UNITED HOMES INC, S-1, 1997-08-19

UNITED HOMES INC
S-1, 1997-08-19

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
------------------------

UNITED HOMES, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
ILLINOIS 1520 36-3978181
(State or other jurisdiction (Primary Standard Industrial (I.R.S.Employer
of incorporation or Classification Code Number) Identification
organization) Number)
</TABLE>

DAVID L. FELTMAN
VICE PRESIDENT, GENERAL COUNSEL
2100 GOLF ROAD, SUITE 110
ROLLING MEADOWS, ILLINOIS 60008
(847) 427-2450

(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

------------------------

WITH COPIES TO:

MICHAEL J. CHOATE, ESQ. DANIEL A. YARANO, ESQ.
Shefsky & Froelich Ltd. Fredrikson & Byron, P.A.
444 North Michigan Avenue 1100 International Center
Suite 2500 900 Second Avenue South
Chicago, Illinois 60611 Suite 1100
(312) 836-4066 Minneapolis, Minnesota 55402-3397
(612) 347-7149

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
AMOUNT OF PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF DEBENTURES TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED DEBENTURE(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
___% Mandatory Redemption Debentures
due March 15, 2005................. 6,000 $1,000 $6,000,000 $1,819
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
UNITED HOMES, INC.

CROSS REFERENCE SHEET SHOWING LOCATION IN THE PROSPECTUS OF

INFORMATION REQUIRED BY ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM LOCATION IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus........................... Outside Front Cover Page

2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Outside Front Cover page; Outside Back Cover Page;
Additional Information

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges.......................... Outside Front Cover Page; Prospectus Summary; Risk
Factors

4. Determination of Offering Price...................... *

5. Use of Proceeds...................................... Prospectus Summary, Use of Proceeds

6. Dilution............................................. *

7. Selling Security Holders............................. *

8. Plan of Distribution................................. Outside Front Cover Page; Underwriting

9. Description of Securities to be Registered........... Prospectus Summary; Dividend Policy; Description of
Securities

10. Interest of Named Experts and Counsel................ *

11. Information with Respect to Registrant............... Prospectus Summary; Dividend Policy; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Management; Certain
Transactions; Underwriting; Selected Consolidated
Financial Data

12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities..................... *
</TABLE>

- ------------------------

* Not Applicable

i
<PAGE>
SUBJECT TO COMPLETION, DATED , 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[UNITED LOGO]

$6,000,000

UNITED HOMES, INC.

___% MANDATORY REDEMPTION DEBENTURES
DUE MARCH 15, 2005
------------------

United Homes, Inc. ("United") is hereby offering $6,000,000 aggregate
principal amount of its __% Mandatory Redemption Debentures which will mature on
March 15, 2005 (the "Debentures").

Interest on the Debentures will accrue from their date of original issuance
and will be payable quarterly on December 15, March 15, June 15 and September 15
of each year, commencing on December 15, 1997. The Debentures initially will be
issued in denominations of $1,000 each, or any integral multiple thereof.

United must redeem a portion of the Debentures on or before September 15,
1999. Commencing on or before September 15, 1999 and on each September 15 and
March 15 thereafter, United will pay the Trustee sufficient cash to redeem 8.33%
of the original principal amount of the Debentures on each redemption date. The
Debentures are redeemable, at United's option, in whole or in part, upon at
least 30 days' notice, at any time beginning December 15, 1997 at the redemption
prices set forth herein plus accrued interest to the date of redemption. The
Debentures to be redeemed will be selected by the Trustee by lot or other
similar method.

The Debentures will be unsecured obligations of United and will rank equally
and ratably with all other unsecured indebtedness of United. The Debentures are
not guaranteed by, or otherwise an obligation of, any of United's subsidiaries.
As of June 30, 1997, United and its operating subsidiaries had approximately
$85.0 million of outstanding liabilities, including approximately $70.2 million
of secured indebtedness.
------------------------

AN INVESTMENT IN THE DEBENTURES INVOLVES A HIGH DEGREE OF RISK. THERE IS NO
EXISTING PUBLIC MARKET FOR THE DEBENTURES AND THERE CAN BE NO ASSURANCE
THAT A PUBLIC MARKET WILL DEVELOP. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNT AND NET PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
<S> <C> <C> <C>
PER DEBENTURE............................................ $1,000 $70 $930
TOTAL.................................................... $6,000,000 $420,000 $5,580,000
</TABLE>

(1) Each Debenture will be offered at par with payment for interest accruing
from the Closing Date or, with respect to Debentures sold after a quarterly
interest payment date, the most recent quarterly interest payment date. The
Company is not required to sell any minimum aggregate principal amount of
Debentures. See "Underwriting."

(2) The Company has granted the Underwriter the exclusive right to sell the
Debentures on a "best efforts" basis for a period of six months, subject to
termination or extension in certain circumstances. The Company has agreed to
pay the Underwriter an Underwriting Discount and Commission equal to 7%, a
management fee equal to 2%, and a non-accountable expense allowance equal to
1% of the Total Price to Public and to reimburse the underwriter for
accountable expenses up to $120,000. The Company has agreed to indemnify the
Underwriter against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."

(3) The amount of the net proceeds to the Company is determined by assuming all
of the Debentures offered hereby are sold and by deducting the Underwriting
Discount and Commissions ($420,000), management fees ($120,000),
non-accountable expense allowance ($60,000) and accountable expense
reimbursements (not to exceed $120,000) as well as deducting the expenses of
this offering payable by the Company, estimated at approximately $188,000.
------------------------------

MILLER & SCHROEDER FINANCIAL, INC.

The date of this Prospectus is , 1997.

2
<PAGE>
MAP
MAPS INDICATE THE LOCATION OF THE COMPANY'S
DEVELOPMENTS IN ARIZONA, ILLINOIS AND MICHIGAN.

3
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS
UNITED HOMES, INC. ("UNITED"), AND UNITED'S WHOLLY-OWNED SUBSIDIARIES UNITED
HOMES OF ILLINOIS, INC.; UNITED HOMES OF MICHIGAN, INC.; AND UNITED HOMES, INC.,
AN ARIZONA CORPORATION (INDIVIDUALLY, A "SUBSIDIARY," COLLECTIVELY THE
"SUBSIDIARIES"). UNITED WAS FORMED IN 1994 TO CARRY ON THE HOMEBUILDING
ACTIVITIES OF UNITED'S PARENT CORPORATION UNITED DEVELOPMENT MANAGEMENT COMPANY
(THE "PARENT"). UNITED IS A WHOLLY-OWNED SUBSIDIARY OF THE PARENT. STATISTICAL
AND OTHER INFORMATION CONTAINED HEREIN REGARDING THE COMPANY'S HOMEBUILDING
ACTIVITIES INCLUDE THE HOMEBUILDING ACTIVITIES OF THE PARENT SINCE 1982.

THE COMPANY

The Company is a fully-integrated land development and homebuilding company
operating in the Chicago, Phoenix and western Michigan markets and since 1982
has developed over 7,300 lots and has built and closed over 6,100 homes. The
Company acquires undeveloped land and develops it into finished lots for
residential subdivisions, and periodically options or purchases finished lots
from third parties, primarily for the construction and sale of homes. The
Company maintains an inventory of potential home sites (lots) by controlling
undeveloped and developed land through options, contingent purchase agreements,
joint ventures, partnerships and other contractual relationships with landowners
("Acquisition Agreements"). The Company believes that this strategy allows it to
control sites for future development and at the same time maximize use of its
available capital. For the nine months ended June 30, 1997, the Company closed
on the sale of 280 homes generating approximately $51.0 million in revenue from
housing and land sales as compared to 205 homes generating approximately $35.0
million in revenue from housing and land sales for the nine months ended June
30, 1996. As of June 30, 1997, the Company had contracts to sell an additional
425 homes and a current inventory of 739 lots on which the Company anticipates
developing and selling 739 homes. Additionally, the Company controlled eight
parcels of land under the Acquisition Agreements for future development of an
estimated 3,314 homes.

Prices for the Company's homes, including the lot, range from $110,000 to
$400,000 per home. During the first nine months of fiscal 1997, the average
price for a home sold by the Company was approximately $202,000. The Company
markets its products to entry-level, first and second move-up, and empty-nest
buyers by emphasizing the community atmosphere of its residential subdivisions,
as well as those characteristics that the Company believes that its homes
possess: desirable designs, quality construction and competitive prices.

United, which is an Illinois corporation, has its principal office at 2100
Golf Road, Suite 110, Rolling Meadows, Illinois 60008. Its telephone number is
847-427-2450.

THE OFFERING

<TABLE>
<S> <C>
Securities Offered................ $6,000,000 aggregate principal amount of ___% Mandatory
Redemption Debentures, due March 15, 2005 to be issued
pursuant to an Indenture (the "Indenture") between the
Company and National City Bank of Minneapolis (the
"Trustee") only in fully registered form in
denominations of $1,000 each, or any integral multiple
thereof. See "Description of Securities."

Interest Payment Dates............ Interest will accrue from the date of original issuance
and will be payable quarterly on December 15, March 15,
June 15 and September 15 of each year ("Interest Payment
Date"), commencing on December 15, 1997.
</TABLE>

3
<PAGE>

<TABLE>
<S> <C>
Mandatory Redemptions............. The Debentures will be subject to mandatory redemption
beginning September 15, 1999. On or before September 15,
1999 and on each September 15 and March 15 thereafter
through September 15, 2004, United will pay to the
Trustee cash sufficient to redeem 8.33% of the original
principal amount of the Debentures on the redemption
date. On or before March 15, 2005, United will pay to
the Trustee cash sufficient to redeem all remaining
outstanding Debentures. Debentures to be redeemed will
be selected by the Trustee by lot or other similar
method. See "Description of Securities--Mandatory
Redemption."

Optional Redemptions.............. United may, at its option, redeem Debentures on any
Interest Payment Date in minimum aggregate amounts of
$100,000 at a price equal to par plus accrued interest
and a premium. If an optional redemption occurs on or
before September 15, 1998, a 5% premium will be due.
After such date, the premium due will decline at the
rate of 1% per year, with no premium due after September
15, 2002. United may, at its option, elect to have any
optional redemption payment applied to the next
mandatory redemption payment or payments. See
"Description of Securities--Optional Redemption."

Rank.............................. The Debentures will be unsecured obligations of United
and will rank equally and ratably with all other
unsecured indebtedness of United. The Debentures are not
guaranteed by, or otherwise an obligation of, any
Subsidiary. As of June 30, 1997, the Company had
outstanding liabilities of $85.0 million (including
$70.2 million of secured indebtedness).

Use of Proceeds................... United intends to use the net proceeds from the sale of
the Debentures, estimated to be approximately $5,092,000
assuming all of the Debentures are sold, to repay
indebtedness outstanding under its Construction Lines as
defined herein, as well as for general corporate
purposes, including land acquisition, land development,
construction of homes, purchase of minority investors
interest in partnerships and for working capital. See
"Use of Proceeds."

Certain Covenants................. United has agreed to comply with certain financial
covenants as set forth in the Indenture. See
"Description of Securities."
</TABLE>

RISK FACTORS

An investment in the Debentures involves certain risks. See "Risk Factors"
for a discussion of factors that investors should carefully consider before
purchasing any of the Debentures offered hereby.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)

The following summary of the Company's consolidated financial information
should be read in conjunction with the Consolidated Financial Statements,
including the notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEAR
ENDED JUNE 30, ENDED SEPTEMBER 30,
-------------------- -------------------------------
1997 1996 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................... $ 51,608 $ 34,991 $ 65,117 $ 44,349 $ 32,886
Gross Profit........................................... 9,855 6,928 11,330 8,004 6,579
Operating Income....................................... 1,575 1,406 1,785 1,512 1,169
Other Income (Expense), Net............................ (465) (375) (735) (70) --
--------- --------- --------- --------- ---------
Income before Taxes.................................... $ 1,110 $ 1,031 $ 1,050 $ 1,442 $ 1,169
--------- --------- --------- --------- ---------
Number of Homes Closed................................. 310(4) 205 378 267 174
Average Selling Price per Home......................... $ 179 $ 171 $ 172 $ 166 $ 189
--------- --------- --------- --------- ---------
Ratio of Earnings to Fixed Charges(1)...................... (3) 1.30 (3) 1.14 2.45
Ratio of Earnings to Adjusted Fixed Charges(2)............. 1.06 4.21 1.70 1.51 2.45
</TABLE>

- ------------------------
(1) In calculating the ratio of earnings to fixed charges, earnings consist of
income before minority interests, income tax and fixed charges, less
capitalized interest, plus the interest component included in cost of
sales. Fixed charges consist of interest expended and capitalized and
amortization of debt service costs. The interest factor implicit in rent
expense is not significant.

(2) Represents the amount of fixed charges reduced by the amount of interest
funded through draws on the Company's revolving lines of credit.

(3) Earnings were inadequate to cover fixed charges by approximately $209,000
for the year ended September 30, 1996 and by approximately $1,496,000 for
the nine months ended June 30, 1997.

(4) Includes the sale of 30 lots at an average price of $46,000 per lot.

<TABLE>
<CAPTION>
AS OF
JUNE 30, 1997 AS OF
---------------------- SEPTEMBER 30,
AS -------------------------------
SELECTED BALANCE SHEET DATA: ADJUSTED(6) ACTUAL 1996 1995 1994
----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Housing Inventories...................... $ 80,420 $ 80,420 $ 54,588 $ 28,796 $ 21,143
Total Assets............................. $ 95,727(7) $ 94,819 $ 69,931 $ 34,365 $ 26,779
Total Liabilities (excluding
Debentures)............................ $ 78,465 $ 83,557 $ 58,699 $ 22,909 $ 18,825
Debentures............................... $ 6,000 -- -- -- --
Investor's Equity in Majority-Owned
Projects(5)............................ $ 1,467 $ 1,467 $ 2,165 $ 3,037 $ 400
Stockholder's Equity..................... $ 9,795 $ 9,795 $ 9,067 $ 8,419 $ 7,554
</TABLE>

- ------------------------
(5) Represents the equity of investors in majority owned projects.

(6) Adjusted to give effect to the sale of all of the Debentures offered hereby
and the application of the net proceeds as of June 30, 1997. See "Use of
Proceeds" and "Underwriting."

(7) The increase includes the estimated costs of the offering estimate at an
aggregate of $908,000 which are paid currently but are capitalized and
amortized over the life of the Debentures.

5
<PAGE>
RISK FACTORS

THE DEBENTURES INVOLVE A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CONSIDER
CAREFULLY THE FOLLOWING RISK FACTORS BEFORE PURCHASING THE DEBENTURES. CERTAIN
STATEMENTS IN THIS PROSPECTUS THAT ARE NOT HISTORICAL FACTS CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, SECTION 27A OF THE SECURITIES ACT AND SECTION 21E
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE
MATERIAL SET FORTH UNDER THIS SECTION AND UNDER "PROSPECTUS SUMMARY,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," AND "BUSINESS," AS WELL AS WITHIN THE PROSPECTUS GENERALLY. IN
ADDITION, WHEN USED IN THE PROSPECTUS THE WORDS "BELIEVES," "INTENDS,"
"ANTICIPATES," "EXPECTS" "SEEKS" AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO A NUMBER OF
RISKS AND UNCERTAINTIES, INCLUDING WITHOUT LIMITATION THE FOLLOWING: CYCLICALITY
OF THE HOME BUILDING INDUSTRY, PRICE FLUCTUATIONS OF MATERIALS, ADVERSE ECONOMIC
CONDITIONS, INABILITY TO SUCCESSFULLY ACCESS CAPITAL AND THE RISK THAT THE
COMPANY WILL FACE DIFFICULTIES IN CONTROLLING OPERATIONS IN DIVERSE GEOGRAPHIC
LOCATIONS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH IN THIS
SECTION AND THE MATTERS SET FORTH IN THE PROSPECTUS GENERALLY. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE THE RESULT OF ANY REVISIONS TO
THESE FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT ANY FUTURE EVENTS
OR CIRCUMSTANCES.

SUBSTANTIAL LEVERAGE, RELIANCE ON FINANCING AND NO ASSURANCE OF AVAILABILITY OF
CREDIT

The land development and homebuilding business is capital intensive. The
Company has incurred a substantial amount of indebtedness to finance its capital
needs. As of June 30, 1997, the Company had $85.0 million of outstanding
liabilities, including $70.2 million of secured indebtedness. Further, the
Company's earnings were inadequate to cover fixed charges by approximately
$212,000 and $1,496,000 for the fiscal year ended September 30, 1996 and the
nine months ended June 30, 1997, respectively. Although the Company believes
that internally generated funds, the net proceeds from the Debentures and the
Company's available borrowings under its credit facilities will be sufficient to
meet its reasonably anticipated needs for working capital, liquidity and debt
service on the Debentures, there can be no assurance that these sources will
prove sufficient. The Company may be required to seek additional capital,
particularly if these sources prove to be insufficient and there can be no
assurance that additional capital, either in the form of equity or debt, will be
available on terms and conditions acceptable to the Company, if at all.

The Company's ability to meet its debt service obligations is dependent upon
the future performance of the Company, which, in turn, is subject to general
economic conditions as to financial, competitive, business and other factors,
including factors beyond the Company's control. The level of the Company's
leverage could restrict its flexibility in responding to changing business and
economic conditions. If the Company is at any time unable to generate sufficient
cash flow from operations or borrow under its existing credit facilities to
service its debt, it may be required to seek refinancing for all or a portion of
that debt or to obtain additional financing. There can be no assurance that any
such refinancing would be possible or that any additional financing could be
obtained on terms that are favorable or acceptable to the Company, if at all.

LACK OF COLLATERAL

United's obligations under the Indenture are not secured by any of United's
assets. As of June 30, 1997, the Company had approximately $85.0 million of
outstanding liabilities, including approximately $70.2 million of secured
indebtedness. Creditors who have a security interest in a particular asset have
a right ranking ahead of the holders of the Debentures with respect to that
asset. Further, United's homebuilding operations are conducted entirely through
the Subsidiaries. Accordingly, United derives its operating income and cash flow
from these Subsidiaries, and relies on the Subsidiaries to generate the

6
<PAGE>
funds necessary to meet its obligations, including its obligations to pay
principal and interest on the Debentures. The ability of the Subsidiaries to pay
dividends or otherwise make payments to United is subject to, among other
things, applicable state law and restrictions imposed on the Subsidiaries by
their respective creditors. The Indenture will not limit the ability of the
Subsidiaries to incur such restrictions in the future. Further, the right of
United to participate in the assets of any Subsidiary (and thus the ability of
the holders of the Debentures to benefit indirectly from these assets) are
generally subject to the prior claims of creditors, including trade creditors,
of that Subsidiary except to the extent that United is recognized as a creditor
of such Subsidiary, in which case United's claims would still be subject to any
security interest holders or other creditors of that Subsidiary. The Debentures,
therefore, will be structurally subordinated to creditors, including trade
creditors of the Subsidiaries.

In the event of the dissolution, winding up, liquidation or bankruptcy of
United, the holders of the Debentures will not be entitled to receive any
payment until the holders of secured indebtedness receive payment or
distributions in respect of the assets collateralizing their debt. Upon the
occurrence of any payment default on secured indebtedness, proceeds from the
assets collateralizing the secured indebtedness which is in default may not be
used to satisfy United's obligations on the Debentures. The Indenture does not
limit the amount of secured indebtedness that United may incur. Further, United
has incurred, and will likely incur in the future, secured indebtedness, to
finance the development of its properties and the construction of its homes. See
"Description of Securities."

INTEREST RATES; MORTGAGE FINANCING

In general, the demand for housing is influenced in large part by the
availability of mortgage financing and the ability of prospective purchasers to
finance home purchases since virtually all of the purchasers of the Company's
homes finance their acquisitions through third-party lenders. Increases in
interest rates generally reduce the demand for, and affordability of, mortgage
financing and therefore the demand for the Company's homes. Increases in
interest rates would have a material adverse affect on the Company's results of
operations and financial condition.

CYCLICAL ECONOMIC CONDITIONS

The homebuilding industry is cyclical in nature and is significantly
affected by changes in national and local economic and other conditions, such as
employment levels, availability of financing, interest rates, consumer
confidence and housing demand. Sales of new homes are also affected by market
conditions for resale homes and rental properties. Certain of the markets in
which the Company operates have at times in the past experienced significant
declines in housing demand and there can no assurance that these declines will
not occur in the future. Homebuilders such as the Company also incur substantial
risk due to the fluctuating market value of land, building lots, and housing
inventories. Additionally, the carrying cost of the Company's inventory can be
significant and can result in losses in poorly performing projects or markets.
Homebuilders are also subject to various other risks which may cause
fluctuations in operating results such as competitive over building, shortage of
desirable land with municipal services, availability and cost of materials and
labor, construction delays, cost overruns, weather conditions, government
regulation, availability of adequate financing, changes in mortgage interest
rates and real estate taxes as well as other governmental fees.

FLUCTUATIONS IN OPERATING RESULTS

The Company's operating results fluctuate from time to time based on factors
not entirely within the Company's control. These factors include, among others:
(i) the timing of home closings and land sales; (ii) the Company's ability to
acquire additional land or options thereon on acceptable terms; (iii) the
condition of the real estate market and the general economy in the Company's
markets as well as other markets into which the Company may expand; (iv) the
cyclical nature of the home building industry and changes in prevailing interest
rates and availability of mortgage financing; and (v) cost of material and

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<PAGE>
labor and delays in construction schedules. The Company's gross margins also are
affected by the location and type of lot, as well as the design of the
particular home sold.

RESTRICTIONS IMPOSED BY TERMS OF INDENTURE

The Indenture will restrict United and the Subsidiaries from, among other
things, incurring additional indebtedness, paying excessive dividends or making
certain other restricted payments or investments, consummating certain asset
sales, entering into certain transactions with affiliates, incurring liens, or
merging or consolidating with any other person or selling, assigning,
transferring, conveying or otherwise disposing of all of substantially all of
their respective assets. The Indenture will also impose limitations on United's
ability to restrict the ability of its Subsidiaries to pay dividends or make
certain payments to United or any of the Subsidiaries. In addition, the
Indenture will require United to maintain specified financial ratios and satisfy
certain financial tests. United's ability to meet these ratios and tests may be
affected by events beyond its control, and there can be no assurance that the
United will meet these tests. The Indenture does not, however, prohibit the
Company from entering new markets and United may elect to utilize a portion of
the proceeds from the Debentures to fund expansion into new markets.

NEED TO ACQUIRE LAND FOR FUTURE DEVELOPMENT

The Company's ability to generate revenues in the future depends, in part,
on its ability to acquire or otherwise control an inventory of undeveloped land
while efficiently deploying its available capital. Although the Company attempts
to minimize the amount of capital invested in land parcels, the Company's
inventory of land may, from time to time, exceed the demand for the Company's
products thus limiting the capital available for additional land acquisition. In
pursuing its development activities, the Company may invest significant amounts
of capital to acquire and maintain control of undeveloped land as well as to
apply for regulatory approvals prior to determining whether the Company will
actually develop the land. There can be no assurance that such land will be
developed on acceptable terms and conditions, if at all, or that the Company
will have adequate capital to compete with third parties in acquiring land. See
"Business--Operating Strategy" and "Business--Land Development."

EXTENSIVE REGULATIONS AND ENVIRONMENTAL FACTORS

The homebuilding industry in general, and the Company in particular, is
subject to extensive and complex laws and regulations which cover, among other
things, zoning and density requirements, design and building permits, building
materials, environmental and health issues, advertising and consumer credit,
development, homebuilding and sales activities. These laws and regulations
impact the time required to obtain approvals necessary to begin home
construction and can adversely impact the time between the initial control of
land, commencement of development and completion of construction. The Company is
also subject to a variety of environmental laws and regulations which can affect
its business and its homebuilding projects. The particular environmental laws
and regulations which apply to any given homebuilding site vary greatly
depending on the site's location, environmental condition, present and former
uses of the site as well as adjoining properties. These laws and regulations may
result in additional delays, may cause the Company to incur substantial
compliance and other costs, and may prohibit or severely restrict homebuilding
activity in certain environmentally sensitive areas. See "Business--Governmental
Regulation."

In addition, the Company is subject to laws and regulations governing the
type of materials used in constructing its homes and imposing liability on the
Company for personal injury and worker's compensation claims. Although the
Company maintains insurance against the liability for personal injury and
worker's compensation claims, there can be no assurance that this coverage will
be adequate.

8
<PAGE>
RELIANCE ON SUBCONTRACTORS

With the exception of field supervisors, the Company does not employ its own
development or construction personnel. Instead, the Company depends on
subcontractors and other independent contractors to complete its land
development and home construction activities. There can be no assurances that
the Company will continue to be able to contract for the services of
subcontractors necessary to complete such land development and construction on
reasonable terms, if at all. See "Business--Home Design and Construction."

RELIANCE ON KEY PERSONNEL

The Company relies upon certain key management employees, including United's
Chairman, Virgil W. Owings, and President, Edward F. Havlik. The loss of either
individual's services could have a material adverse effect on the Company's
results of operations and financial condition. The Company believes that its
future success will depend on its ability to retain key members of management
and to attract experienced management in the future. There can be no assurance
that it will be able to do so. The Company does not carry, and will not likely
obtain any key man life insurance on these individuals. See "Management."

COMPETITION

The homebuilding industry is highly competitive and fragmented. Homebuilders
compete for desirable properties, financing, raw materials and skilled labor.
The Company competes for residential sales with other homebuilders, individual
resales of existing homes, available rental housing and, to a lesser extent,
resales of condominiums. The Company's competitors include a number of large
national and regional homebuilding companies (Chicago and Phoenix markets) and
small local homebuilding companies (in all of the Company's markets), some of
which may have greater financial resources, easier access to capital markets or
lower costs than the Company.

CONFLICTS OF INTEREST

From time to time the Company may enter into transactions with affiliates
including the Parent or its shareholders as well as the Company's officers and
directors. There can be no assurance that these transactions will be on terms
and conditions similar to those that may be available with a third party and may
have an unfavorable impact on the Company's results of operation and financial
condition. See "Certain Transactions."

NO PUBLIC MARKET FOR THE DEBENTURES

There is no existing public market for the Debentures, and there can be no
assurance that one will develop or, if a market does develop, that it will
provide sufficient liquidity or will continue in existence until maturity of the
Debentures. Even if a market develops, there can be no assurance that a holder
of the Debentures will be able to sell Debentures on acceptable terms and
conditions, if at all. To the extent that a market develops, future trading
prices of the Debentures will depend on many factors, including, among other
things, prevailing interest rates, the Company's operating results, competitive
factors and the market for similar securities which is subject to numerous
factors, including but not limited to fluctuating interest rates. The Company
does not intend to list the Debentures on any securities exchange or to seek to
have the Debentures authorized for quotation on Nasdaq.

9
<PAGE>
USE OF PROCEEDS

The net proceeds from sale of the Debentures are estimated to be
approximately $5,092,000, assuming the sale of $6,000,000 in aggregate principal
amount of Debentures (the "Maximum Amount").

The Company expects to utilize the net proceeds to repay debt outstanding
under the Heller Line and the Residential Line I (each as defined herein,
collectively the "Construction Lines") as well as for general corporate
purposes, including land acquisition, land development, construction of homes,
purchase of minority investors' interest in partnerships and for working
capital.

Draws on the Heller Line bear interest at a variable rate equal to the
General Electric Capital Corporation Composite Commercial Paper Rate (as defined
in the loan agreement) plus 3.75% per annum (9.4% as of June 30, 1997). Draws on
the Heller Line which are outstanding on May 31, 1998 automatically convert to a
term loan maturing on May 31, 1999. Draws under Residential Line I bear interest
at a variable rate equal to prime plus 1.25% per annum (9.75% as of June 30,
1997). Residential Line I matures on March 14, 2001. The Company may re-borrow
amounts repaid under either line for general corporate purposes including land
acquisition, land development, construction of homes and for working capital.
See "Management's Discussion and Analysis and Results of Operations and
Financial Condition--Financial Condition and Liquidity."

10
<PAGE>
CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at June 30, 1997, and as adjusted to give effect to the sale of the
Debentures (assuming the sale of the Maximum Amount and the application of the
net proceeds therefrom).

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Indebtedness:
Debt due within one year.......................................... $ 8,899 $ 8,899
Debt due after one year (excluding debentures).................... 61,394 56,302
Debentures........................................................ -- 6,000
--------- -----------
Total Indebtedness................................................ $ 70,293 $ 71,201

Total stockholder's equity............................................ $ 9,795 $ 9,795
--------- -----------
Total capitalization.................................................. $ 80,088 $ 80,996
--------- -----------
--------- -----------
</TABLE>

11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of September 30, 1996
and 1995 and for each of the three years in the period ended September 30, 1996
has been derived from the Company's consolidated financial statements audited by
Ernst & Young LLP, independent auditors, whose report with respect thereto is
included elsewhere in this Prospectus. The selected consolidated financial data
as of September 30, 1994, 1993 and 1992 and for each of the two years in the
period ended September 30, 1993, has been derived from audited financial
statements. The selected consolidated financial data for the nine months ended
June 30, 1997 and 1996 are derived from unaudited financial statements but, in
the opinion of management, includes adjustments, all of which are of a normal
recurring nature, necessary for a fair presentation. The results of operations
for the nine months ended June 30, 1997 may not be indicative of the results to
be expected for the year ending September 30, 1997. The following selected
consolidated financial data should be read in conjunction with the consolidated
financial statements, including the notes thereto, set forth elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE
30, YEAR ENDED SEPTEMBER 30,
---------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF INCOME DATA:
Revenues................................ $ 51,608 $ 34,991 $ 65,117 $ 44,349 $ 32,886 $ 24,896 $ 35,011
Cost of Revenues........................ $ (41,753) $ (28,063) $ (53,787) $ (36,345) $ (26,307) $ (17,193) $ (25,307)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross Profit............................ $ 9,855 $ 6,928 $ 11,330 $ 8,004 $ 6,579 $ 7,703 $ 9,704
Operating Expenses...................... $ (8,280) $ (5,522) $ (9,545) $ (6,492) $ (5,410) $ (5,088) $ (7,689)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before Investors Share of Income
in Majority Owned Land Development and
Housing Partnerships.................. $ 1,575 $ 1,406 $ 1,785 $ 1,512 $ 1,169 $ 2,615 $ 2,015
Investor's Share of Income in Majority
Owned Land Development and Housing
Partnerships.......................... $ (465) $ (375) $ (735) $ (70) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before Income Taxes.............. $ 1,110 $ 1,031 $ 1,050 $ 1,442 $ 1,169 $ 2,615 $ 2,015
Income Taxes............................ $ (382) $ (401) $ (401) $ (577) $ (468) $ (1,046) $ (826)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income.............................. $ 728 $ 630 $ 649 $ 865 $ 701 $ 1,569 $ 1,189
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Number of Homes Closed.................. 310(4) 205 378 267 174 110 146
Average Selling Price per Home.......... $ 179 $ 171 $ 172 $ 166 $ 189 $ 224 $ 233
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of Earnings to Fixed Charges(1)... (3) 1.30 (3) 1.14 2.45 7.28 6.48
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of Earnings to Adjusted Fixed
Charges(2)............................ 1.06 4.21 1.70 1.51 2.45 7.28 6.48
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>

(2) Represents the amount of fixed charges reduced by the amount of interest
funded through draws on the Company's revolving lines of credit.

(3) Earnings were inadequate to cover fixed charges by approximately $209,000
for the year ended September 30, 1996 and by approximately $1,496,000 for
the nine months ended June 30, 1997.

(4) Includes the sale of 30 lots at an average price of $46,000 per lot.

12
<PAGE>

<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF SEPTEMBER 30,
-------------------- -----------------------------------------------------
SELECTED BALANCE SHEET DATA: 1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Inventories............... $ 80,420 $ 52,827 $ 54,588 $ 28,796 $ 21,143 $ 12,506 $ 9,157
Total Assets.............. $ 94,819 $ 60,615 $ 69,931 $ 34,365 $ 26,779 $ 21,216 $ 15,310
Debt Due after One Year... $ 61,394 $ 40,139 $ 37,692 $ 16,507 $ 7,250 $ 7,196 $ 3,323
Total Liabilities......... $ 83,557 $ 48,865 $ 58,699 $ 22,909 $ 18,825 $ 13,718 $ 7,302
Investor's Equity in
Majority-Owned
Projects(5)............. $ 1,467 $ 2,702 $ 2,165 $ 3,037 $ 400 -- --
Stockholders' Equity...... $ 9,795 $ 9,048 $ 9,067 $ 8,419 $ 7,554 $ 7,498 $ 8,008
</TABLE>

- ------------------------
(5) Represents the equity of investors in majority owned projects.

13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following analysis of the Company's consolidated financial condition and
results of operations as of September 30, 1995 and 1996, for the years ended
September 30, 1994, 1995, and 1996 and for the nine months ended June 30, 1996
and 1997 should be read in conjunction with the Company's Consolidated Financial
Statements, including the notes thereto, and other information presented
elsewhere in this Prospectus. Certain statements in this Prospectus that are not
historical facts constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act and Section 21E of the Exchange Act. Discussions containing such
forward-looking statements may be found below and in the material set forth
under "Summary," "Risk Factors," and "Business," as well as within the
Prospectus generally. In addition, when used in the Prospectus the words
"believes," "intends," "anticipates," "expects," "seeks" and similar expressions
are intended to identify forward-looking statements. Such statements are subject
to a number of risks and uncertainties, including without limitation the
following: cyclicality of the homebuilding industry, price fluctuations of
materials, adverse economic conditions, inability to successfully access
capital, and the risk that the Company will face difficulties in controlling
operations in diverse geographic locations. Actual results could differ
materially from those projected in the forward-looking statements as a result of
the factors set forth in the section entitled "Risk Factors" and the matters set
forth in the Prospectus generally. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking statements
that may be made to reflect any future events or circumstances.

GENERAL

The Company generates revenue from the interrelated activities of land
acquisition, development and homebuilding. The Company generally enters into a
purchase agreement with a potential home buyer prior to commencing construction,
except where the home is being constructed on a speculative basis or to be used
as a model home. Additionally, weather conditions in the Chicago and western
Michigan markets make it necessary to start foundation construction in the fall
and early winter months prior to executing purchase agreements to ensure
available inventory for winter sales and spring closings. The Company does not
recognize a sale for accounting purposes until the sale of a home or lot is
closed. The time period from execution of a purchase agreement to the closing of
the sale of a home generally ranges from six to nine months. As of June 30,
1997, the Company had contracts to sell 425 homes. See "Business-Land
Acquisition."

RESULTS OF OPERATIONS

NINE MONTHS ENDED JUNE 30, 1997 AND 1996. Revenues from housing and land
sales increased approximately $17.0 million or 49% for the nine months ended
June 30, 1997, compared to the same period in 1996 increasing from approximately
$34.5 million to approximately $51.5 million. The increase in revenue resulted
from both an increase in the volume of homes closed during the period and an
increase in the average selling price. In particular, the Company closed on
sales of 280 homes in the nine months ended June 30, 1997 at an average selling
price of $202,000 compared to 205 closings at an average selling price of
$171,000 in the same period in 1996. The Company believes that the volume
increase reflected an increase in demand for the Company's homes and an increase
in the number of housing starts. Similarly, the increase in average selling
price reflected both a general price increase of 5% instituted by the Company on
all its products, as well as changes in the mix of homes closed in 1997 compared
to 1996.

Direct construction costs, including amortization of capitalized interest
and real estate taxes, increased during the nine-month period ended June 30,
1997 from approximately $28 million to approximately $42 million as compared to
the same period in 1996. The increase in these costs resulted mainly from
increases in the number of homes constructed, sold and closed during the period
as compared to the same period in 1996 and a corresponding increase in the
expense incurred related to interest and real

14
<PAGE>
estate taxes previously capitalized. As a percentage of housing and land sales
revenue, however, direct construction costs declined from 81.4% during the nine
months ended June 30, 1996 to 80.9% during the nine months ended June 30, 1997.
Other costs and expenses, however, increased from approximately $5.5 million for
the nine months ended June 30, 1996 to approximately $8.3 million for the nine
months ended June 30, 1997. The increase in these costs and expenses was due to
the increase in the number of homes closed between the two periods which
resulted in additional selling and general administrative costs. Income after
adjusting for minority interests in company controlled land development and
housing partnerships and income taxes increased from approximately $630,000 for
the nine months ended June 30, 1996 to approximately $728,000 for the nine
months ended June 30, 1997. Total earnings, which reflects net income before
minority interests and income taxes adjusted for the amount of interest expense
during the period, increased to $3,500,442 for the nine months ended June 30,
1997 from $2,358,704 for the nine months ended June 30, 1996. Total fixed
charges which means all interest charges, whether expensed or capitalized also
increased to $4,996,942 for the nine months ended June 30, 1997 from $1,807,931
for the nine months ended June 30, 1996. The increase in fixed charges reflects
the increase in the number of homes constructed and sold during the period.
These charges are amortized at the time of closing. Although earnings were
inadequate to cover fixed charges for the nine months ended June 30, 1997,
management believes that the Company has adequate capital to cover these fixed
charges. In particular, the Company typically funds its interest charges by
draws under its credit lines described below. Net proceeds from home closings
are utilized to pay down draws on these lines.

YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994. Revenue from housing and
land sales for the fiscal years ended September 30, 1996, 1995 and 1994 was
approximately $64.7 million, $43.4 million and $32.2 million, respectively.
Total revenues were approximately $65.1 million, $44.3 million and $32.8
million, respectively, when adding in revenue from the Company's share of net
income from minority owned land development housing partnerships, as well as
management fees. The total number of homes sold and closed for the fiscal year
ended September 30, 1996, 1995 and 1994 was 378 homes, 267 homes and 174 homes,
respectively. The Company believes that the increases in the volume of homes
closed when comparing 1995 to 1994 and 1996 to 1995 was caused in part by
increases in demand for new residential housing resulting from decreases in
long-term mortgage interest rates, and in the case of 1995 compared to 1994,
increases in the Company's inventory of land available for development which
translated into the construction and sale of more homes in 1995. The average
selling price of a home closed in 1996 also increased from $166,000 in 1995 to
$172,000 in 1996. In contrast, the average selling price for a home closed
during fiscal year 1995 decreased from $189,000 for fiscal year 1994 to
$166,000. The Company believes that the increase in the average selling price of
homes closed in 1996 when compared to 1995 resulted from changes in the mix of
homes closed during 1996 (higher priced homes), which also accounted for the
decline in average selling price during fiscal year 1995 when compared to fiscal
year 1994 (lower priced homes).

Direct construction costs, including amortization of capitalized interest
and real estate taxes for the year ended September 30, 1996, 1995 and 1994 was
approximately $53.7 million, $36.3 million and $26.3 million, respectively. The
year-to-year increases were generally the result of increases in the number of
homes constructed, sold and closed during 1995 when compared to 1994 and during
1996 when compared to 1995. As a percentage of housing and land sales revenue,
direct construction and costs increased to 83.6% for fiscal year 1995 when
compared to 81.6% for fiscal year 1994 and then declined to 83% for fiscal year
ended 1996 when compared to fiscal year 1995. Other costs and expenses for the
year ended September 1996, 1995 and 1994 were approximately $9.5 million, $6.5
million and $5.4 million, respectively. The increase in these expenses resulted
mainly from an increase in the number of active projects, as well as increases
in advertising costs associated with these projects. Net income was $648,627 in
1996 compared to $864,939 in 1995. Total earnings for the fiscal years ended
September 30, 1996, 1995 and 1994 were $3,747,772, $2,171,479 and $1,889,538
respectively. Fixed charges for these periods were $3,960,336, $1,905,129 and
$771,379. Earnings were inadequate to cover fixed charges by $212,000 for the
fiscal year

15
<PAGE>
ended September 30, 1996 but exceeded fixed charges by 1.14 times and 2.45 times
for the fiscal years ended September 30, 1995 and 1994 respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents balance at June 30, 1997 and
September 30, 1996 was approximately $1.1 million and $824,000, respectively. As
described below, the increase in cash and cash equivalents was attributable to
an increase in cashflow from financing activities of approximately $20.9 million
and offset by net cash used in operating activities of approximately $20.6
million.

