site work and infrastructure improvements and other land development to be completed by Borrower on the Land Under Development in accordance

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with the terms and provisions hereof, if any, specifically excluding however, any improvements relating to a CDD.

          “ Indebtedness ” means: (i) all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of Guarantor as of the date said Indebtedness is to be determined, including, without limitation, Capitalized Lease Obligations; (ii) all obligations which Guarantor has guaranteed under the Loan; (iii) all reimbursement obligations in connection with letters of credit or letter of credit guaranties issued for the account of Guarantor; and (iv) all other obligations of Guarantor.

          “ Indemnified Parties ” means and includes Lender, its parent, subsidiary and affiliated companies, assignees of any of Lender’s interest in the Loan or the Loan Documents, owners of participating or other interests in the Loan or the Loan Documents.

          “ Indemnified Costs ” means all actual liabilities, claims, actions, causes of action, judgments, orders, damages (including foreseeable and unforeseeable consequential damages), costs, expenses, fines, penalties and losses (including sums paid in settlement of claims and all consultant, expert and legal fees and expenses of Lender’s attorneys to the extent Lender is a prevailing party), including those incurred in connection with any investigation of site conditions or any remedial, removal or restoration work, of any resulting damages, harm or injuries to the person or property of any third parties or to any natural resources, with respect to the Property to the extent of a Default and Lender incurs expenses contemplated under the Loan Documents.

          “ Initial Borrowing Base Report ” means the description of the Maximum Advance Availability, as of the date hereof, for each Parcel as described in Article VII, Section 1 hereof, a copy of which is attached as Composite Exhibit “C” .

          “ Inspector ” means the architectural or engineering firm or such party(s) or such representative of Lender which Lender shall designate to perform various services on behalf of Lender. The services to be performed by Lender’s Inspector shall include the issuance of reports and certifications solely for the benefit of Lender and shall not impose upon Lender any obligation to make inspections, or to correct or require any other person to correct any defects, or to notify any person with respect to such defects, review of the Plans for any Improvements and all proposed changes to them, periodic inspections of construction work of the Improvements, if any, for conformity with the Plans.

          “ Inspection Agreement ” means the tri-party agreement among Lender, Borrower and Inspector providing for the services of, and payment by Borrower to, the Inspector.

          “ Inventory Report ” means the report to be submitted by Borrower to Lender on a monthly basis on the first day of each and every month included within the form attached hereto as Composite Exhibit “C” .

          “ LTC ” or “ Loan to Cost ” means, as determined on any date, the percentage arrived at by dividing (i) the outstanding principal balance of the Loan on such date by (ii) the Cost of the Property.

          “ LTV ” or “ Loan to Value ” means, as determined on any date, the percentage

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arrived at by dividing (i) the outstanding principal balance of the Loan on such date by (ii) the Appraised Value of the Property.

          “ LUD ” or “ Land Under Development ” means Land owned by Mortgagor which is being developed by Mortgagor with Improvements.

          “ Land ” means the real property described in Exhibit “A” attached hereto and any real property subsequently encumbered by the Loan by modification and spreader agreement.

          “ Lender ” means Wachovia Bank, National Association, its successors and/or assigns.

          “ Letter of Credit ” means a standby letter of credit issued by Lender pursuant to the terms of this Loan Agreement for the account of Borrower, as the same may be renewed, modified, amended or restated from time to time in the manner provided therein, which shall serve as performance bonds for Borrower’s development of real property. Draws under the Letters of Credit shall be secured by the Mortgage as provided herein and in the Mortgage and the Maximum Advance Availability under the Borrowing Base shall be reduced by the amount of the Letter of Credit issued until returned.

          “ Licenses and Development Rights ” means any right, title and interest now owned or hereafter acquired by Borrower in and to the following solely with regard to the Land (i) all development approvals, plat approvals, site plan approvals, density and similar rights, rights under development orders in connection with the development of regional impact solely in connection with the Land, building permits, other governmental approvals, licenses, and other consents and approvals which it may now or hereafter own solely with respect to or in connection with the Property; (ii) all plat drawings, site plans, and other drawings, plans and specifications for the Property and Improvements; (iii) all warranties and guaranties covering any furniture, equipment, machinery, building supplies and materials, appliances, fixtures and other property now or hereafter located on or placed upon the Property or related to the Improvements located on the Land, including, without limitation, air conditioning, heating and other appliances and equipment; (iv) any other governmental licenses, permits, approvals, allocations, contract rights related to the design, development or construction of the Improvements, and similar matters and documents obtained or to be obtained in the future which are necessary or appropriate for the construction, operation and management of any Improvements located on the Land; (v) all development agreements, agreements with utility companies, agreements with governmental authorities and similar agreements solely related to the Land; (vi) all rights in favor of Borrower or the Land under any Community Development Districts (“CDD”) or agreements with any CDD to the extent assignable; and ( vii) any and all permits, licenses, allocations, approvals, certificates and consents heretofore or hereafter issued by any governmental or private authority or agency relating solely to the Land or to any Improvements or the Plans and Specifications thereof, naming Borrower, and all of Borrower’s right, title and interest in any to any subcontracts or agreements for services, labor or materials pertaining to any Improvements, and all claims and rights with respect to non-performance or breach of said contracts and agreements.

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          “ Loan ” means the Revolving Loan.

          “ Loan Agreement ” means this Agreement.

          “ Loan Documents ” means the Commitment, this Loan Agreement, the Notes, any funding agreement, any “Application and Agreement for Irrevocable Standby Letter(s) of Credit” entered into by Lender and Borrower with respect to a Letter of Credit, the Mortgage, the other collateral assignments, the Guaranty, the Financing Statements, and any other document or writing executed in connection therewith or in furtherance thereof, whether entered into simultaneously herewith or at any time hereafter.

          “ Loan Maturity Date ” or “Maturity Date” means that certain date twenty-four (24) months from and after the Closing Date, as may be extended as set forth in the Note.

          “ Lot ” means any plotted Lot within the Property.

          “ Lot Contracts Report ” means the report to be submitted by Borrower to Lender on a monthly basis on the first day of each and every month included within the form attached hereto as Composite Exhibit “C”.

          “ Management and Leasing Agreements ” means (i) any and all management agreements executed by Borrower with any third party or affiliate of either Borrower or either Guarantor to engage in management activities in connection with the Property or the Improvements; and (ii) any and all leasing agreements executed by Borrower with any third party or affiliate of either Borrower or either Guarantor to engage in leasing or sales activities in connection with the Property or the Improvements.

          “ Maximum Advance Availability ” means the amount available for each Sub-limit Classification available for funding under the Borrowing Base in accordance with Section 1 of Article V hereof which amount shall be reduced by the face amount of a Letter of Credit.

           “Maximum Debt” means Guarantor’s Debt less (i) customer deposits, and (ii) subordinated debt due to shareholders of Guarantor.

          “ Mortgage ” means the Mortgage, Assignment of Rents and Security Agreement of even date herewith executed by Borrower for the benefit of Lender encumbering the Property, and any extensions, modifications, renewals or replacements thereof.

          “ Mortgagor ” means Tradition Development Company, LLC, a Florida limited liability company; Horizons St. Lucie Development, LLC, a Florida limited liability company; Horizons Acquisition 7, LLC, a Florida limited liability company; and/or Tradition Mortgage, LLC, a Florida limited liability company, as the case may be.

          “ Notes ” means the Revolving Note executed by Borrower in favor of Lender as well as any promissory note, sub-note, or other notes issued by Borrower in substitution, replacement, extension, future advance, amendment or renewal of the Note or any such promissory note or notes or as required herein.

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          “ Permitted Encumbrances ” means those liens, encumbrances, easements and other matters approved by Lender as acceptable exceptions to Schedule B-Section 2 of the Title Policy, including, but not limited to, taxes and assessments not yet due and payable for the year of closing, and matters contemplated under the Loan Documents, including CDDs created with respect to the Land.

          “ Parcels ” means portions of the Land as described by separate, discrete legal descriptions or by a separately recorded plat, including as set forth in the Initial Borrowing Base Report.