The Company finances most of its capital needs through three primary lines
of credit: (i) a $25 million line of credit from Heller Financial (the "Heller
Line"); (ii) a $25 million line of credit from Residential Funding Corp. (the
"Residential Line I"); and (iii) a second $25 million line of credit from
Residential Funding Corp. which can be used solely to fund acquisition and
development activity, such as sewer and roadway construction (the "Residential
Line II," with the Residential Line I the "Residential Lines"). Draws on the
Construction Lines are secured by certain of the Company's assets and are
available to fund home construction costs. Under these lines, the Company may
draw up to 75-80% of a home's sales contract value or appraised value to fund
these, as well as, other permitted costs. As of June 30, 1997, there was $21.0
million, $17.1 million and $10.9 million outstanding on the Residential Line I,
Heller Line and Residential Line II, respectively. Draws on the Heller Line bear
interest at a variable rate equal to the General Electric Capital Corporation
Composite Commercial Paper Rate plus 3.75% per annum (9.4% as of June 30, 1997).
Draws on the Heller Line which are outstanding on May 31, 1998 automatically
convert to a term loan maturing on May 31, 1999. Draws under the Residential
Lines bear interest at a variable rate equal to prime plus 1.25% per annum
(9.75% as of June 30, 1997). Residential Line I matures on March 14, 2001. The
Company is able to draw on the Residential Line II to finance the cost of laying
foundations in the Chicago and western Michigan markets. This allows the Company
to continue construction activities during the winter months, thus lessening the
impact of adverse weather on the Company's operations. From time to time, the
Company also incurs indebtedness secured by specific projects which is then
retired with the proceeds from sale of the particular project. As of June 30,
1997, the Company had approximately $21.3 million of this indebtedness
outstanding, all of which was secured by certain of the Company's assets. This
indebtedness generally matures between 1997 and 2000 and bears interest at a
rate of approximately 9.75% per annum as of June 30, 1997. Finally, the Company
also generates additional working capital by selling, and then leasing back,
certain of its model homes to Model Homes, L.L.C. ("Model Homes"), a company
controlled by family members of the Company's directors and shareholders. See
"Certain Transactions." Under this arrangement, the Company sells certain of its
model homes to Model Homes at a price equal to the appraised value of the
completed home and then leases the completed home from Model Homes. As part of
the sale, Model Homes typically assumes indebtedness secured by the particular
model home. The net proceeds after debt assumption, typically 25% of the
purchase price, are paid to the Company in cash (15%) and an interest bearing
demand note. As of June 30, 1997, the Company had a $0.6 million note from Model
Homes in respect of these sales. This demand note bears interest at a rate of
10% per annum. The Company believes this arrangement allows it to increase its
available capital by reducing the amount of committed capital to model homes
which typically are the last homes sold at the Company's developments.

The Company believes that the capital available under the lines of credit
described above, as well as project specific indebtedness and cashflow from sale
of the model homes, along with internally generated funds and the proceeds from
the Debentures, will be sufficient to meet the Company's reasonably anticipated
needs for working capital and liquidity.

CASH FLOWS FROM OPERATING ACTIVITIES. The Company's operating activities
utilized cash in both the year ended September 30, 1996 and the nine months
ended June 30, 1997. The Company utilized approximately $29.5 million in cash in
operating activities during the year ended September 30, 1996. This cash was
used primarily to increase the Company's housing inventories (approximately $26
million) as well as to increase

16
<PAGE>
the land held for future development (approximately $8.0 million) offset by an
increase in the Company's increase in accounts payable (approximately $4.0
million). Similarly, for the nine months ended June 30, 1997, the Company
utilized approximately $20.6 million in cash from operating activities. This
cash was utilized primarily to increase the Company's inventory of housing
(approximately $26 million) offset by an increase in the Company's accounts
payable (approximately $4.3 million). In each case, the increase in the
Company's accounts payable reflects an increase in amounts owed to vendors and
other subcontractors reflecting an increase in the number of homes being
constructed by the Company.

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES. The Company's financing
activities provided the bulk of the Company's cashflow in both the fiscal year
ended September 30, 1996, as well as the nine months ended June 30, 1997. During
the fiscal year ended September 30, 1996, net cash provided by financing
activities was approximately $29 million comprised almost entirely of proceeds
from development loans and other notes payable of approximately $99.5 million
offset by repayments on development loans and other notes payable of
approximately $68.8 million. For the nine months ended June 30, 1997, financing
activities provided the Company with net cash of approximately $20.9 million
comprised of the proceeds from development loans and other notes payable of
approximately $93.4 million offset by repayments on development loans and other
notes payable of approximately $71.3 million. The increase in borrowing activity
in each time period reflects increases in the amount of funds necessary to
finance the Company's construction and development activities as reflected by
increases in the number of homes constructed and sold by the Company in each
period when compared to the prior comparable period. These borrowings are
typically repaid from the proceeds of housing or lot sales and then reborrowed
by the Company to fund construction costs. Thus, borrowings on the Company's
lines of credit (described above) fluctuate significantly based on the level of
the Company's activities.

CASH FLOWS FROM INVESTING ACTIVITIES. Net cash provided by or used for
investing activities was not significant for the nine months ended June 30, 1997
or for the fiscal year ended September 30, 1996.

INFLATION AND THE EFFECTS OF CHANGING PRICES. Real estate and residential
housing prices are affected by inflation, which can cause increases in the price
of land, raw materials and subcontracted labor. Historically, the Company has
been able to increase the price of its housing products to cover these costs.
Interest rate fluctuations also affect gross profit margins by increasing or
decreasing financing costs for land, construction, and operations. The Company
believes that product demand and sales are impacted by mortgage interest rates.
The Company benefited from low mortgage interest rates from 1994 through early
1995, and then again from mid-year 1995 through 1997. If rates increase,
customers may be discouraged from purchasing a home, due to the increased cost,
decrease in buying power and possible difficulty in qualifying for a mortgage.
Seasonality is generally not a significant factor in the Company's operations,
in part because homes can be constructed and sold year-round, particularly in
the Phoenix Area.

17
<PAGE>
BUSINESS

The Company is a fully integrated land development and homebuilding company
operating in the Chicago, Phoenix and western Michigan markets and since 1982
has developed over 7,300 lots and has built and closed over 6,100 homes. The
Company acquires undeveloped land and develops it into finished lots for
residential subdivisions, and periodically options or purchases finished lots
from third parties primarily for the construction and sale of homes. The Company
maintains an inventory of potential home sites (lots) by controlling undeveloped
and developed land through the use of the Acquisition Agreements. The Company
believes that this strategy allows it to control sites for future development
and at the same time maximize the use of its available capital. See "--Land
Acquisition" below. For the nine months ended June 30, 1997, the Company closed
on the sale of 280 homes generating approximately $51.6 million in revenue from
housing and land sales as compared to 205 homes generating approximately $35.0
million in revenue from housing and land sales for the nine months ended June
30, 1996. As of June 30, 1997, the Company had contracts to sell an additional
425 homes and a current inventory of 739 lots on which the Company anticipates
developing and selling 739 homes. Additionally, the Company controlled eight
parcels of land under agreements for future development of an estimated 3,314
homes.

Prices for the Company's homes (including the lot) range from $110,000 to
$400,000 per home. During the first nine months of fiscal 1997, the average
price for a home sold by the Company was approximately $202,000. The Company
markets its products to entry level, first and second move-up, and empty-nest
buyers by emphasizing the community atmosphere of its residential subdivisions,
as well as those characteristics that the Company believes its homes possess:
desirable designs, quality construction, and competitive prices.

The table below summarizes the number of closings for the last three fiscal
years and the interim periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30, YEAR ENDED SEPTEMBER 30,
-------------------- -------------------------------
1997 1996 1996 1995 1994
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSAND)
<S> <C> <C> <C> <C> <C>
Homes Closed............................................... 310(1) 205 378 267 174
Average Selling Price of Homes............................. $ 179 $ 171 $ 172 $ 166 $ 189
Total Volume of Closed Homes............................... $ 51,608 $ 34,991 $ 64,749 $ 43,448 $ 32,231
</TABLE>

- ------------------------

(1) Includes the sale of 30 lots at an average price of $46,000 per lot.

OPERATING STRATEGY

The Company seeks to locate and control property for development while
minimizing the amount of direct capital investment. The Company seeks to
minimize its financial exposure by carefully monitoring and controlling the
costs of designing, building and selling its homes and by carefully managing its
inventory of undeveloped land, developed lots and unsold homes. The Company
attempts to achieve this goal by maintaining its inventory of homesites, lots,
undeveloped and developed land by using Acquisition Agreements. Generally, the
Company attempts to develop homes in areas with limited competition and before
purchasing any property employs an independent marketing consultant to analyze
the real estate market in which the property is located. The Company seeks to
control construction costs by requiring firm bids from its subcontractors and
approval of all payments and change orders by the Company's construction
supervisor.

The Company's product mix includes both single family and multifamily home
designs. The Company uses competitive market analysis, focus groups and research
in an effort to define and develop each product line to suit the needs of each
particular market. Each home design is periodically updated in order to reflect
changing market and customer needs and demand.

18
<PAGE>
The Company sells its homes through commissioned employees who work from
sales offices located at each project or, in certain cases, outside brokers. The
Company markets its homes through a combination of newspaper, radio and
television advertising, direct mail, directional signage, special promotions,
the Internet and referrals both from homebuyers and brokers. Uniform corporate
brochures and promotional pieces have been developed to create cost efficiencies
and to promote uniformity in the use of the Company's name, identity and vision.

The Company monitors customer satisfaction through an annual survey
conducted by independent third parties and through post-closing customer
satisfaction surveys as well as through sample surveys of individuals who did
not purchase a home from the Company.

MARKETS/PRODUCT

GENERAL The Company operates principally in three market areas: the Chicago
metropolitan area, Phoenix and its surrounding suburbs and western Michigan. The
Company attempts to tailor its housing products for each market but generally
targets entry level, first and second move-up, and empty-nest buyers at prices
ranging from approximately $110,000 to $400,000 per home depending on the
particular market. The Company's marketing efforts emphasize the community
atmosphere of its residential subdivisions and those characteristics that the
Company believes its homes possess: esthetically pleasing designs, quality
construction and competitive prices.

CHICAGO METROPOLITAN AREA. The Company believes that the Chicago
metropolitan area, which consists of Cook, DeKalb, DuPage, Grundy, Kendall,
Lake, McHenry, Will and Kane counties (the "Chicago Area") offers significant
opportunities for expansion. The Chicago Area economy has exhibited growth in
recent years due in part to the diversification of employment opportunities
which has led to an increase in employment, population and housing starts.
Annual building permits issued for single-family residential units in the
Chicago Area have increased from approximately 17,726 in 1991 to approximately
24,597 in 1996. According to statistics, as reported by TRACY CROSS &
ASSOCIATES, INC., single-family home sales in the Chicago Area were 3.4% higher
in 1996 compared to 1995. Additionally, the MORTGAGE BROKERS ASSOCIATION OF
AMERICA has forecasted that in 1997, the Chicago Area will be ranked the number
one mortgage market in the United States based on a number of factors, including
population trends, number of households, non-farm payroll employment, personal
income, housing permits, home sales, home prices and housing affordability.

The Chicago Area was ranked 88th in the nation by the NATIONAL ASSOCIATION
OF HOMEBUILDERS ("NAHB") in population growth over the last ten years. According
to the U.S. CENSUS BUREAU 1997 estimates, the population of the Chicago Area was
approximately 7,769,033, up from the 1990 census figures of approximately
7,410,858 and is projected to rise to approximately 7,995,867 people by 2002.
The unemployment rate in the Chicago Area has declined from 5.4% in 1990 to 4.7%
as of December 1996 (compared to the national unemployment rate of 5.0% as of
December, 1996 seasonally adjusted to 5.3%). Approximately 260,600 new jobs have
been created in the Chicago Area since 1990, with projected increases of
approximately 62,000 new jobs in 1997. According to statistics reported by the
ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY, the Chicago Area has experienced a
60% increase in job growth rate since 1990. The median annual household income
of the Chicago Area is approximately $45,792 and approximately 33% of the
population is between the ages of 25 and 44, which the Company believes are
favorable indicators of a good supply of potential customers in various stages
of the home buying cycle.

United's subsidiary, United Homes of Illinois, Inc. has consistently been
ranked in the top twenty homebuilders in the Chicago Area. For the first nine
months ended June 30, 1997 the Company sold 372 homes including lot sales in the
Chicago Area and is currently constructing homes in Antioch, Algonquin, Crystal
Lake, Cary, Vernon Hills, Waukegan, Darien, and Tinley Park. Prices for the
Company's Chicago Area homes range from $110,000 to $400,000.

19
<PAGE>
PHOENIX The Company believes that the City of Phoenix and its surrounding
suburbs (the "Phoenix Area") offers significant opportunities for expansion. The
Phoenix Area economy has exhibited growth in recent years due in part to the
high technology industry which has led to an increase in employment, population
and housing starts. Annual building permits issued for single-family residential
units in the Phoenix Area have increased from approximately 10,909 in 1990 to
approximately 28,583 in 1995. According to statistics, as reported by the NAHB
single-family home sales in the Phoenix Area were 262% higher than those in
1990. Additionally, the MORTGAGE BROKERS ASSOCIATION OF AMERICA has forecasted
that in 1997, the Phoenix Area will be ranked as the twelfth largest mortgage
market in the United States based on a number of factors, including population
trends, number of households, non-farm payroll employment, personal income,
housing permits, home sales, home prices and housing affordability.

The Phoenix Area was ranked 12th in the nation by the NAHB for population
growth over the last ten years. According to the U.S. Census Bureau 1997
estimates, the population of the Phoenix Area was approximately 2,815,051, up
from the 1990 census figures of approximately 2,238,890 and is projected to rise
to approximately 3,232,179 by 2002. The unemployment rate in the Phoenix Area
has declined from 4.4% in 1990 to 3.1% as of December, 1996 (compared to the
national unemployment rate of 5.0% as of December, 1996 seasonally adjusted to
5.3%). Approximately 360,000 new jobs have been created in the Phoenix Area
since 1990 with a projected increase of approximately 70,000 to 75,000 in 1997.
According to statistics published by the PHOENIX CHAMBER OF COMMERCE, the
Phoenix Area has experienced a 42% increase in job growth since 1990. The median
annual household income of the Phoenix Area is approximately $42,212 and
approximately 32% of the population is between the ages of 25 and 44, which the
Company believes will assure a good supply of potential customers in various
stages of the home buying cycle.

United's subsidiary, United Homes, Inc., an Arizona corporation, has
operated in the Phoenix Area since 1984. For the first nine months ended June
30, 1997 the Company sold 72 homes in the Phoenix Area. Prices for the Company's
homes in this market range from $110,000 to $400,000.

WESTERN MICHIGAN The Company conducts its homebuilding operations in
Western Michigan primarily in a 60 mile radius of Grand Rapids, Michigan which
includes Holland and Kalamazoo Michigan (the "Grand Rapids Area"). The Company
believes the Grand Rapids Area offers opportunities for expansion. United
believes that the Grand Rapids Area economy has exhibited growth in recent years
due in part to the continued expansion and addition of New York Stock Exchange
listed businesses located within the area/region and continued recognition by
these businesses of a skilled workforce which has led to an increase in
employment, population and housing starts. Annual building permits issued for
single-family residential units in the Grand Rapids Area have increased from
approximately 3,957 in 1990 to approximately 6,117 in 1996. According to
statistics, as reported by NAHB, single-family home sales in the Grand Rapids
Area were 87% higher than those in 1990. Additionally, the MORTGAGE BROKERS
ASSOCIATION OF AMERICA has forecasted that in 1997, the Grand Rapids Area will
be ranked as the fifty-sixth largest mortgage market in the United States based
on a number of factors, including population trends, number of households,
non-farm payroll employment, personal income, housing permits, home sales, home
prices and housing affordability.

The Grand Rapids Area was ranked 54th in the nation by the NAHB for
population growth over the last ten years. According to the U.S. CENSUS BUREAU
the 1996 population of the Grand Rapids Area was approximately 1,015,099, up
from the 1990 census figures of approximately 941,776 and is projected to
increase to approximately 1,052,300 by 2000. The unemployment rate in the Grand
Rapids Area has declined from 6.4% in 1990 to 3.4% as of December 1996 (compared
to the national unemployment rate of 5.0% as of December, 1996 seasonally
adjusted to 5.3%). Approximately 87,200 new jobs have been created in the Grand
Rapids Area since 1990 with a projected increase of approximately 10,150 new
jobs in 1997. Additionally, according to statistics published by the GRAND
RAPIDS CHAMBER OF COMMERCE, the Grand Rapids Area has experienced a 32% increase
in job growth rate since 1990. The median annual household income of the Grand
Rapids Area is approximately $47,400 in 1990 and approximately 33% of the

20
<PAGE>
population is between the ages of 25 and 44, which the Company believes are
favorable indicators of a good supply of potential customers in various stages
of the home buying cycle.

United's subsidiary, United Homes of Michigan, Inc., is the second largest
homebuilder in the Grand Rapids Area based on homes closed. United Homes of
Michigan, Inc. is currently exploring expanding its operations into Lansing, Ann
Arbor and Detroit, Michigan, as well as Indianapolis, Indiana. The Company
generally sells single family homes to move-up buyers with prices generally
averaging $154,000 in this market which is below the market average of $165,000.
For the first nine months ended June 30, 1997 the Company sold 66 homes in the
Grand Rapids Area.

LAND ACQUISITION

A significant factor influencing the Company's results of operation and
financial condition is its ability to acquire land for future home sites on
acceptable terms and conditions. The Company has developed procedures for, and
employs management specialized in, site acquisition and development. The Company
attempts to develop homes in areas with limited competition and before entering
into an acquisition arrangement generally employs an independent marketing
consultant to perform a market analysis.

The Company attempts to minimize the amount of capital invested in
undeveloped land by entering into agreements containing contingencies allowing
the Company extended periods of time to conduct its due diligence review prior
to the actual purchase of the land. The Company uses this review period to
obtain necessary development approvals from government units and to evaluate the
feasibility and profitability of the project. The Company also investigates
other factors affecting the feasibility of the project, including:

<TABLE>
<C> <S> <C> <C>
-- topography -- archeological site status
-- geology, soils and grading -- regulatory processing and approval schedule
-- traffic, transportation and access -- financing alternatives
-- market research -- hazards, including noise and pollution
-- environmental issues -- economic feasibility
</TABLE>

Occasionally, the Company acquires control of land through joint ventures
and other contractual relationships with third-party landowners. Under these
arrangements, the Company generally is employed as an agent to zone and develop
the property and build and sell homes for the ventures. The Company is typically
required to meet certain criteria relating to cost control and absorption rates.
The landowner generally subordinates his or her interest in the land to a
mortgage securing the development financing typically provided by a third party.
As lots are sold, the landowner shares in the profits on the finished lots. This
approach allows the landowner to maximize the profit to be made on the sale of
the land and enables the Company to control a site which it might not otherwise
have been able to control. The arrangement also enables the Company to
participate in the lot profit, while retaining the profit from the construction
of the homes on the site. Affiliates of the Company may be participants in these
arrangements. See "Certain Transactions."

Periodically, the Company uses Acquisition Agreements to control finished
lots developed by third parties. The Company believes that this approach allows
it to control and market a large number of finished lots with minimal capital
investment and limited development risk. Generally, under these agreements, the
Company can continue to control these finished lots as long as the Company
purchases a specified number of lots within a predetermined time period. The
Company attempts to ultimately build its homes on lots developed by the Company,
although the Company occasionally builds homes on lots developed by third
parties. During the fiscal year ended September 30, 1996, approximately 80% of
the homes sold by the Company were built on lots developed by the Company. This
falls within the Company's goal of 70-85% which was set at that level since
homes built on land developed by third parties result in lower profit margins to
the Company.

21
<PAGE>
The following table summarizes the Company's inventory of homes sold, but
not yet closed, the current lot inventory, lots available for future development
and completed homes as of June 30, 1997:

<TABLE>
<CAPTION>
LOTS AVAILABLE
CURRENT LOT FOR FUTURE COMPLETED
HOMES SOLD BUT NOT CLOSED(1) INVENTORY(2) DEVELOPMENT(3) HOMES(4) TOTAL
------------------------------- --------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Illinois...................... 280 381 2,751 5,622 9,034
Michigan...................... 84 168 447 278 977
Arizona....................... 61 190 116 246 613
--- --- ----- ----- ---------
Total......................... 425 739 3,314 6,146 10,624
</TABLE>

- ------------------------------

(1) Represent homes subject to a purchase agreement which have not yet closed
(sales backlog). Revenue is not recognized until the time of closing. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(2) Represents lots owned by the Company that are available for home
construction which have not been sold. The Company typically constructs and
sells one home on a lot.

(3) Represents undeveloped land that the Company either owns or controls through
Acquisition Agreements.

(4) Represents homes that have been closed by the Company and the Parent since
the Parent's inception.

LAND DEVELOPMENT

Land development consists principally of two activities: (i) obtaining
necessary governmental approvals, including zoning, density and plat approvals;
and (ii) preparing the land for construction of homes, including grading,
installing streets, curbs, sewers, utilities and land clearing. The Company
engages engineers to prepare plat drawings and architects to prepare home plans
and, along with employees of the Company, to pursue the necessary governmental
approvals. Once the required preliminary approvals are obtained, the Company
retains subcontractors to perform the land improvements. The Company may begin
land development prior to obtaining final plat approval. Additionally, the
Company may obtain final plat approval for only a portion of a given project and
develop the project in phases. Once these initial activities are complete, the
site is ready for home construction.

Once the Company acquires control of undeveloped land, it commences the
process of obtaining zoning and other government approvals necessary for the
proposed development. This process is generally completed in one to three years.
During this phase, the Company estimates the cost of developing the entire
parcel to determine whether finished lots can be profitably sold and updates its
market studies to determine both the level of competition from other land
developers and builders and projected lot absorption rates. Further, the Company
determines the availability of utilities, surveys, tests soil conditions on the
site and performs the required environmental reviews. Upon receipt of final
governmental approvals, the Company will usually complete its purchase of the
land and begin site development. If at any time during the zoning and approval
process, however, it appears that development costs will be too great for the
market, or that the approval process is not progressing satisfactorily, the
Company will cease the zoning and approval process and sell or abandon its
interest in the land. The Company may, nevertheless, incur pre-development costs
ranging from approximately $50,000 to $250,000 per parcel during the approval
process prior to determining whether it can, or will develop the land. The
Company has generally been successful in obtaining the necessary zoning and
governmental approvals.

During the site development stage, the land is developed into finished lots.
This process generally involves, among other things, grading the land and
installing sanitary and storm sewers, water mains, curbs, gutters and streets.
The Company believes that creating a successful subdivision distinguishable from
that of its competitors requires creating a distinctive neighborhood environment
which fosters a sense of community. The Company focuses on a number of factors
in an effort to create this feeling: a street and lot configuration that it
believes arrives at the best balance of installation and construction costs and
the esthetics of the subdivision; the location, design, landscaping and creation
of the entrance; and the creation

22
<PAGE>
of common amenities, such as children's play areas, tennis courts, swimming
pools, basketball courts, gazebos and community open spaces, such as hiking
trails.

HOME DESIGN AND CONSTRUCTION

The Company builds its homes from a variety of standard plans designed by
national and local architectural firms. These standard plans allow for moderate
customizing by the customer and are reviewed on a regular basis to ensure
desirability, practicality and competitive edge. Additional input on new home
designs is provided by focus groups consisting of individuals who have purchased
homes in the last six months in approximately the same price range as that of
the new designs. In addition, the Company utilizes a number of marketing
consultants in cities across the United States having similar climate and
housing construction techniques. The Company periodically consults with these
marketing consultants to determine the type of houses being sold in other
markets. The Company also sends employees to study new home ideas in other
market areas usually two or three times a year.

The Company acts as its own general contractor at each project but, except
for employing field supervisors, does not employ construction or trade
personnel. Subcontractors are selected through a competitive bidding process
which the Company believes limits its financial exposure. The Company seeks to
control construction costs by requiring a construction supervisor, employed by
the Company, to approve all payments and change orders.

The purchase price for a standard house ranges from approximately $110,000
to $400,000 per home with the average price of a home with no upgrades being
approximately $189,375 with square footage ranging from 900 to 3800 square feet
of finished space. Included within the purchase price of each home is a one/two
year construction warranty and a ten year structural warranty which the Company
purchases from Home Warranty Corporation, an entity unaffiliated with the
Company. Purchasers can select from various base floor plan and elevation
combinations, as well as customize their homes with a selection of changes,
features and upgrades. Some typical features of the Company's floor plans,
depending on the development, are:

- vaulted or higher-than-average ceilings and large decorative windows to
admit natural light;

- two story entries which offer a sight line through the house;
incorporation of columns, arches, bridges, niches and wall cutouts, formal
and informal stairways and other design features;

- basements, most with windows or outside entries;

- two and three car garages.

In addition, purchasers can choose, at additional cost, optional amenities
such as different front elevations for the house, bay windows, decks, cabinets,
upgraded carpets and floor coverings, fireplaces, lighting fixtures, appliances
and hardware. To insure proper communication between the customer and the
construction supervisors, as well as to minimize costs associated with
revisions, the Company conducts two "walk throughs": the first before the
drywall is installed so as to easily allow any modifications necessary and the
second immediately prior to closing.

CUSTOMER SERVICE

The Company places tremendous emphasis on providing a high level of customer
service. The Company attempts to maintain personal contact with its customers
from their first meeting with the sales representative, through the construction
process and after the closing. This relationship begins when the customer first
visits one of the Company's model homes and selects a house plan. The Company
emphasizes customer service by making it a topic at meetings with the
construction, sales, and marketing personnel, as well as by making it an
important part of the annual sales training program in which all the sales
representatives participate. The Company's sales representatives service the
customers' needs until the customers' final plans have been approved for
construction. Once approval for construction has been obtained, a construction
coordinator is assigned to the customer. The construction coordinators are
responsible for addressing any of the customers' concerns, changes, service and
warranty work and are available to talk with customers at any time during the
Company's normal business hours.

23
<PAGE>
The Company has also developed a system to educate its customers on the
process of building a home. This system is designed to establish the sequence
and timing of events during the process of building and servicing a customer's
home. The Company monitors these procedures on a weekly basis, and customers are
automatically sent progress letters at various points during the process.

COST CONTROL

The Company seeks to control costs at each phase of the development. To
control construction costs, the Company seeks to achieve the most efficient
design for each home product. After completing the schematic plan of a home, the
Company's construction department and the purchasing department review the plan
to ensure the home is designed to minimize both labor and material costs. The
sales department also reviews the plan to ensure that amenities designed into
the home will create value for the home buyer. The plan is then sent to an
outside structural engineer who reviews the structural integrity of the plan and
makes recommendations where necessary. Additionally, the plan is sent to a truss
manufacturer, electrical consultant and a cabinet maker for additional input and
recommendations. The Company then reviews these recommendations and, if
appropriate, incorporates them into the final plan. Along with the design
department, the construction and purchasing departments also review the final
plan and officially approve it for use by the Company. The purchasing and
construction departments may seek input from suppliers and subcontractors on
ways to improve on the design of the home. Once the plan is completed, the
purchasing and construction departments seek bids from local subcontractors and
suppliers, although the Company has arranged and is continually attempting to
increase direct purchase relationships with national vendors in order to provide
certain items at a lower price.

Once the home plans are completed, they are sent to the estimating
department, which, using a computerized estimating system, determines the exact
quantities and cost of materials needed to build the home. This estimated cost
is then verified with individual cost quotes or bids from each subcontractor or
supplier. A detailed budget for the home is then input into a computerized
purchase order system which enables the Company to monitor all of its costs and
variances from the original budget. Variances from the original budget for the
home are generally recorded and input into the system as they occur. This allows
the Company to view on a daily basis any variance on homes under construction.
Management of the Company normally meets weekly to review variances to determine
the cause and to establish procedures to eliminate them in the future.

The Company also uses its management information system to monitor and
trigger payments to its suppliers and subcontractors. Unless there is an
approved variance purchase order or approved change order that has been entered
into the system, only originally budgeted amounts are paid to the suppliers and
subcontractors. By using this system over a period of time, the Company believes
it can determine the most cost efficient way for it to produce its homes. The
Company also monitors its gross margin on each home at four different points in
order to determine how the actual margin compares to the budget: (i) when the
purchase agreement is signed by the Company; (ii) after the budget is placed in
the computerized purchase order system; (iii) when the sale closes; and (iv)
approximately forty-five days after the sale closes and all outstanding invoices
have been reviewed and entered into the purchase order system.

INVENTORY MANAGEMENT

The Company believes that most of the risk in the homebuilding industry is
related to excessive inventory, including undeveloped land, finished lots and
completed but unsold homes. The Company attempts to reduce the amount of capital
committed to land by continuously monitoring its undeveloped and finished lot
inventory. The Company seeks to purchase land through Acquisition Agreements,
which the Company believes reduce the amount of capital invested at any one time
and permit the Company to terminate or postpone the ultimate purchase of land
that it does not need. The Company attempts to limit its exposure to an excess
inventory of completed houses by: (i) generally not starting construction of a
home until execution of a purchase agreement, receipt of satisfactory earnest
money, receipt by the home

24
<PAGE>
buyer of a preliminary mortgage commitment and removal of all contingencies; and
(ii) controlling the number of finished homes held as speculation homes on a
project-by-project basis and monitoring weekly the sales progress of each
subdivision.

As of June 30, 1997, the Company had 430 homes built or under construction
to be sold or held as inventory and located in seventeen different subdivisions
and in various stages of the construction process. A total of 425 of these homes
were under contract to be sold. The Company rarely holds houses in inventory
after completing construction, with the exception of model homes which are
typically sold to Model Homes and then leased back. Homes in inventory not
subject to a purchase contract are generally marketed to transferee home buyers
or buyers who can not wait for the construction cycle to be completed.
Transferee buyers have traditionally represented a small portion of the
Company's sales. A transferee buyer typically requires delivery of a new house
within 30 to 60 days. The number of homes held in inventory will vary seasonally
and with changes in the local and national economy.

COMPETITION

The homebuilding industry is highly competitive and fragmented. Homebuilders
compete for desirable properties, financing, raw materials and skilled labor.
The Company competes for residential sales with other homebuilders, resales of
existing homes, available rental housing, and, to a lesser extent, resales of
condominiums. The Company's competitors include a large number of national and
regional homebuilding companies (Chicago and Phoenix markets) and small local
homebuilding companies (in all of the Company's markets), some of which may have
greater financial resources, easier access to working capital or lower capital
costs than the Company.

EMPLOYEES

As of June 30, 1997, the Company employed 130 full-time employees,
including, executive and office personnel as well as, construction
superintendents. The Company's employees are not covered by a collective
bargaining agreement and the Company believes its relations with its employees
are good.

GOVERNMENTAL REGULATION

The Company's business is subject to regulation by a variety of state and
federal laws and regulations relating to, among other things, advertising,
collection of state sales and use taxes and product safety. The Company's
development activities are also affected by local zoning ordinances, building
codes and other municipal laws as well as federal, state and municipal
environmental and conservation laws. While the Company believes it is presently
in material compliance with these regulations, in the event that it should be
determined that the Company is not in compliance with all such laws and
regulations, the Company could become subject to cease and desist orders,
injunctive proceedings, civil fines and other penalties.

ENVIRONMENTAL AND LEGAL PROCEEDINGS

The Company currently is not subject to any environmental litigation or
administrative proceedings. The Company is not currently involved in any legal
proceedings other than those arising in the ordinary course of business.

The Company believes that its potential liability for environmental concerns
can arise in one of two contexts: (i) liability could arise with respect to
substances that are in, under or on land which the Company intends to acquire;
or (ii) liability could arise in connection with how the Company intends to
develop the land. With respect to a substance in, under or on land for which the
Company could face environmental liability, the Company performs a Phase I
environmental audit prior to acquiring the land. If the audit uncovers any
environmental hazards on the land, the Company would not exercise the option
unless the hazard could be corrected at a reasonable cost. With respect to
liabilities in connection with a planned development, the Company obtains the
federal and state permits necessary for building and development before it
exercises the options. If a planned development is not permissible under
environmental laws, the Company will not exercise the option.

25
<PAGE>
MANAGEMENT

The current executive officers, directors and managers of United are as
follows:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ------------------------------------------------------------ --- ----------------------------------------------
<S> <C> <C>
Virgil W. Owings............................................ 62 Chairman of the Board
Edward F. Havlik............................................ 53 President and Director
Laurie H. Bulson............................................ 29 Vice President and Director
Timothy S. Owings........................................... 36 Vice President and Director
William J. Crock, Jr........................................ 49 Executive Vice President, Chief Financial
Officer, Secretary/Treasurer
David L. Feltman............................................ 37 Vice President/General Counsel
</TABLE>

VIRGIL OWINGS, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Owings has served as
the Chief Executive Officer of the Parent since 1982 and as United's Chairman of
the Board since its inception in 1994. Prior thereto, Mr. Owings was Chief
Financial Officer of Urban Investment Company. He holds a B.S. degree from the
University of Missouri and an MBA from the University of Chicago and is a C.P.A.
Mr. Owings is the father of Timothy Owings.

EDWARD F. HAVLIK, PRESIDENT AND DIRECTOR. Mr. Havlik has served as the
Chairman of the Board of the Parent since 1982 and as United's President since
its inception in 1994. Mr. Havlik has more than twenty-three years of experience
building and developing homes with an emphasis on marketing, forward planning
and negotiations. Mr. Havlik holds a B.A. in marketing from Northern Michigan
University and an honorary Doctor of Letters from Jordan College. Mr. Havlik is
scheduled to become President of the Illinois Homebuilders Association in 1998.
Mr. Havlik is the father of Laurie Bulson.

LAURIE H. BULSON, VICE PRESIDENT AND DIRECTOR. Ms. Bulson has been employed
by the Company or its Parent since 1988. In addition to her current
responsibilities, she has also served as Director of Sales and Marketing for
United Homes Michigan, Inc. and Vice President of Marketing of United Homes of
Illinois, Inc. Ms. Bulson has a B.S. degree in Business and Marketing from
Indiana University. Ms. Bulson is the daughter of Mr. Havlik.

TIM S. OWINGS, VICE PRESIDENT AND DIRECTOR, PRESIDENT UNITED HOMES, INC., AN
ARIZONA CORPORATION. Mr. Owings has been employed by the Company or its Parent
since 1984. Prior thereto, he was Director of Research for Home Data
Corporation, Chicago. Mr. Owings is President of United Homes, Inc., an Arizona
corporation and has a degree in Business Administration/Marketing from Western
Illinois University and is a licensed Real Estate Broker in Arizona. Mr. Owings
is the son of Virgil Owings.

WILLIAM J. CROCK, JR., EXECUTIVE VICE PRESIDENT/CHIEF FINANCIAL OFFICER. Mr.
Crock has served as Chief Financial Officer of United and its Parent since 1990.
Prior thereto, he was Chief Lending Officer of Skokie Federal Savings and Loan
from 1986 to 1990, Vice President of Finance for Joseph Freed & Associates from
1983 to 1986 and an audit manager for Touche Ross & Company from 1969 to 1983.
Mr. Crock has a B.S. from Bradley University, Peoria, Illinois and is a C.P.A.

DAVID L. FELTMAN, VICE PRESIDENT/GENERAL COUNSEL. Mr. Feltman joined United
in 1996. From 1988 to 1989 Mr. Feltman was associated with, and from 1990 to
1995 a partner with, Shefsky & Froelich Ltd. practicing in the Real Estate
Department. In 1981 he received a B.S. in Accounting, and in 1984 he received a
J.D. degree, both from the University of Illinois. Mr. Feltman is also a C.P.A.

In addition, the following are the chief officers of the Subsidiaries:

BRUCE C. BROWN, PRESIDENT, UNITED HOMES OF MICHIGAN, INC. Mr. Brown has been
with United Homes of Michigan, Inc. since 1986. Prior to that he was President
and Chief Executive Officer of Square Real Estate, Inc. in Grand Rapids. Mr.
Brown has served as City Manager, Kalamazoo, Michigan and Director

26
<PAGE>
of Planning/Economic Development, Indianapolis, Indiana. Mr. Brown holds B.S.
and M.B.A. degrees from Michigan State University and is a licensed real estate
broker in the State of Michigan.

NEVILLE ALPERSTEIN, PRESIDENT OF UNITED HOMES OF ILLINOIS, INC. Mr.
Alperstein joined United Homes of Illinois, Inc. in 1996. Prior to that, he
spent over fifteen years with Pulte Home Corporation. Mr. Alperstein holds a
B.S. in Construction Engineering as well as an M.B.A. from the University of
Michigan.

The officers of the Company are elected annually and serve at the discretion
of the Board of Directors. None of the Company's officers is employed pursuant
to a written employment contract.

SUMMARY COMPENSATION TABLE

The following table sets forth information with respect to those persons
who: (i) served as the chief executive officer of United during the fiscal year
ended September 30, 1996; and (ii) were the most highly compensated executive
officers of United at September 30, 1996 whose total annual salary and bonus
exceeded $100,000 for the year.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
PAYOUTS
---------------------------------------------------------------------------------
--------------------------------
(G)
(F) SECURITIES
(E) RESTRICTED UNDERLYING
(A) (B) (C) (D) OTHER ANNUAL STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS SARS(#)
- ------------------------------- --------- --------- ------------- --------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Virgil W. Owings
Chairman..................... 1996 325,000 -- -- -- -- -- -- -- -- -- --
1995 325,000 --
1994 325,000 --
Edward F. Havlik
President.................... 1996 325,000 -- -- -- -- -- -- -- -- -- --
1995 325,000 --
1994 325,000 --
William J. Crock, Jr.
Executive Vice President..... 1996 125,000 -- -- -- -- -- -- -- -- -- --
1995 125,000 --
1994 117,000 --
Timothy S. Owings
Vice President............... 1996 100,000 -- -- -- -- -- -- -- -- -- --
1995 100,000 --
1994 100,000 --

<CAPTION>
(H) (I)
(A) LTIP ALL OTHER
NAME AND PRINCIPAL POSITION PAYOUTS($) COMPENSATION
- ------------------------------- --------------- -----------------
<S> <C> <C>
Virgil W. Owings
Chairman..................... -- -- -- -- -- --
Edward F. Havlik
President.................... -- -- -- -- -- --
William J. Crock, Jr.
Executive Vice President..... -- -- -- -- -- --
Timothy S. Owings
Vice President............... -- -- -- -- -- --
</TABLE>

United has recently established a bonus plan which enables all employees of
United to receive up to forty percent (40%) of their annual base salary plus an
additional one quarter of one percent (.25%) for each year that the individual
has been employed by United if certain financial goals are met for any fiscal
year.

27
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

United is a wholly-owned subsidiary of the Parent, which owns 100% of the
issued and outstanding common stock of United. Control of United is directed by
the shareholders of the Parent. The following table sets forth certain
information regarding the ownership of the Parent's common stock as of June 30,
1997 by each person who is known to beneficially own more than 5% of the
Parent's common stock, by each of the Directors and executive officers of
United, and by all Directors and executive officers of United as a group.

<TABLE>
<CAPTION>
NAMES AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS
OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OUTSTANDING
- --------------------------------------------------------------------------- --------------------- -----------------
<S> <C> <C>

Edward F. Havlik (2) ...................................................... 37,455 48%
2100 Gold Road
Suite 110
Rolling Meadows, IL60008

Virgil Owings (3) ......................................................... 38,516 49%
3260 North Hayden
Suite 102
Scottsdale, AZ85251

Timothy S. Owings (4) ..................................................... 652 *
3260 North Hayden
Suite 102
Scottsdale, AZ85251

Laurie Bulson (5) ......................................................... 499 *
2100 Golf Road
Suite 110
Rolling Meadows, IL60008

William J. Crock, Jr. (6) ................................................. 730 *
2100 Golf Road
Suite 110
Rolling Meadows, IL60008

David L. Feltman .......................................................... __ __
2100 Golf Road
Suite 110
Rolling Meadows, IL60008

Officers and Directors of United .......................................... 77,852 98.81%
as a Group (Six Persons)
</TABLE>

- ------------------------

* Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and generally includes voting power
and/or investment power with respect to securities. Shares of common stock
which a person has the right to acquire within 60 days of August 15, 1997,
are deemed outstanding for computing the percentage of the person possessing
such right but are not deemed outstanding for computing the percentage of
any other person. Unless otherwise indicated, the Company believes that each
person named or included in the table has sole voting and investment power
with respect to the shares of common stock set forth opposite his or her
name.

(2) Mr. Havlik owns his interest in United through his interest in the Parent.
Includes 17,500 shares held in a trust of which Paragon Bank serves as
trustee and of which Mr. Havlik has disclaimed beneficial ownership; 17,500
shares of common stock held by the Havlik Family Trust; 2,455 shares of
common stock held by the Parent's Employee Stock Ownership Plan (the "Plan")
which in the aggregate owns 30,000 shares of common stock (30%) of the
Parent's issued and outstanding shares.

28
<PAGE>
(3) Mr. Owings owns his interest in United through his interest in the Parent.
Includes 17,500 shares of common stock held in a trust of which Ruth Owings
serves as trustee and of which Mr. Owings has disclaimed beneficial
ownership; 17,500 shares of common stock held by the Owings Family Trust;
and 3,516 shares of common stock held by the Plan.

(4) Mr. Timothy Owings owns his interests in United through his interest in the
Parent. Mr. Owings does not directly own any shares of the Parent's common
stock. He indirectly owns 652 shares held for Mr. Owings' benefit by the
Plan and has a % interest in the Owings Family Trust which for these
purposes are fully attributable to Mr. Virgil Owings.

(5) Ms. Bulson owns her interest in United through her interest in the Parent.
Ms. Bulson does not directly own any shares of the Parent's common stock.
She indirectly owns 499 shares held for Ms. Bulson's benefit by the Plan and
has a % interest in the Havlik Family Trust, which for these purposes are
fully attributed to Mr. Havlik.

(6) Mr. Crock owns his interest in United through his interest in the Parent.
Mr. Crock does not directly own any shares of the Parent's common stock. He
indirectly owns 730 shares held for Mr. Crock's benefit by the Plan.

CERTAIN TRANSACTIONS

The Company and Nancy I. Havlik ("N. Havlik"), wife of United's president,
are each limited partners with 24.5% interests in United Development Bristolwood
Limited Partnership ("Bristolwood"). The general partner of Bristolwood, which
has a 1% interest, is owned 50% by Edward Havlik, the president of the Company,
and 50% by a third party not affiliated with the Company. Bristolwood sold to
United 48 lots for $22,000 per lot and 142 lots for $28,000 per lot, of which
$784,000 remains unpaid. The purchase price under the agreement was based on the
parties agreement on fair market value for the lots. Neither party relied on
third party appraisals.

The Owings Family Revocable Trust ("Owings Trust") and the Nancy I. Havlik
Trust ("Havlik Trust"), each an affiliate of a director of the Company, each
pledged a $300,000 letter of credit as security for a loan obtained by the
Company in September of 1996. United in turn executed a $300,000 promissory note
in favor of each of the Owings Trust and the Havlik Trust, which notes bear
interest at the rate of 1% per month. No principal becomes due unless the lender
draws on the letters of credit. There have been no draws to date.

During fiscal year 1995, the Company sold four (4) model homes for an
aggregate price of $650,000 to an affiliate of Messrs. Havlik and Owings. The
sale and subsequent purchase was based on the fair market value of the homes as
determined by comparable home costs. The Company repurchased the model homes for
an aggregate price of $650,000 in fiscal year 1996.

The Company sells certain of its model homes to Model Homes, L.L.C., an
Illinois limited liability company which has as its members two corporations
controlled by the Havlik and Owings families. On March 30, 1997 Model Homes,
L.L.C., purchased model homes valued at $4,661,500 from the Company. The
purchase price in these transactions is the appraised value of the model homes
and is paid by (a) assumption of debt secured by the model home in the amount of
75% of its appraisal value, (b) cash (15% of appraised value), and (c) a note
(10% of the appraised value) which bears interest at 10% per annum. The model
home is then leased back to the Company pursuant to a month to month triple net
lease including payments of base rent equal to satisfaction of the assumed debt
service and a return of 15% on the cash paid at acquisition. The Company markets
sale of the model homes for Model Homes, L.L.C. and at closing, the note is
paid, the debt service is paid, Model Homes, L.L.C. is returned its cash payment
and the Company retains excess proceeds. The Company believes that this
transaction is completed on terms substantially similar, or more favorable to
the Company, than is available through independent model home purchasers.

On May 1, 1994, the Parent executed a Real Estate Purchase Agreement with
Greenbrooke Associates, Ltd. ("Greenbrooke"), a Michigan corporation. Edward
Havlik and Virgil Owings each own 16 2/3% of Greenbrooke. The Purchase Agreement
was for the sale of 142 unimproved single family lot sites from Greenbrooke for
$12,000 per lot plus interest at the rate of 8% per annum (subsequently
increased to $13,000 per lot plus interest by amendment to the Purchase
Agreement). The Parent assigned the Purchase Agreement to United Homes of
Michigan, Inc. in May of 1994. As of June 30, 1997 United Homes of Michigan,
Inc. was obligated to pay Greenbrooke $369,000 (inclusive of interest) for lots
to be improved

29
<PAGE>
with single family residences and $143,000 (inclusive of interest) for lots to
be improved with condominiums. The sale price and subsequent increase were
determined based upon the parties agreement of the fair market value of the
lots, without reliance on independent appraisals.

On February 1, 1996 United Homes of Michigan, Inc., executed a $100,000
promissory note in favor of Landrover Properties, L.L.C., a Michigan limited
liability company, 60% of which is owned by the Havlik Trust. The note bears
interest at 10% per annum and is paid with closing proceeds from the sale of
units at the Woodside Green subdivision in Michigan. As of June 30, 1997 the
balance of the note was $94,500.

N. Havlik owns a 15.16% interest in approximately 86 acres of land in
Kalamazoo, Michigan which was sold in fiscal year 1995 to United Homes of
Michigan, Inc. The sale contract requires payment of $422,600 (inclusive of
interest) on March 2, 1997, which amount was paid and an additional $422,600
(inclusive of interest accruing at 8% per annum) to be made to N. Havlik on
March 2, 1998 and March 2, 1999. The sales price was based upon the parties
agreement of the fair market value of the property, without reliance on
independent appraisals.

DR Development, Inc. a corporation owned by the Havlik Trust and the Owings
Trust loaned the Company $200,000 in September of 1993, ("Loan 1") and $182,000
on August 5, 1994 ("Loan 2"). Loan 1 and Loan 2 are each evidenced by a
promissory note ("Note 1" and "Note 2" respectively). Note 1 bears interest at
10% per annum. Note 2 provides that $364,000 inclusive of interest is due on
maturity, which is December 31, 1997. As of June 30, 1997 $384,000 is owed in
aggregate on Note 1 and Note 2.

Odyssey Limited Partnership, an entity owned 25% by each of N. Havlik, and
the children of Edward and Nancy Havlik, in the aggregate and Barbara Owings,
wife of Virgil Owings and the children of Virgil and Barbara Owings, in the
aggregate, is indebted to the Company in the aggregate principal amount of
$558,133 for prior management of certain property known as Odyssey Club.

Greenbrooke Associates Ltd., in which Edward Havlik and Virgil Owings each
own a 16 2/3% interest, loaned the Company $500,000 in February, 1997. The
obligation is not evidenced by any written instrument.

From time to time, the Company has advanced monies to Parent to pay
obligations of Parent. Such advances have resulted in a payable to the Company,
evidenced by a promissory note, which as of June 30, 1997 was $3,526,086. Such
promissory note does not bear interest.

Messrs. Havlik and Owings have each guaranteed certain indebtedness of the
Company and its subsidiaries in the past. As of June 30, 1997 these guarantees
are for approximately $15,000,000 of debt, in the aggregate.

30
<PAGE>
DESCRIPTION OF SECURITIES

GENERAL

The Debentures will be issued under an Indenture (the "Indenture"), dated as
of September , 1997 between United and the Trustee. A copy of the form of the
Indenture is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The following statements are summaries of certain
provisions of the Indenture and are subject to and qualified in their entirety
by reference to all of the provisions of the Indenture, including the
definitions therein of certain terms herein.

The Debentures offered by United under the Indenture will be limited to
$6,000,000 aggregate principal amount. The Debentures will mature March 15,
2005, unless redeemed earlier. Interest on the Debentures will accrue at an
annual rate of %. Interest is payable quarterly on the 15th day of each
calendar quarter (each a "Interest Payment Date") beginning on December 15, 1997
to the person in whose name the Debenture is registered, at the close of
business on the Regular Record Date which is the 15th day of the calendar month
next preceding each Interest Payment Date.

Principal, premium, if any, and interest will be payable, and the Debentures
will be exchangeable and transfers thereof will be registered, at the office or
agency to be maintained by United in St. Paul or Minneapolis, Minnesota.
Initially, United's office will be the office of the Trustee in St. Paul,
Minnesota.

The Debentures will be issued only in registered form, without a coupon, in
denominations of $1,000 each and any integral multiple of $1,000. The Debentures
are transferable and transfers will be registered without charge thereof, but
United may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Holders may transfer the
Debentures by surrendering them for transfer at the office of the Trustee.

COLLATERAL AND RANKING

The Debentures will be unsecured obligations of United. In the event of the
dissolution, winding up, liquidation or bankruptcy of United, the holders of the
Debentures will not be entitled to receive any payment until the holders of
secured indebtedness receive payment or distributions in respect of the assets
collateralizing their debt. Upon the occurrence of any payment default on
secured indebtedness, proceeds from the assets collateralizing the secured
indebtedness which is in default may not be used to satisfy United's obligations
on the Debentures. The Indenture does not limit the amount of secured
indebtedness that United may incur.

REDEMPTION

MANDATORY REDEMPTION. The Debentures will be subject to mandatory
redemption. On September 15, 1999 and on each March 15 and September 15
thereafter through September 15, 2004, United will pay to the Trustee cash
sufficient to redeem up to 8.33% of the original principal amount of the
Debentures on each redemption date. On or before March 15, 2005, United will pay
to the Trustee cash sufficient to redeem all remaining outstanding Debentures.
The Debentures will be redeemed in whole, but not in part, and will be selected
by the Trustee by lot or in any manner deemed proper by the Trustee.

OPTIONAL REDEMPTION. The Debentures will be subject to redemption at the
option of United, in whole or in part, from time to time, commencing on December
15, 1997, upon not less than 30 days' nor more than 60 days' notice mailed to
the holders thereof, at the Redemption Prices established for the Debentures,
together in each case, with interest accrued to the date fixed for redemption
(subject to the right of a holder on the Regular Record Date for an interest
payment to receive such interest). The Redemption Prices for the debentures
(expressed as a percentage of the principal amount) shall be as

31
<PAGE>
follows for Debentures redeemed in the 12-month periods beginning December 15 of
each of the following years:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
1997.............................................................................. 105%
1998.............................................................................. 104%
1999.............................................................................. 103%
2000.............................................................................. 102%
2001.............................................................................. 101%
2002 and thereafter............................................................... 100%
</TABLE>

United may elect to redeem less than all of the Debentures. If United elects
to redeem less than all of the Debentures, the Trustee will select which
Debentures to redeem by lot or any similar method which is deemed fair and
appropriate.

DEFINITIONS

"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the net income of such person and its Subsidiaries for such
period, on a Consolidated basis, determined in accordance with GAAP, provided
that extraordinary gains and losses (determined in accordance with GAAP) shall
be excluded.

"Consolidated Tangible Net Worth" means, with respect to any person at any
date of determination, the Consolidated stockholders' equity represented by the
shares of such person's capitalized stock (other than Disqualified Stock)
outstanding at such date, as determined on a Consolidated basis in accordance
with GAAP less any portion of such stockholders' equity attributable to
intangible assets as determined in accordance with GAAP.

"Indebtedness" means, with respect to any person at any date, without
duplication, all items of indebtedness which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such person at such date, and in addition includes: (i)
Guaranties by such person; (ii) all Capitalized Lease Obligations of such
person; and (iii) all indebtedness secured by any mortgage, lien, pledge, charge
or encumbrances upon property owned by such person, whether or not the
indebtedness so secured has been assumed by such person. For the purpose of
computing the "Indebtedness" of any person, the following will be excluded: (i)
any particular Indebtedness to the extent that, upon or prior to the maturity
thereof, there will have been deposited with the proper depository in trust the
necessary funds, securities, or evidences of such Indebtedness, if permitted by
the instrument creating such Indebtedness, for the payment, redemption, or
satisfaction of such Indebtedness, and thereafter such funds and evidences of
Indebtedness so deposited shall not be included in any computation of the assets
of such person; and (ii) Indebtedness of a Restricted Subsidiary of such person,
which is not guaranteed by such person.

"Restricted Payment" means: (i) the declaration of payment for any dividend
or any other distribution on the capital stock of United or any Subsidiary of
United or any payment made to the direct or indirect holders (in their
capacities as such) of the capital stock of United or any Subsidiary of United
(other than (x) dividends or distributions payable solely in capital stock or in
options, warrants or other rights to purchase capital stock, and (y) in the case
of any Subsidiary of United, dividends or distributions payable to United or to
a Subsidiary of United); (ii) the purchase, redemption or other acquisition or
retirement for value of any capital stock of United or any Subsidiary; or (iii)
payments to, investments in, or transfers of any value to any Restricted
Subsidiary. If a Restricted Payment is made in other than cash, the value of any
such payment shall be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Company Resolution to be
filed with the Trustee. For purposes of this definition, "Restricted Payment"
shall not include: (a) payments made in the form of United's common

32
<PAGE>
stock; (b) mandatory repurchase obligations by United with respect to shares
issued by any employee stock ownership plan of United; or (c) purchases of
common stock of a Wholly-Owned Subsidiary of United that is not a Restricted
Subsidiary.

MODIFICATION OF THE INDENTURE

With the consent of the holders of majority in aggregate principal amount of
the Debentures then outstanding, the Trustee and United may execute a
supplemental Indenture to add provisions to, or change in any manner or
eliminate any provisions of, the Indenture or modify in any manner the rights of
the holders of the Debentures, provided that, without the consent of the holder
of each outstanding Note so affected, no such supplemental Indenture and no such
amendment will: (i) change the maturity date of the principal or interest rate
payable on any Note, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof; (ii) reduce
the percentage of the holders of the Debentures whose consent is required for
the authorization of any such supplemental Indenture.

RESTRICTIVE COVENANTS

LIMITATION ON ADDITIONAL INDEBTEDNESS. The Indenture will restrict United
and each Subsidiary from incurring additional Indebtedness, except for: (i)
Indebtedness under the Debentures and the Indenture; (ii) Indebtedness
outstanding on the original issue date of the Debentures; (iii) Indebtedness
that immediately after giving pro forma effect to the incurrence thereof, (a)
does not cause the ratio the ratio of Total Liabilities to Consolidated Tangible
Net Worth to exceed ; and (iv) with certain limitations, any deferrals,
renewals, extensions, or modifications to Indebtedness incurred under clause
(ii) or (iii) above.

LIMITATION ON RESTRICTED PAYMENTS. The Indenture will restrict United and
each Subsidiary from making any Restricted Payments (as defined below ): (i) if
at the time of such action an Event of Default shall have occurred and be
continuing, after giving effect to such Restricted Payment; (ii) if at the time,
upon giving effect to such Restricted Payment, United could not incur at least
$1.00 of Indebtedness pursuant to the provisions of the Indenture limiting
additional Indebtedness; or (iii) if, immediately after giving effect to such
Restricted Payment, the aggregate of all Restricted Payments declared or made
from the date of the Indenture, through and including the date of such
Restricted Payment (the "Base Period") exceeds the sum of 50% of Consolidated
Net Income (or in the event Consolidated Net Income is a deficit, minus 100% of
such deficit) during the Base Period and 100% of the aggregate net proceeds
received by United from the issue or sale during the Base Period of capital
stock of United.

LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Indenture will restrict
United and each Subsidiary from engaging, conducting or entering into any
transaction or series of transactions with or for the benefit of any Affiliate
or Subsidiary of United or any holder of 5% or more of any class of Capital
Stock of United (each an "Affiliate Transaction"), except in good faith and on
terms that are, in the aggregate, no less favorable to United or such
Subsidiary, as the case may be, than those that could have been obtained in a
comparable transaction on an arms-length basis from a person not an Affiliate of
United or such Subsidiary. Any loans to United or any Subsidiary from any
Affiliate, whether existing on the date the Debentures are issued or thereafter
incurred, shall be fully subordinate to payment in full of the Debentures (i.e.,
the affiliate shall be prohibited from receiving any payments with respect to
the loan, whether principal or interest, until the Debentures shall have been
indefensibly paid in full) pursuant to a subordination agreement in form and
substance satisfactory to the Trustee and counsel to the Trustee.

LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING A
SUBSIDIARY. The Indenture will restrict United and each Subsidiary from,
directly or indirectly, creating or otherwise causing or suffering to exist or
become effective or entering into any agreement with any person that would cause
or create any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary of United to: (i) pay dividends, in cash or otherwise, or make
any other distributions on its capital stock or any other interest or

33
<PAGE>
participation in, or measured by, its profits owned by United or a Subsidiary of
United; (ii) make any loans or advances to, or pay any Indebtedness owed to,
United or any Subsidiary of United; or (iii) transfer any of its properties or
assets to United or to any Subsidiary of United, except, in each case, for such
encumbrances or restrictions existing under or contemplated by or by reason of:
(a) the Debentures or the Indenture; (b) any restrictions existing under
agreements in effect on the date the Debentures are issued; and (c) any
restrictions existing under any agreement that refinances or replaces an
agreement containing a restriction permitted by clause (a) or (b) above,
provided that the terms and conditions of such restrictions are not materially
less favorable in the aggregate to the Debentureholders than those under or
pursuant to the agreement being replaced or the agreement evidencing the
Indebtedness being refinanced or replaced.

NET WORTH. The Indenture will require United to keep and maintain, at all
times during the term of the Debentures, Consolidated Tangible Net Worth,
determined as of the last day of each quarter, at an amount not less than
Million Dollars ($ ) plus % of positive Consolidated Net Income earned
after . Compliance with this covenant shall be measured on the last day of
March, June, September and December of each year, and the Indenture requires
United to provide Consolidated Tangible Net Worth as of each quarter within 45
days of each calendar quarter except December 31 for which United shall have 90
days to provide the calculation. In the event of any non-compliance with this
covenant, the Indenture will require United deliver to the Trustee a certificate
from United's independent public accountants as to subsequent compliance to cure
any such default.

LIMITATIONS ON INVESTMENTS. The Indenture will restrict United and each
Subsidiary from acquiring for value, making, having or holding any Investments,
except: (i) Investments existing on the date of this Agreement; (ii) Property to
be used in the ordinary course of business consistent with past practice; (iii)
current assets arising from the sale of goods and services in the ordinary
course of business; (iv) Investments in readily marketable direct obligations
issued or guaranteed by the United States or any agency thereof and supported by
the full faith and credit of the United State; (v) Certificates of deposit or
bankers' acceptances issued by any commercial bank organized under the laws of
the United States or any State thereof which has combined capital and surplus of
at least $100,000,000; (vi) commercial paper given the highest rating by a
nationally recognized rating service and maturing not more than one year from
the date of acquisition thereof.

ADDITIONAL LIENS; NEGATIVE PLEDGES. The Indenture will restrict United and
each Subsidiary from creating, incurring, assuming or suffering to exist any
lien, or entering into, or making any commitment to enter into, any arrangement
for the acquisition of any property through conditional sale, lease-purchase or
other title retention agreements, with respect to any property now owned or
hereafter acquired by United or a Subsidiary, except: (i) liens existing on the
date the Debentures are originally issued and disclosed in United's audited
financial statements; (ii) Deposits or pledges o secure payment of workers'
compensation, unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of United or a Subsidiary; (iii)
liens for taxes, fees, assessments and governmental charges not delinquent or to
the extent that payment therefor shall not at the time be required to be made in
accordance with the provisions of the Indenture; (iv) liens of carriers,
warehousemen, mechanics and materialmen, and other like liens arising in the
ordinary course of business, for sums not due or to the extent that payment
therefor shall not at the time be required to be made in accordance with the
provision of the Indenture; (v) liens incurred or deposits or pledges made or
given in connection with, or to secure payment of, indemnity, performance or
other similar bonds; (vi) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property and
landlord's liens under leases on the premises rented, which do not materially
detract from the value of such property or impair the use thereof in the
business of United or a Subsidiary; (vii) the interest of any lessor under any
capitalized lease entered into after the date the Debentures are issued or
purchase money liens on property acquired after such date; provided, that: (a)
the Indebtedness secured thereby is otherwise

34
<PAGE>
permitted by the Indenture; and (b) such liens are limited to the property
acquired and do not secure Indebtedness other than the related capitalized lease
obligations or the purchase price of such property.

Further, the Indenture will restrict United and each Subsidiary from,
entering into any agreement, bond, note or other instrument with or for the
benefit of any person other than the Debentureholders which would: (i) prohibit
United or such Subsidiary from granting, or otherwise limit the ability of
United or such Subsidiary to grant, to the Debentureholders any lien on any
assets or properties of United or such Subsidiary; or (ii) require United or
such Subsidiary to grant a lien to any other person if United or such Subsidiary
grants any lien to the Debentureholders.

PAYMENTS ON SUBORDINATED DEBT. The Indenture will restrict United and each
Subsidiary from making any payment or repurchase of any part or all of any debt
subordinate to the Debentures or take any other action or omit to take any other
action in respect of any such subordinated debt, except in accordance with any
subordination agreement relative thereto.

CONSOLIDATION, MERGER, TRANSFER OR LEASE. Under the Indenture, United may
not consolidate with, or merge with or into, or transfer all or substantially
all of its assets in one transaction or a series of related transactions, to
another person unless: (i) the successor corporation is a corporation organized
and existing under the laws of the United States or any state thereof or the
District of Columbia; (ii) the successor corporation (if other than United)
assumes all of the obligations of United under the Debentures and the Indenture;
and (iii) immediately after giving effect to such transaction: (a) no Default or
Event of Default shall have occurred and be continuing; (b) the net worth of the
successor corporation is not less than that of United immediately prior to such
merger, consolidation or transfer; and (c) the successor corporation is able to
incur at least one dollar of additional Indebtedness.

EVENTS OF DEFAULT

The following acts constitute events of default under the Indenture: (i)
failure to pay any installment of interest due and payable; (ii) failure to pay
any installment of principal due and payable; (iii) breach by United of any
covenant contained in the Indenture; (iv) a decree or order by a court of
competent jurisdiction shall have been entered, either: (a) adjudging United a
bankrupt or insolvent; (b) approving a petition seeking reorganization of United
under the Bankruptcy Act or any other similar applicable federal or state law;
(c) appointing a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of United or a receiver of all or any substantial portion of the
property; or (d) directing the winding up or liquidation of its affairs, and any
such decree or order shall have continued in force undischarged or unstayed for
a period of 60 days; (v) United shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking reorganization
under the Bankruptcy Act or any other similar applicable federal or state law,
or shall consent to the filing of any such petition; or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of all or substantially all of its property, or shall make a
general assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or corporate action
shall be taken by United in furtherance of any of the aforesaid purposes; or
(vi) an event of default as defined in any indenture or trust agreement securing
or protecting any indebtedness, or in any instrument evidencing any indebtedness
in excess of $100,000 of United or any of its Subsidiaries now or hereafter
outstanding shall happen and be then continuing and the holders of such
indebtedness shall have the right to accelerate the maturity of such
indebtedness.

In each and every such case, so long as an Event of Default has not have
been remedied and the principal of all the Debentures shall not have already
become due and payable, then either the Trustee or the holders of not less than
twenty-five percent (25%), in aggregate principal amount of the Debentures then
outstanding, by notice in writing to United (and to the Trustee if given by the
Subordinated Note

35
<PAGE>
Holders) may declare the principal of all the Debentures then outstanding to be
due and payable immediately.

THE TRUSTEE

Upon the occurrence and during the continuance of any Event of Default, the
Trustee is required to apply only the degree of care and skill in fulfilling its
obligations as a prudent person would exercise or use in the circumstances in
the conduct of such person's own affairs. The Trustee is not liable for any
error of judgment made in good faith and will not be liable with respect to any
action taken or omitted to be taken in good faith in accordance with the
direction of the holders of a majority in aggregate principal amount of the
Debentures at the time outstanding, relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or of
exercising any trust or power conferred upon the Trustee, under the Indenture.

36
<PAGE>
UNDERWRITING

Miller & Schroeder Financial, Inc. (the "Underwriter") has entered into an
Underwriting Agreement with the Company pursuant to which the Underwriter,
subject to certain terms and conditions, has been appointed and will act as the
exclusive underwriter for the Debentures for a period of six months from the
commencement of this offering.

The Underwriting Agreement provides that the Underwriter will offer the
Debentures on a "best efforts" basis. The Offering is not subject to the sale by
the Company of any minimum aggregate principal amount of Debentures. The
Underwriter initially proposes to offer the Debentures to the public at The
Price to Public set forth on the cover page of this Prospectus, plus accrued
interest, and to certain selected dealers at such price less a concession on the
principal amount of the Debentures. The Price to Public, concession, and other
sales terms of the issue may change during the offering period.

In addition to the Underwriting Discount and Commissions equal to 7% of the
Total Price to Public, the Company has agreed to pay to the Underwriter a
management fee equal to 2% of the Total Price to Public and a non-accountable
expense allowance equal to 1% of the Total Price to Public and to reimburse the
Underwriter for accountable expenses (up to $120,000).

The Company has agreed to indemnify the Underwriter against, and to provide
contribution with respect to, certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended.

The Company will pay interest on each Debenture accruing from ,
1997 or, with respect to Debentures sold after a subsequent quarterly interest
payment date, the most recent quarterly interest payment date. For purposes of
computing interest, a Debenture will be deemed to have been sold on, and will be
dated as of, the date upon which confirmation of the purchase thereof is sent to
the Company by the Underwriter after payment in full of the purchase price is
timely made. The Underwriter expects to confirm to the Company purchases of
Debentures upon concurrent confirmation of the sale thereof to the public or to
selected dealers, or for its own account for the purpose of subsequent resale if
consented to by the Company, and will transmit to the Company, from time to time
on a regular basis, registration and delivery instructions and proceeds from the
sale of such Debentures, net of underwriting commissions and expenses, subject
to closing and delivery of the certificates.

The Debentures will be offered by the Underwriter on a "best efforts" basis,
when, as, and if issued by the Company, subject to the Underwriter's right to
reject orders in whole or in part, the approval by counsel of certain legal
matters and certain other conditions. Proceeds of the sale of Debentures by the
Underwriter pending delivery to the Company at each closing will be held in a
segregated account by the Underwriter. Sales of Debentures by selected dealers
will be settled in the same manner as sales by the Underwriter with proceeds
held in a segregated account by the clearing agent for each of the respective
selected dealers. Closings will be held on or about the fifteenth of each month
with respect to securities sold during the preceding month. If any closing
should not occur on or about the time agreed upon by the Company, the sales
transactions shall be canceled and the proceeds held in the segregated accounts
will be promptly remitted to the purchasers with interest, if any, paid thereon.

The offering is not subject to the sale of any minimum aggregate principal
amount of Debentures. However, the obligations of the Underwriter to act as
underwriter in connection with the purchase and sale of the Debentures
contemplated by this Prospectus and to accept delivery of the Debentures against
payment therefor, are subject to certain typical conditions precedent within the
control of the Company contained in Underwriting Agreement, as of the date of
this Prospectus and as of each monthly closing, such as: (i) the performance by
the Company of its obligations thereunder; (ii) the delivery by the Company of
certain certificates; (iii) the delivery to the Underwriter of an opinion of
counsel to the Company and related bring-down certificates; and (iv) the
delivery to the Underwriter of a letter of the independent accountants for the
Company, and related bring-down certificates. The form of the Underwriting
Agreement is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.

37
<PAGE>
LEGAL MATTERS

Certain legal matters in connection with the issuance and sale of the
Debentures will be passed upon for the Company by Shefsky & Froelich Ltd.,
Chicago, Illinois. Fredrikson & Byron, P.A. is acting as counsel for the
Underwriter in connection with certain legal matters relating to the securities
offered hereby.

EXPERTS

The consolidated financial statements of United Homes, Inc. as of September
30, 1996 and 1995 and for each of the three years in the period ended September
30, 1996, appearing in the Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company has filed a Registration Statement on Form S-1 under the
Securities Act of 1933, as amended, with respect to the Debentures offered
hereby. For purposes hereof, the term "Registration Statement" means the
original Registration Statement and any and all amendments thereto. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the schedules and exhibits thereto, to which reference hereby is
made, as permitted by the rules and regulations of the Commission. The material
terms of certain material agreements to which the Company is party are
summarized in this Prospectus, but these summaries do not purport to be complete
nor qualified in their entirety by reference to the relevant agreements which
are filed as exhibits to the Registration Statement of which this Prospectus is
a part. Any interested party may inspect the Registration Statement and its
exhibits, without charge, at the Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the public reference facilities maintained
by the Commission at its regional offices located at The Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at Seven
World Trade Center, Suite 1300, New York, New York 10048. The Commission also
maintains a site on the World Wide Web at http:\\www.sec.gov that contains
reports, proxy and other information statements and other information regarding
registrants that file electronically with the Commission.

38
<PAGE>
UNITED HOMES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
ANNUAL FINANCIAL STATEMENTS
Report of Independent Auditors............................................................................. F-2
Consolidated Balance Sheets as of September 30, 1996 and 1995.............................................. F-3
Consolidated Statements of Income for the years ended September 30, 1996, 1995, and 1994................... F-4
Consoldidated Statements Changes in Stockholder's Equity for the years ended
September 30, 1996, 1995, and 1994....................................................................... F-5
Consolidated Statements of Cash Flows for the years ended September 30,
1996, 1995, and 1994..................................................................................... F-6
Notes to the Consolidated Financial Statements............................................................. F-7

INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheet as of June 30, 1997................................................... F-13
Condensed Consolidated Statements of Income for the nine months ended June 30, 1997 and 1996............... F-14
Consolidated Statements of Changes in Stockholder's Equity for the nine months ended June 30, 1997 and
1996..................................................................................................... F-15
Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 1997 and 1996........... F-16
Notes to the Condensed Consolidated Interim Financial Statements........................................... F-17
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors

United Development Management Company

We have audited the accompanying consolidated balance sheets of United
Homes, Inc., a wholly owned subsidiary of United Development Management Company,
as of September 30, 1996 and 1995, and the related consolidated statements of
income, changes in stockholder's equity, and cash flows for each of the three
years in the period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of United Homes,
Inc. at September 30, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.

Ernst & Young LLP

December 12, 1996,

except for Note 6(1), as to which the date is
March 25, 1997

F-2
<PAGE>
UNITED HOMES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
ASSETS

Cash and cash equivalents...................................... $ 824,162 $ 1,103,216
Closing proceeds in transit.................................... 322,281 506,424
Due from managed properties (net of allowance of $100,000 in
1996 and 1995)............................................... 516,508 386,953
Contract fees receivable....................................... 80,182 184,905
Housing inventories............................................ 54,588,044 28,796,061
Land held for future development............................... 8,258,741
Investment in real estate partnership.......................... 485,274 507,041
Due from Parent:
Construction advances........................................ 1,564,176 1,552,493
Advances in excess of income taxes payable................... 1,931,121
Due from affiliates............................................ 263,306 11,157
Note receivable................................................ 340,000
Deposits 400,710 76,005
Other.......................................................... 696,374 900,258
------------- -------------
Total assets................................................... $ 69,930,879 $ 34,364,513
------------- -------------
------------- -------------

LIABILITIES AND STOCKHOLDER'S EQUITY

Construction draws in process.................................. $ 1,059,437 $ 1,735,073
Accounts payable............................................... 5,629,497 1,692,752
Accrued costs on closed sales.................................. 2,796,202 798,721
Accrued liabilities............................................ 316,989 669,100
Deposits from home buyers...................................... 758,401 621,696
Development loans and other notes payable...................... 48,138,856 17,391,862
------------- -------------
Total liabilities.............................................. 58,699,382 22,909,204
Investors' equity in majority-owned land development and
housing partnerships......................................... 2,164,111 3,036,550

Stockholder's equity:
Common stock, $.01 par value; 1,000,000 shares authorized;
1,000 shares issued and outstanding........................ 100 100
Additional paid-in capital..................................... 3,900 3,900
Retained earnings.............................................. 9,063,386 8,414,759
------------- -------------
Total stockholder's equity..................................... 9,067,386 8,418,759
------------- -------------
Total liabilities and stockholder's equity..................... $ 69,930,879 $ 34,364,513
------------- -------------
------------- -------------
</TABLE>

See accompanying notes.

F-3
<PAGE>
UNITED HOMES, INC.

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Housing and land sales (378 units, 267 units, and 174 units in 1996,
1995, and 1994, respectively)..................................... $ 64,749,166 $ 43,448,117 $ 32,230,783
Share of net income from minority-owned land development and housing
partnership....................................................... 156,233 376,904 215,887
Management fees..................................................... 212,021 524,470 438,935
------------- ------------- -------------
65,117,420 44,349,491 32,885,605
Direct construction costs, including amortization of capitalized
interest and real estate taxes of $2,031,442, $868,213, and
$605,607 in 1996, 1995, and 1994, respectively.................... 53,787,863 36,345,524 26,306,536
------------- ------------- -------------
11,329,557 8,003,967 6,579,069
OTHER COSTS AND EXPENSES
Amortization of capitalized project costs........................... 6,706,639 3,722,184 2,919,807
Administrative...................................................... 2,818,552 2,700,221 2,459,352
Interest, net of interest income of $38,971, $10,184, and $23,653 in
1996, 1995, and 1994, respectively................................ 19,811 69,814 31,059
------------- ------------- -------------
9,545,002 6,492,219 5,410,218
------------- ------------- -------------
Income before investors' share of income in majority-owned land
development and housing partnerships.............................. 1,784,555 1,511,748 1,168,851
Investors' share of income in majority-owned land development and
housing partnerships.............................................. 734,597 70,250
------------- ------------- -------------
Income before income taxes.......................................... 1,049,958 1,441,498 1,168,851
Income taxes........................................................ 401,331 576,559 467,541
------------- ------------- -------------
Net income.......................................................... $ 648,627 $ 864,939 $ 701,310
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See accompanying notes.

F-4
<PAGE>
UNITED HOMES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
----------- ----------- ------------
<S> <C> <C> <C>
Balance at October 1, 1993................................................... $ 100 $ 3,900 $ 7,493,571
Net distributions to Parent.................................................. (645,061)
Net income................................................................... 701,310
----- ----------- ------------
Balance at September 30, 1994................................................ 100 3,900 7,549,820
Net income................................................................... 864,939
----- ----------- ------------
Balance at September 30, 1995................................................ 100 3,900 8,414,759
Net income................................................................... 648,627
----- ----------- ------------
Balance at September 30, 1996................................................ $ 100 $ 3,900 $ 9,063,386
----- ----------- ------------
----- ----------- ------------
</TABLE>

See accompanying notes.

F-5
<PAGE>
UNITED HOMES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
----------------------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income....................................................... $ 648,627 $ 864,939 $ 701,310
Adjustments to reconcile net income to net cash used in operating
activities:
Share of net income from real estate partnership............. (156,233) (376,904) (215,887)
Investors' share of equity in majority-owned land development
and housing partnerships................................... 734,597 70,250
Bad debt expense............................................. 100,000
Changes in operating assets and liabilities:
(Increase) decrease in closing proceeds in transit......... 184,143 (320,232) (186,192)
Decrease in contract fees receivable....................... 104,723 257,180 8,390
Increase in housing inventories............................ (25,791,983) (7,993,243) (8,636,394)
(Increase) decrease in land held for future development.... (7,918,741) 265,852 2,251,989
(Increase) decrease in due from Parent..................... (1,942,804) (2,393,390) 467,541
Increase in due from affiliates............................ (252,149) (158,499) (497,719)
(Increase) decrease in deposits............................ (324,705) (76,005) 28,183
(Increase) decrease in other assets........................ 203,884 (153,852) (367,717)
Decrease in construction draws in process.................. (675,636) (1,118,825) (312,557)
Increase in accounts payable............................... 3,936,745 1,189,859 242,091
Increase (decrease) in accrued costs
on closed sales.......................................... 1,997,481 33,463 (964,374)
Increase (decrease) in accrued liabilities................. (352,111) (3,775,518) 4,018,816
Increase (decrease) in deposits from home buyers........... 136,705 (119,028) 173,913
-------------- -------------- --------------
Net cash used in operating activities............................ (29,467,457) (13,703,953) (3,288,607)
CASH FLOW FROM INVESTING ACTIVITIES
(Increase) decrease in due from managed properties............... (129,555) 2,313,047 (800,000)
Distributions from real estate partnership investment............ 178,000 140,500 390,250
-------------- -------------- --------------
Net cash provided by (used in) investing activities.............. 48,445 2,453,547 (409,750)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from development loans and other
notes payable.................................................. 99,565,025 56,411,522 21,544,883
Repayments of development loans and other
notes payable.................................................. (68,818,031) (47,532,783) (20,227,480)
Contributions from investors in majority-owned land development
and housing partnerships....................................... 150,000 3,056,300 400,000
Distributions to investors in majority-owned land development and
housing partnerships........................................... (1,757,036) (490,000)
-------------- -------------- --------------
Net cash provided by financing activities........................ 29,139,958 11,445,039 1,717,403
-------------- -------------- --------------
Increase (decrease) in cash and cash equivalents................. (279,054) 194,633 (1,980,954)
Cash and cash equivalents at beginning of year................... 1,103,216 908,583 2,889,537
-------------- -------------- --------------
Cash and cash equivalents at end of year......................... $ 824,162 $ 1,103,216 $ 908,583
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying notes.

F-6
<PAGE>
UNITED HOMES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

In 1994, United Development Management Company (the Parent), transferred
ownership of its wholly owned subsidiaries, United Homes of Illinois, Inc.,
United Homes of Arizona, Inc., and United Homes of Michigan, Inc. to a newly
formed, wholly owned subsidiary, United Homes, Inc. (UHI). UHI and its
subsidiaries own controlling interests in the following partnerships which are
included in the consolidated financial statements: Williams Glen Limited
Partnership, The Hidden Springs Real Estate Limited Partnership, United/RBG XII
L.P., and the United Lindsay East Valley Limited Partnership (collectively, the
Majority-Owned Partnerships). The accompanying consolidated financial statements
include the accounts of UHI, its wholly owned subsidiaries, and Majority-Owned
Partnerships. In addition, UHI has a noncontroling 24.875% ownership interest in
United Development Bristolwood Limited Partnership (UDB), which is presented as
an investment in real estate partnership and is accounted for using the equity
method.