          “ Plans ” or “ Plans and Specifications ” means plans and specifications for the construction of the Improvements submitted to and approved by Lender from time to time and including such amendments thereto as may from time to time be made by Borrower and approved by Lender, such approval not to be unreasonably withheld.

          “ Property ” means the Land and the Improvements located or to be located on the real property described in Exhibit “A” attached hereto and made a part hereof encumbered by the Mortgage and any Land and Improvements subsequently encumbered by the Mortgage, and any rights, other property, and appurtenances as defined, described or identified in the Mortgage to be used as Collateral for the Loan.

          “ Requisition ” means Lender’s form of loan requisition, completed by Borrower, evidencing Borrower’s draw request.

          “ Revolving Loan ” means the Forty Million and 00/100 Dollar ($40,000,000.00) revolving line of credit loan to be funded pursuant to the Borrowing Base as described in this Loan Agreement.

          “ Site Plan ” means collectively the site plans for the Improvements, approved by the applicable Governmental Authorities, as same may be amended from time to time with Lender’s approval which shall not be unreasonably withheld.

          “ Sub-Limit Classification(s) ” means the type of property to be used in determining the availability under the Borrowing Base as set forth in Article V hereof.

          “ Tangible Net Worth ” means Guarantor’s Assets less Guarantor’s Liabilities plus subordinate and/or subordinated debt payable to Guarantor’s shareholders.

          “ Title Commitment ” means the mortgagee title insurance commitment satisfying the requirements of this Loan Agreement.

          “ Title Insurer ” means title insurance underwriter satisfactory to Lender.

          “ Title Policy ” means the mortgagee title insurance policy issued pursuant to the Title Commitment satisfying the requirements of this Loan Agreement.

          “ Utilities ” means services necessary for the construction of the Improvements and the operation thereof for their intended purpose are available at the boundaries of the Land,

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including water supply, storm and sanitary sewer facilities, electric, telephone facilities, cable television, and trash/dumpster services.

          “ Work in Progress Report ” means the report to be submitted by Borrower to Lender on a monthly basis on the first day of each and every month included within the form attached hereto as Composite Exhibit “C” .

     2. Capitalized terms not defined in this Loan Agreement shall have the meanings ascribed to them in the Mortgage, Notes, or other applicable Loan Documents.

ARTICLE II.

LOAN DOCUMENTS

     As a condition to Closing and prior to and as a condition of any disbursement of Loan funds hereunder, Borrower shall execute and deliver, or cause to be executed and delivered to Lender the Loan Documents to be executed by Borrower and/or Guarantor (the “ Loan Documents ”), and due diligence documents to be delivered by Borrower and/or Guarantor on the Land which Borrower utilizes as part of the Borrowing Base (collectively, the “ Due Diligence Documents ”), including as described on Exhibit “B” attached hereto and made a part hereof, all in form and substance reasonably satisfactory to Lender.

     All of the Loan Documents and Due Diligence Documents shall be in form and content reasonably satisfactory to the Lender, and shall comply with all of the requirements set forth in this Loan Agreement.

ARTICLE III.

SECURITY AGREEMENTS

     1. In addition to the security interests granted pursuant to the Mortgage and the other Loan Documents, Borrower hereby collaterally assigns, transfers, sets over and grants a security interest to Lender, its successors and assigns, in and to the following:

          (a) Design and Construction Contracts, Plans and Specifications . All of its right, title and interest in and to: (i) all construction contracts now or hereafter entered into by Borrower with various contractors (hereinafter each such are referred to as a “ Contractor ”) for the various Improvements to be constructed upon the Land, and all addenda, modifications and amendments thereto (“ Construction Contracts ”);

          (b) Developer’s Rights . All of its rights, title and interest as developer or declarant in and to the Declarations to the extent assignable in accordance with the terms and conditions of the Declarations.

          (c) Management and Leasing Agreements . All of its rights, title and interest in and to the Management and Leasing Agreements.

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          (d) Licenses and Development Rights . All of its rights, title and interest in and to the Licenses and Development Rights.

          (e) All of its rights, title and interest in and to all current and future purchase and sale agreements with third party purchasers (collectively, “ Purchase Agreements ”).

     Hereinafter the Construction Contracts, Declarations, Management and Leasing Agreements, Licenses and Development Rights, and Purchase Agreements are referred to as the “ Assigned Rights ”.

     2. Borrower covenants, warrants and represents to Lender that with regard to the Assigned Rights currently held by Borrower (and for any Assigned Rights subsequently assigned to Lender as of the date of such assignment) (i) Borrower has all lawful right, title and interest to the Assigned Rights (if any), and has the right to make this assignment (to the extent the Assigned Rights are assignable), and (ii) Borrower has not assigned nor shall it assign to any other person or entity any interest in such Assigned Rights and (iii) the Assigned Rights are in full force and effect and there are no defaults by Borrower thereunder or by any other party thereto. Borrower warrants and represents that Lender shall not be under any obligation to perform any of the obligations of Borrower under the Assigned Rights. Nothing contained herein shall be construed to impose any liability upon Lender by reason of the assignment granted hereby until Lender exercises dominion and control with respect thereto, and Borrower shall indemnify, defend and hold Lender harmless from and against any and all claims, damages, liabilities, fines and expenses (including but not limited to reasonable attorney’s fees and costs) arising from or related to this assignment or under any of the Assigned Rights until Lender exercises dominion and control with respect thereto. Borrower shall deliver to Lender prompt written notice of any and all defaults or events which, with the giving of notice and/or the passage of time will become defaults by either Borrower or any third party under any Assigned Rights, and shall deliver copies of all written notices, demands and material communications between Borrower and any third party under any Assigned Rights. Borrower shall obtain any necessary consents or joinders necessary to effectuate the Assigned Rights.

     3. These assignments shall be in full force and effect as of the date hereof. Notwithstanding that this assignment is effective immediately, so long as there shall exist no Default by Borrower of this Loan Agreement or any other Loan Document which has not been cured within an applicable cure period and the cure accepted by Bank, Borrower shall have the right to take all action with respect to the items and matters assigned hereby. These assignments shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Borrower acknowledges that the making of the Loan by Lender to Borrower shall be made by Lender in full reliance upon these assignments. This instrument is for the sole benefit of Lender and shall not be construed for the benefit of any third party or parties.

     4. Upon delivery of written notice of Default to Borrower (after expiration of any applicable cure period), Lender shall have the right in its sole discretion to take in its name or in the name of Borrower or otherwise, such action as Lender may at any time or from time to time reasonably determine to be necessary to cure any Default of Borrower under the Assigned Rights, but under no circumstances shall Lender be obligated to take such action. Lender shall incur no liability on account of any action taken in good faith by it or on its behalf or otherwise

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hereunder, whether or not the same shall prove to be improper, inadequate or invalid in whole or in part, and Borrower agrees to protect, defend, indemnify and hold Lender harmless from and against any and all loss, cost, liability or expense, including, but not limited to attorneys’ fees and expenses, in connection with any such action or actions except for Lender’s wrongful acts or gross negligence. These assignments shall constitute Borrower’s irrevocable direction to and full authority for third parties to act at Lender’s written direction, notice or demand and to otherwise perform on Lender’s behalf under the Assigned Rights after a Default exists under the Loan. Third parties shall be fully protected by Borrower in their reliance upon and compliance with any written request, notice or demand made by Lender with respect to the Assigned Rights or for performance of any undertaking thereunder, and shall have no right or duty to inquire as to whether any Default under the Loan Agreement or the other Loan Documents has actually occurred or is then existing.

     5. Borrower hereby irrevocably constitutes and appoints Lender as its true and lawful attorney-in-fact, empowered to act in Borrower’s name or in Lender’s name or otherwise, in order to enforce all rights of Borrower under the Assigned Rights (i) during a Default or (ii) after a Default has occurred and been cured but said cure has not been accepted by Lender. This power of attorney, being coupled with an interest, is irrevocable.

ARTICLE IV.