UHI, its wholly owned subsidiaries, Majority-Owned Partnerships, and UDB
(collectively, the Company) are engaged in the ownership, development,
construction, and sale of residential real estate, with operations in Illinois,
Arizona, and Michigan. UHI also provides development and construction management
services to an unconsolidated affiliated partnership and to third parties.
Aggregate unit closings and revenues associated with the Company's direct sales
were as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30 CLOSINGS REVENUES
- ----------------------- ----------- -------------
<S> <C> <C>
1996................... 378 $ 64,749,166
1995................... 267 43,448,117
1994................... 174 32,230,783
</TABLE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenues from housing and land sales are recognized in the period in which
the sale closes.

HOUSING INVENTORIES AND LAND HELD FOR FUTURE DEVELOPMENT

Housing inventories and land held for future development are stated at cost,
which is not in excess of net realizable value. Housing inventories include all
direct costs of land under development, construction, plus financing and other
carrying costs incurred during the period of development. Capitalized project
costs, including construction administration, legal fees, and various office
costs that relate to land development housing construction, are capitalized and
are charged to income as housing units are sold.

CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments with a maturity of
three months or less, when purchased.

INCOME TAXES

The Company and its Parent file a consolidated federal income tax return.
Income tax expense is reflected in the accompanying consolidated financial
statements as if the Company filed its income tax returns separately from its
Parent.

F-7
<PAGE>
UNITED HOMES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

RECLASSIFICATIONS

Certain amounts in the 1995 and 1994 consolidated financial statements have
been reclassified to conform with the 1996 presentation. Such reclassifications
had no effect on the Company's previously reported financial position or results
of operations.

3. HOUSING INVENTORIES

Housing inventories consisted of the following:

<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Land under development, including site development
costs.............................................. $ 27,231,981 $ 14,963,625
Direct construction costs............................ 14,228,576 6,404,016
Capitalized project costs............................ 10,918,232 7,163,020
Land held for sale................................... 2,209,255 265,400
------------- -------------
$ 54,588,044 $ 28,796,061
------------- -------------
------------- -------------
</TABLE>

4. INVESTMENT IN REAL ESTATE PARTNERSHIP

The following is a summary of the Company's investment in real estate
partnership at September 30, 1996 and 1995:

<TABLE>
<CAPTION>
INVESTEE CONDENSED FINANCIAL
INFORMATION
TYPE OF INVESTMENT -------------------------------
PARTNERSHIP PERCENT CARRYING SHARE OF NET
NAME INTEREST OWNERSHIP AMOUNT INCOME ASSETS LIABILITIES INCOME
- ------------------------------------ ----------- ----------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>

Balance at September 30, 1996:
United Development Bristolwood
Limited Partnership(1)............ Limited... 24.875% $ 485,274 $ 156,233 $3,087,323 $1,647,519 $ 628,071

Balance at September 30, 1995:
United Development Bristolwood
Limited Partnership(1)............ Limited... 24.875% $ 507,041 $ 376,904 $4,599,277 $3,011,989 $1,515,190
</TABLE>

- ------------------------------

Note (1): During 1996, 1995, and 1994, the Company acquired $1,848,000,
$1,444,000 and $396,000, respectively, of improved lots from
UDB.

Note (2): During 1994, the Company's share of income relating to its 24.875%
investment in UDB was $215,887.

F-8
<PAGE>
UNITED HOMES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. NOTE RECEIVABLE

During 1995, the Company sold a parcel of land for its carrying value of
$1,000,000 and received cash and a $340,000 note receivable, collateralized by
the parcel. The note bore interest at 8% with principal and interest due March
1, 1996. In 1996, the Company exercised an option to reacquire the parcel for a
purchase price of $1,456,281. The note receivable and unpaid interest was
applied toward the purchase price.

6. DEVELOPMENT LOANS AND OTHER NOTES PAYABLE

Development loans and other notes payable consist of the following:

<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
GE Capital revolving credit agreement(1)....................... $ 16,519,114 $ 10,656,345
Land development and construction(2)........................... 31,560,190 6,679,627
Installment and other(3)....................................... 59,552 55,890
------------- -------------
$ 48,138,856 $ 17,391,862
------------- -------------
------------- -------------
</TABLE>

- ------------------------

(1) On May 30, 1995, the Company entered into a revolving credit agreement with
GE Capital Corporation (GECC) which matures May 31, 1998. At September 30,
1996, the maximum principal outstanding under the credit agreement is
$25,000,000, with a lending base subject to the number of housing units
under construction. The credit agreement bears interest at the GECC
composite commercial rate, as defined, plus 3.75% (9.23% at September 30,
1996), which is added monthly to the unpaid balance. Outstanding principal
and interest are repaid from proceeds of home sales. The credit agreement
includes various operating and financial covenants with which the Company
must be in compliance as a condition for continuation of construction draw
funding.

(2) The Company has development loans with various financial institutions for
the purpose of financing land acquisition, development, and construction
improvements that mature from 1997 to 2026. The loans bear interest at fixed
rates ranging primarily from 8% to 10.5%, as well as variable rates ranging
from prime plus 1% to prime plus 2%, and include various restrictions
concerning use and timing of borrowings.

Interest is added to the outstanding principal monthly, and unpaid principal
and interest are repaid from proceeds of home sales. These loans include
$1,376,002 and $550,409 at September 30, 1996 and 1995, respectively, due to
affiliates of the principal stockholders of the Parent. The loans to
affiliates mature in 2000 and bear interest at fixed rates ranging primarily
from 8% to 10% per annum.

(3) The Company has various installment and other loans maturing from 1997 to
2000, and bearing interest at fixed rates ranging from 5.9% to 10%. The
notes are repayable in monthly installments including principal and
interest.

In addition, the Company, its Parent, and a principal stockholder of the
Parent have guaranteed the repayment of amounts due under certain loan
agreements on behalf of United Development Bristolwood Limited Partnership in
the amount of $1,000,000 at September 30, 1996 that matures on July 16, 1997.

F-9
<PAGE>
UNITED HOMES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. DEVELOPMENT LOANS AND OTHER NOTES PAYABLE (CONTINUED)
The aggregate amounts of all debt maturities are as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30 AMOUNT
- ------------------------------------------------------------------------------- -------------
<S> <C>
1997........................................................................... $ 10,447,013
1998........................................................................... 22,397,527
1999........................................................................... 11,027,545
2000........................................................................... 1,541,015
2001........................................................................... 67,992
Thereafter..................................................................... 2,657,764
-------------
$ 48,138,856
-------------
-------------
</TABLE>

Substantially all of the Company's housing inventories and land held for
sale are pledged as collateral to secure repayment of indebtedness.

During the years ended September 30, 1996, 1995, and 1994, the Company
incurred and paid interest on development loans and other notes payable of
$3,960,336, $1,904,939, and $771,379, respectively, of which $3,901,554,
$1,824,941, and $716,667 was capitalized, respectively.

7. INCOME TAXES

The Company's income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
---------- ----------- -----------
<S> <C> <C> <C>
Current................................................ $ 363,952 $ (262,661) $ 825,433
Deferred............................................... 37,379 839,220 (357,892)
---------- ----------- -----------
$ 401,331 $ 576,559 $ 467,541
---------- ----------- -----------
---------- ----------- -----------
</TABLE>

Income tax expense differs from the amounts computed by applying the U.S.
federal income tax rate of 35 percent as a result of the following:

<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Computed "expected" tax expense.......................... $ 367,485 $ 504,524 $ 409,098
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal income tax
benefit.............................................. 29,294 72,075 58,443
Other, net............................................. 4,552 (40)
---------- ---------- ----------
Total.................................................... $ 401,331 $ 576,559 $ 467,541
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The Company's deferred tax liabilities of $836,305 and $798,926 at September
30, 1996 and 1995, respectively, arose primarily from differences in the
carrying value of housing inventories for financial statement and income tax
purposes related to the capitalization of certain operating expenses.

F-10
<PAGE>
UNITED HOMES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. RELATED PARTY TRANSACTIONS

Substantially all of the receivables from managed properties and due from
affiliates at September 30, 1996 and 1995, relate to costs incurred for
development of housing projects and temporary advances to entities in which
either the Parent or the two principal stockholders of the Parent are the
general partners. The amounts due from managed properties and from affiliates
are non-interest-bearing and are payable from proceeds from sales of certain
housing units.

During 1995, the Company sold four model homes for an aggregate sales price
of $650,000 to an affiliate of the principal stockholders of the Parent. In
1996, the Company repurchased the four model homes from the affiliate for an
aggregate purchase price of $600,000.

In 1995, the Company purchased 25 lots from a limited partnership in which
the principal stockholders of the Parent have a 33% limited partnership interest
for $550,000. During 1996, the Company purchased an additional 58 lots from the
affiliate for $799,000. The Company is obligated to purchase an additional 89
lots at a price of $13,000 per lot through 1999 (see Note 10).

9. FAIR VALUES OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" (SFAS No. 107) requires disclosures of the fair
value of certain financial instruments for which it is practicable to estimate.
Value is defined by SFAS No. 107 as the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale.

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS

The carrying amount of cash and cash equivalents reported in the balance
sheet approximates its fair value.

DEVELOPMENT LOANS AND OTHER NOTES PAYABLE

The carrying amount of the Company's development loans and other notes
payable approximates fair value based on the current borrowing rate for similar
types of borrowing arrangements.

10. COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS

Letters of credit and bonds approximating $10.1 million at September 30,
1996, have been issued on behalf of the Company to guarantee the completion of
certain improvements associated with various properties under agreements with
municipalities in which the Company is constructing homes. At September 30,
1996, the Company has pledged cash of approximately $265,000 as collateral for
these letters of credit.

F-11
<PAGE>
UNITED HOMES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS (CONTINUED)
The Company has committed to acquire various parcels of improved and
unimproved land through 1999 as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30 AMOUNT
- -------------------------------------------------------------------------------- ------------
<S> <C>
1997............................................................................ $ 2,939,575
1998............................................................................ 1,711,000
1999............................................................................ 1,087,000
2000............................................................................ 407,625
------------
$ 6,145,200
------------
------------
</TABLE>

As collateral for mortgage loans of affiliates of the Parent, the Parent
pledged a certain parcel of the Company's land held for future development with
a carrying value approximating $1,191,000. The two principal stockholders of the
Parent have agreed to indemnify the Company in the event that the Company may
incur any loss. This indemnity is supported by the Parent's two principal
stockholders' pledge of certain personally owned assets to the Parent.

F-12
<PAGE>
UNITED HOMES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 1997
(UNAUDITED)

<TABLE>
<S> <C>
ASSETS

Cash and cash equivalents...................................................... $1,145,234
Housing inventories............................................................ 80,420,503
Land held for future development............................................... 6,791,185
Investment in real estate partnership.......................................... 485,274
Due from Parent................................................................ 2,926,086
Note receivable--affiliate..................................................... 1,200,982
Other.......................................................................... 1,849,692
----------
Total assets................................................................... $94,818,956
----------
----------

LIABILITIES AND STOCKHOLDER'S EQUITY

Accounts payable and accrued liabilities....................................... $11,844,062
Deposits from home buyers...................................................... 1,419,319
Development loans and other notes payable...................................... 70,293,116
----------
Total liabilities.............................................................. 83,556,497
Investors' equity in majority-owned land development and housing
partnerships................................................................. 1,467,210
Stockholder's equity........................................................... 9,795,249
----------
Total liabilities and stockholder's equity..................................... $94,818,956
----------
----------
</TABLE>

See accompanying notes.

F-13
<PAGE>
UNITED HOMES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
REVENUES
Housing and land sales (280 units in 1997 and 205 units in 1996)................... $ 46,910,479 $ 34,566,505
Housing sales--affiliate (22 units in 1997)........................................ 4,661,500
Other.............................................................................. 36,084 424,667
------------- -------------
51,608,063 34,991,172
Direct construction costs, including amortization of capitalized interest and real
estate taxes of $2,077,453 in 1997 and $1,113,364 in 1996........................ 41,753,434 28,063,353
------------- -------------
9,854,629 6,927,819
OTHER COSTS AND EXPENSES
Amortization of capitalized project costs.......................................... 6,378,109 3,235,999
Other.............................................................................. 1,901,279 2,286,324
------------- -------------
8,279,388 5,522,323
Income before investors' share of income in majority-owned land development and
housing partnerships............................................................. 1,575,241 1,405,496
Investors' share of income in majority-owned land development and housing
partnerships..................................................................... 464,946 374,691
------------- -------------
Income before income taxes......................................................... 1,110,295 1,030,805
Income taxes....................................................................... 382,432 401,181
------------- -------------
Net income......................................................................... $ 727,863 $ 629,624
------------- -------------
------------- -------------
</TABLE>

See accompanying notes.

F-14
<PAGE>
UNITED HOMES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

NINE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
----------- ----------- ------------
<S> <C> <C> <C>
Balance at October 1, 1996................................................... $ 100 $ 3,900 $ 9,063,386
Net income................................................................... 727,863
----- ----------- ------------
Balance at June 30, 1997..................................................... $ 100 $ 3,900 $ 9,791,249
----- ----------- ------------
----- ----------- ------------
</TABLE>

See accompanying notes.

F-15
<PAGE>
UNITED HOMES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30
------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income........................................................................ $ 727,863 $ 629,624
Adjustments to reconcile net income to net cash used in operating activities:
Share of net income from real estate partnership................................ (294,000)
Investors' share of equity in majority-owned land development and housing
partnership................................................................... 464,946 374,691
Changes in operating assets and liabilities:
Increase in housing inventories............................................... (25,832,459) (24,405,187)
(Increase) decrease in land held for future development....................... 1,467,556 (680,357)
(Increase) decrease in due from Parent........................................ 569,211 (2,157,221)
Increase in notes receivable.................................................. (1,200,982)
Decrease in other assets...................................................... 207,988 578,175
Increase in deposits from home buyers......................................... 660,918 577,916
Increase in accounts payable and accrued liabilities.......................... 2,305,243 631,011
-------------- --------------
Net cash used in operating activities............................................. (20,629,716) (24,745,348)

CASH FLOW FROM INVESTING ACTIVITIES
Increase in due from managed properties........................................... (41,625) (113,222)
Distributions from real estate partnership investment............................. 178,000
-------------- --------------
Net cash (used in) provided by investing activities............................... (41,625) 64,778

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from development loans and other notes payable........................... 93,474,338 74,673,769
Repayments of development loans and other notes payable........................... (71,320,078) (50,059,771)
Distribution to investors in majority-owned land development and housing
partnerships.................................................................... (1,161,847) (334,859)
-------------- --------------
Net cash provided by financing activities......................................... 20,992,413 24,279,139
-------------- --------------
Increase (decrease) in cash and cash equivalents.................................. 321,072 (401,431)
Cash and cash equivalents at beginning of period.................................. 824,162 1,103,216
-------------- --------------
Cash and cash equivalents at end of period........................................ $ 1,145,234 $ 701,785
-------------- --------------
-------------- --------------
</TABLE>

See accompanying notes.

F-16
<PAGE>
UNITED HOMES, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated interim financial statements do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. These interim statements should be
read in conjunction with the Company's audited financial statements included
elsewhere herein as certain footnote disclosures which substantially duplicate
those contained in such audited financial statements have been omitted from
these condensed interim financial statements. In the opinion of management, the
interim financial statements contain all adjustments (which are normal and
recurring) necessary for a fair statement of financial results for the interim
periods.

2. HOUSING INVENTORIES

Housing inventories consisted of the following at June 30, 1997:

<TABLE>
<S> <C>
Land under development, including site development costs....... $39,380,899
Direct construction costs...................................... 19,704,552
Capitalized project costs...................................... 18,613,886
Land held for sale............................................. 2,721,166
----------
$80,420,503
----------
----------
</TABLE>

3. NOTE RECEIVABLE

During 1997, the Company sold 22 model homes for $4,661,500 to an affiliate
controlled by the shareholders of the Parent. The Company received cash in the
amount of $600,000 and a promissory note in the amount of $565,375 bearing
interest at 10% per annum. In addition, the affiliate assumed the debt
requirements on the existing loans secured by the models in the amount of
$3,496,125. Concurrent with the sale, the Company entered into a lease agreement
with the affiliate to lease the model homes on a month-to-month basis. The
Company recorded a gain on the sale of the models of $766,526.

4. DEVELOPMENT LOANS AND OTHER NOTES PAYABLE

In January 1997, the Company entered into a revolving credit agreement with
Heller Financial Services which matures May 1999 and replaced the Company's
previous credit facility with GE Capital Corporation. At June 30, 1997, the
maximum principal outstanding under the credit agreement is $25,000,000 subject
to the maximum number of housing units under construction. The credit agreement
bears interest at the Commercial Paper Rate, as defined, plus 3.75% (9.4% at
June 30, 1997), which is added monthly to the unpaid balance. Outstanding
principal and interest on the construction base are repaid from proceeds of home
sales. The credit agreement provides various operating and financial covenants
with which the Company must be in compliance as a condition for continuation of
construction draw funding. The outstanding principal balance at June 30, 1997 is
$16,992,959.

In March 1997, the Company entered into a revolving credit agreement with
Residential Funding Corporation which matures March 2000. At June 30, 1997, the
maximum principal outstanding under the credit agreement is $50,000,000, with a
land acquisition and development loan amount not to exceed $25,000,000 and a
construction loan not to exceed $40,000,000 subject to a minimum loan amount of
$10,000,000 on the land acquisition and development facility. Amounts borrowed
under the credit

F-17
<PAGE>
UNITED HOMES, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

4. DEVELOPMENT LOANS AND OTHER NOTES PAYABLE (CONTINUED)
agreement bear interest at the prime rate plus 1.25% (9.75% at June 30, 1997)
which is added monthly to the unpaid balance. Outstanding principal and interest
on the land acquisition and development loan are repaid based on agreed upon
release prices. Outstanding principal and interest on the construction base are
repaid from proceeds of home sales. The credit agreement provides various
operating and financial covenants with which the Company must be in compliance
as a condition for continuation of construction draw funding. The outstanding
principal balance at June 30, 1997 is $21,083,160.

F-18
<PAGE>
PHOTOGRAPHS
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 10
Capitalization............................................................ 11
Selected Consolidated Financial Data...................................... 12
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 14
Business.................................................................. 18
Management................................................................ 26
Certain Transactions...................................................... 29
Description of Securities................................................. 31
Underwriting.............................................................. 37
Legal Matters............................................................. 38
Experts................................................................... 38
Additional Information.................................................... 38
Financial Statements...................................................... F-1
</TABLE>

------------------------

UNTIL , 1997 ( DAYS AFTER THE DATE HEREOF), ALL DEALERS EFFECTING
TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

$6,000,000

[UNITED LOGO]

UNITED HOMES, INC.
___% MANDATORY REDEMPTION
DEBENTURES

---------------------

PROSPECTUS

---------------------

MILLER & SCHROEDER FINANCIAL, INC.

_________ __, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
SEC registration fee.............................................. $ 1,819
NASD filing fee................................................... 1,100
Accounting fees and expenses...................................... 60,000*
Legal fees and expenses........................................... 145,000*
Blue Sky fees and expenses (including counsel fees)............... 20,000*
Printing and engraving expenses................................... 50,000*
Miscellaneous expenses............................................ 30,000*
---------
Total......................................................... $ 307,919*
---------
---------
</TABLE>

- ------------------------

* estimated

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 8.75 of the Illinois Business Corporation Act of 1983, as amended
(the "Act"), authorizes indemnification of directors, officers, employees and
agents of United; allows the advancement of costs of defending against
litigation; and permits companies incorporated in Illinois to purchase insurance
on behalf of directors, officers, employees and agents against liabilities
whether or not in the circumstances such companies would have the power to
indemnify against such liabilities under the provisions of the statute. United's
Articles of Incorporation provides for indemnification of United's officers and
directors to the fullest extent permitted by Section 8.75 of the Act.

Section 2.10 of the Act authorizes corporations to limit or eliminate the
personal liability of directors and officers to corporations and their
shareholders for monetary damages for breach of directors' fiduciary duty of
care. The duty of care requires that, when acting on behalf of the corporation,
directors must exercise an informed business judgment based on all material
information reasonably available to them. Absent the limitations authorized by
the Illinois statute, directors could be accountable to corporations and their
shareholders for monetary damages for conduct that does not satisfy their duty
of care. Although the statute does not change directors' duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. United's Articles of Incorporation limits the
liability of United's directors, officers or shareholders to the fullest extent
permitted by the Illinois statute. The inclusion of this provision in the
Articles of Incorporation may have the effect of reducing the likelihood of
derivative litigation against directors and may discourage or deter shareholders
or management from bringing a lawsuit against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefitted United and its shareholders.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In connection with the formation of United, on September 21, 1994, United
Development Management Company purchased 1,000 shares of common stock for an
aggregate price of $1,000. No sales commission or other consideration was paid
in connection with such sale, which was effective without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption
from registration under Section 4(2) of the Act.

II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation of United Homes, Inc.
3.2 -- Bylaws of United Homes, Inc.
4.1 -- Specimen Debenture*
4.2 -- Form of Indenture*
5.1 -- Opinion of Shefsky & Froelich Ltd. regarding the legality of the
Debentures being registered*
10.1 -- Revolving Credit Agreement between Genel Company, Inc. and United Homes,
Inc. dated May 30, 1995
10.2 -- Loan Agreement between Residential Funding Corporation and United Homes,
Inc., United Homes of Illinois, Inc., United Homes of Michigan, Inc. and
United Homes, Inc., an Arizona corporation dated March 14, 1997
10.3 -- Loan Agreement between Residential Funding Corporation and United Homes,
Inc., United Homes of Illinois, Inc., United Homes of Michigan, Inc. and
United Homes, Inc., an Arizona corporation dated May 28, 1996
10.4 -- Supplement to Loan Agreement between Residential Funding Corporation and
United Homes, Inc., United Homes of Illinois, Inc., United Homes of
Michigan, Inc. and United Homes, Inc., an Arizona corporation dated
October 3, 1996
10.5 -- Supplement to Loan Agreement between Residential Funding Corporation and
United Homes, Inc., United Homes of Illinois, Inc., United Homes of
Michigan, Inc. and United Homes, Inc., an Arizona corporation dated
August 21, 1996
10.6 -- Supplement to Loan Agreement between Residential Funding Corporation and
United Homes, Inc., United Homes of Illinois, Inc., United Homes of
Michigan, Inc. and United Homes, Inc., an Arizona corporation dated
February 3, 1997
10.7 -- Loan Agreement between United-Darien Limited Partnership, United
Development Management Company, United Homes, Inc., United Homes of
Illinois, Inc., Edward Havlik and Virgil Owings and First Bank National
Association dated March 5, 1996
12.1 -- Statements regarding computation of ratios
21.1 -- List of Subsidiaries of United Homes, Inc.
23.1 -- Consent of Shefsky & Froelich Ltd.*
23.2 -- Consent of Ernst & Young LLP
24.1 -- Power of Attorney (see signature page)
27.1 -- Financial Data Schedule
</TABLE>

- ------------------------

* To be filed by amendment.

II-2
<PAGE>
(b) Financial Statement

<TABLE>
<C> <S>
ANNUAL FINANCIAL STATEMENTS:

Report of Independent Auditors;
Consolidated Balance Sheets as of September 30, 1996 and 1995;
Consolidated Statements of Income for the years ended September 30, 1996,
1995 and 1994;
Consolidated Statements Changes in Stockholder's Equity for the years
ended September 30, 1996, 1995 and 1994;
Consolidated Statements of Cash Flows for the years ended September 30,
1996, 1995 and 1994; and
Notes to the Consolidated Financial Statements for the years ended
September 30, 1996, 1995 and 1994.

INTERIM FINANCIAL STATEMENTS (UNAUDITED):

Condensed Consolidated Balance Sheet as of June 30, 1997;
Condensed Consolidated Statements of Income for the nine months ended June
30, 1997 and 1996;
Consolidated Statements of Changes in Stockholder's Equity for the nine
months ended June 30, 1997 and 1996;
Condensed Consolidated Statements of Cash Flows for the nine months ended
June 30, 1997 and 1996;
Notes to the Condensed Consolidated Interim Financial Statements.
</TABLE>

All schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the applicable
instructions, are inapplicable, or the information is included in the combined
financial statements or notes thereto included in the Prospectus and therefore
have been omitted.

ITEM 17. UNDERTAKINGS

The Registrant undertakes:

A. To file, during any period in which offers of sales are being made, a
post-effective amendment to this Registration Statement:

(i) to file any prospectuses required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act").

(ii) to reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement.

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.

B. That for the purpose of determining any liability under the Act,
each such post-effective amendment may be deemed to be a new registration
statement relating to the securities offered therein and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

II-3
<PAGE>
C. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

D. Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

E. For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.

F. For purposes of determining liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Rolling
Meadows, State of Illinois, on August 15, 1997.

<TABLE>
<S> <C> <C>
UNITED HOMES, INC.

By: /s/ EDWARD HAVLIK
-----------------------------------------
Edward Havlik
Title: PRESIDENT
</TABLE>

II-5
<PAGE>
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William J. Crock, Jr., his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and his or her name, place and stead, in any and
all capacities, to sign any and all pre- or post-effective amendments to the
Registration Statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cease to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ VIRGIL OWINGS
- ------------------------------ Chairman of the Board and August 15, 1997
Virgil Owings Director

/S/ EDWARD HAVLIK President and Director
- ------------------------------ (Principal Executive August 15, 1997
Edward Havlik Officer)

Executive Vice President,
Chief Financial Officer,
/S/ WILLIAM J. CROCK, JR. Secretary and Treasurer
- ------------------------------ (Principal Financial August 15, 1997
William J. Crock, Jr. Officer and Principal
Accounting Officer)

/S/ TIMOTHY OWINGS
- ------------------------------ Vice President and August 15, 1997
Timothy Owings Director

/S/ LAURIE BULSON
- ------------------------------ Vice President and August 15, 1997
Laurie Bulson Director

II-6
<PAGE>
EXHIBIT INDEX

- ------------------------

* To be filed by amendment.

<PAGE>

Form BCA-2.10 ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
(ILLEGIBLE 1991)

George H. Ryan SUBMIT IN DUPLICATE
Secretary of State FILED ----------------------
Department of Business SEP 21 1994 This space for use by
Services Secretary of State
Springfield, IL 62756 GEORGE H. RYAN Date 9-21-94
- ------------------------- SECRETARY OF STATE Franchise Tax $ 25
Payment must be made by Filing Fee $ 70
certified check, cashier's ----
check, Illinois attorney's Approved: 100
check, Illinois C.P.A's
check or money order,
payable to Secretary of
State.
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1. CORPORATE NAME: United Homes, Inc. /s/ (ILLEGIBLE) PAID
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SEP 21 1994
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(The corporate name must contain the word "corporation," "company,"
"incorporated," "limited" or an abbreviation thereof.)
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2. Initial Registered Agent: Michael Havlik
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FIRST NAME MIDDLE INITIAL LAST NAME

Initial Registered Office: 2100 Golf Road, Suite 110
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NUMBER STREET SUITE #

Rolling Meadows 60008 Cook
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CITY ZIP CODE COUNTY
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3. Purpose or purposes for which the corporation is organized:
(if not sufficient space to cover this point, add one or more sheets of
this size.)

To transact any and all lawful business for which corporations may be
incorporated under the Illinois Business Corporation Act.

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4. Paragraph 1: Authorized Shares, Issued Shares and Consideration Received:

Par Value Number of Shares Number of Shares Consideration to be
Class per Share Authorized Proposed to be Issued Received Therefor

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Common $0.01 1,000,000 1,000 $1,000.00
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Paragraph 2: The preferences, qualifications, limitations, restrictions
and special or relative rights in respect of the shares of each class are:
(if not sufficient space to cover this point, add one or more sheets of
this size.)

(over)

<PAGE>

5. OPTIONAL: (a) Number of directors constituting the initial board of
directors of the corporation ________________________

(b) Names and addresses of the persons who are to serve as
directors until the first annual meeting of shareholders or
until their successors are elected and qualify:

Name Residential Address
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6. OPTIONAL: (a) It is estimated that the value of all
property to be owned by the corporation
for the following year wherever located
will be: $
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(b) It is estimated that the value of the
property to be located within the State
of Illinois during the following year
will be: $
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(c) It is estimated that the gross amount
of business that will be transacted by
the corporation during the following
year will be: $
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(d) It is estimated that the gross amount
of business that will be transacted from
places of business in the State of
Illinois during the following year will
be: $
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7. OPTIONAL: OTHER PROVISIONS *SEE ATTACHMENT*
Attach a separate sheet of this size for any other provision to
be included in the Articles of Incorporation, e.g., authorizing
preemptive rights, denying cumulative voting, regulating internal
affairs, voting majority requirements, fixing a duration other
than perpetual, etc.
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8. NAME(S) & ADDRESS(ES) OF INCORPORATOR(S)

The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation are
true.

Dated 20 September _____ , 1994

Signature and Name Address

1. /s/ Laura Brady 1. 444 N. Michigan Ave.
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SIGNATURE STREET

Laura Brady Chicago, IL 60611
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(TYPE OR PRINT NAME) CITY/TOWN STATE ZIP CODE
2. 2.
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SIGNATURE STREET

----------------------------------- ----------------------------
(TYPE OR PRINT NAME) CITY/TOWN STATE ZIP CODE
3. 3.
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SIGNATURE STREET

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(TYPE OR PRINT NAME) CITY/TOWN STATE ZIP CODE

(Signatures must be in ink on original document. Carbon copy, photocopy or
rubber stamp signatures may only be used on conformed copies.)
NOTE: If a corporation acts as incorporator, the name of the corporation and
the state of incorporation shall be shown and the execution shall be by its
president or vice president and verified by him and attested by its secretary or
assistant secretary.
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FEE SCHEDULE

- - The initial franchise tax is assessed at the rate of 15/100 of 1 percent
($1.50 per $1,000) on the paid-in capital represented in this state, with a
minimum of $25.

- - The filing fee is $75.

- - The minimum total due (franchise tax + filing fee) is $100.
(Applies when the Consideration to be Received as set forth in Item 4 does
not exceed $16,667)

- - The Department of Business Services in Springfield will provide assistance
in calculating the total fees if necessary.

Illinois Secretary of State Springfield, IL 62756
Department of Business Services Telephone (217) 782-9522
(ILLEGIBLE)

<PAGE>

ATTACHMENT

BCA - 2.10 Articles of Incorporation
United Homes, Inc.

#7. Other Provisions

The personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director of the corporation
shall be eliminated except a director shall continue to be liable, to the extent
provided under applicable law, (i) for any breach of the director's duty of
loyalty to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) under Section 8.65 of the Illinois Business Corporation Act, or (iv)
for any transaction from which the director derived an improper personal
benefit.

<PAGE>

BY-LAWS

UNITED HOMES, INC.
(an Illinois corporation)

ARTICLE I

OFFICES

SECTION 1. PRINCIPAL OFFICE. The principal office of the corporation
in the State of Illinois shall be located in the City of Wheeling and in the
County of Lake. The corporation may have such other offices, either within or
without the State of Illinois, as the business of the corporation may require
from time to time.

SECTION 2. REGISTERED OFFICES. The registered office of the
corporation required by the applicable law of the corporation's state of
incorporation ("Applicable Law") to be maintained in such state may, but need
not be, identical with the principal office of the corporation. The
corporation shall maintain such other registered offices as the laws of such
other jurisdictions as the property or assets of the corporation may, from
time to time, require. The address of any registered office may be changed
from time to time by the board of directors or the registered agent of the
corporation in accordance with the Applicable Law.

ARTICLE II

SHAREHOLDERS

SECTION 1. ANNUAL MEETING. An annual meeting of the shareholders shall
be held on the fourth Friday in September of each year, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday, such meeting shall be held on the next succeeding business day.

SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may
be called either by the chairman of the board, the president, the board of
directors, or the holders of not less than one-fifth (1/5th) of all the
outstanding shares entitled to vote on the matter for which the meeting is
called.

SECTION 3. PLACE OF MEETING. Meetings of shareholders may be held at
such place, either within or without the state of incorporation, as may be
designated in the notice for any annual or for any special meeting. If no
designation is made, or if a special meeting be otherwise called, the place
of meeting shall be

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<PAGE>

at the principal offices of the corporation.

SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date
and hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten (10), and not more than sixty (60) days before the date of the meeting,
or in the case of a meeting at which is to be considered a merger or
consolidation not less than twenty (20), and not more than sixty (60) days
before the meeting, either personally or by mail, by or at the direction of
the chairman of the board, the president, or the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder at his
address as it appears on the records of the corporation, with postage thereon
prepaid. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken.

SECTION 5. FIXING OF RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or to receive payment of any dividend, or other
distribution or allotment of any rights, or to exercise any rights in respect
of any change, conversion or exchange of shares or for the purpose of any
other lawful action, the board of directors of the corporation may fix in
advance a record date which shall not be more than sixty (60) days and, for a
meeting of shareholders, not less than ten (10) days, or in the case of a
meeting at which is to be considered a merger or consolidation not less than
twenty (20) days, before the date of such meeting. If no record date is
fixed, the record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be the date on which
notice of the meeting is mailed, and the record date for the determination of
shareholders for any other purpose shall be the date on which the board of
directors adopts the resolution relating thereto. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting.

SECTION 6. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make, within twenty (20)
days after the record date for a meeting of shareholders, but, in no event,
less than ten (10) days before such meeting of shareholders, a complete list
of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, showing the address of and the number of shares
registered in the name of each shareholder, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be open to inspection by any

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<PAGE>

shareholder for any purpose germane to the meeting, at any time during usual
business hours. Such list shall also be produced and kept open at the time
and place of the meeting and may be inspected by any shareholders during the
whole time of the meeting. The original share ledger or transfer book, or a
duplicate thereof kept in this State, shall be evidence as to the
shareholders entitled to examine such list or share ledger, or transfer book
or to vote at any meeting of shareholders.

SECTION 7. QUORUM. The shareholders of a majority of the outstanding
shares of the corporation, present in person or represented by proxy, shall
constitute a quorum at any meeting of shareholders; provided, that if less
than a majority of the outstanding shares are represented at said meeting, a
majority of the shares so represented may adjourn the meeting at any time
without further notice. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by Applicable Law, the articles of incorporation of the corporation
or these by-laws. At any adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at
the original meeting. Withdrawal of shareholders from any meeting shall not
cause failure of a duly constituted quorum at that meeting.

SECTION 8. PROXIES. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing,
without a meeting, may authorize another person or persons to act for him by
proxy, but no such proxy shall be valid after eleven (11) months from the
date of its execution, unless otherwise provided in the proxy.

SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote upon each matter submitted to vote at a
meeting of shareholders.

SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or
in the absence of such provision, as the board of directors of such
corporation may determine.

Shares standing in the name of a deceased person, a minor ward, or an
incompetent person, may be voted by his administrator, executor, court
appointed guardian or conservator, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, court
appointed guardian or conservator. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy.

A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the

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<PAGE>

name of the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.

Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise
represent their shares, for a period not to exceed ten (10) years, by
entering into a written voting trust agreement specifying the terms and
conditions of the voting trust, and transferring their shares to such trustee
or trustees for the purpose of the agreement. Any such voting trust agreement
shall not become effective until a counterpart of the agreement is deposited
with the corporation at its registered office. The counterpart of the voting
trust agreement so deposited with the corporation shall be subject to the
same right of examination by a shareholder of the corporation, in person or
by agent or attorney, as are the books and records of the corporation, and
shall be subject to examination by any holder of a beneficial interest in the
voting trust, either in person or by agent or attorney, at any reasonable
time for any proper purpose.

Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but
shares of its own stock held by it in a fiduciary capacity, may be voted and
shall be counted in determining the total number of outstanding shares at any
given time.

SECTION 11. INSPECTORS. At any meeting of the shareholders, the
presiding officer may, or upon the request of any shareholder shall, appoint
one or more persons as inspectors for such meeting.

Such inspectors shall (a) ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity
and effect of proxies; (b) count all votes and report the results; and (c) do
such other acts, as are proper to conduct the election and voting with
impartiality and fairness to all the shareholders.

Each report of an inspector shall be in writing and signed by him or by
a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall
be the report of the inspectors. The report of the inspector or inspectors on
the number of shares represented at the meeting and the results of the voting
shall be evidence thereof.

SECTION 12. VOTING BY BALLOT. Voting at any meeting on any question or
in any election may be by voice unless the presiding officer shall order or
any shareholder shall demand that voting be by ballot.

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<PAGE>

SECTION 13. CUMULATIVE VOTING. In all elections for directors, every
shareholder shall have the right to vote, in person or proxy, the number of
shares owned by him, for as many persons as there are directors to be
elected, or to cumulate said shares, and give one candidate as many votes as
the number of directors multiplied by the number of his shares shall equal,
or to distribute them on the same principle among as many candidates as he
shall see fit.

SECTION 14. INFORMAL ACTION BY SHAREHOLDERS. Any action required by
Applicable Law to be taken at a meeting of the shareholders, or any other
action which may be taken at a meeting of the shareholders, may be taken
without a meeting, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares having not less
than the minimum number of votes which would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon
were present and voting so long as any notice required under Applicable Law
is given to those shareholders not so consenting but who are entitled under
Applicable Law to notice of the action taken.

ARTICLE III

DIRECTORS

SECTION 1. GENERAL POWERS. The business of the corporation shall be
managed by its board of directors.

SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors
shall consist of not less than two (2) members and not more than seven (7)
members. Within the limit above specified, the number of Directors shall be
determined from time to time by resolution of the shareholders. The initial
number of directors of the corporation shall be fixed at two (2). Each
director shall hold office until the next annual meeting of shareholders or
until his or her successor shall have been elected and qualified. Directors
need not be residents of the State of Illinois, or shareholders of the
corporation. The number or range of directors may be increased or decreased,
from time to time, by amendment of this Section, but no decrease shall have
the effect of shortening the term of any incumbent director.

SECTION 3. REMOVAL; VACANCIES. Any director may be removed with, or if
not prohibited by Applicable Law, without cause, at any meeting of the
shareholders, by the affirmative vote of the holders of a majority of the
shares of stock of the corporation having voting power, and the vacancy in
the board of directors caused by such removal may be filled by the
shareholders at such meeting.

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<PAGE>

Any other vacancy in the board of directors occurring for any reason
whatsoever, except for a vacancy created by removal of a director, may be
filled for the unexpired term by the board of directors.

SECTION 4. ANNUAL MEETINGS; OTHER REGULAR MEETINGS. An annual meeting
of the board of directors shall be held without other notice than this
by-law, immediately after the annual meeting of shareholders. The board of
directors may provide by resolution, the time and place for the holding of
other regularly scheduled meetings of the board of directors without other
notice except such resolution.

SECTION 5. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the chairman of the board,
the president or any director. The president shall fix the place for holding
any special meeting of the board of directors. Written notice of any special
meeting shall be given not less than two (2) days prior to the meeting if the
meeting is called by the chairman of the board, or the president, and not
less than five (5) days prior to the meeting if the meeting is otherwise
called and delivered to each director at the address for him or her set forth
on the records of the corporation. If mailed, such notice shall be deemed
delivered on the second (2nd) day after being deposited in the United States
mail so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered on the day of delivery
shown by the telegraph company. If notice is delivered by courier service,
such notice shall be deemed to be delivered on the day of delivery shown by
such courier. Unless an alternate address for notice is given by a director
to the chairman of the board, or the president, notice delivered in
accordance with this Section shall be effective whether or not the director
to whom notice is addressed actually receives such notice, notwithstanding
the knowledge of the sender that the addressee was not, for any reason,
available at the address provided for notice under this Section. The
attendance of a director at any meeting shall constitute a waiver of notice
of such meeting, unless a director attends such meeting for the sole express
purpose of objecting to the transaction of any business, because the meeting
is not lawfully called or convened. Neither the business to be transacted at
nor the purpose of any annual or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting.

SECTION 6. QUORUM. A majority of the number of directors fixed by
these by-laws shall constitute a quorum for transaction of business at any
meeting, whether annual or special, of the board of directors; provided, that
if less than such number of directors are present at said meeting, a majority
of the directors present may adjourn the meeting at any time without further
notice.