CLOSING AND INITIAL DISBURSEMENT

     1. The Closing of the Loan, and funding of the proceeds of this Loan which are approved by the Lender for any initial funding are conditioned upon, and such proceeds of the Loan shall be funded subsequent to, the following:

          (a) Execution and/or delivery of all Loan Documents and Due Diligence Documents such other documents as Lender and Lender’s counsel may require to insure that the Lender has a valid first lien on the Property which constitutes the Borrowing Base used by Lender to fund this Loan Agreement and as necessary or appropriate to effectuate the terms of this Loan Agreement.

          (b) Receipt by Lender of satisfactory evidence of applicable insurance required pursuant to the Loan Documents.

          (c) Receipt by Lender of the marked-up Title Insurance Commitment, insuring Lender’s Mortgage, which marked-up commitment must be approved by Lender’s counsel together with all required reinsurance and co-insurance agreements, required endorsements and coverages.

          (d) Receipt by Lender of evidence satisfactory to Lender and Lender’s counsel of the Borrower’s and Guarantor’s fulfillment of any other condition to funding as set forth in this Loan Agreement.

          (e) Borrower and Guarantor are in full compliance with the Loan Documents and all warranties and representations of the Borrower and Guarantor are true and correct.

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          (f) Written confirmation from Borrower that the applicable Parcels to be included in the Borrowing Base have the appropriate approvals, permits, licenses and Improvements required (if any) to qualify for the applicable Sub-Limit Classification set forth in Article VII, Section 1 hereof and in the Initial Borrowing Base Report.

ARTICLE V.

LOAN FUNDING

     1.  Borrowing Base . Eligibility for funding under the Loan shall be determined under a “ Borrowing Base ” formula calculated based on the Sub-Limit Classifications (“ Sub-Limit Classification(s) ”) set forth in the chart below (“ Borrowing Base Matrix ”), with each such Sub-Limit Classification referred to in this Loan Agreement (including without limitation in calculating the Maximum Advance Availability by the letter reference in the left-hand column of the chart below). Each such Sub-Limit Classification shall be a sublimit under the Revolving Loan for that category up to the referenced “ Maximum Advance Availability ” as shown in the Borrowing Base Matrix as may be combined with other Sub-Limit Classifications. The Maximum Advance Availability under the Borrowing Base shall be the value, or cost, as applicable, of each Sub-Limit Classification set forth below multiplied by the applicable Advance Rate as noted in the Borrowing Base Matrix, which results in the aggregate Margined Value (as hereinafter defined). “ Margined Value ” means the appraised value or cost, if applicable, of the applicable portion of the Mortgaged Property multiplied by the applicable Advance Rate for the particular Sub-Limit Classification as set forth below.

     2.  Eligibility Limitations Under Borrowing Base . Eligibility under the Borrowing Base will be further limited as follows:

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          (a) For “ Undeveloped Land ” owned by the Borrower ( Sub-Limit Classification A ), eligibility will be limited by the following:

(i) Undeveloped Land identified for use as golf course, amenities, parks, retention, preserve or other non-development uses for sale or rental use, or any other property designated as non-master planned community or property to be deeded to a master property owners association, an improvement district or a CDD other third party, is not eligible for the Borrowing Base once it has been identified and/or Borrower is contractually obligated to convey the property.

          (b) Any CDD Bond (net of adjustments) will be deducted from the applicable Margined Value (as hereinafter defined).

          (c) The formation of a CDD or modifications of the conditions of or new funding by an existing CDD on any part of the Property will require the reasonable consent of the Lender. The Lender reserves the rights to secure an appraisal update and/or modify the Advance Rate(s) set forth in Section 1 above with respect to the Property under the Borrowing Base on any portion of the Property submitted to a CDD. The Borrower shall use best efforts to obtain from the CDD quarterly internally prepared financial reports and annual audited financial statements; and to cause the internally prepared reports to be certified. The Borrower shall provide such reports to Lender within thirty (30) days of receipt by Borrower. Lender acknowledges that any Property under the Borrowing Base submitted to a CDD will be subject to assessments imposed by the CDD.

          (d) Notwithstanding the foregoing Borrower Base Matrix, if any Land is optioned, contracted or owned for a period in excess of two (2) years prior to the Closing Date of the Loan, the Maximum Advance Availability will be based on the LTV Advance Rates and not the LTC Advance Rates listed in the Borrowing Base Matrix.

     3.  Borrowing Base Administration .

          (a) The Lender shall be responsible for administering the Borrowing Base. The following reports shall be submitted by Borrower on monthly basis on forms and with such supporting documentation as the Lender shall reasonably require: (i) a Borrowing Base Report (the Initial Borrowing Base Report shall be used for the determination of the Maximum Advance Availability under the Borrowing Base for the first quarter); (ii) an Inventory Report; (iii) Work in Progress Report; and (iv) any other information required by Lender in Lender’s reasonable discretion.

          (b) Additions, reclassifications, and all partial releases of Property under the Borrowing Base will be processed by the Lender, with assistance from counsel, as requested by the Lender, at the Borrower’s expense.

          (c) Phase I environmental reports (or participation in Lender’s Environmental Collateral Protection Program) shall be required on any new real property mortgaged to the Lender, to be reviewed and determined to be acceptable by the Lender, in the Lender’s

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reasonable discretion. The Lender may accept existing Phase I reports, subject to its review and acceptance at Lender’s sole and absolute discretion.

          (d) Additions to the Property to be considered eligible for the Borrowing Base must be acceptable to the Lender in accordance with the requirements set forth in this Loan Agreement, in Lender’s reasonable discretion, and documented in the same manner as required with respect to the Property under the terms of this Loan Agreement and the Commitment, and must include, but not limited to:

               (1) Recorded mortgage spreader and advance documents as reasonably required by Lender’s counsel.

               (2) Title policies endorsed advancing the effective date of the Lender’s Title Policy, insuring that no adverse matters have appeared of record since the prior effective date, and adding such real property insured under Lender’s first priority mortgage subject to any Permitted Exceptions.

               (3) Recorded plat, if applicable, and a certified boundary survey of the Property then being encumbered.

               (4) Appraisal in satisfactory form and content in Lender’s sole and absolute discretion.

               (5) Phase I environmental report in satisfactory form and content in Lender’s reasonable discretion (or participation in Lender’s Environmental Collateral Protection Program).

               (6) Evidence satisfactory to the Lender of Sub-Limit Classification status as defined in the Borrowing Base.

               (7) Written confirmation of Lender’s counsel that documentation received is acceptable in order to add the proposed real property to the Borrowing Base.

               (8) If required by Lender, the Lender’s Inspector has performed any required project permit review, cost/design review, development rights review and/or progress inspections of any Land Under Development. Borrower will provide copies of progress/development status reports from project engineers, plans and specification, permits, development orders, and other information the Lender may reasonably require to validate collateral eligibility under the Borrowing Base. Borrower shall reimburse the Lender for the cost of the Lender’s Inspector.

          (e) Reclassifications of eligible Land will require:

               (1) Evidence satisfactory to the Lender of Sub-Limit Classification status and Maximum Advance Availability as defined in the Borrowing Base, including but not limited to, copies of approved and/or recorded plats, if any, endorsement advancing the effective date of the Lender’s Title Policy and insuring that no adverse matters have appeared of record since the prior effective date, whatever affidavits and/or surveys required by title agent in order

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to delete any exceptions for survey matters on the title endorsement, which may include, a surveyor’s affidavit or updated certified boundary survey (if original boundary survey provided is dated more than ninety (90) days prior to reclassification request), site plans, if any, permits, licenses and other approvals as appropriate. The Borrower shall pay for the reasonable fees and costs for the review of such documentation, including Lender’s reasonable attorneys’ fees and costs and Lender’s Inspector’s fees and costs.

               (2) Appraisal update (if applicable).

          (f) Deletions or partial releases of portions of Land eligible under the Borrowing Base will be executed by the Lender upon submission of:

               (1) Partial release and attached legal description.

               (2) If unplatted, at Lender’s request, a boundary survey or sketch.

               (3) Compliance with Paragraph 4 below.

     4.  Release Prices . Partial releases will be executed by the Lender without the requirement for payment of a “ Release Price ” so long as: (a) there is no uncured Default; (b) the Lot, development parcel, or other Property to be released is not needed in the Borrowing Base to support outstanding borrowings, any Letters of Credit issued, or any other exposure; and (c) the partial release does not negatively impact in any way the value or use of the remaining collateral. Without limiting the foregoing, Lender acknowledges that Borrower may request, from time to time, releases for parks, roads, and other non-developable portions of the Property including, but not limited to, conveyances to property owners associations, CDDs and Governmental Authorities without payment of a Release Price so long as the requirements for nonpayment of a Release Price contained in this provision are satisfied. If release of a Lot or development parcel would result in the amounts outstanding under the Loans being in excess of the Margined Value, the partial release may be denied or (i) a reduction of principal outstanding to the Margined Value or (ii) an increase in the Collateral to the Margined Value may be required by the Lender as a condition to the partial release. Partial Releases will reduce availability in the Borrowing Base by the Margined Value of the property released. The Borrower shall be required to provide Lender with Partial and Final Lien Waivers (as applicable) from any party filing a Notice to Owner on any Land encumbered by Lender.

     5.  Plats and Consents . Lender acknowledges that Lender will be required to execute and consent to certain plats, certain easements, declarations and other development documents in connection with the development of the Land. Lender agrees to execute all such documents, after Lender’s review and approval of same, such approval not to be unreasonably withheld or delayed without payment of any Release Price or other consideration. Without limiting the foregoing, Lender agrees to join in all plats and subordinate the lien of the mortgage to any dedications provided on such plats and to execute such documents as may be reasonably required from Borrower with respect to any of the following: (i) recordation of any declaration of covenants and restrictions for all or any portion of the Property; (ii) formation of any CDD for all or any portion of the Property; (iii) any easement, license or other grant or conveyance to any Governmental Authority or utility company; (iii) any dedication, reservation or other restriction

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provided on a plat, and (iv) such other authorizations, consents and joinders as may be required to obtain the further development approvals with respect to the Property.

ARTICLE VI.

METHOD AND CONDITIONS OF DISBURSEMENT OF LOAN PROCEEDS

     1.  Revolving Loan . The purpose of the Revolving Loan is to provide financing under the Borrowing Base as provided in Article V above.

     2.  Loan Requisitions .

          (a) All Requisitions for proceeds of the Loan under Sub-Limit Classifications shall be disbursed to Borrower upon request in accordance with this Loan Agreement, subject only to the following limitations: (i) Borrower is in compliance with the terms and conditions of this Loan Agreement and the Loan Documents including, but not limited to, the Financial and Operating Statements contained in this Loan Agreement; (ii) there is availability under the Borrowing Base considering any limitations set forth in Article V hereof; and (iii) no Default shall have occurred and be uncured as of the date of the funding request.

          (b) Notwithstanding the foregoing, in the event funding on the Borrowing Base exceeds the amount permitted by an inspection audit as performed by Lender’s Inspector, Borrower must, within twenty (20) business days after notification by Lender, either (i) reduce the loan balance to the amount documented by the audit, or (ii) provide additional collateral acceptable to the Lender in accordance with this Loan Agreement at a value (based on Advance Rates as noted in the Borrowing Base Matrix) that would support the current Borrowing Base funding.

     3.  Solvency . At such time as Borrower shall desire to obtain a disbursement of any portion of the Loan proceeds, Lender may require, in its reasonable discretion, that Lender be provided with satisfactory evidence that there is not pending against Borrower a petition in bankruptcy, whether voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangements under the Federal bankruptcy laws of the United States or of any other action brought under the aforesaid bankruptcy laws. Such evidence shall be in the form of affidavits signed by an officer of Borrower.

     4.  Access to Streets . Lender shall not make any disbursement for construction of the Improvements for any Land Under Development if the Land Under Development shall not have legal and insurable access which may include an easement providing such access. Lender acknowledges and agrees that legal access to any Land Under Development will be constructed contemporaneously with the Improvements.

     5.  Final Disbursement Date . Subject to other provisions of this Article, Lender shall not be required to make any disbursement from the proceeds of this Loan later than the Loan Maturity Date.

     6.  Lien Priority as Prerequisite for Funding . As of the date hereof, the Mortgage shall be of first lien priority as to the Property. Lender shall in no event disburse funds from the

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Loan proceeds unless (a) the Mortgage then shall constitute a first lien on such Property subject to the Permitted Exceptions and (b) there shall exist no other lien of any sort, whether prior or inferior, than the lien of the Mortgage with respect to the Property other than the Permitted Exceptions.

     7.  Condi t ions Precedent to Each Disbursement of the Loan . At no time and in no event shall Lender be obligated to disburse funds if any Default as described herein or in the Mortgage shall have occurred and shall not have been cured prior to the expiration of any applicable cure period.

     8.  Notice, Frequency and Place of Disbursements . At Lender’s option (a) the above-said Requisition shall be submitted to Lender at least three (3) business days prior to the date of the requested advance, (b) disbursement shall be made no more frequently than bi-monthly, and (c) all disbursements as to the Loan shall be made by transfer to Borrower’s account at Lender or at such other place as Borrower may designate from time to time.

     9.  Advances Do Not Constitute a Waiver . No advance of Loan proceeds hereunder shall constitute a waiver of any of the conditions of Lender’s obligation to make further advances, nor in the event Borrower is unable to satisfy any such condition, shall any such waiver have the effect of precluding Lender from thereafter declaring such inability to be an Event of Default described herein or in the Mortgage.

     10.  Letters of Credit . At the request of Borrower and provided that a Default does not exist, the Lender shall issue, pursuant to the requirements of the Revolving Loan and in accordance with the Borrowing Base procedures of Article V, stand-by Letters of Credit in favor of governmental authorities in order to serve as performance bonds for Borrower’s development of real property. Prior to issuance of a Letter of Credit by the Lender and at such time as a Letter of Credit is requested by Borrower for the benefit of any real property being developed with proceeds of the Loan:

          (a) Borrower shall execute an Application and Agreement for Irrevocable Standby Letter(s) of Credit;

          (b) The amount advanced by Lender under such Letter of Credit shall be secured by the applicable Mortgage and guaranteed by the applicable Guarantor;

          (c) Borrower shall pay to Bank upon issuance of the Letter of Credit a fee of ¹ / 2 of 1% of the face amount of such Letter of Credit (and thereafter upon any annual renewal);

          (d) The Letter of Credit shall contain a thirty (30) day cancellation by Bank provision and shall have an expiration date no later than twelve (12) months (with annual renewal options upon payment of a renewal fee);

          (e) Any sums paid by Bank under the Letter of Credit shall initially accrue interest at the Loan interest rate provided in the Note and such sum, together with accrued interest to the extent it exceeds the Borrowing Base, shall be repaid by Borrower within five (5) business days from receipt of notice from Bank that the Letter of Credit (or portions thereof) have been paid;

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          (f) In the event the Letter of Credit is paid by Bank (and not repaid by Borrower as provided immediately above), such payment shall be deemed by Bank as a Default by Borrower under the Loan and interest shall commence to accrue on the amount of such payment at the Default Rate of Interest provided in the Note; and

          (g) The applicable Mortgage shall not be satisfied until all Letters of Credit relating to such Property are returned to Bank or the Letters of Credit are secured by cash or other collateral acceptable to Bank in its reasonable discretion.

If at any time Borrower requests a reduction or cancellation in the amount of any Letter of Credit issued by the Lender, Borrower must present written authorization in substance acceptable to the Lender from the beneficiary of such Letter of Credit approving the reduction and the amount so reduced. Any Letter of Credit issued shall reduce the Borrowing Base Availability by the amount of the letter of credit issued.

ARTICLE VII.