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<PAGE>

SECTION 7. MANNER OF ACTING. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors, unless the act of a greater number is required by
statute, these by-laws, or the articles of incorporation of the corporation.

The chairman of the meeting of the board of directors shall have a vote
on any matter to come before such meeting, notwithstanding any contrary rule
which might otherwise require that the chairman of the meeting vote only in
case of a tie vote.

SECTION 8. ACTION WITHOUT A MEETING. Any action required to be taken at
a meeting of the board of directors or a committee thereof, or any other
action which may be taken without a meeting of the board, may be taken
without a meeting if a consent in writing, setting forth the the action so
taken, shall be signed by all the directors entitled to vote with respect to
the subject matter thereof, or by all the members of such committee, as the
case may be. Any such consent signed by all the directors or all the members
of the committee shall have the same effect as a unanimous vote and may be
stated as such in any document filed with any person, private entity or
public agency. Regardless of any personal interest in any matter being
consented to, any director may consent to such matter, so long as he has
disclosed his personal interest on such matter in accordance with Applicable
Law.

SECTION 9. COMPENSATION. The board of directors, by the affirmative vote
of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise and reimbursement of their costs and expenses, if any,
of attendance at each meeting of the board. No such payment previously
mentioned in this Section shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.

SECTION 10. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of a board of directors at which action on any corporate
matter is taken, shall be conclusively presumed to have assented to the
action taken, unless his dissent shall be entered in the minutes of the
meeting, or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment
thereof, or shall forward such dissent by certified or registered mail to the
secretary of the corporation immediately after the adjournment of the
meeting. The right to dissent as to any action shall not accrue to any
director who voted in favor of such action.

SECTION 11. COMMITTEES. The board of directors may designate such
committees as the board of directors deems appropriate, and appoint the
members thereof. Service on such committees shall be

<PAGE>

at the pleasure of the board of directors, which may by a majority vote taken
in accordance with these by-laws, increase or decrease committee membership,
remove a committee member and appoint members to fill vacancies in a
committee. Any committee of the board of directors shall make such reports as
required by the board of directors available to the entire board for review
and any necessary action by the board of directors.

Not in lieu of the authority vested in the board pursuant to this
Section, the board of directors may designate an executive committee
consisting of two or more directors, which committee, to the extent provided
by the board and otherwise permitted by law, shall have an exercise all of
the authority of the board of directors in the management of the corporation,
such committee to keep minutes of its proceedings and report the same to the
board when required.

Nothing in this Section shall be construed as precluding the board of
directors or officers from appointing such other committees, whether or not
including board members, as they deem necessary and proper, to aid in the
management and operation of the corporation's business.

ARTICLE IV

OFFICERS

SECTION 1. OFFICERS. The officers of the corporation shall be a
chairman of the board, a president and secretary, and may also include a
treasurer, and such vice president or vice presidents, assistant secretary or
assistant secretaries, and assistant treasurer or assistant treasurers as may
be elected by the board of directors. Any two or more offices may be held by
the same person if permitted by Applicable Law.

SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the annual meeting of
the board of directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as may be convenient. Vacancies may be filled or
new offices may be created and filled at any meeting of the board of
directors. Each officer shall hold office until his successor shall have been
duly elected and qualified, or until his death or other inability to serve,
or until he shall resign or shall have been removed from office in the
manner hereinafter provided. Election of an officer shall not of itself be
deemed in any manner to vest any express or implied contract right or any
other right to continuing employment in such offices.

<PAGE>

SECTION 3. REMOVAL; VACANCIES. Any officer elected or appointed by the
board of directors may be removed by the board of directors with, or if not
prohibited by Applicable Law, without cause, whenever in its judgment, the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to express contract rights, if any, held by the
person so removed.

A vacancy in any office occurring for any reason, including, without
limitation, removal of an officer and the creation of any new office, may be
filled for the unexpired portion of the term by the board of directors.

SECTION 4. CHAIRMAN OF THE BOARD. The chairman of the board shall be the
chief executive officer of the corporation and an EX OFFICIO member of all
standing committees of the board of directors. The chairman of the board
shall attend and preside at all meetings of the shareholders and of the board
of directors, and shall perform such other duties as are usually performed by
a chief executive officer or as may be prescribed by the corporation's
by-laws or board of directors. The chairman of the board shall see that all
orders and resolutions of the board of directors are carried into effect. The
chairman of the board may execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required by
law to be otherwise signed and executed, and except where the signing and
execution thereof shall be expressly delegated by the board of directors to
some other officer or agent of the corporation.

SECTION 5. PRESIDENT. The president shall be the chief operating officer
of the corporation and, subject to the supervision of the chairman of the
board, and the direction and control of the board of directors, he shall be
in charge of the business of the corporation; he shall see that the
resolutions and directions of the board of directors are carried into effect
except in those instances in which that responsibility is specifically
assigned to some other person by the board of directors; and, in general, he
shall discharge all duties incident to the office of president and such other
duties as may be prescribed by the board of directors from time to time. He
shall preside at all meetings of the shareholders and of the board of
directors if the chairman of the board is unable to do so. Except in those
instances in which the authority to execute is expressly delegated to another
officer or agent of the corporation or a different mode of execution is
expressly prescribed by the board of directors or these by-laws, he may
execute for the corporation certificates for its shares, and any contracts,
deeds, mortgages, bonds, or other instruments which the board of directors
has authorized to be executed, and he may accomplish such execution either
under or without the seal of the corporation and either individually or with
the secretary, any assistant secretary, or any other officer thereunto
authorized by the board of directors, according to the requirements of the
form

<PAGE>

of the instrument. He may vote all securities which the corporation is
entitled to vote except as and to the extent such authority shall be vested in
a different officer or agent of the corporation by the board of directors.

SECTION 6. VICE PRESIDENTS. The vice president (or in the event there be
more than one vice president, each of the vice presidents), if any, shall
assist the president in the discharge of his duties as the vice presidents
may be directed by the chairman of the board, the president or the board of
directors and shall perform such other duties, as from time to time, may be
assigned to him by the chairman of the board, the president, or the board of
directors. Anything herein to the contrary notwithstanding, the board of
directors may designate the vice presidential offices with such functional or
hierarchical designations as the board of directors may determine, and
otherwise delegate such duties to each vice presidential office or to the
person serving in any such office as the board of directors determines. In
the absence of the president or in the event of his inability to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designated by these by-laws, or otherwise by the
president if the board of directors has not made such a designation, or in
the absence of any designation, then in the order of seniority of tenure as
vice president) shall perform and discharge the duties of the president, and
when so acting, shall have all the powers of and be subject to all the
restrictions imposed upon the president. Each vice president may execute for
the corporation, certificates for its shares and any contracts, deeds,
mortgages, bonds or other instruments to the extent authorized or permitted
by action of the board of directors or authorized by the chairman of the
board or the president under a grant of authority by the board of directors,
and may accomplish such execution either under or without the seal of the
corporation, and either individually or with the secretary, any assistant
secretary or any other officer thereunto authorized by the board of
directors, according to the requirements of the form of the instrument to be
executed.

SECTION 7. SECRETARY. The secretary shall: (a) record the minutes of the
shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation; (d)
keep a register of the post office address of each shareholder, which shall
be furnished to the secretary by such shareholder; (e) sign with the
chairman of the board, the president, or a vice president, or any other
officer thereunto authorized by the board of directors, certificates for
shares of the corporation, the issue of which shall have been authorized by
the board of directors, and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors have authorized to be executed,
according to the

<PAGE>

requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the board of directors or these by-laws;
(f) have general charge of the stock transfer books and records of the
corporation; and (g) perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the
chairman of the board, the president, or a vice president or any other
officer thereunto authorized by the board of directors.

SECTION 8. TREASURER. The treasurer, if any, shall be the principal
accounting and financial officer of the corporation. The treasurer shall: (a)
have charge of and be responsible for the maintenance of adequate books of
accounts and records for the corporation; (b) have charge and custody of all
funds and securities of the corporation, and be responsible for the receipt
and disbursement thereof; and (c) perform all the duties incident to the
office of treasurer and such other duties from time to time, as may be
assigned to him by the chairmen of the board, the president or the board of
directors. If required by the board of directors, the treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the board of directors may determine.

SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers and assistant secretaries, if any, shall be elected,
shall perform such duties as shall be assigned to them by the treasurer or
the secretary, respectively, or by the chairman of the board, the president,
or a vice president, or any other officer thereunto authorized by the board
of directors. The assistant secretaries may sign with the chairman of the
board, president, or a vice president, or any other officer thereunto
authorized by the board of directors, certificates for shares of the
corporation, the issue of which shall have been authorized by the board of
directors, and any contracts, deeds, mortgages, bonds or other instruments
which the board of directors have authorized to be executed, according to the
requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the board of directors or these by-laws.
The assistant treasurers shall, if required by the board of directors, give
bonds for the faithful discharge of their duties in such sums and with such
sureties as the board of directors shall determine.

SECTION 10. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.

SECTION 11. OPERATING EMPLOYEES. The board of directors may designate or
by resolution, permit the president to designate operating employees to
employ such titles in undertaking their duties as is deemed necessary and
proper without the power and

<PAGE>

authority to take actions other than are encompassed by the employee's
employment duties.

ARTICLE V

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. CONTRACTS. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.

SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name,
unless authorized by a resolution of the board of directors. Such authority
may be general or confined to specific instances.

SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or any other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers,
agent or agents of the corporation and in such manner as shall, from time to
time, be determined by resolution of the board of directors.

SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries, as the
board of directors may select.

ARTICLE VI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of the corporation shall be signed by the chairman of the board, the
president or a vice president or by such other officer as shall be designated
by resolution of the board of directors, and by the secretary or any assistant
secretary, and may be sealed with the seal or a facsimile of the seal of the
corporation. If both of the signatures of the officers be by facsimile, the
certificate shall be executed by or on behalf of a duly authorized transfer
agent or clerk. Each certificate representing shares shall be consecutively
numbered or otherwise identified, and shall also state the name of the person
to whom issued, the number and class of shares (with designation of series,
if any), the date of issuance, that the corporation is organized under the
laws of the State of Illinois, and the par value or a statement that the
shares are without par value. If the

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<PAGE>

corporation is authorized and issues any shares of more than one class or of
any series within a class, the certificate shall contain such information or
as may be required by Applicable Law.

The name and address of each shareholder, the number and class of shares
held and the date on which the certificates for the shares were issued, shall
be entered on the books and records of the corporation.

SECTION 2. LOST CERTIFICATES. If a certificate representing shares has
allegedly been lost or destroyed, the board of directors may, in their sole
discretion, except as may be required by law, direct that a new certificate
be issued upon such indemnification and other reasonable requirements as it
may impose.

SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the corporation
shall be recorded on the books and records of the corporation, and, except in
the case of a lost or destroyed certificate, on surrender for cancellation of
the certificate for such shares. A certificate presented for transfer must
be duly endorsed and accompanied by proper guaranty of signature and other
appropriate assurances that the endorsement is effective.

ARTICLE VII

FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of
January of each year, and shall end on the last day of December of each year.

ARTICLE VIII

DIVIDENDS

The board of directors may, from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in cash, property or
its own shares or dividends on its treasury shares in its own shares, in the
manner and upon the terms and conditions provided by law and its articles of
incorporation of the corporation.

ARTICLE IX

TELEPHONIC MEETINGS

Any meeting of shareholders, directors or a committee of the board of
directors may be conducted by means of voice communication equipment, whereby
all persons participating in the meeting,

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<PAGE>

whether in person or from a remote location, are in oral and aural
communication. Participation in a meeting by means of such equipment shall
constitute presence in person at such meeting.

ARTICLE X

SEAL

The board of directors may provide for a corporate seal which shall be
in the form of a circle and have inscribed thereon the name of the
corporation and the words "Corporate Seal, Illinois."

ARTICLE XI

WAIVER OF NOTICE

Whenever any notice is required to be given under the provisions of
these by-laws, or under the provisions of the articles of incorporation of
the corporation or under Applicable Law, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE XII

INDEMNIFICATION

Unless the board of directors establishes a different basis for
indemnification for any or all of the below described indemnitees, each
person who at any time is or shall have been a director, officer, employee or
agent of the corporation, or is or shall have been serving at the request of
the corporation as a director, officer, employee, partner or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified by the corporation in accordance with and to the fullest extent
permitted by Applicable Law as in effect at the time of adoption of these
by-laws; provided, however, that indemnity shall not be extended as to any
expense incurred by an indemnitee based upon or attributable to such
indemnitee's dishonesty, personal profit or personal advantage to which he
was not legally entitled. The phrase "at the request of the corporation"
refers, without limitation, to any formal or informal election, appointment,
request, requirement, deputation, delegation or devolution of or by the
corporation, by action of its board of directors, officers or shareholders, to
serve in any office or position, or to undertake any act or duty, and shall
also include any capacity or duty imposed or implied at law or arising under
any charter instrument of the corporation or any other entity. The foregoing
right of indemnification shall not be deemed exclusive of

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<PAGE>

any other rights to which a person seeking indemnification may be entitled
under any by-law, agreement, vote of shareholders or vote of disinterested
directors. The corporation may purchase and maintain insurance on behalf of
any person to the fullest extent permitted by Applicable Law as in effect at
the time of the adoption of these by-laws or as amended from time to time.

Notwithstanding any provision in this Article XII to the contrary, in
the event the Business Corporation Act of the State of Illinois is either
amended to provide, or interpreted by judicial or other binding legal
decisions to provide, broader indemnification rights than those contained
herein, such broader indemnification rights shall be provided to any and all
persons entitled to be indemnified pursuant to the Business Corporation Act
of the State of Illinois, the intent of this provision being to permit the
corporation to indemnify, to the full extent permitted by the Business
Corporation Act of the State of Illinois, persons whom its may indemnify
thereafter.

ARTICLE XIII

AMENDMENTS

Unless otherwise provided in the articles of incorporation of the
corporation, these by-laws may be altered, amended or repealed and new
by-laws, not inconsistent with the articles or incorporation of the
corporation or the laws of the State of Illinois (except in the case of
emergency by-laws adopted under Applicable Law), may be adopted at any
properly constituted meeting of the board of directors by a majority vote of
the directors present at the meeting, except that in the case of a matter
which requires greater than a majority vote of the directors, any amendment
with respect to such matter must be approved by a vote of directors equal to
or greater than the number of votes required under these by-laws to
effectuate the matter in question; provided, further, that no by-law adopted
by the shareholders may be altered, amended or repealed by the board of
directors if the by-law adopted by action of the shareholders so restricts
such alteration, amendment or repeal.

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<PAGE>

UP TO U.S. $25,000,000

REVOLVING CREDIT AGREEMENT

Dated as of May 30, 1995

between

UNITED HOMES, INC.

as Borrower

and

GENEL COMPANY, INC.

as Lender

GENEL COMPANY, INC. HOLDS ARIZONA MORTGAGE BANKER'S LICENSE NO. 8284

<PAGE>

TABLE OF CONTENTS

Page
----
1. DEFINITIONS AND INTERPRETATION MATTERS ................................ 1
1.1 DEFINITIONS ................................................. 1
1.2 ACCOUNTING MATTERS .......................................... 24
1.3 OTHER MATTERS ............................................... 25

2. AMOUNT AND TERMS OF CREDIT ............................................ 25
2.1 REVOLVING CREDIT ADVANCES ................................... 25
2.2 MANDATORY PREPAYMENT ........................................ 27
2.3 OPTIONAL PREPAYMENT ......................................... 27
2.4 USE OF PROCEEDS ............................................. 27
2.5 SINGLE LOAN ................................................. 27
2.6 INTEREST ON LOAN ............................................ 27
2.7 COMMITMENT FEE .............................................. 29
2.8 AVAILABILITY AND ADMINISTRATION FEES ........................ 29
2.9 CASH MANAGEMENT SYSTEM ...................................... 29
2.10 APPLICATION OF PAYMENTS ..................................... 31
2.11 ACCOUNTING .................................................. 31
2.12 INDEMNITY ................................................... 31
2.13 ACCESS ...................................................... 32
2.14 TAXES ....................................................... 32
2.15 CONFIDENTIALITY ............................................. 33

3. CONDITIONS PRECEDENT .................................................. 34
3.1 CONDITIONS TO LOAN .......................................... 34
3.2 FURTHER CONDITIONS TO EACH REVOLVING CREDIT ADVANCE.......... 37

4. REPRESENTATIONS AND WARRANTIES ........................................ 38
4.1 CORPORATE EXISTENCE: COMPLIANCE WITH LAW .................... 38
4.2 EXECUTIVE OFFICES ........................................... 38
4.3 SUBSIDIARIES ................................................ 38
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS ..... 38
4.5 FINANCIAL STATEMENTS ........................................ 39
4.6 PROJECTIONS ................................................. 40
4.7 OWNERSHIP OF PROPERTY; LIENS ................................ 40
4.8 NO DEFAULT .................................................. 41
4.9 BURDENSOME RESTRICTIONS ..................................... 41

4.10 LABOR MATTERS ............................................... 42

i
<PAGE>

4.11 OTHER VENTURES .............................................. 42
4.12 INVESTMENT COMPANY ACT ...................................... 42
4.13 MARGIN REGULATIONS .......................................... 42
4.14 TAXES ....................................................... 42
4.15 ERISA ....................................................... 43
4.16 NO LITIGATION ............................................... 44
4.17 BROKERS ..................................................... 44
4.18 OUTSTANDING STOCK; OPTIONS; WARRANTS, ETC. .................. 44
4.19 EMPLOYMENT AND LABOR AGREEMENTS ............................. 44
4.20 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES ................ 45
4.21 FULL DISCLOSURE ............................................. 45
4.22 LIENS ....................................................... 45
4.23 NO MATERIAL ADVERSE EFFECT .................................. 45
4.24 ENVIRONMENTAL PROTECTION .................................... 45

5. FINANCIAL STATEMENTS AND INFORMATION .................................. 46
5.1 REPORTS AND NOTICES ......................................... 46
5.2 COMMUNICATION WITH ACCOUNTANTS .............................. 48

6. AFFIRMATIVE COVENANTS ................................................. 48
6.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS............. 48
6.2 PAYMENT OF OBLIGATIONS ...................................... 49
6.3 FINANCIAL COVENANTS ......................................... 49
6.4 LENDER'S FEES ............................................... 51
6.5 BOOKS AND RECORDS ........................................... 51
6.6 LITIGATION .................................................. 51
6.7 INSURANCE ................................................... 51
6.8 COMPLIANCE WITH LAW ......................................... 52
6.9 AGREEMENTS .................................................. 52
6.10 SUPPLEMENTAL DISCLOSURE ..................................... 52
6.11 EMPLOYEE PLANS .............................................. 53
6.12 SEC FILINGS; CERTAIN OTHER NOTICES .......................... 54
6.13 LEASES ...................................................... 54
6.14 ENVIRONMENTAL MATTERS ....................................... 54
6.15 STAY, EXECUTION AND USURY LAWS .............................. 56
6.16 REAL ESTATE SALES FROM AFFILIATES ........................... 56
6.17 SOLVENCY CERTIFICATE OF AFFILIATE ........................... 57

7. NEGATIVE COVENANTS .................................................... 57
7.1 MERGERS, ETC. ............................................... 57
7.2 INVESTMENTS; LOANS AND ADVANCES.............................. 57
7.3 PAYMENTS TO AFFILIATES....................................... 57
7.4 INDEBTEDNESS................................................. 58
7.5 RELEASE OR SUBORDINATION OF PERMITTED ENCUMBRANCES........... 58

ii
<PAGE>

7.6 CAPITAL STRUCTURE ........................................... 59
7.7 MAINTENANCE OF BUSINESS ..................................... 59
7.8 TRANSACTIONS WITH AFFILIATES ................................ 59
7.9 GUARANTEED INDEBTEDNESS ..................................... 59
7.10 LIENS ....................................................... 59
7.11 CAPITAL EXPENDITURES ........................................ 59
7.12 SALE OF ASSETS .............................................. 59
7.13 CANCELLATION OF INDEBTEDNESS ................................ 59
7.14 HEDGING TRANSACTIONS ........................................ 60
7.15 RESTRICTED PAYMENTS ......................................... 60
7.16 COMPENSATION AND MANAGEMENT ................................. 60
7.17 ERISA ....................................................... 60
7.18 PREPAYMENT OF INDEBTEDNESS .................................. 60
7.19 VENDOR NOTES ................................................ 60
7.20 ESOP ........................................................ 60

8. TERM .................................................................. 60
8.1 TERMINATION ................................................. 60
8.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENT ....................................................... 61

9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ................................ 61
9.1 EVENTS OF DEFAULT ........................................... 61
9.2 REMEDIES .................................................... 63
9.3 WAIVERS BY BORROWER ......................................... 63
9.4 RIGHT OF SET-OFF ............................................ 64

10. MISCELLANEOUS ......................................................... 64
10.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF
INTEREST .......................................................... 64
10.2 FEES AND EXPENSES ........................................... 65
10.3 NO WAIVER LENDER ............................................ 66
10.4 REMEDIES .................................................... 67
10.5 WAIVER OF JURY TRIAL ........................................ 67
10.6 SEVERABILITY ................................................ 67
10.7 PARTIES ..................................................... 67
10.8 CONFLICT OF TERMS ........................................... 67
10.9 AUTHORIZED SIGNATURE ........................................ 67
10.10 GOVERNING LAW ............................................... 67
10.11 NOTICES ..................................................... 68
10.12 SURVIVAL .................................................... 69
10.13 SECTION TITLES .............................................. 69
10.16 JOINT AND SEVERAL LIABILITY ................................. 70
10.17 NO ORAL AGREEMENTS .......................................... 70

iii

<PAGE>

LIST OF DEFINED TERMS

Page
----

Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Consolidated Cash Flow . . . . . . . . . . . . . . . . . . . 1
Adjusted Consolidated Cash Flow Available for Fixed Charges . . . . . 2
Adjusted Consolidated Net Income . . . . . . . . . . . . . . . . . . 2
Adjusted Consolidated Operating Profit . . . . . . . . . . . . . . . 2
Adjusted Consolidated Tangible Net Worth. . . . . . . . . . . . . . . 2
Adjusted Financial Terms. . . . . . . . . . . . . . . . . . . . . . . 2
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . 3
Advance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . 3
Asset Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assignee Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Availability Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Backlog Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Book Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Borrowing Base. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Borrowing Base Availability . . . . . . . . . . . . . . . . . . . . . 4
Advance Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Borrowing Base Book Cost. . . . . . . . . . . . . . . . . . . . . . . 5
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Calculation Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Lease Obligations . . . . . . . . . . . . . . . . . . . . . . 5
Carryback Purchase Note . . . . . . . . . . . . . . . . . . . . . . . 5
Certain Indebtedness Incurred . . . . . . . . . . . . . . . . . . . . 5
Certain Indebtedness Paid . . . . . . . . . . . . . . . . . . . . . . 6
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Collateral Documents. . . . . . . . . . . . . . . . . . . . . . . . . 7
Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

iv
<PAGE>

Commitment Termination Date . . . . . . . . . . . . . . . . . . . . . 7
Common Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Concentration Account . . . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Capital Expenditures . . . . . . . . . . . . . . . . . . 7
Consolidated Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . 7
Consolidated Net Income . . . . . . . . . . . . . . . . . . . . . . . 8
Consolidated Net Tangible Assets . . . . . . . . . . . . . . . . . . 8
Construction Budget . . . . . . . . . . . . . . . . . . . . . . . . . 8
Construction Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Determination Date. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Depository Account. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Development Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Disbursement Accounts . . . . . . . . . . . . . . . . . . . . . . . . 8
DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eligible Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eligible Housing Unit . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Lot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Model Homes. . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligibility Termination Date. . . . . . . . . . . . . . . . . . . . . 10
Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Reports . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Existing Guaranteed Indebtedness. . . . . . . . . . . . . . . . . . . 11
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . 11
Financials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Finished Building Lots. . . . . . . . . . . . . . . . . . . . . . . . 11
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fixed Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Funding Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Governmental Authority. . . . . . . . . . . . . . . . . . . . . . . . 12
Guaranteed Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 12
Primary Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 12
Primary Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

v
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Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guaranty of Performance . . . . . . . . . . . . . . . . . . . . . . . 13
Hazardous Substances. . . . . . . . . . . . . . . . . . . . . . . . . 13
Hazardous Substances Indemnity Agreement. . . . . . . . . . . . . . . 13
Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 13
Housing Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Index Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
GECC Composite Commercial Paper Rate. . . . . . . . . . . . . . . . . 14
Average Interest Expense. . . . . . . . . . . . . . . . . . . . . . . 14
GECC Composite Commercial Paper . . . . . . . . . . . . . . . . . . . 14
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interest Incurred . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . 15
Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Lien. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Loan Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Market Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 16
Maximum Available Revolving Credit Advances . . . . . . . . . . . . . 17
Maximum Lawful Rate . . . . . . . . . . . . . . . . . . . . . . . . . 17
Maximum Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Multiemployer Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Operating Protocol. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Option Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Ordinary Course Liens . . . . . . . . . . . . . . . . . . . . . . . . 18
Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 18
Other Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 18
PBGC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Pension Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Permitted Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . 18
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . 19
Permitted Refinancing Indebtedness. . . . . . . . . . . . . . . . . . 20

vi
<PAGE>

Person ................................................................... 20
Plan ..................................................................... 20
Pledge and Security Agreement (Borrower) ................................. 20
Pledge and Security Agreement (Guarantor) ................................ 20
Proceeding ............................................................... 21
Projections .............................................................. 21
Qualified Plan ........................................................... 21
Real Estate .............................................................. 21
Land ..................................................................... 21
Receipts ................................................................. 21
Reportable Event ......................................................... 21
Reserves ................................................................. 21
Restricted Payment ....................................................... 21
Retiree Welfare Plans .................................................... 22
Revolving Credit Advance ................................................. 22
Security Agreement ....................................................... 22
Speculative Unit ......................................................... 22
Spill .................................................................... 22
Stated Rate .............................................................. 22
Stock .................................................................... 22
Subordinated Loans ....................................................... 22
Subsidiary ............................................................... 22
Taxes .................................................................... 23
Termination Date ......................................................... 23
Title Company ............................................................ 23
Title IV Plan ............................................................ 23
Total Indebtedness ....................................................... 23
Total Indebtedness to Adjusted Consolidated Tangible Net Worth Ratio ..... 23
Total Unsecured Indebtedness ............................................. 23
Trade Payables ........................................................... 23
Trademark Security Agreement ............................................. 23
Tri-Party Agreement ...................................................... 23
Unit Backlog ............................................................. 24
Unit Backlog to Unit Inventory Ratio ..................................... 24
Unit Inventory ........................................................... 24
Welfare Plan ............................................................. 24
Work-in-Progress ......................................................... 24
Accounting Change ........................................................ 24
Accounting Change ........................................................ 24
Revolving Credit Advance ................................................. 25
Note ..................................................................... 26
Notice of Revolving Credit Advance ....................................... 27
Interest Payment Date .................................................... 27
Stated Rate .............................................................. 28

vii
<PAGE>

Default Rate ............................................................. 28
Maximum Lawful Rate ...................................................... 28
Availability Fee ......................................................... 29
Administration Fee ....................................................... 29
Concentration Account .................................................... 29
Concentration Bank ....................................................... 29
Escrow Funds ............................................................. 30
Indemnified Part ......................................................... 31
Taxes .................................................................... 32
Other Taxes .............................................................. 32
Representatives .......................................................... 33
Confidential Information ................................................. 33
Confidential Information ................................................. 34
Projections .............................................................. 40
Federal Reserve Board .................................................... 42
Spill .................................................................... 45
Work ..................................................................... 55
Carryback Purchase Note .................................................. 56
dispositions ............................................................. 59
Event of Default ......................................................... 61
Borrowing Base ...........................................................1.1-1

Accounting Change ........................................................ 24
Accounting Change ........................................................ 24
Adjusted Consolidated Cash Flow .......................................... 1
Adjusted Consolidated Cash Flow Available for Fixed Charges .............. 1
Adjusted Consolidated Net Income ......................................... 2
Adjusted Consolidated Operating Profit ................................... 2
Adjusted Consolidated Tangible Net Worth ................................. 2
Adjusted Financial Terms ................................................. 2
Administration Fee ....................................................... 3
Administration Fee ....................................................... 29
Advance Costs ............................................................ 3
Advance Rate ............................................................. 4
Affiliate ................................................................ 3
Agreement ................................................................ 3
Agreement ................................................................ 1
Ancillary Agreements ..................................................... 3
Asset Sale ............................................................... 3
Assignee Lender .......................................................... 4
Availability Fee ......................................................... 4
Availability Fee ......................................................... 28
Average Interest Expense ................................................. 14
Backlog Unit ............................................................. 4

viii
<PAGE>

Board of Directors ....................................................... 4
Book Cost ................................................................ 4
Borrower ................................................................. 4
Borrower ................................................................. 1
Borrowing Base ........................................................... 4
Borrowing Base ...........................................................1.1-1
Borrowing Base Availability .............................................. 4
Borrowing Base Book Cost ................................................. 5
Business Day ............................................................. 5
Calculation Date ......................................................... 5
Capital Asset ............................................................ 5
Capital Lease ............................................................ 5
Capital Lease Obligations ................................................ 5
Carryback Purchase Note .................................................. 5
Carryback Purchase Note .................................................. 55
Certain Indebtedness Incurred ............................................ 5
Certain Indebtedness Paid ................................................ 6
Change of Control ........................................................ 6
Charges .................................................................. 6
Code ..................................................................... 6
Collateral ............................................................... 6
Collateral Documents ..................................................... 7
Commitment Fee ........................................................... 7
Commitment Termination Date .............................................. 7
Common Equity ............................................................ 7
Compensation ............................................................. 7
Concentration Account .................................................... 7
Concentration Account .................................................... 29
Concentration Bank ....................................................... 29
Confidential Information ................................................. 33
Confidential Information ................................................. 33
Consolidated Capital Expenditures ........................................ 7
Consolidated Fixed Charge Coverage Ratio ................................. 7
Consolidated Net Income .................................................. 7
Consolidated Net Tangible Assets ......................................... 8
Construction Budget ...................................................... 8
Construction Costs ....................................................... 8
Cost of Sales ............................................................ 8
Default .................................................................. 8
Default Rate ............................................................. 27
Depository Account ....................................................... 8
Determination Date ....................................................... 8
Development Costs ........................................................ 8
Disbursement Accounts .................................................... 8

<PAGE>
dispositions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Eligibility Termination Date. . . . . . . . . . . . . . . . . . . . . . 10
Eligible Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eligible Housing Unit . . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Lot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Model Homes. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Report. . . . . . . . . . . . . . . . . . . . . . . . . . 10
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Escrow Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Existing Guaranteed Indebtedness. . . . . . . . . . . . . . . . . . . . 11
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . 42
Financials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Finished Building Lots. . . . . . . . . . . . . . . . . . . . . . . . . 11
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fixed Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Funding Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GECC Composite Commercial Paper . . . . . . . . . . . . . . . . . . . . 14
GECC Composite Commercial Paper Rate. . . . . . . . . . . . . . . . . . 14
Governmental Authority. . . . . . . . . . . . . . . . . . . . . . . . . 12
Guaranteed Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 12
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guaranty of Performance . . . . . . . . . . . . . . . . . . . . . . . . 12
Hazardous Substances. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Hazardous Substances Indemnity Agreement. . . . . . . . . . . . . . . . 13
Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Housing Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Index Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interest Incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

x
<PAGE>

Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . 15
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . 27
Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Lien. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Loan Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Market Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . 16
Maximum Available Revolving Credit Advances . . . . . . . . . . . . . . 16
Maximum Lawful Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Maximum Lawful Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Maximum Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Multiemployer Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notice of Revolving Credit Advance. . . . . . . . . . . . . . . . . . . 26
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Operating Protocol. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Option Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Ordinary Course Liens . . . . . . . . . . . . . . . . . . . . . . . . . 17
Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Other Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PBGC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Pension Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Permitted Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . 18
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . 19
Permitted Refinancing Indebtedness. . . . . . . . . . . . . . . . . . . 20
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Pledge and Security Agreement (Borrower). . . . . . . . . . . . . . . . 20
Pledge and Security Agreement (Guarantor) . . . . . . . . . . . . . . . 20
Primary Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Primary Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Proceeding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

xi
<PAGE>

Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Qualified Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Reportable Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Restricted Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Retiree Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . 21
Revolving Credit Advance. . . . . . . . . . . . . . . . . . . . . . . . 25
Revolving Credit Advance. . . . . . . . . . . . . . . . . . . . . . . . 21
Security Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Speculative Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Spill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Spill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Stated Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Stated Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Subordinated Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Title Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Title IV Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Total Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Total Indebtedness to Adjusted Consolidated Tangible Net Worth Ratio. . 23
Total Unsecured Indebtedness. . . . . . . . . . . . . . . . . . . . . . 23
Trade Payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Trademark Security Agreement. . . . . . . . . . . . . . . . . . . . . . 23
Tri-Party Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Unit Backlog. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Unit Backlog to Unit Inventory Ratio. . . . . . . . . . . . . . . . . . 23
Unit Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Welfare Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Work-in-Progress. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

xii

<PAGE>

INDEX OF EXHIBITS

Exhibit A - Form of Note

Exhibit B - Form of Notice of Revolving
Credit Advance

Exhibit C - Form of Instruction Letter
(Concentration Banks)

Exhibit D - Form of Carryback Purchase Note

xiii
<PAGE>

INDEX OF SCHEDULES

Schedule 1.1 Borrowing Base
Schedule 2.9(a) - Concentration Account
Schedule 2.9(b) - Disbursement Accounts
Schedule 4.2 - Executive Offices
Schedule 4.3 - Subsidiaries and Guarantors
Schedule 4.5(d) - Material Adverse changes and
Stock Related Transactions
Since December 31, 1992
Schedule 4.7(a) - Encumbrances on Real Estate
Schedule 4.7(b) - Rights of First Refusal
Schedule 4.7(d) - Pending or Threatened
Condemnation Proceedings
Schedule 4.7(e) - Casualty and Flood Hazard Area
Schedule 4.8 - Defaults
Schedule 4.11 - Other Ventures
Schedule 4.14 - Tax Matters
Schedule 4.15 - ERISA
Schedule 4.16 - Litigation
Schedule 4.18 - Outstanding Options
Schedule 4.19 - Employment Matters
Schedule 4.20 - Patents and Trademarks
Schedule 4.23 - Material Adverse Effect
Schedule 4.24 - Environmental Matters
Schedule 5.1(f) - Operating Reports
Schedule 6.7 - Insurance
Schedule 7.8 - Transactions with Affiliates
Schedule 7.16 - Employees and Officers Whose Annual Compensation
Exceeds $100,000
Schedule 10.9 - Authorized Signatures

xiv
<PAGE>

REVOLVING CREDIT AGREEMENT

This REVOLVING CREDIT AGREEMENT ("AGREEMENT"), dated as of May ___,1995,
between UNITED HOMES, INC., an Illinois corporation, having an office at 2100
Golf Road, Suite 110, Rolling Meadows, Illinois 60008-4220 ("BORROWER"), and
GENEL COMPANY, INC., an Oregon corporation, having an office at 13455 Noel Road,
Suite 1740, Two Galleria Tower, LB24, Dallas, Texas 75240 ("LENDER").

R E C I T A L S:

A. Borrower has requested Lender to provide a secured revolving working
capital line of credit to Borrower, of up to Twenty Five Million Dollars
($25,000,000) in aggregate principal amount outstanding at any one time.

B. Lender has agreed to provide such secured revolving working capital
line of credit, but only upon the terms, and subject to the conditions,
contained herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:

1. DEFINITION AND INTERPRETATION MATTERS

1.1 DEFINITIONS.

In addition to the defined terms appearing above, capitalized terms used in
this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:

"ADJUSTED CONSOLIDATED CASH FLOW" shall mean, with respect to Borrower, for
any period, an amount equal to the sum of the following amounts for such period:
(i) Adjusted Consolidated Operating Profit, plus (ii) all capitalized costs
relieved through Cost of Sales, including, without limitation, capitalized
interest, development and land costs, but excluding development and land costs
with respect to Eligible Collateral, plus (iii) Certain Indebtedness Incurred,
minus (iv) without duplication, all costs which are capitalized, including,
without limitation, Consolidated Capital Expenditures, capitalized finance,
interest, development and land costs, but excluding development and land costs
with respect to Eligible Collateral, minus (v) all cash payments constituting
Certain Indebtedness Paid, minus (vi) cash payments of Other Distributions,
Permitted Tax Distributions and federal, state and local income taxes, minus
(vii) Interest Incurred by Borrower in connection with this Agreement.

1
<PAGE>

"ADJUSTED CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGES" of Borrower
shall mean, for any period, the sum of the amounts for such period of (i)
Consolidated Net Income, plus (ii) federal income tax liability of Borrower and
Guarantor (other than income tax expense, either positive or negative,
attributable to extraordinary and nonrecurring gains or losses on Asset Sales),
plus (iii) Interest Expense, plus (iv) without duplication, all interest
included as a component of Cost of Sales, plus (v) all depreciation and, without
duplication, amortization, plus (vi) all other noncash items reducing
Consolidated Net Income during such period, minus (vii) all other noncash items
increasing Consolidated Net Income during such period, all as determined on a
consolidated basis for Borrower in accordance with GAAP.

"ADJUSTED CONSOLIDATED NET INCOME" shall mean, with respect to Borrower for
any period, the aggregate net income (or loss) for such period, determined in
accordance with GAAP; provided, that there will be excluded from such net income
(to the extent otherwise included therein), without duplication: (i) the net
income (or loss) of any Person other than Borrower in which any Person other
than Borrower has an ownership interest, provided, however, that to the extent
that any such income is actually received by Borrower in the form of dividends
or similar distributions, it shall be counted as net income during the period in
which it is received, (ii) except to the extent includable in Adjusted
Consolidated Net Income pursuant to the foregoing clause (i) the net income (or
loss of any Person that accrued prior to the date that (a) such Person is merged
into or consolidated with Borrower or (b) the assets of such Person are acquired
by Borrower, (iii) in the case of a successor to Borrower by consolidation,
merger or transfer of its assets, any net income (or loss) of the successor
prior to such merger, consolidation or transfer of assets, (iv) any noncash
losses, whether or not extraordinary, incurred in connection with the issuance
of Stock in exchange for Indebtedness of Borrower, and (v) all other noncash
items increasing net income during such period.

"ADJUSTED CONSOLIDATED OPERATING PROFIT" shall mean, with respect to
Borrower, for any period, the sum of the following amounts for such period: (i)
Adjusted Consolidated Net Income, (ii) federal income tax liability of Borrower
and Guarantor, the aggregate amounts of Interest Expense as reflected on the
income statement prepared in accordance with GAAP of Borrower, (iii)
depreciation, and (iv) amortization.

"ADJUSTED CONSOLIDATED TANGIBLE NET WORTH" shall mean, with respect to
Borrower at any date, (I) the stockholders' equity on a consolidated basis at
the end of the fiscal quarter immediately preceding such date, as determined in
accordance with GAAP, minus (ii) the amount of Intangible Assets reflected on
the consolidated balance sheet of Borrower as of the end of the fiscal quarter
of Borrower immediately preceding such date.

"ADJUSTED FINANCIAL TERMS" shall include the following defined terms:
Adjusted Consolidated Cash Flow, Adjusted Consolidated Net Income, Adjusted
Consolidated Operating Profit, Adjusted Consolidated Tangible Net Worth, Book
Cost, Adjusted Consolidated Cash Flow Available for Fixed Charges, Consolidated
Net Income, Consolidated Net Tangible Assets and Cost of Sales.

2
<PAGE>

"ADMINISTRATION FEE" shall have the meaning assigned to it in Section
2.8(b) of this Agreement.

"ADVANCE COSTS" shall mean, for any period, redevelopment costs and land
development costs incurred by Borrower for improvements that may be required by
municipalities or other governmental bodies or any other party or entity that
imposes development requirements on any Real Estate.

"AFFILIATE" shall mean, with respect to any Person, (i) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, 10% or more of the Stock having ordinary voting
power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person or (iii)
each of such Person's officers and directors. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies , whether through the ownership of voting securities, by contract or
otherwise; provided, however, that Lender shall not be deemed to be an Affiliate
of Borrower.

"AGREEMENT" shall mean this Revolving Credit Agreement, including all
amendments, modifications and supplements hereto and any appendices, exhibits or
schedules to any of the foregoing, and shall refer to the agreement as the same
may be in effect at the time such reference becomes operative.

"ANCILLARY AGREEMENTS" shall mean any supplemental agreement, undertaking,
instrument, document or other writing executed by Borrower or any Affiliate as a
condition to advance or funding under this Agreement or otherwise in connection
herewith, including, without limitation, the Loan Documents, and all amendments
or supplements thereto.

"ASSET SALE" for any Person shall mean the sale, lease, conveyance or
other disposition (including, without limitation, by merger, consolidation or
sale and leaseback transaction, and whether by operation of law or otherwise)
of any of that Person's assets (including, without limitation, the sale or
other disposition of Stock or other ownership interest of any Subsidiary of
such Person, whether by such Person or such Subsidiary), whether owned on the
date hereof or subsequently acquired in one transaction or a series of
related transactions, in which such Person receives cash and/or consideration
(including, without limitation, the unconditional assumption of Indebtedness
of such Person) having an aggregate Fair Market Value of $200,000 or more as
to such transaction or series of related transactions; provided, however, (i)
sales of homes and sales of mortgages on homes in the ordinary course of
business consistent with past practices will not constitute Asset Sales, (ii)
sales, leases, conveyances or other dispositions, including, without
limitation, exchanges or swaps, of Real Estate in the ordinary course of
business consistent with past practices will not constitute Asset Sales, and
(iii) sales, leases, sale-leasebacks or other dispositions of amenities and
other improvements at Borrower's communities in the ordinary course of
business consistent with past practices will not constitute Asset Sales.

3
<PAGE>

"ASSIGNEE LENDER" shall mean any holder of all or any portion of the Note
other than Lender.

"AVAILABILITY FEE" shall have the meaning assigned to such term in Section
2.8(a) of this Agreement.

"BACKLOG UNIT" means any Housing Unit that is the subject of a formal,
written agreement between Borrower and a third party customer (i) whereby
Borrower agrees to deliver and the customer agrees to buy a specific Housing
Unit at a specific selling price, and (ii) pursuant to which such customer
shall have made a customary cash deposit against the selling price of such
Housing Unit.

"BOARD OF DIRECTORS" means the board of directors of a Person or any
authorized committee of the board of directors of such Person.

"BOOK COST" of any Real Estate owned or acquired by any person shall mean
the cost of such Real Estate as reflected on the financial statements of such
Person determined in accordance with GAAP.

"BORROWER" shall mean United Homes, Inc., an Illinois corporation, having
an office at 2100 Golf Road, Suite 110, Rolling Meadows, Illinois 60008-4220.

"BORROWING BASE" shall have the meaning assigned to it in Schedule 1.1
attached hereto, as interpreted and administered pursuant to the Operating
Protocol.

"BORROWING BASE AVAILABILITY" shall mean at any time, an amount equal to
the sum of:

(a) for each Eligible Housing Unit, the lesser of (i) 100% of
Construction Costs of the Eligible Housing Unit, PLUS the Advance Rate of the
Eligible Lot on which such Eligible Housing Unit has been or is being
constructed, or (ii) the applicable Advance Rate of the Eligible Housing Unit:
PLUS

(b) for each Eligible Lot, the lesser of (i) 100% of Borrowing Base
Book Cost for the Eligible Lots on which an Eligible Housing Unit has not been
and is not being constructed, or (ii) the applicable Advance Rate for such
Eligible Lot; MINUS

(c) the aggregate amount of all Trade Payables that have been
outstanding more than thirty (30) days after the due date of the applicable
invoice (after giving effect to the payment terms thereof).

As used herein, "ADVANCE RATE" shall mean: (a) with respect to any Eligible
Housing Unit, the following amounts: (i) if such Eligible Housing Unit is an
Eligible Model Home, 75% of the Market Value of such Eligible Model Home and the
Eligible Lot on which such

4
<PAGE>

Eligible Model Home has been or is being constructed (considered as a whole);
(ii) if such Eligible Housing Unit qualifies as a Backlog Unit, 75% of the
Market Value of such Backlog Unit and the Eligible Lot on which such Backlog
Unit has been or is being constructed (considered as a whole); or (iii) if such
Eligible Housing Unit qualifies as a Speculative Unit, 65% of the Market Value
of such Speculative Unit and the Eligible Lot on which such Speculative Unit has
been or is being constructed (considered as a whole); and (b) with respect to an
Eligible Lot, 75% of the Market Value of such Eligible Lot.

"BORROWING BASE BOOK COST" of a Finished Building Lot shall mean all
acquisition costs of such Finished Building Lot which have been incurred by
Borrower. However, in the case of a Finished Building Lot transferred from an
Affiliate to Borrower, Borrowing Base Book Cost shall mean, at the time of the
transfer, all acquisition and development costs of such Finished Building Lot
which have been incurred by such Affiliate, including, but not limited to,
carrying cost, legal cost, engineering costs, taxes, bonds and permits. No
increases in Borrowing Base Book Cost shall occur due to transfer among
Affiliates and Borrower.

"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the States of Illinois
or New York.

"CALCULATION DATE" shall mean the first Business Day following which
Borrower has delivered its quarterly financial statements to Lender, an in no
event later than (i) the 45th day following the end of each Borrower's first
three fiscal quarters of each of Borrower's fiscal years and (ii) the 90th day
following the end of each of Borrower's fiscal years.

"CAPITAL ASSET" shall mean any asset that has a useful life of more than
one year and which is properly classified in relevant financial statements of
Borrower as a real property (excluding land held for investment or development,
land in the process of development, building lots and housing units, whether
under construction or completed), equipment, improvements, fixed assets or
similar types of assets capitalized in accordance with GAAP.

"CAPITAL LEASE" shall mean any lease of any property (whether real,
personal or mixed) by Borrower as lessee that, in accordance with GAAP, would be
required either to be classified and accounted for as a capital lease on a
balance sheet of Borrower or otherwise to be disclosed as such in a note to such
balance sheet.

"CAPITAL LEASE OBLIGATIONS" shall mean, with respect to any Capital Lease,
the amount of the obligations of the lessee thereunder.

"CARRYBACK PURCHASE NOTE" shall have the meaning assigned to it in Section
6.16.

"CERTAIN INDEBTEDNESS INCURRED" shall mean the amount of all sums borrowed
by Borrower in any period (i) pursuant to any future private placement or public
offering of Borrower's debt securities, (ii) representing acquisition,
development or construction

5
<PAGE>

financing, and (iii) representing financing received from third parties with
respect to Models, but in no event including any (a) Guaranteed Indebtedness,
(b) Indebtedness evidenced by this Agreement, (c) Indebtedness evidenced by
the Carryback Purchase Notes or (d) Indebtedness evidenced by any vendor
notes, other than vendor notes given by Borrower with respect to Real Estate
which is not Eligible Collateral, or Trade Payables.

"CERTAIN INDEBTEDNESS PAID" shall mean all payments of principal and
interest made by Borrower in any period in connection with (i) any future
private placement or public offering of Borrower's debt securities, (ii)
acquisition, development or construction financing, including without
limitation any payments made by Borrower in connection with any Indebtedness
to third parties which Borrower has guaranteed or on which Borrower is a
co-obligor, and (iii) representing financing received from third parties with
respect to Models; but in no event including any (a) Indebtedness evidenced by
this Agreement, (b) Indebtedness evidenced by the Carryback Purchase Notes,
or (c) Indebtedness evidenced by any vendor notes, other that vendor notes
given by Borrower with respect to Real Estate which is not Eligible
Collateral, or Trade Payables, or (d) without duplication, other
Indebtedness, the proceeds of which were used to pay costs included in Cost
of Sales.

"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events:

(i) the sale, lease or transfer of more than 5% of the assets
of borrower (considered as one entity) to any Person or "group" (as such
term is used in section 13(d)(3) of the Exchange Act);

(ii) any transaction or series of transactions the result of
which is that, Edward F. Havlik, Virgil W. Owings, and trusts
established for estate planning purposes for members of the immediate
families of Edward F. Havlik and Virgil W. Owings, in the aggregate,
beneficially own, directly or indirectly, less than 60% of the aggregate
voting power of all outstanding classes of Common Equity of Borrower and
Guarantor including, without limitation, convertible debt on an as
converted basis.

"CHARGES" shall mean all Federal, state, county, city, municipal, local,
foreign or other governmental taxes (including, without limitation, PBGC) at
the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations,
(iii) Borrower's employees, payroll, income or gross receipts, (iv)
Borrower's ownership or use of any of its assets, or (v) any other aspect or
Borrower's business.

"CODE" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.

"COLLATERAL" shall mean the "Collateral" covered by the Security
Agreement, the Mortgages, the Trademark Security Agreement and any other
property, real or personal,

<PAGE>

tangible or intangible, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or Lien in favor of Lender
to secure the Obligations.

"COLLATERAL DOCUMENTS" shall mean the Security Agreement, the Mortgages,
the Trademark Security Agreement and any other security agreements, pledge
agreements, mortgages, deeds of trust, assignments or any other agreement or
document pursuant to which Lender obtains or perfects a security interest in
or Lien on Collateral.

"COMMITMENT FEE" shall have the meaning assigned to it in Section 2.7 of
this Agreement.

"COMMITMENT TERMINATION DATE" shall mean the earlier of (i)
May 31, 1999, (ii) the date that Lender elects, pursuant to an express
provision of this Agreement, to terminate Borrower's right to receive Revolving
Credit Advances, and (iii) the date of prepayment in full by Borrower of the
Loan in accordance with the provisions of Section 2.3 hereof.

"COMMON EQUITY" of any Person means all Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in
the selection of the governing body, partners, managers or others that will
control the management and policies of such Person.

"COMPENSATION" shall mean, with respect to any Person, all payments
and accruals commonly considered to be compensation, including, without
limitation, all wages, commissions, salary, deferred payment arrangements,
bonus payments and accruals, profit sharing arrangements, stock appreciation
rights or similar rights, incentive payments, pension or employment benefit
contributions or similar payments, made to or accrued for the account of such
Person or otherwise for the direct or indirect benefit of such Person.

"CONCENTRATION ACCOUNT" shall mean that account designated on Schedule
2.9(a) hereof or other accounts as may be agreed to by Lender and Borrower.

"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the
aggregate amount of all payments by Borrower for any Capital Asset or
improvements or for replacements, substitutions or additions thereto, all as
determined on a consolidated basis for Borrower in accordance with GAAP.

"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" of Borrower shall mean,
with respect to any Calculation Date, the ratio of (i) Adjusted Consolidated
Cash Flow Available for Fixed Charges of Borrower for the prior four full
fiscal quarters for which financial results have been reported immediately
preceding the Calculation Date, to (ii) the aggregate Interest Incurred of
Borrower for the prior four full fiscal quarters for which financial results
have been reported immediately preceding the Calculation Date, determined on
a consolidated basis in accordance with GAAP.

<PAGE>

"CONSOLIDATED NET INCOME" of Borrower, for any period, shall mean the
Adjusted Consolidated Net Income of Borrower; provided that there will be
excluded therefrom (to the extent otherwise included therein), without
duplication, the gains (but not losses) resulting from (a) the acquisition of
securities issued by Borrower or extinguishment of Indebtedness of Borrower,
(b) Asset Sales, and (c) other extraordinary items. Notwithstanding the
foregoing, in calculating Consolidated Net Income, Borrower will be entitled
to take into consideration the tax benefits associated with any extraordinary
loss, but only to the extent such tax benefits are recognized by Borrower,
all determined on a consolidated basis in accordance with GAAP.

"CONSOLIDATED NET TANGIBLE ASSETS" shall mean, for any Person, the total
amount of assets of such Person and its subsidiaries (less applicable
reserves) on a consolidated basis, as determined in accordance with GAAP,
less Intangible Assets.

"CONSTRUCTION BUDGET" shall mean with respect to any Eligible Collateral
the budget for construction costs presented by Borrower with a "start
package" described in the Operating Protocol and approved by Lender.

"CONSTRUCTION COSTS" shall mean the actual costs incurred by Borrower in
connection with the construction of any Eligible Collateral pursuant to the
Construction Budget submitted to Lender for that Eligible Collateral,
including all capitalized soft costs which are allowable under GAAP, but
excluding the actual cost or Market Value of the Eligible Lots on which
Eligible Collateral has been or is being constructed.

"COST OF SALES" shall mean, with respect to Borrower for any period, the
"cost of sales" of Borrower for such period, determined on a consolidated
basis in accordance with GAAP.

"DEFAULT" shall mean any event which, with the passage of time or notice
or both, would, unless cured or waived, become an Event of Default.

"DETERMINATION DATE" shall mean any date on which Lender is determining
the current Borrowing Base Availability.

"DEPOSITORY ACCOUNT" shall mean that certain account of Lender, account
number 50256602 in the name of GENEL/RCL-United at Bankers Trust Company, 17
Wall Street, New York, New York, ABA number 021 001 033.

"DEVELOPMENT COSTS" shall mean, with respect to Borrower as of any date,
land development costs for improvements.

"DISBURSEMENT ACCOUNTS" shall mean those certain accounts of Borrower
designated on Schedule 2.9(b) hereof, the primary Disbursement Account to
which Lender shall disburse

<PAGE>

Revolving Credit Advances being American National Bank and Trust Company of
Chicago Account No. 500601658.

"DOL" shall mean the United States Department of Labor or any successor
thereto.

"ELIGIBLE COLLATERAL" shall mean Real Estate designated in writing by
Lender in its sole discretion as constituting Eligible Collateral and with
respect to which:

(i) Borrower is vested in title;

(ii) Lender has a first priority Lien perfected as contemplated by
the terms of this Agreement and the other Loan Documents;

(iii) In the case of any Finished Building Lot, Lender has approved
the Subdivision in which such Finished Building Lot is located;

(iv) In the case of any Housing Unit, there is Work-in-Progress or
finished Housing Units or Models thereon;

(v) In the case of any Housing Unit, Lender and Borrower have agreed
upon a "start package" and Construction Budget with respect to such Real
Estate as more fully described in the operating Protocol;

(vi) In the case of any Housing Unit, such Real Estate has all
necessary building and other permits and construction of a Housing Unit or
Model thereon has commenced;

(vii) Lender is satisfied with the results of its physical
inspection and with the valuation of such Real Estate set forth in
third-party appraisals performed at Borrower's expense;

(viii) Lender has received an Environmental Report from an
environmental consultant acceptable to Lender and is satisfied with the
environmental condition of such Real Estate;

(ix) Lender and its counsel are satisfied with the results of a
legal review of title to such Real Estate and Lender has received an ALTA
1970 lender's policy of title insurance (or a binding commitment to issue the
same) in form and content satisfactory to Lender and which, when the
applicable premium therefor is paid by Borrower and the policy is issued,
will insure that Lender's Lien created pursuant to the Collateral Documents
constitutes a valid first priority Lien encumbering such Real Estate, naming
Lender as insured, issued by a nationally recognized title insurance company
acceptable to Lender and providing such endorsements as Lender may require;

<PAGE>

(x) Lender has received such other information and documents
regarding such Real Estate as it may require;

(xi) such Real Estate otherwise meets Lender's normal and customary
requirements for lending on similar real estate collateral including, without
limitation, approvals of subdivisions, absorption analyses, residual value
calculations and cash flow analyses;

(xii) with respect to any Real Estate subject to a Subordinated
Loan, the subordinated lender shall have delivered to Lender copies of all
documents evidencing such Subordinated Loan and such other documentation as
Lender may require and shall have submitted to the escrow company designated
to facilitate the sale of such Real Estate, duly executed and acknowledged
partial releases of the lots and units comprising the Real Estate; and

(xiii) all conditions to Real Estate becoming Eligible Collateral
set forth in the Operating Protocol have been satisfied.

"ELIGIBLE HOUSING UNIT" shall mean any housing unit on which Lender has
a first priority Lien and no other party has a Lien (other than Permitted
Encumbrances) and which constitutes Eligible Collateral and part of the
Borrowing Base.

"ELIGIBLE LOT" means any Finished Building Lot on which Lender has a
first priority Lien and no other party has a Lien (other than Permitted
Encumbrances) and which constitutes Eligible Collateral and part of the
Borrowing Base.

"ELIGIBLE MODEL HOMES" shall mean any Model on which Lender has a first
priority Lien and no other-party has a Lien (other than Permitted
Encumbrances) and which constitutes Eligible Collateral and part of the
Borrowing Base.

"ELIGIBLE TERMINATION DATE" shall mean May 31, 1998.

"ENVIRONMENTAL LAWS" shall mean (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601 ET SEQ.,
(ii) the Resource Conservation and Recovery Act, as amended by the Hazardous
and Solid Waste Amendment of 1984, 42 U.S.C.A Section 6901 ET SEQ., (iii) the
Clean Air Act, 42 U.S.C.A. Section 7401 ET SEQ., (iv) the Clean Water Act of
1977, 33 U.S.C.A. Section 1251 ET SEQ., (v) the Toxic Substances Control Act,
15 U.S.C.A. 2601 ET SEQ., and (vi) all other federal, state and local laws,
rules, regulations, statutes, and ordinances relating to air pollution, water
pollution, and the handling, release, discharge, use, storage, treatment, or
disposal of on-site or off-site hazardous or toxic waste, substances or
materials.

<PAGE>

"ENVIRONMENTAL REPORT" shall mean an environmental report, audit or
assessment of real property owned, leased or operated by the Borrower which
is performed in accordance or substantially consistent with the Standard
Practices for Environmental Site Assessments; Phase I Environmental Site
Assessment Process or Transaction Screen Process, as established by the
American Society for Testing and Materials, or which is otherwise prepared in
accordance with the requirements of an appropriate federal, state or local
governmental agency.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time.

"ERISA AFFILIATE" shall mean, with respect to Borrower, any trade or
business (whether or not incorporated) under common control, or treated as a
single employer, with Borrower within the meaning of Section 414(b), (c),
(m), or (o) or the IRC.

"ERISA EVENT" shall mean, with respect to Borrower or any ERISA
Affiliate, the failure to make required contributions to a Qualified Plan.

"ESOP" shall mean the Employee Stock Ownership Plan adopted by Guarantor
for its employees.

"EVENT OF DEFAULT" shall have the meaning assigned to it in Section 9.1
hereof.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"EXISTING GUARANTEED INDEBTEDNESS" shall have the meaning assigned to it
in section 7.4(a) hereof.

"FAIR MARKET VALUE" shall mean the price at which particular assets or
property could be sold by a willing seller to a willing buyer under ordinary
and customary terms and conditions, and shall not mean the price at which
such assets or property could be sold in a liquidation or forced sale.

"FEDERAL RESERVE BOARD" shall have the meaning assigned to it in Section
4.13 hereof.

"FINANCIALS" shall mean the financial statements referred to in Sections
4.5(a) and (b) hereof.

"FINISHED BUILDING LOTS." shall mean any Real Estate that has been duly
recorded and platted for use as single family attached or detached dwelling
sites, zoned for such use, with respect to which all requisite governmental
consents and approvals have been obtained and as to which (i) all site
development activity, other than the application of the seal or finishing
coat on improved roadways and other minor repairs required to dedicate such
roadways has

<PAGE>

been completed and (ii) all utilities connections (including electrical and,
where applicable, water and sewer) have been brought to each lot shown on the
plat covering such parcel and are available for hook-up.

"FISCAL YEAR" shall mean each one-year period commencing on October 1
and ending on September 30 of the succeeding year. Subsequent changes of the
fiscal year of Borrower shall not change the term "Fiscal Year," unless
Lender consents in writing to such changes.

"FIXED CHARGE" shall mean the aggregate of all interest on the Loan, all
interest on the loan from The Chase Manhattan Bank, N.A. to Guarantor
relating to the ESOP, and other fixed debt payments, other charges, and
reserves of Borrower and Guarantor as determined by Lender from time to time.

"FUNDING DATE" shall mean the first date on which all of the following
have occurred: (i) all conditions precedent set forth in Section 3 have been
satisfied or waived in writing by Lender as provided therein, and (ii) Lender
makes its first advance pursuant to this Agreement.

"GAAP" shall mean accounting policies and methodologies consistent with
generally accepted accounting principles in the United States of America as
in effect from time to time, as adjusted where required pursuant to Section
1.2 hereof.

"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state
or other political subdivision thereof and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

"GUARANTEED INDEBTEDNESS" shall mean any obligation of Borrower or
Guarantor guaranteeing any Indebtedness, lease, dividend, or other obligation
("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any
manner including, without limitation, any obligation or arrangement of
Borrower or Guarantor (i) to purchase or repurchase any such Primary
Obligation, (ii) to advance or supply funds (a) for the purchase or payment
of any such Primary Obligation or (b) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such Primary Obligation of the ability of the
Primary Obligor to make payment of such Primary Obligation, or (iv) to
indemnify the owner of such Primary Obligation against the loss in respect
thereof.

"GUARANTOR" shall mean United Development Management Company, an
Illinois corporation.

"GUARANTY" shall mean the agreement made in favor of Lender, including
all amendments, modifications and supplements thereto, and shall refer to the
Guaranty as the same may be in effect at the time such reference becomes
operative.

<PAGE>

"GUARANTY OF PERFORMANCE" shall mean any surety or performance bond,
stand-by letter of credit or similar instrument issued to municipalities,
local governments or utilities supporting the performance by any Person for
the construction of public facilities required for the development or
maintenance of a subdivision.

"HAZARDOUS SUBSTANCES" shall mean any substance, material or waste, the
use, generation, handling, storage, release, treatment or disposal of which
is regulated by and federal, state or local government authority in any
jurisdiction in which either Borrower or Guarantor has owned, leased or
operated real property or disposed of hazardous materials, including, without
limitation, any such material, waste or substance which is (i) petroleum or a
petroleum product, whether refined or unrefined, (ii) regulated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33
U.S.C.A. 1251 ET SEQ., (33 U.S.C.A. 1321) or regulated pursuant to Section
307 of the Clean Water Act (33 U.S.C.A. 1317), (iii) regulated as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C.A. 6901 ET SEQ., (42 U.S.C.A. 6903), (iv) regulated as
a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.A. 9601 ET
SEQ., (42 U.S.C.A. 9601), or (v) similarly regulated under any other federal,
state or local law, statute, regulation or ordinance relating to the
protection of human health or the environment.

"HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT" shall mean the Hazardous
Substances Indemnity Agreement entered into among Lender, Borrower, and
Guarantor.

"HEDGING OBLIGATIONS" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate cap or collar agreement, option or futures contract
or other similar agreement or arrangement relating to interest rates or
foreign exchange rates.

"HOUSING UNIT" shall mean any house, constructed or under construction
on a Finished Building Lot, for sale to retail purchasers.

"INDEBTEDNESS" of any Person at any date means, without duplication, (i)
all indebtedness of such Person for borrower money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof), (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, including, without
limitation, any and all such obligations of such Persons which are
convertible into or exchangeable for Stock, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), other than standby letters
of credit (or similar instruments, including, without limitation,
reimbursement obligations) issued for the benefit of, or surety and
performance bonds issued by, such Person in the ordinary course of business,
(iv) all obligations of such Person with respect to Hedging Obligations
(other than (x) those that fix the exchange rate in connection with
indebtedness denominated in a foreign currency and otherwise permitted by
this Agreement and (y) the purchase of mortgage commitments in the ordinary
course of business), (v) all

<PAGE>

obligations of such Person to pay the deferred and unpaid purchase price of
property or services, including, without limitation, all conditional sale
obligations of such Person and all obligations under any title retention
agreement (except trade payables and accrued expenses incurred in the
ordinary course of business), (vi) all Capital Lease Obligations of such
Person, (vii) all indebtedness of others secured by a Lien on any asset of
such Person, whether or not such indebtedness is assumed by such Person, and
(viii) all indebtedness of others guaranteed by, or otherwise the liability
of, such Person to the extent of such guaranty or liability, and (ix) all
indebtedness of any Person in connection with the ESOP. The amount of
indebtedness of such Person at any date will be (a) the outstanding balance
at such date of all unconditional obligations as described above, (b) the
maximum liability of such Person for any contingent under clause (viii) above
and (c) in the case of clause (vii) (if the Indebtedness referred to therein
is not assumed by such Person), the lesser of the (A) Fair Market Value of
any asset subject to a Lien securing the indebtedness of others on the date
that the Lien attached and (B) amount of the indebtedness secured.
Notwithstanding the foregoing, Indebtedness shall not include any obligations
relating to or arising out of special assessments by any municipality or by
any finance entities or agencies created by any municipality or authorized to
be created under state statutes.

"INDEX RATE" shall mean the "GECC Composite Commercial Paper Rate."
"GECC COMPOSITE COMMERCIAL PAPER RATE" shall mean the Average Interest
Expense on the actual principal amount of the GECC Composite Commercial Paper
outstanding for Lender's full fiscal month preceding the interest billing
month. "AVERAGE INTEREST EXPENSE" shall mean the percentage obtained by
dividing the interest expense on GECC Composite Commercial Paper for such
fiscal month by the average daily principal amount of GECC Composite
Commercial Paper outstanding during such fiscal month, divided by the actual
number of days in such fiscal month and multiplied by the actual number of
days in the calendar year. The GECC Composite Commercial Paper Rate shall be
determined by Lender and evidenced by a certificate issued by an authorized
Lender employee. "GECC COMPOSITE COMMERCIAL PAPER" shall mean Lender's
outstanding commercial paper for terms of nine (9) months or less from
sources within the United States, but excluding the current portion of
Lender's long term Debt and GECC Financial Corporation's borrowings and
interest expense.

"INTANGIBLE ASSETS" shall mean all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, write-ups of assets over their carrying value
on the Funding Date or the date of acquisition, if acquired subsequent
thereto (other than write-ups resulting from foreign currency transactions
and write-ups of tangible assets of a going concern business made within
12 months after the acquisition of such business), and all other items which
would be treated as intangibles on the consolidated balance sheets of
Borrower and Guarantor prepared in accordance with GAAP.

"INTEREST EXPENSE" of any Person for any period means, without
duplication, interest which, in conformity with GAAP, would be set opposite
the caption "interest expense" or any like caption on an income statement for
such Person (including, without limitation and

<PAGE>

to the extent required to be included as "interest expense" in conformity
with GAAP, imputed interest included on Capital Lease Obligations, all
commissions, discounts and other fees and charges owed with respect to
letters of credit securing financial obligations and bankers' acceptance
financing, the net costs associated with Hedging Obligations, amortization of
other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premium, if any, and all
other noncash interest expenses other than interest and other charges
amortized to Cost of Sales BUT EXCLUDING any interest paid from interest
reserves on development loans).

"INTEREST INCURRED" of any Person for any period means, without
duplication, Interest Expense of such Person for such period plus, to the
extent not included in Interest Expense, all interest capitalized for such
period, all interest attributable to discontinued operations for such period
to the extent not set forth on the income statement under the caption
"interest expense" or any like caption, and all interest actually paid under
any guaranty of Indebtedness (including, without limitation, a guaranty of
principal, interest or any combination thereof) of any other Person during
such period.

"INTEREST PAYMENT DATE" shall have the meaning assigned to such term in
Section 2.6(a) hereof.

"INVESTMENT" means, with respect to any Person, (i) any direct or
indirect advance (other than advances to employees for moving, entertainment
and travel expenses, loans, advances or deposits in anticipation of goods or
services to be provided, in each case in the ordinary course of business),
loan or other extension of credit to, or guarantee of any Indebtedness of, or
capital contribution by such Person or any of its Subsidiaries to any other
Person (other than a Subsidiary of such Person), including all Indebtedness
and accounts receivable from such other Person that are not current assets or
did not arise from sales to such other Persons in the ordinary course of
business, (ii) any direct or indirect capital contribution to, purchase or
other acquisition of any Stock, partnership interest or other ownership
interest, debt security or other security of, or other investment in, any
Subsidiary or Affiliate of such Person, or (iii) any direct or indirect
purchase or other acquisition by such Person or any of its Subsidiaries of,
or a beneficial interest in, stock or other securities of any other Person.
The amount of any Investment shall be the original cost of such Investment
plus the costs of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-down or write-offs with
respect to such Investment.

"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.

"IRS" shall mean the Internal Revenue Service, or any successor thereto.

"LEASES" shall mean all of those leasehold estates in real property now
owned or hereafter acquired by Borrower, as lessee.

<PAGE>

"LENDER" shall mean Genel Company, Inc. and certain of its affiliates
or their successors thereto which may make advances under this Agreement.

"LIEN" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement
(or other preferential arrangement in the nature of a security interest or
lien) of any kind or nature whatsoever (including, without limitation, any
lease or title retention agreement, any financing lease having substantially
the same economic effect as any of the foregoing, any perfected workers',
mechanics', suppliers', carriers' or warehousemen's lien, any "stop notice",
and the filing of, or agreement to give, any financing statement perfecting
a security interest under the Code or comparable law of any jurisdiction).

"LOAN" shall mean at any date the aggregate amount of Revolving Credit
Advances outstanding at such-date.

"LOAN DOCUMENTS" shall mean this Agreement, the Note, the Collateral
Documents, the Guaranty, the Tri-Party Agreement, those other Ancillary
Agreements as to which Lender is a party or a beneficiary on the Funding Date,
and all other agreements, instruments, documents and certificates, including,
without limitation, pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore, now or
hereafter executed by or on behalf of Borrower or any of its Affiliates, or
any employee of Borrower or any of its Affiliates, and delivered to Lender
in connection with this Agreement or the transactions contemplated hereby.

"LOAN PARTY" shall mean Borrower, Guarantor, and each other party to a
Loan Document.

"MARKET VALUE" shall mean, with respect to any Eligible Collateral, an
amount equal to a value for such Eligible Collateral either (a) established
by Lender or an independent qualified appraiser approved by Lender in its
reasonable discretion, or (b) established by the sales price specified in a
formal written agreement between Borrower and a third-party customer which
qualifies a Housing Unit as Backlog Unit.

"MATERIAL ADVERESE EFFECT" shall mean material adverse effect on (i) the
business, assets, operations, prospects or financial or other condition of
Borrower, (ii) the Borrower's collective ability to perform the Obligations
in accordance with the terms thereof, (iii) the Collateral or Lender's Lien
on the Collateral or the priority of any such Lien where the aggregate value
of all Collateral or Lender's Lien therein so adversely affected shall exceed
$50,000 at any given time during the term of this Agreement or (iv) Lender's
rights and remedies under any of the Loan Documents, other than any effect on
such rights or remedies arising out of or caused by actions voluntarily taken
by Lender (including in connection with any exercise of its remedies).

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<PAGE>

"MAXIMUM AVAILABLE REVOLVING CREDIT ADVANCES" shall mean the maximum
amount of Revolving Credit Advances Borrower would have the ability to obtain
at any given time.

"MAXIMUM LAWFUL RATE" shall have the meaning assigned to it in Section
2.6(d) hereof.

"MAXIMUM LOAN" shall mean an amount of up to $20,000,000 until (i)
Borrower shall have achieved an Adjusted Consolidated Tangible Net Worth of in
excess of $9,000,000,(ii) Borrower shall have sold at least 351 Housing Units
in Fiscal Year 1994-1995, and (iii) shall have paid the $20,000 addition to
the Commitment Fee under Section 2.7, at which time Maximum Loan shall mean
an amount of up to $25,000,000.

"MODEL" shall mean any display house, which, may be decorated,
landscaped or furnished, which is used for marketing purposes and is not
generally for sale to retail purchasers until such time as it ceases to be
used as a display house, and may include with respect to Models of attached
housing, a unit or units attached to such Models but which are not used for
marketing purposes.

"MORTGAGES" shall mean agreements made in favor of Lender by Borrower,
granting Lender a Lien on Eligible Collateral, in form satisfactory to
Lender, subject to changes made from time to time to conform to applicable
state laws, including all amendments, modifications, spreaders and
supplements thereto and shall refer to the Mortgages as the same may be in
effect at the time such reference becomes operative.

"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.

"NOTE" shall have the meaning assigned to it in Section 2.1(b) hereof.

"OBLIGATIONS" shall mean all loans, advances, debts, liabilities, and
obligations, for monetary amounts (whether or not such amounts are liquidated
or determinable) owing by Borrower to Lender and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or
not evidenced by any note, agreement or other instrument, arising under any
of the Loan Documents. This term includes, without limitation, all interest,
Commitment Fees, Availability Fees, Administration Fees, charges, expenses,
indemnities (to the extent of any present claim thereunder), attorneys' fees
and any other sums chargeable to Borrower under any of the Loan Documents.

"OPERATING PROTOCOL" shall mean the Protocol and Procedures for
admission of Real Estate to and removal of Real Estate from the Borrowing
Base.

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<PAGE>

"OPTION DEPOSIT" shall mean any payment of a cash deposit or delivery
of a letter of credit in conjunction with a contract committing a seller to
deliver title to all or a portion of a land parcel or finished lots, on
specified terms.

"ORDINARY COURSE LIENS" shall mean (i) liens for ad valorem taxes,
assessments or other similar governmental charges or levies, which are
either (a) not yet due and payable or, (b) contested in good faith and fully
bonded; and (ii) workers' mechanics', suppliers', carriers', or
warehousemen's liens arising by virtue of statute, in the ordinary course of
business, not yet due and payable.

"OTHER DISTRIBUTIONS" shall mean all amounts paid to Affiliates (whether
by loan, dividends, contributions, for the purchase of property, for services
or otherwise) except as permitted pursuant to Section 7.3(a), (c), (d), (e),
(f), (g) and (h).

"OTHER INDEBTEDNESS" shall mean all Indebtedness of Borrower, but not
including Indebtedness outstanding under this Agreement, Indebtedness
reflected by the Carryback Purchase Notes, or Trade Payables or other
customary trade payables and accruals incurred in the ordinary course of
business consistent with past practice (unless evidenced by notes).

"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.

"PENSION PLAN" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, which Borrower
or any ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of
them.

"PERMITTED ENCUMBRANCES" shall mean the following encumbrances: (i)
Ordinary Course Liens; (ii) pledges or deposits securing obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which Borrower is a party as lessee made in the ordinary course of
business; (iv) deposits securing public or statutory obligations of Borrower;
(v) deposits securing or in lieu of surety, appeal or customs bonds in
proceedings to which Borrower is a party; (vi) any attachment or judgment lien,
unless the judgment it secures shall not, within 60 days after the entry
thereof, have been discharged or execution thereof stayed pending appeal, or
shall not have been discharged within 60 days after the expiration of any
stay; (vii) "stop notices," unless the aggregate amount outstanding and
unbonded exceeds $50,000; (viii) zoning restrictions on the use of real
property (including leasehold title), so long as the same do not materially
impair the use, value, or marketability of such real property, leases or
leasehold estates; (ix) Liens, licenses or other restrictions or encumbrances
on Real Estate, specified on mortgagee title insurance binders and policies
approved by Lender and its counsel; (x) Liens securing the Permitted
Refinancing

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Indebtedness; provided that (a) the amount of Indebtedness secured by such
Liens does not result in a violation of any of the financial covenants of
this Agreement, (b) such Liens do not spread to cover any additional assets
with a Fair Market Value in excess of the assets which previously secured the
refinanced Indebtedness, and (c) such Liens only extend to assets which are
similar to the type of assets previously securing the refinanced
Indebtedness; (xi) any interest in or title of a lessor to property subject
to any Capital Lease Obligations incurred in compliance with the provisions
of this Agreement; (xii) any contract to sell an asset; provided such sale is
not otherwise prohibited under this Agreement; (xiii) Liens securing
Indebtedness of Borrower; (xiv) any right of a lender or lenders to which
Borrower may be indebted to offset against, or appropriate and apply to the
payment of, such indebtedness any and all balances, credits, deposits,
accounts or monies of Borrower with or held by such lender or lenders; (xv)
any pledge or deposit of cash or property in conjunction with obtaining
surety and performance bonds and letters of credit required to engage in
constructing on-site and off-site improvements required by municipalities or
other governmental authorities in the ordinary course of business of
Borrower, by Borrower and as otherwise permitted by this Agreement; (xvi)
Liens in favor of Borrower; (xvii) Liens on property of a Person existing at
the time such Person is merged into or consolidated with Borrower or any
Subsidiary of Borrower or becomes a Subsidiary of Borrower; provided, that
such Liens were in existence prior to such merger or consolidation or the
time such Person becomes a Subsidiary and were not created in contemplation
thereof; (xviii) Liens on property existing at the time of acquisition
thereof by Borrower or any Subsidiary of Borrower; provided, that such Liens
were in existence prior to such acquisition and were not created in
contemplation thereof; (xix) Liens existing on the date hereof; (xx) Liens
created by special assessment districts used to finance infrastructure
improvements so long as such liens are non-recourse; (xxi) zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of
such real property in the ordinary course of business of Borrower or the
value of such real property for the purpose of such business; and (xxii) any
contract to sell an asset provided such sale is otherwise permitted under
this Agreement.

"PERMITTED INVESTMENTS" means (a) any Investments in Borrower, (b) any
Investments in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof, (ii)
marketable direct obligations issued by any state of the United States of
America maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings obtainable
from both Standard & Poor's Corporation and Moody's Investors Service, Inc.,
(iii) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from both Standard & Poor's Corporation and
Moody's Investors Service, Inc., (iv) certificates of deposit maturing within
six months from the date of acquisition thereof issued by, or bank accounts
maintained with, commercial banks organized under the laws of the United
States of America or any state thereof or the District of Columbia, each
having combined capital and surplus, as shown in the most recently

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<PAGE>

consolidated financial statements at the time of acquisition of not less than
$10,000,000 and, at the time of acquisition, having a rating of "A" or better
from both Standard & Poor's Corporation and Moody's Investors Service, Inc.,
(v) bonds issued by corporations organized under the laws for the United
States of America or any state thereof, having a maturity within one year
from the date of acquisition thereof and having, at the time of acquisitions,
one of the two highest ratings obtainable from both Standard & Poor's
Corporation and Moody's Investors Service, Inc. but only to the extent that
such corporate bonds do not exceed fifty percent (50%) of the Borrower's
total Investments at the time of acquisition, (vi) money market funds
organized under the laws of the United States of America or any state thereof
that invest solely in any of the types of Investments permitted under this
definition, or (vii) any securities received in connection with Asset Sales
provided that, at the time of acquisition, the aggregate book value of such
securities does not exceed 10% of Borrower's Consolidated Net Tangible Assets
at the end of the most recent fiscal quarter for which financial statements
are available.

"PERMITTED REFINANCING INDEBTEDNESS" shall mean Indebtedness issued in
exchange for, or the proceeds of which are used to extend, refinance, renew,
replace, substitute or refund other Indebtedness of Borrower, but not any
Affiliate of Borrower; provided, however, that the principal amount of such
Permitted Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness so extended, refinanced, renewed, replaced, substituted or
refunded (plus the amount of reasonable fees and expenses incurred in
connection therewith).

"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether
Federal, state, city, municipal or otherwise, including, without limitation,
any instrumentality, division, agency, body or department thereof).

"PLAN" shall mean an employee benefit plan, as defined in Section 3(3) of
ERISA, which Borrower or any ERISA Affiliate maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any of them.

"PLEDGE AND SECURITY AGREEMENT (BORROWER)" shall mean the agreement
entered into by Borrower in favor of Lender in form satisfactory to Lender,
including all amendments, modifications and supplements thereto, and shall
refer to the Pledge and Security Agreement (Borrower) as the same may be in
effect at the time such reference becomes operative.