WARRANTIES AND REPRESENTATIONS OF BORROWER

     As material inducements to Lender to enter into this Loan Agreement and to make the Loan, Borrower hereby warrants and represents to Lender as follows:

          (a) Validity of Loan Documents . That the Loan Documents are in all respects legal, valid and binding according to their terms and grant to Lender a direct, valid and enforceable first lien security interest in the Property and the personalty located thereon subject only to bankruptcy, insolvency and other similar laws affecting the rights of creditors.

          (b) Priority of Lien on Personalty . That no bill of sale, security agreement, financing statement or other title retention agreement (except those executed in favor of Lender) has or will be executed with respect to any personal property, equipment or fixtures used in conjunction with the construction, operation or maintenance of the Improvements located on the Property owned by Borrower other than Improvements for a CDD.

          (c) Conflicting Transactions of Borrower . That the consummation of the transactions hereby contemplated and the performance of Borrower’s obligations under and by virtue of the Loan Documents will not result, to the best of Borrower’s knowledge, in any breach of, or constitute a default under any mortgage, security deed, deed of trust, lease, bank loan or credit agreement, corporate charter or bylaws or other instrument to which Borrower is a party or by which it may be bound or affected.

          (d) Pending Litigation . That there are no actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower which adversely affects any of the Property securing the Loan in any material respect, or involving the validity or enforceability of any of the Loan Documents or the priority of the lien thereof, at law or in equity, or before or by any governmental authority, except actions, suits and proceedings which are fully covered by insurance and which, if adversely determined, would not substantially impair Borrower’s ability to perform each and every one of its obligations under and by virtue of the Loan Documents; and that to Borrower’s knowledge, it is not in default with respect to any

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order, writ, injunction, decree or demand of any court or any governmental authority that would have a material adverse affect on Borrower’s ability to repay the Loan.

          (e)  Violations of Governmental Law, Ordinances or Regulations . That Borrower has no knowledge of any material violation or notice of violations of any federal or state law or municipal ordinance or order or requirement of, or agreement with, the County or City or any municipal department or other governmental authority having jurisdiction affecting the Property, which violations in any way relate to or affect the Property.

          (f)  Compliance with Zoning Ordinances, Building Codes, and Similar Laws . That as a condition of funding a Requisition for any Land Under Development, the proposed Improvements to be developed thereon will have been approved by all appropriate Governmental and quasi-Governmental Authorities and all applicable permits will have been issued pursuant to all applicable building codes. Borrower is familiar, has complied, and will comply with all of the laws, regulations, codes, ordinances, and development orders and resolutions applicable to the Property and construction of the Improvements on any Land Under Development. The Land Under Development is and will be in full compliance with all requirements of any and all existing Development Order(s), resolutions and approvals; and the Borrower has satisfied all conditions to such Development Order(s), resolutions and approvals. As a condition of funding any Requisition for any Land Under Development, Borrower shall have obtained, all permits, licenses and approvals necessary to construct the Improvements in accordance with all laws, including those pertaining to land use, and Borrower has delivered or will deliver promptly upon receipt, true and accurate copies of all such permits, licenses, and approvals to Lender.

          (g)  Availability of Utilities . That all utility services necessary for the construction of the Improvements on any Land Under Development are or will be available at the boundaries of the Land, including water supply, storm and sanitary sewer facilities, electric, telephone facilities, cable television, and trash/dumpster services (“ Utilities ”) at the time of a funding request.

          (h)  Development Approvals and Building Permits . That all development approvals, permits, licenses and requirements as applicable for any work then to be funded by Lender with respect to any Property as noted in the relevant Sub-Limit Classification under the Borrowing Base shall have been obtained as a condition of funding at the Advance Rate noted in the Borrowing Base Matrix for such Sub-Limit Classification. By submitting a Due Diligence Report and an updated Borrowing Base Report, the Borrower shall be deemed to have represented to Lender that the state of facts set forth therein are true and correct in all respects, and that Lender may rely on such Due Diligence Report and Borrowing Base Report in funding the Loan pursuant to and in accordance with the Loan Documents, without further inquiry or investigation. Borrower shall deliver copies of all issued approvals, licenses, permits and other evidence of the satisfaction of governmental requirements to Lender as a condition of funding and in order to verify the requirements under the applicable Sub-limit Classification as noted in the Borrowing Base Matrix. For any Land Under Development, that the Property is vested both for concurrency requirements and under any Preliminary Development Agreement or DRI Development Order, all necessary density units and uses are vested with respect to the Improvements, and that the use complies with such DRI Development Order. The Borrower

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shall deliver to Lender, as obtained, copies of all plats, approvals, and permits as issued by the applicable governmental authority.

          (i)  Condition of Property . That the Property is not now damaged or injured as a result of any fire, explosion, accident, flood or other casualty and remains in substantially the same condition as existed on the date of the Appraisal other than preparation of the Land for any improvements to be constructed. To Borrower’s knowledge, the Property does not contain significant amount of muck or organic materials which would adversely affect the appraised value of such land below that required by this Agreement and significant amounts of off-site fill are not required.

          (j)  Brokerage Commissions . That any brokerage commission due in connection with the transaction contemplated hereby has been paid in full and that any such commission coming due in the future will be paid promptly by Borrower. Borrower agrees to and shall indemnify Lender from any liability, claim or loss arising by reason of any such brokerage commission. This provision shall survive the repayment of the Loan and shall continue in full force and effect so long as the possibility of such liability, claim or loss exists.

          (k)  Usury . That the amounts to be received by Lender which are or which may be deemed to be interest hereunder or under any of the Loan Documents or otherwise in connection with the transactions herein contemplated constitute lawful interest and are not usurious or illegal under the laws of the State of Florida, and no aspect of the transactions contemplated by this Loan Agreement is or will be usurious under current Florida law.

          (l)  Accuracy of Information . That Lender’s commitment to make the Loan, as expressed in the Commitment is based on the accuracy of Borrower’s representations and statements. Neither this Loan Agreement nor any document, financial statement, credit information, certificate or statement required herein to be furnished or furnished to Lender contains any untrue statement of a material fact or omits to state a fact material to this Loan Agreement or to Lender’s decision to enter into this Loan Agreement or the transaction contemplated hereunder. Lender shall have the option to declare the Commitment to be breached if there shall have been any material misrepresentation or misstatement or any material error in any statement, document or other submission delivered to Lender, or if prior to the initial Loan disbursement, there shall have been a material adverse change in the state of facts submitted to Lender, or Borrower or any Guarantor has become insolvent, bankrupt or incapacitated, or has otherwise been subject to any material adverse change in financial condition.

          (m)  Set-Offs . That Borrower and Guarantor do not currently have any defense or set-off with respect to any money disbursed or otherwise advanced or to be advanced hereunder.

          (n)  Investment Company . That Borrower represents and warrants that Borrower is not an investment company as defined by the Investment Company Act of 1940, as amended, and that Borrower is not required to register under said Act.

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          (o)  Continuation and Investigation . That the warranties and representations contained herein shall be and remain true and correct so long as any of Borrower’s or any Guarantor’s obligations hereunder have not been satisfied, or so long as part of the Loan shall remain outstanding, and each request by Borrower for a disbursement or extension of the Loan shall constitute an affirmation that the foregoing representations and warranties remain true and correct as of the date thereof. All representations, warranties, covenants and agreements made herein or in any certificate or other document delivered to Lender by or on behalf of Borrower pursuant to or in connection with this Loan Agreement shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf, and shall survive the making of any or all of the disbursements contemplated hereby.

          (p)  Hazardous Substances .

               (1) Borrower and Guarantor represent and warrant to Lender the following:

                    (i) that Borrower and Guarantor have made all due inquiry and investigation into the present condition of the Property and the previous ownership and uses of the Property consistent with good commercial or customary practice in an effort to minimize liability with respect to “ Hazardous Substances ”, as that term is defined herein;

                    (ii) that neither Borrower, any Guarantor, nor any other person to the Borrower’s and Guarantor’ knowledge, after all due inquiry and investigation, has ever used the Property as a facility for the manufacture, processing, distribution, use, transport, handling, storage, treatment or disposal of any Hazardous Substances, and Borrower and Guarantor will not in the future use the Property for any such purposes;

                    (iii) that the Property, to the best of Borrower’s and Guarantor’s knowledge, is now and at all times hereafter will continue to be in full compliance with all federal, state and local “ Environmental Laws ” (as that term is defined herein);

                    (iv) that to the best of Borrower’s and Guarantor’s knowledge, as of the date hereof, there are no hazardous or toxic materials, substances, wastes or other environmentally regulated substances (including solids or gaseous products and any materials containing asbestos) in violation of Environmental Laws, the presence of which is limited, regulated or prohibited by any state, federal or local governmental authority or agency having jurisdiction over the Property, or which are otherwise known to pose a hazard to health or safety of occupants of the Property, located on, in or under the Property or used in connection therewith; and any aboveground or underground storage tanks on the Property have been properly registered with the Florida Department of Environmental Regulation and are in material compliance with the standards for stationary tanks contained in Chapter 17-761 or 17-762, Florida Administrative Code, any local tank regulation program authorized under Chapter 17-63, Florida Administrative Code, and regulations for underground storage tanks promulgated by the U.S. Environmental Protection Agency in 40 CFR Part 280. Borrower and Guarantor further represent that to the best of each other’s knowledge there has never been a discharge, as that term is defined in Rule 17-761.200(33)(b), F.A.C., of any pollutants, contaminants or petroleum products from any of the aboveground or underground storage tanks and the Property has never

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been the subject of a petroleum contamination site cleanup or remediation under Chapter 17-770, Florida Administrative Code, or other applicable environmental law;

                    (v) that Borrower and/or Guarantor shall promptly notify Lender in writing of any change in the nature or extent of any Hazardous Substances or toxic materials, substances or wastes maintained on, in or under the Property or used in connection therewith, and will transmit to Lender copies of any citations, orders, notices, liens, or other material governmental or other communication received with respect to any other hazardous materials, substances, wastes or other environmentally regulated substances affecting the Property; and Borrower and Guarantor shall not cause or permit to exist, as a result of an intentional or unintentional act or omission on its part, a releasing, discharging, spilling, leaking, pumping, emitting, pouring, emptying or dumping of a Hazardous Substance from the Property into waters or onto lands of the State of Florida or the waters of the United States, or into waters outside the jurisdiction of the State of Florida where damage may result to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of Florida or the United States, unless said release, discharge, spill, leak, pump, emission, pouring, emptying or dumping, etc. is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities;

                    (vi) that Borrower and Guarantor are not aware of, nor have the Borrower, Guarantor, or any subsidiary or affiliated entities, received notice of, any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with Environmental Laws or any ordinance, regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any Hazardous Substance; and

                    (vii) that there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or threatened against Borrower, Guarantor, or the Property, relating in any way to any Environmental Laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.

               (2) Borrower and Guarantor shall, at their own cost and expense, take all actions as shall be necessary or advisable for the clean-up of the Property, including all removal, containment and remedial actions in accordance with all applicable Environmental Laws, and shall further pay or cause to be paid at no expense to Lender all clean-up, administrative, and enforcement costs of applicable governmental agencies which may be asserted against the Property or the owner thereof.

               (3) Borrower and Guarantor hereby agree to indemnify, reimburse, defend and hold harmless Lender, its officers, directors, employees, successors and assigns from and against all demands, claims, civil or criminal actions or causes of action, liens, assessments, civil or criminal penalties or fines, losses, damages, liabilities, obligations, costs, disbursements,

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expenses or fees of any kind or of any nature (including, without limitation, cleanup costs, attorneys’, consultants’ or experts’ fees and disbursements and costs of litigation at trial and appellate levels) which may at any time be imposed upon, incurred by or asserted or awarded against, Lender directly or indirectly, resulting from: (i) any acts or activities of Borrower, its agents, employees or contractors, at, on or about the Property which contaminate air, soils, surface waters or groundwaters over, on or under the Property; (ii) arising from or out of any Hazardous Substance on, in or under the Property; (iii) pursuant to or in connection with the application of any Environmental Law to the acts or omissions of Borrower or any other person and any environmental damage alleged to have been caused, in whole or in part, by the transportation, treatment, storage, or disposal of any Hazardous Substance; or (iv) arising from or in relation to the presence, whether past, present or future, of any Hazardous Substances on the Property.

               (4) Without limiting the foregoing, this indemnification provision specifically protects the Lender against any claim or action from activities described in (i), (ii), (iii) or (iv) above, based in whole or in part upon any Environmental Law, environmental statute, rule, regulation or policy, CERCLA and RCRA (as may be amended from time to time), and other laws, whether now in existence or enacted in the future.

               (5) Borrower’s and Guarantor’s indemnification obligations hereunder shall be one of strict liability and shall be enforceable without regard to any fault or knowledge of Borrower or Guarantor with respect to any act or omission or condition or event which is the basis of the claim under such indemnification obligation. Borrower’s and Guarantor’s obligation under this Paragraph shall not be limited to any extent by the term of the Note or other obligations secured hereby, and such obligation shall continue, survive and remain in full force and effect notwithstanding payment in full or other satisfaction or release therefrom but shall not apply to the gross negligence or willful misconduct of Lender or events arising after foreclosure or deed in lieu of foreclosure. The provisions of this Paragraph shall be deemed to survive and continue in full force and effect after any foreclosure or other proceeding by which the Lender, and its successors and assigns succeed to ownership of the Property.

               (6) Those liabilities, losses, claims, damages and expenses for which Lender is indemnified under this Paragraph shall be reimbursable to Lender at Lender’s option to make payments with respect thereto, without any requirement of waiting for the ultimate outcome of any litigation, claim or other proceeding, and Borrower and Guarantor shall, jointly and severally, pay such liability, losses, claims, damages and expenses to Lender as so incurred within thirty (30) days after notice from Lender itemizing the amounts incurred to the date of such notice. In addition to any remedy available for failure to periodically pay such amounts, such amounts shall after such thirty (30) day period bear interest at the “Default Rate” as defined in the Loan Documents.

               (7) Borrower and Guarantor waive any acceptance of this indemnity by Lender. The failure of Lender to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against Lender, nor excuse Borrower from their obligations hereunder. Any waiver of such right or remedy must be in writing and signed by Lender. This indemnity is subject to enforcement at law and/or equity, including actions for damages and/or specific performance.

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               (8) Lender shall have the right, in its sole discretion, to require Borrower to periodically perform (at Borrower’s and Guarantor’s expense) an environmental audit (if Lender reasonably suspects the presence of Hazardous Substances or violation of Environmental Laws, if a notice of violation is sent by any governmental authority, or if any governmental authority, including those regulating financial institutions, should require such) and, if deemed necessary by Lender due to the foregoing, an environmental risk assessment, each of which must be satisfactory to Lender in its sole discretion, of the Property, hazardous waste management practices and/or hazardous waste disposal sites used by Borrower. Such audit and/or risk assessment must be by an environmental consultant satisfactory to Lender. Should Borrower fail to perform such environmental audit or risk assessment within 30 days of the Lender’s written request, Lender shall have the right but not the obligation to retain an environmental consultant to perform such environmental audit or risk assessment. All costs and expenses incurred by Lender in the exercise of such rights shall bear interest at the default rate set forth in the Note and shall be secured by the Mortgage and shall be payable by Borrower and Guarantor upon demand or charged to Borrower’s loan balance at the discretion of the Lender.

               (9) Any breach of warranty, representation or agreement contained in this Paragraph shall be an Event of Default hereunder and shall entitle Lender to exercise any and all remedies provided in the Mortgage, or otherwise permitted by law. The warranties, representations, and indemnities made by Borrower and/or any Guarantor in this Loan Agreement shall survive satisfaction of the Note and Mortgage.

               (10) Notwithstanding the foregoing, each of the foregoing representations are qualified to the extent that Borrower has provided Lender with written information, such as an environmental audit disclosing any environmental conditions.