"PLEDGE AND SECURITY AGREEMENT (GUARANTOR)" shall mean the agreement
entered into by Guarantor in favor of Lender in form satisfactory to Lender,
including all amendments, modifications and supplements thereto, and shall
refer to the Pledge and Security Agreement (Guarantor) as the same may be in
effect at the time such reference becomes operative.

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<PAGE>

"PROCEEDING" shall mean any (i) insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to Borrower or Guarantor, or their property or other
creditors as such (pursuant to the Bankruptcy Code or otherwise), (ii)
proceeding for any liquidation, dissolution or other winding-up of Borrower,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) assignment for the benefit of creditors of Borrower, or
(iv) other marshalling of the assets of Borrower.

"PROJECTIONS" shall mean the projections referred to in Section 4.6
hereof.

"QUALIFIED PLAN" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA, which is intended to be tax-qualified under Section
401(a) of the IRC, and which Borrower or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.

"REAL ESTATE" shall mean all of those plots, pieces or parcels of land
now owned or hereafter acquired by Borrower (the "LAND"), together with the
right, title and interest of Borrower, if any, in and to the streets, the land
lying-in the bed of any streets, roads or avenues, opened or proposed, in
front of, adjoining, or abutting the land to the center line thereof, the air
space and development rights pertaining to the Land and right to use such air
space and development rights, all rights of way, privileges, liberties,
tenements, hereditaments, and appurtenances belonging or in any way
appertaining thereto, all fixtures, all easements now or hereafter benefiting
the Land all royalties and rights appertaining to the use and enjoyment of
the land, including, without limitation, all alley, vault, drainage, mineral,
water, oil, and gas rights, together with all of the buildings and other
improvements now or hereafter erected on the Land, and all fixtures and
articles of personal property appertaining thereto and all additions thereto
and substitutions and replacements thereof.

"RECEIPTS" shall mean all cash, cash equivalents, checks, notes, drafts
and any items of payment or collection received by or on behalf of Borrower,
or by any officers, employees, agents of Borrower, or other Persons acting
for or in concert with Borrower, to make collections on Borrower's behalf.

"REPORTABLE EVENT" shall mean any of the events described in Section
4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.

"RESERVES" shall mean such reserves for warranties, allowances and the
like as may be established by Borrower or as may otherwise be required in
accordance with GAAP.

"RESTRICTED PAYMENT" shall mean, with respect to any Person (i) the
declaration of any dividend or the incurrence of any liability to make any
other payment or distribution of cash, securities or other property or assets
in respect of such Person's Stock, except for dividends on Common Equity
payable in additional shares of Common Equity, and (ii) any

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<PAGE>

payment on account of the purchase, redemption, retirement or other
acquisition for value of such Person's Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, other
than through the issuance of, or out of the proceeds of the substantially
concurrent sale of, Common Equity of such Person.

"RETIREE WELFARE PLANS" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination from employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at
the sole expense of the participant or the beneficiary of the participant.

"REVOLVING CREDIT ADVANCE" shall have the meaning assigned to it in
Section 2.1(a) hereof.

"SECURITY AGREEMENT" shall mean the agreement entered into by Borrower in
favor of Lender, including all amendments, modifications and supplements
thereto, and shall refer to the Security Agreement as the same may be in
effect at the time such reference becomes operative.

"SPECULATIVE UNIT" shall mean any Housing Unit that, on any Determination
Date, in not a Backlong Unit or a Model.

"SPILL" shall have the meaning assigned to it in Section 4.24 hereof.

"STATED RATE" shall have the meaning assigned to it in Section 2.6(a)
hereof.

"STOCK" shall mean all shares, options, warrants, general or limited
partnership interests, participants or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1
of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended);
provided that debt securities convertible into or redeemable or exchangeable
for Stock shall be deemed not to be Stock.

"SUBORDINATED LOANS" shall mean loans encumbering Eligible Collateral at
the time accepted by Lender as Eligible Collateral which are fully
subordinated to Lender's security interest in such Eligible Collateral
pursuant to documentation required by Lender in its discretion ; provided,
however, at no time shall the aggregate outstanding principal balances of all
Subordinated Loans exceed Two Million Dollars ($2,000,000).

"SUBSIDIARY" shall mean, with respect to any Person, (a) any corporation
of which an aggregate of more than 50% of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the

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<PAGE>

time, Stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned legally or beneficially by such Person
and/or one or more Subsidiaries of such Person, and (b) any partnership in
which such Person and/or one or more Subsidiaries of such Person shall have
an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50%.

"TAXES" shall have the meaning to it in Section 2.14 hereof.

"TERMINATION DATE" shall mean the date on which (i) all obligations
hereunder have been completely discharged and (ii) Borrower shall have no
further right to borrow any monies hereunder.

"TITLE COMPANY" shall mean Chicago Title Insurance Company.

"TITLE IV PLAN" shall mean a Pension Plan, other than a Multiemployer
Plan, which is covered by Title IV of ERISA.

"TOTAL INDEBTEDNESS" shall mean, with respect to Borrower as of any date
(without duplication), (i) all Indebtedness of Borrower outstanding pursuant
to this Agreement at such date, (ii) all Other Indebtedness outstanding at
such date.

"TOTAL INDEBTEDNESS TO ADJUSTED CONSOLIDATED TANGIBLE NET WORTH RATIO"
shall mean, as at the date of the calculation therof, the ratio (i) Total
Indebtedness at such date to (ii) Adjusted Consolidated Tangible Net Worth at
such date.

"TRADE PAYABLE" shall mean all lienable trade or other payables or
obligations incurred by Borrower in connection with the acquisition or
development of or construction of Real Estate.

"TRADEMARK SECURITY AGREEMENT" shall mean the agreement entered into
between Lender and Borrower, including all amendments, modifications and
supplements thereto, and shall refer to the Trademark Security Agreement as
the same may be in effect at the time such reference become operative.

"TRI-PARTY AGREEMENT" shall mean the agreement entered into among
Lender, Borrower, and the Title Company, including all amendments,
modifications and supplements thereto, and shall refer to the Tri-Party
Agreement as the same may be in effect at the time such reference becomes
operative.

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<PAGE>

"UNIT BACKLOG" at any date shall mean the sum total, net of
cancellations, of all written agreements for the sale of Backlong Units.

"UNIT BACKLOG TO UNIT INVENTORY RATIO" shall mean, as at the date of
determination thereof, the ratio of (i) Unit Backlog to (ii) Unit Inventory;
PROVIDED, HOWEVER, that at any time and from time to time the Unit Backlog to
Unit Inventory Ratio may be recalculated based on Unit Backlog and Unit
Inventory over the most recent three (3)-month period.

"UNIT INVENTORY" at any date shall mean all Housing Units owned by
Borrower at such date (whether under construction or completed) which are not
included in Unit Backlong or which are Models at such date.

"WELFARE PLAN" shall mean an employee welfare benefit plan, as defined in
Section 3(1) of ERISA, which Borrower or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.

"WORK-IN-PROGRESS" shall mean construction work which has begun, is
actively being pursued and has not yet been completed with respect to a
Finished Building Lot, Housing Unit or Model.

1.2 ACCOUNTING MATTERS. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically
provided herein, in accordance with GAAP consistently applied, except as
provided below:

(a) In the event that any "ACCOUNTING CHANGE" (as defined below)
shall occur and such change would result in a change in the method of
calculation of financial covenants, standards or terms in this Agreement,
then Borrower and Lender agree to enter into negotiations in order to amend
such provisions of this Agreement so as to equitably reflect such Accounting
Change with the desired result that after such amendment has been executed
and delivered the criteria for evaluating Borrower's compliance with this
Agreement shall be as nearly as practicable the same after such Accounting
Change as it was prior to such Accounting Change having been made. Until such
time as such an amendment shall have been executed and delivered by Borrower
and Lender, all financial covenants, standards and terms in this Agreement
shall continue to be calculated or construed as if such Accounting Change had
not occurred. "ACCOUNTING CHANGE" means any change in accounting principles
required by the promulgation of any rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the Securities and
Exchange Commission (or successors thereto or agencies with similar
functions). That certain terms or computations

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<PAGE>

are explicitly modified by the phrase "in accordance with GAAP" shall in no
way be constructed to limit the foregoing.

(b) Lender and Borrower acknowledge that GAAP requires the Borrower
carry over the book basis of Real Estate purchased form certain Affiliates
(including the purchase of Finished Building Lots from Affiliates), as
opposed to obtaining a new book basis equal to the lower of the purchase
price or the Fair Market Value of such Real Estate. Lender and Borrower
desire to avoid such carryover treatment and the related income and other
accounting impacts, and hereby agree that the Adjusted Financial Terms shall
be calculated in accordance with GAAP with the exception that transfers of
Real Estate from Affiliates to Borrower on or after a non-Affiliate both for
balance sheet and income statement purposes. In no event, however, shall such
revised method apply in calculating Borrowing Base Book Cost or in preparing
the Financials referred to in Section 4.5 or the Projections referred to
Section 4.6 (except as otherwise specified).

1.3 OTHER MATTERS. Undefined terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of Illinois to the extent the same are used or
defined therein. The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole, including the Exhibits
and Schedules hereto, as the same may from time to time be amended, modified
or supplemented, and not to any particular section, subsection or clause
contained in this Agreement.

Wherever from the context it appears appropriate, each term stated in
either the singular or plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.

2. AMOUNT AND TERMS OF CREDIT

2.1 REVOLVING CREDIT ADVANCES

(a) Upon and subject to the terms and conditions hereof, Lender
agrees to make available, from time to time, until the Commitment Termination
Date, for Borrower's use and upon the request of Borrower therefor, advances
(each, a "REVOLVING CREDIT ADVANCES") against Borrowing Base Availiblity, in
an aggregate outstanding amount, which shall not at any given time exceed the
lesser of (i) the Maximum Loan, or (ii) Borrowing Base Availabilty on the
date such Revolving Credit Advance is made; PROVIDED, HOWEVER, and it is
understood and agreed (i) that the initial Revolving Credit Advance is being
made in order to satisfy, among the costs, indebtedness and obligations of
Borrower to other lenders which are secured by Liens against Housing Units
and Finished Building Lots, (ii) that Loan shall be secured by Mortgages
encumbering such Housing Units and Finished Building Lots, and the initial
Revolving Credit Advance shall be made

<PAGE>

notwithstanding that such Housing Units and Finished Building Lots may not
qualify as Eligible Collateral or conform to the requirements of the
Operating Protocol, (iii) that on September 30, 1995, any of such Housing
Units and Finished Building Lots which do not qualify as Eligible Collateral
shall be removed from the Borrowing Base and on that date the Borrowing Base
availability shall be adjusted accordingly, and (iv) that from and after the
date hereof, no additional Housing Units or Finished Building Lots, other
than Eligible Housing Units and Eligible Lots, shall be admitted into the
Borrowing Base. On the Eligibility Termination Date, (i) no additional
Eligible Collateral will be accepted by Lender, (ii) no additional Borrowing
Base Availability will be created (other than Construction Costs incurred
with respect to Eligible Housing Units and Eligible Model Homes on the
existing Finished Building Lots, subject to the limitations set forth
herein), and (iii) no additional Revolving Credit Advances will be made,
except that from the Eligibility Termination Date to the Commitment
Termination Date, Lender shall make Revolving Credit Advances to complete
Work-in-Progress related to Eligible Collateral for the purpose of
liquidating the Eligible Collateral and paying down the outstanding balance
of the Loan and Borrower shall be entitled to Revolving Credit Advances to
the extent of existing Borrowing Base Availability. During the year
following the Eligibility Termination Date and unless the Borrowing Base
Availability otherwise shall have been reduced through sales of Eligible
Collateral or in accordance with the Operating Protocol, the Borrowing Base
Availability shall be automatically reduced as follows: (A) on August 31,
1998, the Borrowing Base Availability shall be reduced to eighty percent
(80%) of the sum of Borrowing Base Availability on the Eligibility on the
Eligibility Termination Date plus any additions to the Borrowing Base under
the immediately preceding sentence (the "FINAL BORROWING BASE AVAILABILITY"),
(B) on November 30, 1998, the Borrowing Base Availability shall be reduced to
sixty percent (60%) of the Final Borrowing Base Availability and (C) on
February 28, 1999, the Borrowing Base Availability shall be reduced to forty
percent (40%) of the Final Borrowing Base Availability. Subject to the
provisions of Section 2.3 hereof and until all amounts outstanding in respect
of the Loan shall become due and payable on the Commitment Termination Date,
Borrower may from time to time borrow, repay and reborrow under this section
2.1(a).

(b) The Loan made by Lender shall be evidenced by a promissory
note to be executed and delivered by Borrower, the form of which is attached
hereto and made a part hereof as Exhibit A (as subsequently renewed, amended,
restated, modified, continued and reinstated, the "NOTE"). The Note shall be
payable to the order of Lender and shall represent the obligation of Borrower
to pay the amount of the Maximum Loan or, if less, the aggregate unpaid
principal amount of all Revolving Credit Advances made by Lender to Borrower
with interest and expenses thereon as prescribed in Section 2.6(a). The date
and amount of each Revolving Credit Advance and each payment of principal
with respect thereto shall be recorded on the books and records of Lender,
which books and records shall constitute prima facie evidence of the accuracy
of the information therein recorded absent manifest error therein. The
entire unpaid balance of the Loan shall be due and payable on the Commitment
Termination Date.

<PAGE>

(c) Each Revolving Credit Advance shall be made on notice, given
no later than 11:30 A.M. (Dallas, Texas time) on the Business Day of the
proposed Revolving Credit Advance, by Borrower to Lender. Each such notice
(a "NOTICE OF REVOLVING CREDIT ADVANCE") shall be in writing or by telephone
to Investment Manager, (214) 788-1775, telex of facsimile, confirmed
immediately in writing, in substantially the form of EXHIBIT B hereto,
specifying therein the requested date and amount of such Revolving Credit
Advance. Lender shall, before 1:30 P.M. (Dallas, Texas time) upon
fulfillment of the applicable conditions set forth in Section 2.1(c), wire to
a Disbursement Account selected by Lender the amount of such Revolving Credit
Advance.

2.2 MANDATORY PREPAYMENT.

(a) In the event that the outstanding balance of the Loan at any
time shall exceed the lesser of (i) the Maximum Loan or (ii) Borrowing Base
Availability, Borrower shall immediately repay the Loan in the amount of such
excess.

(b) No prepayment fee shall be payable in respect of any mandatory
prepayment under this Section 2.2.

2.3 OPTIONAL PREPAYMENT. Borrower shall have the right at any time, on
thirty (30) days prior written notice to Lender, to voluntarily and
permanently prepay the entire outstanding amount of the Loan, if any, without
premium or penalty and, at Borrower's election, to terminate Borrower's right
to receive further Revolving Credit Advances hereunder. Each repayment shall
be accompanied by the payment of any interest and fees that shall have
accrued and be unpaid through the date of such prepayment.

2.4 USE OF PROCEEDS. Borrower shall apply the proceeds of the
Revolving Credit Advances solely (i) for working capital purposes of Borrower
in the following regions: Greater Chicago metropolitan area, extended Phoenix
metropolitan area, and Grand Rapids, Michigan metropolitan area only,
including by not limited to, construction of homes, sales and marketing of
homes, and normal and customary business operations related to the
construction of homes excepting therefrom those operations that are not
related to Borrower's home-building business, and (ii) subject, without
limitation, to the provisions set forth in Sections 6.16 and 7.3, payments of
Carryback Purchase Notes and Other Distributions.

2.5 SINGLE LOAN. All of the Obligations of Borrower arising under this
Agreement and the other Loan Documents shall constitute one general
obligation of Borrower and shall be secured, until the Termination Date, by
all of the Collateral.

2.6 INTEREST ON LOAN.

(a) Borrower shall pay interest to Lender monthly, in arrears, on
the first day of each month, commencing on June 1, 1995 (each, an "INTEREST
PAYMENT DATE"), in an amount equal to the quotient of (i) an amount equal to
(A) the sum of the daily unpaid

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<PAGE>

principal amounts of the Loan outstanding on each day during the previous
month multiplied by (B) a rate equal to the Index Rate plus 3.75% per annum
(the "STATED RATE"), divided by (ii) 360.

(b) The Stated Rate shall be determined on the last day of
each month (unless any such day is not a Business Day, in which event the
next succeeding Business Day will be used) for use in calculating the
interest which is payable for the following month. If any payment on the Loan
becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.

(c) So long as any Event of Default shall be continuing, the
interest rate applicable to the Loan shall be equal to the Stated Rate plus
5.0% per annum (the "DEFAULT RATE").

(d) Notwithstanding anything to the contrary set forth in
this Section 2.6 if at any time until payment in full of all of the
Obligations, the Stated Rate or the Default Rate, as applicable, exceeds the
highest rate of interest permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto (the
"MAXIMUM LAWFUL RATE"), then in such event and so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest payable hereunder shall be
equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the applicable rate is less than the Maximum Lawful Rate, Borrower
shall continue to pay interest hereunder at the Maximum Lawful Rate until the
total interest received by Lender from the making of advances hereunder is
equal to the total interest which Lender would have received had the Stated
Rate or the Default Rate, as the case may be, been (but for the operation of
this paragraph) the interest rate payable since the Funding Date. Thereafter,
the interest rate payable hereunder shall be the Stated Rate or the Default
Rate, as the case may be, unless and until the Stated Rate or the Default
Rate, as the case may be, again exceeds the Maximum Lawful Rate, in which
event this paragraph shall again apply. In no event shall the total interest
received by Lender pursuant to the terms hereof exceed the amount which
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. In the event
the Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made.
In the event that a court of competent jurisdiction, notwithstanding the
provisions of this Section 2.6(d), shall make a final determination that
Lender has received interest hereunder or under any of the Loan Documents in
excess of the Maximum Lawful Rate, Lender shall, to the extent permitted by
applicable law, promptly apply such excess in the following order: (i) to
then due and payable fees and expenses, (ii) to any due and payable interest,
(iii) to any due and payable principal, (iv) to the remaining principal, (v)
to other unpaid Obligations, and (vi) thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.

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<PAGE>

2.7 COMMITMENT FEE. Borrower shall pay to Lender a commitment fee
(the "COMMITMENT FEE") in the amount of $125,000, (a) $105,000 of which shall
be payable in immediately available funds on the date hereof, and (b) the
remaining $20,000 of which shall be payable as a condition to the increase of
the Maximum Loan to $25,000,000.

2.8 AVAILABILITY AND ADMINISTRATION FEES. The Availability Fee and
the Administration Fee shall be calculated as follows:

(a) Borrower shall pay to Lender an availability fee (each,
"AVAILABILITY FEE") in an amount equal to (i) $150,000 per annum until the
Maximum Loan is increased to $25,000,000, and (ii) $187,500 per annum
thereafter, accruing from and after the date hereof and payable in equal
quarterly installments (of $37,500 before the Maximum Loan is increased to
$25,000,000 and $46,875 after the Maximum Loan is increased to $25,000,000)
commencing on and thereafter quarterly in advance on the first Business Day
of each calendar quarter thereafter prior to the Commitment Termination Date,
which amount shall be prorated for any partial quarter during which this
Agreement is in effect. Borrower shall pay the Availability Fee to Lender in
immediately available funds; provided that to the extent the conditions of
Section 2.1 hereof are met, the quarterly Availability Fee payments may be
Revolving Credit Advances.

(b) As additional consideration for Lender's ongoing
administrative costs in making the Loan and other financial accommodations
available to Borrower, Borrower agrees to pay to Lender on the date hereof
(for the period from such date to the end of the Month in which such date
occurs) and thereafter on the first Business Day of each month prior to the
Termination Date, an administration fee in an amount equal to $2,000 per
month, which amount shall be prorated for any partial month during which this
Agreements is in effect (each such payment being an "ADMINISTRATION FEE").

2.9 CASH MANAGEMENT SYSTEM.

(a) From and after the date hereof, Borrower shall (i)
maintain an account (the "CONCENTRATION ACCOUNT") only with the bank set
forth on Schedule 2.9(a) (the "CONCENTRATION BANK") (so long as Lender deems
the procedures of such Concentration Bank acceptable to Lender; Lender hereby
acknowledging that it deems the procedures of the Concentration Bank set
forth on Schedule 2.9(a) to be acceptable to Lender); and (ii) deposit all
Receipts capable of being deposited into the Concentration Account; provided,
however, the Concentration Bank shall not be a bank to which Borrower or any
Guarantor owes any obligations and that if Concentration Bank is unacceptable
to Lender, Borrower may designate a substitute therefor reasonably acceptable
to Lender, which substitute shall then constitute a Concentration Bank
hereunder.

(b) From and after the Funding Date, Borrower shall maintain
the Disbursement Accounts as set forth in Schedule 2.9(b).

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<PAGE>

(c) On each Business Day, the bank at which the Concentration
Account is held, shall, in accordance with irrevocable instructions from
Borrower (by letter in the form attached hereto as EXHIBIT D) wire transfer
all collected and "good" funds on deposit in such Concentration Account to
the Depository Account, and Lender shall apply such funds to the obligations
in the order specified in Section 2.10 hereof.

(d) Borrower shall not establish or maintain any depository
accounts with banks or other financial institutions other than the
Concentration Accounts and the Disbursement Accounts.

(e) For purposes only of computing interest hereunder, all
payments shall be applied by Lender on the day payment has been credited by
Lender's depository bank to the Depository Account in immediately available
funds. For purposes of determining the amount of funds available for
borrowing by Borrower pursuant to Section 2.1(a) hereof, such payments shall
be applied by Lender against the outstanding aggregate amount of the Loan at
the time they are credited to Lender's Depository Account.

(f) On or before the Funding Date, Borrower, Title Company
and Lender will enter into the Tri-Party Agreement.

(g) Any instruments which constitute Receipts and which
evidence obligations payable to Borrower not capable of being transferred as
available funds to the Concentration Account shall instead be transferred to
Lender as soon as reasonably practicable and pledged directly to Lender as
part of the Collateral pursuant to the terms of the Security Agreement
(Borrower). Notwithstanding the foregoing, Borrower shall not transfer to
Lender any instruments which, by their terms, are required to be paid in cash
within 30 days of their receipt by Borrower, but shall instead immediately
remit such cash pursuant to the terms of this Section 2.9 upon its receipt.

(h) At any time at which (i) the amount of outstanding
Revolving Credit Advances is zero, (ii) all interest and applicable fees
payable to Lender pursuant to this Agreement have been received by Lender,
and (iii) Lender has been permanently relieved from its obligations to make
any additional Revolving Credit Advances, then the provisions of Section 2.9
hereof shall terminate and be of no further force or effect. In order to
facilitate the termination of the arrangements specified in this Section 2.9,
Lender agrees to execute such documents and make such acknowledgements as
shall be required to terminate such arrangements.

(i) Notwithstanding the foregoing provisions of this Section
2.9, this subsection (i) will govern Receipts which are received by or on
behalf of Borrower from buyers of Real Estate ("ESCROW FUNDS"). The initial
deposit made by a buyer shall be deposited in an escrow established by
Borrower and the buyer at Title Company. All other Escrow Funds, including,
without limitation, the buyer's closing funds and loan proceeds from third
party lenders shall be deposited directly with Title Company. On each day that

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<PAGE>

a close of an escrow occurs, Title Company shall, in accordance with the
Tri-Party Agreement, wire transfer all Escrow Funds which are payable to
Borrower at the close of escrow to the Concentration Bank for deposit in the
Concentration Account.

2.10 APPLICATION OF PAYMENTS. Lender and Borrower agree that Lender
shall apply any and all payments at any time or times hereafter received by
Lender from or on behalf of Borrower, including, without limitation, amounts
transferred to the Depository Account, against the outstanding Obligations of
Borrower as provided in the next sentence. Such payments received by Lender
shall be applied upon receipt in the following order: (i) then due and
payable fees and expenses; (ii) then due and payable interest payments; (iii)
then outstanding principal payments due on the Loan; (iv) then to any other
due and unpaid obligations; and (v) any excess shall be remitted to the
Disbursement Account. Lender is authorized to, and at its option may, make
advances on behalf of Borrower for payment of all fees, expenses, charges,
costs, principal and interest incurred by Borrower hereunder. Such advances
shall be made when and as Borrower fails to promptly pay when due such fees,
expenses, charges, costs, principal and interest and, at Lender's option and
to the extent permitted by law, shall be deemed Revolving Credit Advances
constituting part of the Loan hereunder.

2.11 ACCOUNTING. Lender will provide a monthly accounting of
transactions under the Loan to Borrower. Each and every such accounting shall
(absent manifest error) be deemed final, binding and conclusive upon Borrower
in all respects as to all matters reflected therein, unless Borrower, within
30 days after the date any such accounting is rendered, shall notify Lender
in writing of any objections which Borrower may have to any such accounting,
describing the basis for such objection with specificity. In that event, only
those items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Lender's determination, based upon the facts available,
of any item objected to by Borrower in such notice shall (absent manifest
error) be final, binding and conclusive on Borrower, unless Borrower shall
commence a judicial or other proceeding (including arbitration) to resolve
such objection within 30 days following Lender's notifying Borrower of such
determination.

2.12 INDEMNITY. Borrower shall indemnify and hold Lender and each of
Lender's Affiliates, directors, officers, employees, agents and advisors
(each, an "INDEMNIFIED PARTY") harmless from and against any and all suits,
actions, proceedings, claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable attorney's fees and disbursements,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by an Indemnified Party as the result of Lender having
entered into any of the Loan Documents or extended credit hereunder (but
excluding an action or proceeding by an Assignee Lender against Lender);
provided, however, that Borrower shall not be liable for such indemnification
to such Indemnified Party to the extent that any such suit, action,
proceeding, claim, damage, loss, liability or expense results solely from
such Indemnified Party's gross negligence or willful misconduct.

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<PAGE>

2.13 ACCESS. Lender and each Assignee Lender and any of their officers,
employees and/or agents shall have the right, exercisable as frequently as
Lender or any Assignee Lender reasonably determines to be appropriate, during
normal business hours (or at such other times as may reasonably be requested
by Lender or any Assignee Lender), to inspect the properties and facilities
of Borrower and its Affiliates (other than the Affiliates who are
individuals) and to inspect, audit and make extracts from all of Borrower's
and its Affiliates' (other than the Affiliates who are individuals) records,
files and books of account. Borrower shall deliver any document or instrument
reasonably necessary for Lender or any Assignee Lender, as any of them may
request, to obtain records from any service bureau maintaining records for
Borrower or its Affiliates (other than the Affiliates who are individuals),
and shall maintain duplicate records or supporting documentation on media,
including, without limitation, computer tapes and discs owned by Borrower and
its Affiliates (other than the Affiliates who are individuals), as the case
may be. Borrower shall instruct its Affiliates' (other than the Affiliates
who are individuals) banking and other financial institutions to make
available to Lender such information and records as Lender and each Assignee
Lender may reasonably request.

2.14 TAXES.

(a) Any and all payments by Borrower hereunder or under the Note
shall be made, in accordance with this Section 2.14, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes that accrue as a result of Lender having failed to
comply with the limitations set forth in clause (i) of the third sentence of
Section 10.1 hereof, taxes imposed on or measured by the net income of Lender
by the jurisdiction under the laws of which Lender is organized or any
political subdivision thereof or taxes resulting solely from actions taken by
Lender (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "TAXES"). If
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under the Note to Lender, (i) the sum payable
shall be increased as may be necessary so that, after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.14), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law.

(b) In addition, Borrower agrees to pay any present, past or
future intangible personal property, stamp or documentary taxes or any other
sales, transfer, excise or property taxes, charges or similar levies that
arise from any payment made hereunder or under the Note or from the
execution, sale, transfer, delivery or registration of, or otherwise with
respect to, this Agreement on the Note, the Loan Documents and any other
agreements and instruments contemplated thereby (hereinafter referred to as
"OTHER TAXES").

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<PAGE>

(c) Borrower shall indemnify Lender for the full amount of Taxes
or Other Taxes (including without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.14) paid
by Lender and any liability (including penalties interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made
within 30 days from the date Lender makes written demand therefor.

(d) Within 30 days after the date of any payment of Taxes,
Borrower shall furnish to Lender, at its address referred to in Section
10.11, the original or a certified copy of a receipt evidencing payment
thereof.

(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 2.14 shall survive the payment in full of principal and interest
hereunder and under the Note and the termination of this Agreement.

2.15 CONFIDENTIALITY. Lender hereby agrees, on behalf of itself, its
Affiliates, advisors and Representatives (as defined below) (a) to treat any
Confidential Information regarding Borrower or any of its Affiliates as
confidential and not, except (i) as may be released by Lender pursuant to any
court decree, subpoena, or other administrative order or process reasonably
believed by it to complete its disclosure, or if, in the opinion of its
counsel, Lender is otherwise required by law to disclose such information,
(ii) as set forth in clause, (iii) as may be required in Lender's judgement
in connection with any sale of all or part of the Loan, (b) below or (iv) as
otherwise agreed to in writing by Borrower, to disclose any of such
Confidential Information to any other person; (b) to limit the dissemination
of all Confidential Information to those of Lender's directors, officers,
employees, partners, representatives, agents and attorneys (such permitted
recipients, "REPRESENTATIVES") who, as part of their regular duties, need to
know such information; (c) to use such Confidential Information solely for
the purpose of performing Lender's obligations hereunder and the transactions
contemplated hereby; and (d) that Borrower and any Affiliates shall be
entitled to equitable relief, including injunction, in the event of any
breach of any of the provisions set forth in this section. Lender further
agrees to inform those of its Representatives to whom any Confidential
Information is disclosed pursuant to clause (b) above of the confidential
nature of the Confidential Information and of the restrictions set forth in
this section and to be responsible for compliance with the terms of this
section by such persons and by all of Lender's other Representatives. Should
Borrower agree in writing to allow Lender to disclose any Confidential
Information to any person other than its Representatives, Lender agrees,
prior to so disclosing, to obtain from such person a written confidentiality
agreement in form satisfactory to Borrower.

The Term "CONFIDENTIAL INFORMATION" as used in this section shall mean
all written information regarding the business, finances, operations and
affairs of the Borrower and its Affiliates (whether prepared by any of such
persons, its advisors or otherwise), including, without limitation, all
analyses, compilation, studies or other documents, records or data

33
<PAGE>

prepared by Lender or any of its advisors or Representatives, together with
all analyses, compilations, studies or other documents, records or data
prepared by Lender or any of its Representatives that contain or otherwise
reflect or are generated from such information and documents. The term
"CONFIDENTIAL INFORMATION" does not include any information that (i) at the
time of disclosure to Lender or thereafter is generally available to the
public (other than as a result of a disclosure by Lender or any of its
Representatives in violation of this section), (ii) was available to Lender
on a nonconfidential basis from a source other than Borrower or its
Affiliates or advisers who is not prohibited from transmitting the
information to Lender by a contractual, legal or fiduciary obligation to
Borrower or any of its Affiliates, or (iii) has been independently developed
by Lender without violation of any obligation under this section, (iv) is
inadvertently disclosed by Lender despite the exercise of the same level of
care as Lender normally takes to preserve and safeguard its own confidential
proprietary information. In no event shall Lender be liable for any indirect,
punitive, exemplary, or consequential damages resulting from disclosure of
Confidential Information.

3. CONDITIONS PRECEDENT

3.1 CONDITIONS TO LOAN. Notwithstanding any other provision of this
Agreement and without affecting in any manner the rights of Lender hereunder,
Lender shall not be obligated to make the first Revolving Credit Advance
hereunder until each of the following conditions is satisfied (on or before
the date specified below) and, where required, Borrower shall have delivered
the required document or other documentation on the date indicated below,
each dated as of the date indicated below, to Lender, all in substantially
the form set forth as an exhibit hereto or to one of the other Loan Documents
or otherwise in form and substance satisfactory to Lender (unless otherwise
indicated) each dated the date hereof:

(a) The Note made payable to the order of Lender, duly executed by
Borrower;

(b) The Mortgages, duly executed by Borrower and acknowledged and
recorded:

(c) The Security Agreement, duly executed and delivered by
Borrower, the Trademark Security Agreement, duly executed by Borrower, the
Pledge and Security Agreement (Borrower), duly executed by Borrower, the
Pledge and Security Agreement (Guarantor), duly executed by Guarantor,
together with evidence that all other actions necessary or, in the opinion of
Lender, desirable to perfect and protect the security interests and Liens
created by the Collateral Documents will be taken;

(d) The Guaranty, duly executed and delivered by Guarantor;

(e) The Tri-Party Agreement duly executed by Borrower and the
Title Company;

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<PAGE>

(f) The Hazardous Substance Indemnity Agreement, duly executed by
Borrower and Guarantor;

(g) Favorable opinions of Shefsky and Froelich, counsel to the
Loan Parties, and of Arizona counsel and Michigan counsel to the Loan
Parties, it being understood that to the extent that such opinion shall rely
upon any other opinion of counsel, each such other opinion shall be in form
and substance satisfactory to Lender and shall provide that Lender may rely
thereon;

(h) Instruction letter to the Concentration Bank, duly executed by
Borrower and the respective banks;

(i) Letter agreement from each bank holding a Disbursement
Account, waiving any rights of offset;

(j) Governmental certificates, dated the most recent practicable
date prior to the date hereof, with telegram updates where available, showing
that Borrower and each other Loan Party as Lender may request, is organized
and in good standing in the jurisdiction of its organization and is qualified
as a foreign corporation or partnership and in good standing in all other
jurisdictions in which it is qualified to transact business;

(k) Evidence that ALTA Loan Policies of Title Insurance, in form
and content acceptable to Lender, have been issued with respect to the
Eligible Collateral;

(l) Evidence that all regulatory approvals and third-party
consents necessary to permit Borrower to consummate the transactions
contemplated hereby have been obtained;

(m) Payment of the Commitment Fee, the Availability Fee and the
Administration Fee, pursuant to Sections 2.7 and 2.8;

(n) Evidence that Borrower has established cash control systems
and taken other steps required under Section 2.9 hereof;

(o) A copy of the organizational charter and all amendments
thereto of Borrower and each other Loan Party as Lender may request,
certified as of a recent date by the Secretary of State of the jurisdiction
of its organization, and copies of each Loan Party's by-laws, certified by
the Secretary or Assistant Secretary of such Loan Party as true and correct
as of the date hereof;

(p) Certificates of the Secretary or an Assistant Secretary of
Borrower and each other Loan Party as Lender may request, as to the
incumbency and signatures of the officers of such Loan Party executing this
Agreement, the Guaranty and any of the Loan Documents and other Ancillary
Agreements and any other certificate or other

35
<PAGE>

document to be delivered pursuant hereto or thereto, together with evidence
of the incumbency of such Secretary or Assistant Secretary.

(q) The Projections and the pro forma consolidated financial
statements referred to in Sections 4.5 and 4.6, each certified by the chief
financial officer of Borrower;

(r) A certificate of Borrower executed by the chief executive
officer of Borrower, satisfactory in form and substance to Lender, stating
that, as of the date hereof, to the best of his knowledge, except as set
forth in Schedule 4.5(d), no material adverse change has occurred in the
business, assets, operations, prospects, or financial or other condition of
Borrower taken as a whole since March 31, 1995;

(s) A certificate of Borrower executed by the chief executive
officer of Borrower, satisfactory in form and substance to Lender, stating
that all of the representations and warranties of the Loan Parties contained
herein or in any of the Loan Documents are correct, and, except as set forth
on Schedule 4.8, no event has occurred and is continuing, or would result
from the Loan, which constitutes or would constitute a Default or an Event of
Default;

(t) Evidence that the insurance policies provided for in Section 6.7
are in full force and effect, certified by the issuer thereof, together with
appropriate evidence showing a loss payable clause in favor of Lender and a
clause whereby Lender receives 30-day notice of cancellation, non-renewal or
material change;

(u) A copy of each agreement or plan or, if not available, a
summary thereof, providing for employment, severance, deferred payments,
bonus payments or accruals, profit sharing arrangements, stock option or
stock appreciation rights, incentive payments, pension or employment benefit
contributions or similar payments or arrangements for the benefit of
Borrower's management personnel, in form and substance as has been approved
by Lender;

(v) To the extent no already advanced by Borrower, payment by
Borrower of all (i) reasonable fees and expenses of (a) Lender's outside
counsel, (b) all special local counsel retained in connection with any of the
Loan Documents and the transactions contemplated thereby, (c) all appraisers
or asset valuators retained in connection with any of the Loan Documents and
the transactions contemplated thereby, and (ii) other reasonable costs and
expenses incurred by Lender in connection with the negotiation,
documentation, closing or other activities undertaken with respect to the
transactions contemplated hereby;

(w) A copy of each loan contract and material agreement of the
Borrower and each Guarantor has been made available to Lender, each of which
has been reviewed by Lender with results satisfactory to Lender;

<PAGE>

(x) The Operating Protocol, duly executed by Borrower;

(y) Evidence satisfactory to Lender that each Affiliate or other
party which is transferring any property to Borrower concurrent with this
Agreement is solvent, is not rendered insolvent by reason of such transfer,
and is receiving reasonably equivalent value for such transfer.

(z) Such additional information and materials as Lender may
reasonably, and in a timely manner with due regard to the scheduled Funding
Date, request, including, without limitation, copies of any debt agreements,
security agreements and other material contracts.

3.2 FURTHER CONDITIONS TO EACH REVOLVING CREDIT ADVANCE. It shall be a
further condition to the initial and each subsequent Revolving Credit Advance
that the following statements shall be true on the date of each such advance
or incurrence:

(a) All of the representations and warranties of the Loan Parties
contained herein or in any of the Loan Departments shall be correct on and as
of the Funding Date and the date of each such Revolving Credit Advance as
though made on and as of such date, except to the extent that any such
representation or warranty expressly relates to an earlier date and for
changes therein permitted or contemplated by this Agreement.

(b) No event shall have occurred and be continuing, or would result
from the funding of any Revolving Credit Advance, which constitutes or would
constitute a Default or an Event of Default.

(c) The aggregate unpaid principal amount of the Revolving Credit
Advances, after giving effect to such Revolving Credit Advance, shall not
exceed the lesser of (i) the Maximum Loan, or (ii) the Borrowing Base
Availability.

(d) No Liens have arisen or been granted with respect to the
Collateral, other than Liens permitted under 7.10 hereof, as verified by
title searches obtained by Lender, at Borrower's expense, from the Title
Company from time to time.

(e) No Proceedings shall exist wherein any Loan Party is a party.
No action, claim or proceeding shall be pending or, to the knowledge of
Borrower, threatened or contemplated against Borrower, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of
any Federal, state, or local government or of any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators, which, if
determined adversely, could reasonably be expected to have a Material Adverse
Effect, either individually or in the aggregate, nor, to the knowledge of
Borrower, shall a state of facts exist which is reasonably likely to give
rise to such proceedings, nor shall any pending or threatened action, claim
or proceeding question the validity of the Loan Documents or any action taken
or to be taken pursuant thereto.

<PAGE>

(f) Borrower (i) is solvent, (ii) has sufficient assets and capital
for its business and (iii) has the ability to pay its debts as they become due.

(g) Borrower's Adjusted Consolidated Tangible Net Worth as of
September 30, 1994 equalled or exceeded $7,500,000.

The acceptance by Borrower of the proceeds of each Revolving
Credit Advance shall be deemed to constitute, as of the date of such
acceptance, (i) a representation and warranty by Borrower that the
conditions in this Section 3.2 have been satisfied and (ii) a confirmation
by Borrower of the granting and continuance of Lender's Liens pursuant to the
Collateral Documents.