          (q)  Financial Information . All financial information which has been and will be delivered to Lender in connection with the Loan or pursuant to the Loan Documents, including all information relating to the financial condition of Borrower, or any of its partners or shareholders, and Guarantor, fairly and accurately represents the financial condition that is being reported. All such information was prepared in accordance with generally accepted accounting principles consistently applied, unless otherwise noted. There has been no material adverse change in any financial condition reported at any time to Lender that would result in a violation of the financial covenants applicable to such party. Borrower and Guarantor shall be required to execute and deliver to Lender attestation forms as to all financial statements provided to the Lender, which said attestation forms shall be executed by an authorized officer of the Borrower and Guarantor, respectively.

          (r)  Accuracy . All reports, documents, instruments, information and forms of evidence which have been delivered to Lender concerning the Loan or required by the Loan Documents are accurate, correct and sufficiently complete in all material respects to give Lender true and accurate knowledge of their subject matter. None of them contains any misrepresentation or omission.

          (s)  Taxes . Borrower has, prior to delinquency, duly filed, paid and/or discharged all taxes or other claims that may become a lien on any Property, except to the extent that such items are being appropriately contested in good faith and an adequate reserve for the

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payment thereof is being maintained. With regard to any other property or assets not subject to this Loan, the nonpayment by Borrower or Guarantor of taxes or other claims that may be come a lien on such other property or assets will not have a material adverse effect on the financial covenants made by Borrower or Guarantor in this Loan Agreement.

          (t)  Interest Rate Swap Security . During the term of the Loan, Borrower will be provided with an option to hedge the Loan’s floating interest expense by entering into a future interest rate swap (the “Swap”) with Lender contemporaneously with the closing of the Loan, pursuant to which Borrower would receive the amount necessary to pay the interest expense due under the Loan (exclusive of default interest or other adjustments provided for in the Loan Documents) and would pay the amount that would be equal to the interest that would accrue on the Loan at a fixed rate. Lender will provide this Swap to Borrower upon mutually agreeable terms. The actual rate of the Swap would be subject to market conditions at the time the Swap is consummated. The Swap would be governed by an ISDA Master Agreement and secured by the Collateral described in the Loan Documents.. In the event that the Borrower exercises the Swap with Lender and in the event of prepayment in whole or in part of the Loan, the Swap must be unwound and a “breakage fee” may be due and payable to Lender.

          (u)  Ownership of Borrower . The Borrower is owned and controlled by Guarantor, which in turn is owned and controlled by Levitt Corporation.

ARTICLE VIII.

COVENANTS AND FURTHER AGREEMENTS OF BORROWER

     Borrower hereby covenants and agrees with Lender as follows:

     1.  Loan Documents . To duly and punctually perform, observe and comply with all of the terms, provisions, conditions, covenants and agreements on its part to be performed, observed and complied with hereunder and under the Loan Documents and any other documents and instruments delivered to Lender in connection herewith. Borrower will not suffer or permit any default or Event of Default to exist hereunder or thereunder. Borrower will promptly give notice in writing to Lender (a) of the occurrence of any material litigation or proceeding affecting Borrower and whether or not Borrower’s liability, if any, is covered by insurance, and (b) of any dispute between Borrower and any governmental or regulatory body or any other party, which dispute may materially interfere with Borrower’s normal operations or with construction of the Improvements.

     2.  Insurance . Borrower will procure for, deliver copies of and original certificates of and maintain for the benefit of Lender during the life of the Mortgage, insurance policies in such amounts as Lender shall reasonably require in accordance with the terms of the Mortgage and required by the Loan Documents.

     3.  Collection of Insurance Proceeds . To cooperate with Lender in obtaining for Lender the benefits of any insurance or other proceeds lawfully or equitably payable to Borrower or Lender in connection with the transactions contemplated hereby and in paying any indebtedness or obligation of Borrower to Lender incurred hereunder (including the payment by

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Borrower of the expense of an independent appraisal on behalf of Lender in case of a fire or other casualty affecting the Property).

     4.  Ad Valorem Tax and Assessments . If required by Lender, after the occurrence of and during the continuance of any Default or if required by regulatory requirements, Borrower will pay to Lender on the first (1st) day of each month, together with and in addition to the regular installment of interest and principal and until the Note is fully paid, an amount equal to one-twelfth (1/12th) of the estimated ad valorem real estate taxes to enable Lender to pay such taxes when due. Such added payments shall not be nor be deemed to be trust funds, but may be commingled with the general funds of Lender and Lender shall not pay interest on them. At the option of Lender, such added payments may be carried as a debit item on Lender’s books and accounts. Taxes and assessments for the Property shall be escrowed with the Lender in accordance with the terms of the Mortgage.

     Upon demand of Lender, Borrower agrees to deliver to Lender such additional sums as are necessary to make up any deficiencies in the amounts necessary to enable Lender to pay such real estate taxes. Lender shall have no responsibility for payment of any premium for taxes hereunder, except to the extent that funds are deposited by Borrower with Lender hereunder. In the event of a default by Borrower in the performance of any of the terms, covenants and conditions in the Mortgage, this Loan Agreement or the Note, Lender may, at Lender’s option, apply any amount then held by Lender under this paragraph to the reduction of the indebtedness secured in the Mortgage.

     If Lender does not require the aforementioned escrow, Borrower shall pay such taxes before such become delinquent and shall submit proof, on an annual basis, but no later than ten (10) days after written request from Lender.

     5.  Application of Loan Proceeds . Borrower shall be permitted to use the proceeds under the Loan for any lawful business activities conducted by Borrower in the normal course of Borrower’s real estate business in accordance with the terms and conditions of this Loan Agreement.

     6.  Interest and Other Reserves . Intentionally Omitted.

     7.  Expenses . To pay all costs of closing the Loan and incurred during the term of the Loan and all expenses of Lender with respect thereto, including but not limited to fees of Lender’s Inspector, the disbursing agent, reasonable attorneys’ fees and costs (including attorneys’ fees and costs incurred by Lender subsequent to the closing of the Loan in connection with the disbursement, administration, collection, restructure, amendment or transfer of the Loan), advances, recording expenses, surveys, title insurance premiums, intangible taxes, documentary stamps, sales taxes, surtax and other revenue fees, escrow fees, tax service and flood certification fees, and Engineer’s costs and inspection fees, expenses of foreclosure (including attorneys’ fees and costs); in the Loan and Letters of Credit by the Lender, and similar items, and to allow all closing papers, Loan Documents and other legal matters to be subject to the approval of Lender’s attorneys. Under no circumstances will Lender pay to any third party any mortgage brokerage or other fees incurred in connection with this Loan and Borrower covenants and agrees to indemnify Lender and hold Lender harmless from any and all

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such claims for fees or commissions by third parties. Further, Borrower agrees to pay all of Lender’s costs and attorneys’ fees, including all appellate litigation, involving any of such claims.

     8.  Borrower’s Equity Requirement . Intentionally Omitted.

     9.  General Construction Requirements . Good workmanship and quality materials shall be utilized. Quality of construction, consistent with the caliber of the Improvements and customary building practices and industry standards, is of the essence. Borrower shall supply such sums of money and perform such duties as may be necessary to complete the construction of the Improvements pursuant to the approved Plans and Specifications and in full compliance with all terms and conditions of the Loan Documents without liens, claims or assessments (actual or contingent) asserted against the Property for any material, labor or other items furnished in connection therewith, and all in full compliance with Florida law, and further in compliance with all construction, use, building, zoning and other similar requirements of any pertinent governmental authority. Borrower will provide to Lender evidence of satisfactory compliance with all of such requirements upon request therefore by Lender. Completion of construction shall include, but not be limited to, lot grading, and adequate sewer, water, electrical, gas, telephone and other utility facilities at the boundary of the Lot.

     10.  Access . The rights-of-way for all roads necessary for the full utilization of any existing Improvements for their intended purposes, and sufficient to provide legal access to all undeveloped Parcels have either been acquired by the master property owners association or appropriate governmental authority or have been dedicated to public use and accepted by such master property owners association or governmental authority (or are the subject of permanent easements for ingress and egress, in form and substance satisfactory to Lender).

     11.  Right of Lender to Inspect Property and Review Plans for any Land Under Development . With regard to any Land Under Development, Lender and its representatives and agents and any Lender’s construction inspector shall be permitted to enter upon the Property regardless of whether such inspection is related to a specific Requisition, and to cooperate and cause each Contractor, if any, to cooperate with Lender and its representatives and agents and Lender’s Inspector during such inspections (including making available to Lender working copies of the Plans and Specifications together with all related supplementary materials); provided, however, that this provision shall not be deemed to impose upon Lender any obligation to undertake such inspections. Lender may, in Lender’s sole discretion, designate a construction Inspector to perform various services on behalf of Lender. The reasonable costs of these services shall be charged to and shall be paid by Borrower. The services performed by Lender’s Inspector include but are not limited to review of the Plans and Specifications, review of any and all other documents in the possession or control of Borrower and all proposed changes to them, inspection of construction work for the proposed Improvements and approval of requests for Loan disbursements.

     12.  Changes in Plans and Specifications for Land Under Development .

          (a) Borrower must obtain from the appropriate persons or entities all approvals of any changes in the plans, specifications, work, materials or contracts that are

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required for any Land Under Development by any applicable laws, statutes or regulations, or by any restrictive covenants encumbering the Property, or under the terms of any lease, loan commitment or other agreement relating to the Property.

          (b) Lender may take such time as is reasonable to evaluate any requests for proposed changes in the Plans and Specifications for any Land Under Development, and may require that all other approvals required from other parties be obtained before it reviews any requested change. Lender may approve or disapprove changes in the exercise of its reasonable judgment. Borrower acknowledges that delays may result as a result of such time for approval by Lender, and Borrower agrees that Lender shall not be liable for such delays and Borrower hold Lender harmless from and against any claims, demands, damages, costs and expenses arising from such delay.

     13.  Correction of Defects . For any Land Under Development, to promptly correct any defect in the Improvements or any material departure from the Plans and Specifications not permitted herein which has not been approved previously by Lender. The advance of any Loan proceeds shall not constitute a waiver of Lender’s right to require compliance with this covenant.

     14.  Sign Regarding Financing . During the development of any Improvements, and to the extent permitted by the applicable ordinances and/or other restrictions, to promptly erect and maintain on the Property, on a site suitable to Lender, a sign provided by Lender at Lender’s expense, indicating that Lender is providing financing, all to Lender’s satisfaction, and to prevent the destruction or removal of said sign without Lender’s prior written approval.

     15.  Books and Records . To keep and maintain proper and accurate books, records and accounts reflecting all items of income and expense of Borrower in connection with the Property and the construction thereon; and upon the request of Lender, to make such books, records and accounts immediately available to Lender, upon reasonable notice, for inspection or independent audit. Such inspection shall take place in Borrower’s offices during normal business hours.

     16.  Notification by Borrower . Borrower shall promptly notify Lender in writing of:

          (a) any litigation affecting Borrower, with amounts at issue of greater than $50,000.00 or which seek attachment, levy, or foreclosure against any of the Property; or

          (b) any written communication that Borrower may receive from any governmental, judicial or legal authority, giving notice of any claim or assertion that the Land or the Improvements fail in any respect to comply with any applicable governmental law, regulation, ordinance or guidance;

          (c) any material adverse change in the physical condition of the Property (including any damage suffered as a result of storms or floods) or the financial condition or operations of Borrower or either Guarantor;

          (d) any actual or proposed condemnation or taking for public or private use which affects all or part of the Property or any interest in it;

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          (e) any actual or threatened exercise by any third party of any right or remedy on account of any default or alleged default of Borrower under or with respect to any loan, contract or agreement to which Borrower is a party, and which could have a material adverse effect upon Borrower or the Property; and

          (f) any actual or proposed change in Borrower’s name or any trade name in which it does business.

     17.  Keeping Guarantor Informed . Borrower shall keep Guarantor informed of Borrower’s financial condition and business operations, the condition and all uses of the Property; including all changes in condition or use, and all other circumstances which may affect Borrower’s ability to pay and perform its obligations under the Loan Documents. Guarantor acknowledges and agrees that the Borrower’s failure to comply with the terms of this paragraph shall not limit, abrogate or diminish, or constitute a defense to, the Guarantor’s liability to Lender under the guaranty or the other Loan Documents.

     18.  Financial and Operating Statements .

          (a) Borrower and Guarantor shall deliver to Lender, within thirty (30) days after the close of each quarter, company prepared financial statements reflecting their operations during such fiscal quarter, including, without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules; all on a consolidated and consolidating basis and in reasonable detail.

          (b) Borrower shall deliver to Lender, within one hundred twenty (120) days after the close of its fiscal year, company prepared financial statements reflecting its operations during such fiscal year, including, without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules; all on a consolidated and consolidating basis and in reasonable detail. Guarantor shall deliver to Wachovia, within one hundred twenty (120) days after the close of its fiscal year, audited financial statements reflecting its operations during such fiscal quarter, including, without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules; all on a consolidated and consolidating basis and in reasonable detail.

          (c) Borrower and Guarantor shall deliver to Lender, within thirty (30) days of filing, complete copies of federal and state tax returns, as applicable if not filed on a consolidated basis, each of which shall be signed and certified by Borrower or Guarantor to be true and complete copies of such returns. In the event an extension is filed, Borrower or Guarantor shall deliver a copy of the extension within thirty (30) days of filing. Notwithstanding the foregoing and in lieu thereof, Guarantor may deliver to Lender, within thirty (30) days of filing, copies of the applicable pages of the federal and state tax returns of the consolidated tax return of its parent, Levitt Corporation, relating to the Guarantor.

          (d) Within ten (10) days of the end of each month, the Borrower shall provide to the Lender a Lot Contracts Report for any Land Under Development and Undeveloped Land Owned by Borrower and Under Contract for Sale to include among other things: sales, closings, contracts, reservations, deposits, or additional documentation as required by the Lender in form

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and substance satisfactory to the Lender. Each statement must contain a certification to the Bank of the statement’s accuracy and completeness signed by an authorized officer as applicable.

          (e) Within ten (10) days of the end of each month, the Borrower shall provide to Lender, (i) a Borrowing Base Report, (ii) an Inventory Report, (iii) a Work in Progress Report and (iv) a report setting forth an advance availability calculation and Financial Covenant calculation (all substantially in the form attached hereto as Composite Exhibit “C” ). Each statement must contain a certification to the Bank of the statement’s accuracy and completeness signed by an authorized officer as applicable.

          (f) Borrower and Guarantor shall be required on a quarterly basis to provide to Lender a “Compliance Certificate” in a form satisfactory to Lender, which shall be signed by its chief financial officer, certifying that Borrower and Guarantor are in full compliance with all Financial Covenants hereinafter required. Said Compliance Certificate shall show the actual calculations for each covenant as applicable.

     All financial reporting is to be prepared in a form and substance acceptable to the Lender. Each statement shall bear an authorized signature of an authorized officer of Borrower and each Guarantor attesting to the Lender the accuracy of the statement.

     19.  Monthly Inventory Reports for Residential Developments . Borrower shall provide monthly inventory reports to Lender on all residential communities of the Borrower and its subsidiaries and partnerships now existing or hereinafter formed, including any residential developments not funded under this Revolving Loan.

     20.  Bank Accounts . During the term of the Loan, Borrower shall maintain the following accounts with Lender:

          (a) its primary operating account; and

          (b) a demand deposit account into which all Loan advances shall be deposited or credited.

     21.  Financial Covenants . The Borrower and Guarantor shall at all times comply with the following financial covenants, conditions and requirements (collectively, the “Financial Covenants” each a “Financial Covenant”):

          (a)  Asset Liquidity . At all times during the term of the Loan (and until such time as all of the Borrower’s and Guarantor’s obligations under the Loan Documents have been fully paid and satisfied), Guarantor shall maintain unencumbered and unrestricted liquid assets (in the