4. REPRESENTATIONS AND WARRANTIES

To induce Lender to make the Loan as herein provided for, Borrower makes
the following representations and warranties to Lender, each and all of which
shall be true and correct as of the date hereof and shall survive the
execution and delivery of this Agreement:

4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each entity comprising
Borrower (i) is a corporation duly organized, validly existing and in good
standing under the laws of the state of its organization; (ii) is duly
qualified as a foreign corporation, as the case may be, and is in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification; (iii)
has the requisite corporate or partnership, as the case may be, power and
authority and the legal right to own, pledge, mortgage or otherwise encumber
and operate its properties, to lease the property it operates under lease,
and to conduct its business as now, heretofore and proposed to be conducted;
(iv) has all licenses, permits, consents or approvals from or by, and has
made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct except where the failure to have any such license,
permit, consent or approval, make such filing or give such notice will not
have a Material Adverse Effect; (v) is in compliance with its certificate or
articles of incorporation and by-laws or partnership agreement, as the case
may be; and (vi) is in compliance with all applicable provisions of law where
the failure to comply would have a Material Adverse Effect.

4.2 EXECUTIVE OFFICES. The current location of Borrower's executive
offices and principal place of business is set forth on Schedule 4.2
hereto.

4.3 SUBSIDIARIES. There currently exist no subsidiaries of Borrower
other than as set forth on Schedule 4.3 hereto.

4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by Borrower and Affiliates of the
Loan Documents, Ancillary Agreements and all instruments and documents
to be delivered by Borrower and Affiliates

<PAGE>

to the extent they are parties thereto, hereunder and thereunder and the
creation of all Liens provided for herein and therein: (i) are within
Borrower's and the Guarantors', corporate power or partnership power, as the
case may be; (ii) have been duly authorized by all necessary or proper
corporate action or partnership action, as the case may be; (iii) are not in
contravention of any provision of Borrower's or the Guarantors', respective
certificates or articles of incorporation or by-laws or partnership or
venture agreements, as the case may be; (iv) will not violate any law or
regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, or any other
agreement or instrument which is material and to which Borrower or any of the
Guarantors is a party or by which Borrower or any of the Guarantors or any of
their property is bound; (vi) do not require the consent, approval,
authorization of or filing or registration with any governmental body,
agency, authority or any other Person other than those which will have been
duly obtained or made prior to the date hereof and which will be in full
force and effect on the date hereof; and (vii) will not result in the
creation or imposition of any Lien upon any of the property of Borrower or
any of the Guarantors other than those in favor of Lender, all pursuant to
the Loan Documents. At or prior to the date hereof, each of the Loan
Documents shall have been duly executed and delivered for the benefit of or
on behalf of Borrower or the Guarantors, as the case may be, and each shall
then constitute a legal, valid and binding obligation of Borrower or the
Guarantors, to the extent they are parties thereto, enforceable against them
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors, rights and remedies generally and subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

4.5 FINANCIAL STATEMENTS.

(a) The pro forma consolidated balance sheets of Borrower as of
September 30, 1994, copies of which have been furnished to Lender prior to
the date of this Agreement, have been prepared in a manner consistent with
Borrower's GAAP accounting, are based on the audited consolidated balance
sheet of Borrower as of September 30, 1994, and present fairly on a pro forma
basis the consolidated financial position of Borrower at such date.

(b) All of the following consolidated balance sheets and
statements of income, retained earnings and cash flow statements of Borrower,
copies of which have been furnished to Lender prior to the date of this
Agreement, have been, except as noted therein, prepared in accordance with
GAAP consistently applied throughout the periods involved and present fairly
the consolidated financial position of Borrower as at the dates thereof, and
the results of operations and cash flow statements for the periods then ended
(as to the unaudited interim financial statements, subject to normal year-end
audit adjustments):

39
<PAGE>

(i) the unaudited consolidated balance sheet of Borrower as of
February 28, 1995, and the related consolidated statements of income, and
retained earnings and cash flow statements for the three (3) months ending
on such date; and

(ii) the audited consolidated balance sheet of Borrower as at
September 30, 1994, and the related consolidated statements of income, and
retained earnings and cash flow statements for the year then ended.

(c) Borrower as of February 28, 1995, had no obligations,
contingent liabilities or liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the September 30,
1994 audited consolidated balance sheet of Borrower or otherwise disclosed in
writing to Lender and which would have a Material Adverse Effect.

(d) Except as set forth on Schedule 4.5(d), there has been no
material adverse change in the business, assets, operations, prospects or
financial or other condition of Borrower taken as a whole since February 28,
1995. No dividends or other distributions have been declared, paid or made
upon any shares of Stock of Borrower, nor have any shares of Stock of
Borrower been redeemed, retired, purchased or otherwise acquired for value by
Borrower since February 28, 1995, otherwise than as set forth on Schedule
4.5(d).

4.6 PROJECTIONS. The projections of Borrower's annual operating budgets
on a consolidated basis, and Borrower's consolidated balance sheets and cash
flow statements prepared in a manner consistent with Borrower's GAAP
accounting, and Borrower's cash flow statements wherein transfers of Real
Estate from Affiliates to Borrower are treated as though such transfers were
from non-Affiliates for the fiscal years ending on December 31, 1994, 1995
and 1996 (the "PROJECTIONS"), copies of which have been delivered to Lender,
disclose in general terms all material assumptions made with respect to
general economic, financial and market conditions in formulating such
Projections. No facts are known to Borrower which would result in any
material change in any of such Projections. The Projections are based upon
reasonable estimates and assumptions, all of which are fair in light of
current conditions, have been prepared on the basis of the assumptions,
stated therein, and reflect the reasonable estimate of Borrower of the results
of operations and other information projected therein. Additional projections
for future periods requested by Lender shall constitute "Projections" and
shall be subject to this Section 4.6.

4.7 OWNERSHIP OF PROPERTY: LIENS.

(a) Borrower owns good and marketable fee simple title to all of
the Real Estate and good and marketable title to, or valid leasehold
interests in, all of its other properties and assets, and none of the
properties and assets of Borrower, including without limitation, the Real
Estate and Leases, is subject to any Liens, except (i) encumbrances existing
as of the date hereof as set forth on Schedule 4.7(a), (ii) Permitted
Encumbrances, and (iii) from and after the date hereof, the Lien in favor of
Lender pursuant to the Collateral

40
<PAGE>

Documents, have a Material Adverse Effect; and Borrower has received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents, and duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect Borrower's right, title and interest in and to all such property
except where the failure to have received such documents or effected such
actions will not, in the aggregate, have a Material Adverse Effect.

(b) Except as set forth on Schedule 4.7(b), Borrower does not own
or hold, and is not obligated under or a party to, any option, right of first
refusal or any other contractual right to purchase, acquire, sell, assign or
dispose of any real property other than option contracts for the purchase of
lots or raw land entered into in the ordinary course of their business.

(c) All permits required to have been issued in order for the Real
Estate to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used, have been lawfully issued and are, as
of the date hereof, in full force and effect, except for any such permit
where the failure to obtain the same would not have a Material Adverse Effect.

(d) Except as set forth on Schedule 4.7(d), Borrower has not
received any notice, and has no knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any Real Estate or any part
thereof, or of any sale or other disposition of an real property owner or
leased by Borrower or any part thereof in lieu of condemnation.

(e) Except as set forth on Schedule 4.7(e), no portion of any Real
Estate owned or leased by Borrower has suffered any material damage by fire
or other casualty loss which has not heretofore been repaired and restored as
nearly as practicable to its original condition. Except as set forth on
Schedule 4.7(e), no portion of the Real Estate is located in a special flood
hazard area as designated by any federal, Governmental Authority, except for
Real Estate located in such areas, where the effect of such location would
not have a Material Adverse Effect.

4.8 NO DEFAULT. Except as set forth on Schedule 4.8, Borrower is not in
default, nor to Borrower's knowledge without inquiry, is any third party in
default, under or with respect to any contract, agreement, lease or other
instrument to which it is a party, except for any defaults which (either
individually or collectively with other defaults arising out of the same
event or events) would not have a Material Adverse Effect. No Default or
Event of Default under this Agreement has occurred and is continuing.

4.9 BURDENSOME RESTRICTIONS. No contract, lease, agreement or other
instrument to which Borrower is a party or is bound and no provision of
applicable law or governmental regulation has a Material Adverse Effect, or
insofar as Borrower can reasonably forsee, may have a Material Adverse Effect.

41
<PAGE>

4.10 LABOR MATTERS. There are no strikes or other labor disputes against
Borrower pending or, to Borrower's knowledge, threatened which would have a
Material Adverse Effect. Hours worked by and payment made to employees of
Borrower have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters which would have a Material
Adverse Effect. All payments due from Borrower on account of employee health
and welfare insurance which would have a Material Adverse Effect if not paid
have been paid or accrued as a liability on the books of Borrower.

4.11 OTHER VENTURES. Schedule 4.11 lists (i) each interest held by
Borrower in any partnership, joint venture or other business association,
together with a description of such interest, (ii) all material agreements
and documents defining such interest, and (iii) each Affiliate (other than
Edward F. Havlik and Virgil W. Owings) of Borrower, together with a
description of the relationship between Borrower and such Affiliate and a
list of all material agreements or documents defining such relationship.
Except as set forth in Schedule 4.11, Borrower is not engaged in any joint
venture or partnership with any other Person.

4.12 INVESTMENT COMPANY ACT. Borrower is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended. The making of the Loan by Lender, the application of the
proceeds and repayment thereof by Borrower and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not violate any provision of such Act or any rule, regulation or order issued
by the Securities and Exchange Commission thereunder.

4.13 MARGIN REGULATIONS. Borrower does not own any "margin security," as
that term is defined in Regulations G and U of the Board of Governors of the
Federal Reserve System (the "FEDERAL RESERVE BOARD"), and none of the
proceeds of the Loan will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might cause any of the
loans under this Agreement to be considered a "purpose credit" within the
meaning of Regulations G, T, U or X of the Federal Reserve Board. Borrower
will not take or permit any agent acting on its behalf to take any action
which might cause this Agreement or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.

4.14 TAXES. Except as set forth on Schedule 4.14, all Federal, state,
local and foreign tax returns, reports and statements required to be filed by
Borrower have been filed with the appropriate Governmental Authority and all
Charges and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid. Except as set forth on Schedule
4.14, Borrower has paid, when due and payable, all Charges required to be
paid by it. Proper and

<PAGE>

accurate amounts have been withheld by Borrower from its employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
governmental agencies. Schedule 4.14 sets forth for Borrower those taxable
years for which its tax returns are currently being audited by the IRS or any
other applicable Governmental Authority. Except as set forth on Schedule
4.14, Borrower has not executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having
the effect of 3extending, the period for assessment or collection of any
Charges. Borrower has not filed a consent pursuant to IRC Section 341(f) or
agreed to have IRC Section 341(f)(2) apply to any dispositions of subsection
(f) assets (as such term is defined in IRC Section 341(f)(4)). Except as set
forth on Schedule 4.14, none of the property owned by Borrower is property
which Borrower is required to treat as being owned by any other Person
pursuant to the provisions of IRC Section 168(f)(8) of the Internal Revenue
code of 1954, as amended, and in effect immediately prior to the enactment of
the Tax Reform Act of 1986 or is "tax-exempt use property" within the
meaning of IRC Section 168(h). Except as set forth on Schedule 4.14, Borrower
has not agreed and has not requested to make any adjustment under IRC Section
481(a) by reason of a change in accounting method or otherwise. Except as set
forth on Schedule 4.14 hereof, Borrower has no obligation under any written
tax-sharing agreement.

4.15 ERISA.

(a) Schedule 4.15 lists all Plans maintained or contributed to by
Borrower and all Qualified Plans maintained or contributed to by any ERISA
Affiliate. Neither Borrower nor any of its Affiliates maintains, contributes
to or has any obligation to contribute to any Pension Plan, Title IV Plan,
Multiemployer Plan or Retiree-Welfare Plan or has in the past maintained,
contributed or had an obligation to contribute to the same.

(b) Each Qualified Plan has been determined by the IRS to qualify
under Section 401 of the IRC, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the
IRC, and, to the best knowledge of Borrower nothing has occurred which would
cause the loss of such qualification or tax-exempt status.

(c) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA (all of which are true and correct in all
material respects as of the date filed), and all required contributions and
benefits have been paid in accordance with the provisions of each such Plan.

(d) Neither Borrower nor any ERISA Affiliate, with respect to any
Qualified Plan, has failed to make any contribution or pay any amount due as
required by Section 412 of the IRC.

<PAGE>

(e) There are no pending or, to the knowledge of Borrower, any
threatened claims, actions or lawsuits (other than claims for benefits in the
normal course), asserted or instituted against (i) any Plan or its assets,
(ii) any fiduciary with respect to any Plan or (iii) Borrower or any ERISA
Affiliate with respect to any Plan.

(f) Borrower and each ERISA Affiliate have complied in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the IRC and the regulations thereunder.

(g) Borrower has not engaged in a prohibited transaction, as
defined in Section 4975 of the IRC or Section 406 of ERISA, in connection
with any Plan, which would subject Borrower (after giving effect to any
exemption) to a material tax on prohibited transactions imposed by Section
4975 of the IRC or any other material liability.

(h) Except as set forth on Schedule 4.15, no liability under any
Plan has been funded, nor has such obligation been satisfied, with the
purchase of a contract from an insurance company that is not rated AA by
Standard & Poor's Corporation and the equivalent rating by each other
nationally recognized rating agency.

4.16 NO LITIGATION. Except as set forth on Schedule 4.16 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened or contemplated against Borrower, at law, in equity or otherwise,
before any court, board, commission agency or instrumentality of any Federal,
state, or local government or of any agency or subdivision thereof, or before
any arbitrator or panel or arbitrators, which, if determined adversely, could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, nor, to the knowledge of Borrower, does a state of facts
exist which is reasonably likely to give rise to such proceedings, nor do any
of the matters set forth therein question the validity of any of the Loan
Documents or any action taken or to be taken pursuant thereto.

4.17 BROKERS. No broker or finder acting on behalf of Borrower brought
about the obtaining, making or closing of the Loan made pursuant to this
Agreement, and Borrower has no obligation to any Person in respect of any
finder's or brokerage fees in connection with the Loan contemplated by this
Agreement.

4.18 OUTSTANDING STOCK; WARRANTS, ETC. Except as set forth on Schedule
4.18, Borrower has no outstanding rights, options, warrants or agreements
pursuant to which it may be required to issue or sell any Stock.

4.19 EMPLOYMENT AND LABOR AGREEMENTS. Except as set forth on Schedule
4.19, there are no employment agreements covering management of Borrower
which provide for compensation in excess of $100,000 per year and there are
no collective bargaining agreements or other labor agreements covering any
employees of Borrower. A true and complete copy of each agreement listed on
Schedule 4.19 has been furnished to Lender.

<PAGE>

4.20 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as would not
have a Material Adverse Effect, Borrower owns or has the right to use as they
are currently used or contemplated to be used, all licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications
and trade names necessary to continue to conduct its business as heretofore
conducted by it, now conducted by it and proposed to be conducted by it, each
of which is listed, together with Patent and Trademark office application or
registration numbers, where applicable, on Schedule 4.20 hereto. To the best
of its knowledge, Borrower conducts its business without infringement or
claim of infringement of any license, patent, copyright, service mark,
trademark, trade name, trade secret or other intellectual property right of
others, except where such infringement or claim of infringement would not
have a Material Adverse Effect. To the best of Borrower's knowledge and
except as set forth on Schedule 4.20, there is no infringement or claim of
infringement by others of any material license, patent, copyright, service
mark, trademark, trade name, trade secret or other intellectual property
right of Borrower.

4.21 FULL DISCLOSURE. No information contained in this Agreement, the
other Loan Documents, the Financials or any written statement furnished by or
on behalf of Borrower pursuant to the terms of this Agreement which has
previously been delivered to Lender, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which made.

4.22 LIENS. The Liens granted to Lender pursuant to the Collateral
Documents with respect to the Borrower and each Affiliate are (i) valid and
continuing first priority perfected security interests in the Concentration
Account and in all other Collateral with respect to which a security interest
may be perfected by filing pursuant to the UCC prior to all other Liens,
except, with respect to Collateral other than the Concentration Account,
Liens existing as of the date hereof and the Liens granted to Lender under
the Collateral Documents, and (ii) fully perfected Liens in and to the
Collateral which is Real Estate, as described therein; provided, however that
all Liens related to Eligible Collateral must be fully perfected first
priority Liens.

4.23 NO MATERIAL ADVERSE EFFECT. Except as set forth on Schedule 4.23,
no event has occurred since March 31, 1995, and is continuing which has had
or could reasonably be expected to have a Material Adverse Effect.

4.24 ENVIRONMENTAL PROTECTION. To Borrower's knowledge, except as
disclosed in Schedule 4.24, (a) no Hazardous Materials are located at, on or
under any real property owned, leased, or operated by Borrower in violation
of any Environmental Laws, (b) Borrower is in compliance with all
Environmental Laws at real property owned, leased or operated by Borrower,
(c) Borrower has not caused or suffered to occur any actual or threatened
discharge, disposal, release, migration, spillage, uncontrolled loss,
seepage, or filtration of any Hazardous Materials, including, without
limitation, chemical liquids, gases or solids, (a "SPILL") from or within any
real property owned, leased or operated by

<PAGE>

Borrower, (d) Borrower is not aware of any condition, nor is it involved in
any operations, which would lead to the imposition of any material liability
or Lien against the Borrower under the Environmental Laws, and Borrower has
not permitted any tenant or occupant of such real property to engage in any
such activity, and (e) Borrower has not caused or allowed any offsite Spill
of Hazardous Materials originating from or generated at real property owned,
leased, or operated by Borrower.

5. FINANCIAL STATEMENTS AND INFORMATION

5.1 REPORTS AND NOTICES. Borrower covenants and agrees that from and after
the date hereof and until the Termination Date, it shall deliver to Lender:

(a) Within 30 days after the end of each fiscal month, copies of all
financial information which has been prepared by Borrower for such month. At
any time and from time to time upon the reasonable request of Lender,
Borrower shall prepare such financial information on a monthly basis.

(b) Within 45 days after the end of each fiscal quarter (other than
the last fiscal quarter of the fiscal year), (i) a copy of the unaudited
consolidated balance sheets and the related consolidated statements of income
and retained earnings and cash flows of Borrower as of the close of such
quarter and the related consolidated statements of income and retained
earnings and cash flows for that portion of the Fiscal Year ending as of the
close of such quarter, and (ii) a copy of the unaudited consolidated
statements of income of Borrower for such quarter, all prepared in accordance
with GAAP (subject to normal year end adjustments), setting forth in
comparative form in each case the consolidated figures for such quarter in
the prior Fiscal Year, the consolidated figures for that portion of the prior
Fiscal Year and projected consolidated figures for such period and
accompanied by (A) a statement in reasonable detail showing the calculations
used in determining the financial and real estate covenants under Sections
6.3, 7.3, 7.11 and 7.12 hereof, and (B) the certification of the chief
executive officer or chief financial officer of Borrower that all such
financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year end adjustments) the
consolidated financial position, the consolidated results of operations and
cash flow statements of Borrower as at the end of such quarter and for the
period ended, and that, to the best of such officer's knowledge and belief,
there was no Default or Event of Default in existence as of such time.

(c) Within 90 days after the close of each Fiscal Year, a copy of
the annual audited consolidated financial statements of Borrower consisting
of consolidated balance sheets and consolidated statements of income and
retained earnings and cash flow, setting forth in comparative form in each
case the consolidated figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, accompanied by an
unqualified auditor's report, from the independent certified public
accountants regularly retained by Borrower, or any other firm of independent
certified public accountants of recognized national standing selected by
Borrower and acceptable to Lender, and

<PAGE>

accompanied by (i) a schedule in reasonable detail showing the calculations
used in determining the financial and real estate covenants under Sections
6.3, 7.3, 7.11 and 7.12 hereof, (ii) a report from such accountants to the
effect that in connection with their audit examinations, nothing has come to
their attention to cause them to believe that a Default or Event of Default
had occurred and (iii) a certification of the chief executive officer or
chief financial officer of Borrower that all such financial statements are
complete and correct and present fairly in accordance with GAAP the
consolidated financial position, the consolidated results of operations and
the changes in consolidated financial position of Borrower as at the end of
such year and for the period then ended and that, to the best of such
officer's knowledge and belief, there was no Default or Event of Default in
existence as of such time.

(d) On or before the fifteenth (15th) day of the third month of each
fiscal quarter, projections of Borrower's cash flows for the succeeding
fiscal quarter, reported on a monthly basis.

(e) As soon as practicable, but in any event within two (2) Business
Days after Borrower become aware of the existence of any Default or Event of
Default, or and in any event within five (5) Business Days after Borrower
becomes aware of any development or other information which could reasonably
be expected to have a Material Adverse Effect, by telephonic or telegraphic
notice specifying the nature of such Default or Event of Default or
development or information, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within five (5) days.

(f) In form and detail satisfactory to Lender, each operating report
listed on Schedule 5.1(f) hereof, as prescribed by such Schedule, and each
other operating report reasonably requested by Lender.

(g) Within 30 days prior to the beginning of each Fiscal Year,
Borrower's preliminary budget for such Fiscal Year, which shall include:

(i) projected consolidated balance sheet of Borrower for such
Fiscal Year, on a monthly basis;

(ii) projected consolidated cash flow statements of Borrower,
including summary details of cash disbursements, including for
Consolidated Capital Expenditures, for such Fiscal Year, on a monthly
basis;

(iii) projected consolidated income statements of Borrower for
such Fiscal Year, on a monthly basis; and

(iv) a summary of key assumptions underlying the projections
delivered pursuant to this Section 5.1(g);

together with appropriate supporting details as requested by Lender.

<PAGE>

(h) If requested by Lender, copies of all federal, state, local and
foreign tax returns and reports in respect of income, franchise or other
taxes on or measured by income (excluding sales, use or like taxes) filed by
Borrower.

(i) As soon as practicable, but in any event, within two (2) Business
Days, notice of any change in the management of Borrower by Edward F. Havlik
and Virgil W. Owings.

(j) As requested by Lender from time to time, (i) updated title
searches of all Eligible Collateral, (ii) lien releases, waivers, or receipts
for payment from all Persons who have performed work or for Eligible Housing
Units, (iii) a detailed schedule of all Trade Payables, including Trade
Payables aging information, and (iv) a current updated list of all
subcontractors and materialmen who have performed work on, or furnished
materials for, Eligible Collateral.

(k) Such other information respecting Borrower's business, financial
condition or prospectus as Lender or any Assignee Lender may, from time to
time, reasonably request.

5.2 COMMUNICATION WITH ACCOUNTANTS. Borrower authorized Lender, on
behalf of itself and each Assignee Lender, to communicate directly with its
independent certified public accountants and authorizes those accountants to
disclose any and all financial statements, work papers and other supporting
financial documents and schedules including copies of any management letter
with respect to the business, financial condition and other affairs of
Borrower to Lender, on behalf of itself and any Assignee Lender, and notifies
those accountants that Lender is entitled to rely on such materials.

6. AFFIRMATIVE COVENANTS

Borrower covenants and agrees that, unless Lender shall otherwise
consent in writing from and after the date hereof and until the Termination
Date:

6.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each entity
comprising Borrower shall (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation,
and its rights and franchises; (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; (c) at
all times maintain, preserve and protect all of its trademarks and trade
names, and preserve all the remainder of its property, in use or useful in
the conduct of its business and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all needful and proper repairs,
renewals and replacements, betterments and improvements thereto consistent
with industry practices, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times (provided
that Borrower shall not be required to replace or improve property
constituting Capital Assets if such replacement or improvement

<PAGE>

would violate the provisions of Section 7.11, unless the requirements of such
Section are waived by Lender, in its sole discretion); and (d) transact
business in such names as Borrower may from time to time use in conducting
its businesses.

6.2 PAYMENT OF OBLIGATIONS.

(a) Borrower shall (i) pay and discharge or cause to be paid and
discharged all its Indebtedness (other than nonrecourse Indebtedness)
including, without limitation, all the Obligations, as and when due and
payable by Borrower, except where failure to pay or discharge or cause to be
paid or discharged would not be a default under Section 9.1(m) hereof; and
(ii) except as set forth in Section 6.2(b) pay and discharge or cause to be
paid and discharged promptly all (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed), and (B) lawful
claims for labor, materials, supplies and services before any thereof shall
become in default.

(b) Borrower may in good faith contest, by proper legal actions or
proceedings, the validity or amount of any Charges or claims arising under
Section 6.2(a)(ii), provided that, at the time of commencement of any such
action or proceeding, and during the pendency thereof (i) no Default or Event
of Default shall have occurred, and (ii) adequate Reserves with respect
thereto are maintained on the books of Borrower in accordance with GAAP, and
(iii) Borrower obtains a bond with respect to such Charges or claims in form
and substance acceptable to Lender.

6.3 FINANCIAL COVENANTS. Borrower shall, on a consolidated basis:

(a) Maintain (such maintenance to be evidenced as at the end of
each fiscal quarter specified below) an Adjusted Consolidated Tangible Net
Worth equal to or greater than:

Adjusted

<PAGE>

Consolidated
Period Tangible Net
Worth
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Fiscal quarter ending June 30, 1995 $7,500,000
Fiscal quarter ending September 30, 1995 $7,740,000
Fiscal quarter ending December 31, 1995 $7,980,000
Fiscal quarter ending March 31, 1996 $8,220,000
Fiscal quarter ending June 30, 1996 $8,460,000
Fiscal quarter ending September 30, 1996 $8,700,000
Fiscal quarter ending December 31, 1996 $8,940,000
Fiscal quarter ending March 31, 1997 $9,180,000
Fiscal quarter ending June 30, 1997 $9,420,000
Fiscal quarter ending September 30, 1997 $9,660,000
Fiscal quarter ending December 31, 1997 $9,900,000
Fiscal quarter ending March 31, 1998 and for each
quarter thereafter until the Termination Date $10,140,000

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(b) Achieve Adjusted Consolidated Operating Profit for each fiscal
quarter, equal to or greater than $800,000 (i) for the fiscal quarter ending
September 30, 1995 (based on that fiscal quarter), (ii) for the fiscal
quarter ending December 31, 1995 (based on an average of that fiscal quarter
and the immediately preceding quarter), (iii) for the fiscal quarter ending
March 31, 1996 (based on an average of that fiscal quarter and the
immediately preceding two fiscal quarters), and (iv) for each fiscal quarter
thereafter (based on an average of that fiscal quarter and the preceding
three fiscal quarters):

(c) Maintain (such maintenance to be evidenced as at the end of
each fiscal quarter specified below) a Total Indebtedness to Adjusted
Consolidated Tangible Net Worth Ratio equal to or less than 5:1.

(d) Maintain at all times, such maintenance to be evidenced as at
the end of each fiscal quarter based on a rolling four quarter period, a
Consolidated Fixed Charge Coverage Ratio equal to or greater than 1.5:1.

(e) Maintain at all times, such maintenance to be evidenced at the
end of each fiscal quarter, a ratio of Trade Payables balance to dollar value
of housing inventory equal to or less than 15%, reported consistent with and
reflected on Borrower's financial statements dated February 28, 1995.

(f) Maintain at all times, such maintenance to be evidenced at the
end of each fiscal quarter, a ratio of selling, general and administrative
expenses (excluding,

<PAGE>

however, amortization of financing costs, capitalized interest and other
indirect costs) to total revenues from the "sale of homes," of no more than
15%, reported consistent with and reflected on Borrower's financial
statements dated February 28, 1995.

(g) Maintain on the Financials of Borrower and Guarantor an
average ratio based on a rolling four-quarter period of the value of all land
on such Financials to the Adjusted Consolidated Tangible Net Worth of not
more than (i) 2.5:1 on September 30, 1995 and December 31, 1995, (ii) 2.25:1
on March 31, 1996 and June 30, 1996, (iii) 2.0:1 on September 30, 1996 and
December 31, 1996, and (iv) 1.75:1 on March 31, 1996 and on the last day of
each calendar quarter thereafter.

6.4 LENDER'S FEES. Borrower shall pay to Lender, on demand, any and
all fees, costs or expenses that Lender shall pay to a bank or other similar
institution arising out of or in connection with the forwarding to Borrower
or any other Person on behalf of Borrower by Lender of proceeds of the Loan.

6.5 BOOKS AND RECORDS. Borrower shall keep adequate records and books
of account with respect to its business activities, in which proper entries,
reflecting all of its financial transactions, are made in accordance with
GAAP and on a basis consistent with the Financials referred to in Section
4.5(b) hereof.

6.6 LITIGATION. Borrower shall notify Lender in writing, promptly upon
learning thereof, of any litigation commenced or threatened against Borrower
or Guarantor and of the institution against it of any suit or administrative
proceeding that may impair the Collateral or if the amount in controversy
exceeds $200,000.

6.7 INSURANCE. Schedule 6.7 lists all insurance of any nature
maintained by Borrower as well as a summary of the terms of such insurance.
Borrower shall maintain (i) fire, (ii) theft, (iii) burglary, (iv) product
liability, (v) workers' compensation, (vi) standard all-risk coverage
insurance, (vii) builder's risk coverage insurance policies for properties
under construction for

<PAGE>
the full insurable value of such properties, (viii) flood insurance on those
properties that have been identified as being in an area having special flood
hazard risks, and (ix) comprehensive general public liability insurance
providing for limits of liability of not less than $5,000,000 per occurrence
for injury or death to a person or property damage; Borrower shall deliver
certified copies of all such policies and such policies shall be enforced on
the standard New York (or local equivalent) long-form non-contributory
mortgagee clause in the name of Lender with endorsement on all property
insurance coverage in favor of Lender as an additional insured or loss payee,
as its interest may appear, issued by carriers rated at least A-IX by A.M.
Best Company with terms and coverage (in an amount and scope) acceptable to
Lender and requiring at least thirty (30) days' notice to Lender prior to
cancellation, non-renewal or material change and providing that no act or
default of Borrower or any other Person shall affect the right of Lender to
recover under such policy in case of loss or damage. Borrower shall pay all
insurance premiums.

6.8 COMPLIANCE WITH LAW. Borrower shall comply with all federal, state
and local laws and regulations applicable to it, including, without
limitation, ERISA, those regarding the collection, payment and deposit of
employees, income, unemployment and social security taxes and those relating
to environmental matters, in each case where the failure to comply reasonably
could be expected to have a Material Adverse Effect.

6.9 AGREEMENTS. Borrower shall perform, within all required time periods
(after giving effect to any applicable grace periods), all of its obligations
and enforce all of its rights under each agreement to which it is a party,
including, without limitation, any leases to which it is a party, where the
failure to so perform and enforce would have a Material Adverse Effect.
Borrower shall not terminate or modify, in any manner adverse to it any
provision of any agreement to which it is a party, which termination or
modification could reasonably be expected to have a Material Adverse Effect.

6.10 SUPPLEMENTAL DISCLOSURE.

(a) From time to time as Lender reasonably may request (in the
event that such information is not otherwise delivered by Borrower to Lender
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, Borrower will supplement or amend each Schedule or representation
herein with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation
or which is necessary to correct any information in such Schedule or
representation which has been rendered inaccurate thereby.

(b) Borrower shall from time to time upon Lenders' request, provide
Lender with an updated appraisal, performed by a licensed independent
appraiser, of any Finished Building Lot designated as Collateral.

<PAGE>

6.11 EMPLOYEE PLANS.

(a) With respect to each Qualified Plan (other than a Multiemployer
Plan) hereafter adopted or maintained by the Borrower or any ERISA Affiliate,
Borrower shall (i) seek, or cause its ERISA Affiliates to seek, and receive
determination letters from the IRS to the effect that such Qualified Plan is
qualified within the meaning of Section 401(a) of the IRC; and (ii) from and
after the adoption of any such Qualified Plan, cause such plan to be
qualified within the meaning of Section 401(a) of the IRC and to be
administered in all material respects in accordance with the requirements of
ERISA and Section 401(a) of the IRC.

(b) With respect to each Welfare Plan hereafter adopted or
maintained by Borrower or any ERISA Affiliate, Borrower shall comply, or
cause its ERISA Affiliates to comply, with the notice and continuation
coverage requirements of Section 4980B of the IRC and the regulations
thereunder.

(c) (i) Promptly and in any event within thirty (30) days after
Borrower or any ERISA Affiliate knows or has reason to know that any ERISA
Event has occurred, and (ii) promptly and in any event within ten (10) days
after Borrower or any ERISA Affiliate knows or has reason to know that a
request for a minimum funding waiver under Section 412 of the IRC has been
filed with respect to any Qualified Plan, Borrower shall furnish to Lender a
written statement of the chief financial officer or other appropriate officer
of Borrower describing such ERISA Event or waiver request and the action, if
any, which Borrower or any ERISA Affiliate proposes to take with respect
thereto and a copy of any notice filed with the PBGC or the IRS pertaining
thereto.

(d) Promptly upon request by Lender, Borrower shall furnish to
Lender a copy of each annual report (Form 5500 Series, including schedules
thereto) with respect to each Plan.

(e) Promptly and in any event within thirty (30) days after receipt
thereof, Borrower shall furnish to Lender a copy of any adverse notice,
determination letter, ruling or opinion Borrower or any ERISA Affiliate
receives from the PBGC, DOL or IRS with respect to any Qualified Plan.

(f) Promptly and in any event within thirty (30) Business Days
after the adoption thereof, Borrower shall furnish to Lender notice of any
amendment to any Welfare Plan which Borrower maintains, contributes or has an
obligation to contribute to, and which could result or results in an increase
in benefits for retirees or new benefits for retirees.

(g) Promptly and in any event after receipt of written notice of
commencement thereof, Borrower shall furnish to Lender notice of any action,
suit or proceeding before any court or other governmental authority affecting
Borrower or any

53
<PAGE>

ERISA Affiliate with respect to any Plan, except those which, in the
aggregate, if adversely determined, could not reasonably be expected to have a
Material Adverse Effect.

(h) Promptly and in any event within thirty (30) days after notice
or knowledge thereof, Borrower shall furnish to Lender notice that Borrower
becomes subject to the tax on prohibited transactions imposed by Section 4975
of the IRC, together with a copy of Form 5330.

6.12 SEC FILINGS; CERTAIN OTHER NOTICES. Borrower shall furnish to
Lender (i) promptly after the filing thereof with the Securities and Exchange
Commission, a copy of each report, notice or other filing, if any, by
Borrower with the Securities and Exchange Commission, (ii) a copy of each
written communication which either (x) is material or (y) pertains to subject
matter outside the ordinary course of business, received by Borrower from or
delivered by Borrower to (A) the Securities and Exchange Commission or (B)
any holder of publicly held subordinated debt of Borrower, in each case
promptly after each such receipt or delivery.

6.13 LEASES. Upon request of Lender, Borrower shall provide Lender with
copies of all leases of real property or personal property (other than DE
MINIMIS items of personal property not necessary for the conduct of
Borrower's business) or similar agreements (and all amendments thereto)
entered into by Borrower after the date hereof, whether as lessor or lessee
and which provide for aggregate annual lease payments of $50,000 or greater.
Borrower shall (i) provide Lender with a copy of each notice of default
received by Borrower under any such lease promptly after receipt of any such
notice and deliver to Lender a copy of each notice of default sent by
Borrower under any such lease simultaneously with its delivery of such notice
under such lease; (ii) notify Lender, not later than 30 days prior to the
date of the expiration of the term of any such lease, of its intention either
to renew or not renew any such lease, and, if Borrower shall intend to renew
such lease, the terms and conditions of such renewal lease; and (iii) notify
Lender at least 14 days prior to the date Borrower takes possession of any
new leased premises or becomes liable under any lease, whichever is earlier.

6.14 ENVIRONMENTAL MATTERS.

(a) Borrower shall, and Borrower shall cause its agents,
representatives, tenants or occupants to (i) comply in all material respects
with the Environmental Laws applicable to them, (ii) notify Lender promptly,
but in any event within thirty (30) days, after knowledge in the event of any
Spill of Hazardous Materials upon, under, originating from or generated at
any real property owned, leased or operated by Borrower that is likely to
result in any actual or potential liability under the Environmental Laws to
Borrower, and (iii) promptly forward to Lender a copy of any significant
order, notice, permit, or any other communication or report received or
prepared by the Borrower relating to the cleanup or abatement of any
significant Spill of Hazardous Materials in violation of any applicable
Environmental Laws relating to such real property.

54
<PAGE>

(b) Borrower shall at all times indemnify Lender and hold Lender
harmless from and against any loss, claims, suits, actions, obligations,
liability, damages or expense, including reasonable attorneys' fees,
suffered or incurred by Lender, whether as holder of a deed of trust, as
mortgagee in possession, or as successor in interest to Borrower by virtue of
foreclosure or acceptance of a deed or other transaction in lieu of
foreclosure (i) under or on account of the Environmental Laws, including the
assertion of any Lien thereunder, (ii) with respect to any Spill or liability
for the use of Hazardous Materials affecting real property owned, leased or
operated by Borrower, whether or not the same originates or emanates from
such real property or any contiguous real estate, including any loss of value
of such real property as a result of such use or Spill of Hazardous
Materials, (iii) with respect to the offsite disposal, release or migration
of Hazardous Materials originating from or generated by real property owned,
leased or operated by Borrower, (iv) with respect to any liability for
personal injury or property damage caused by, resulting from, or related to
an environmental condition or activity arising under any statutory or common
law theory, including, without limitation, damages assessed for the
maintenance of public or private nuisance or the carrying on of an abnormally
dangerous activity at or near any real property owned, leased or operated by
Borrower, and (v) with respect to any costs of removal, remedial or
investigative action incurred by Lender, including those costs incurred as a
result of actions or claims brought by the United States government, any
other government body or agency, or third party, or any costs incurred by
Lender as a result of injury to, destruction of, or loss of natural
resources, including reasonable costs to investigate and assess such injury,
destruction or loss; provided, however, Borrower shall not be liable to
Lender for any contamination at, under or from such property to the extent
caused or contributed to by actions of the Lender, its agents,
representatives or employees.

(c) In the event of (i) any Spill of Hazardous Materials in violation
of any Environmental Laws at, upon, under, or originating or generated from
any real property owned, leased or operated by Borrower, or (ii)
contamination or violation of Environmental laws resulting from the use of
any Hazardous Materials at such real property, Borrower shall, at no cost to
Lender, investigate and, as appropriate or necessary under the Environmental
Laws or as required by federal, state, or local governmental agencies,
remediate or correct such Spill, contamination or violation, or defend
against liability therefor. So long as Borrower is diligently pursuing such
investigation of, remediation of, correction of, or good faith defense
against liability for any such Spill, contamination or violation (together
"WORK"), Borrower shall be deemed to be in compliance with subsection (a)(i)
above. Nothing herein shall relieve Borrower of any other obligations as set
forth in this Section. If Lender believes that Borrower has materially failed
to conduct the Work, or is not conducting the Work in material compliance
with applicable Environmental Laws, Lender may cause such Work to be
performed, including taking any and all actions required under applicable
Environmental Laws to remedy such Spill, contamination or violation;
provided, however, that Lender shall provide Borrower with written notice of
Lender's intent to perform such Work or to take such actions thirty (30) days
in advance of so doing. However, in the event that such Spill, contamination
or violation poses an imminent and substantial danger or threat under
applicable Environmental

<PAGE>

Laws, Lender may proceed immediately with such Work, but only to the extent
necessary to abate such condition. If Borrower notifies Lender within this
30-day period of Borrower's intent to perform such Work and thereafter
diligently proceeds to complete the Work as soon as feasible, any alleged
failure thereof shall be deemed cured. Borrower shall cooperate in good faith
with the performance of the Work by or for Lender, which shall include
providing Lender and its representatives access to the real property to
perform the Work. Any Work conducted by or for Lender shall be conducted so
as not to unreasonably interfere with the normal operations of Borrower on or
with respect to the real property. Any amounts paid by Lender as a result
thereof, together with interest thereon at the rate set forth in Section 2.6
hereof, shall be immediately due and payable by Borrower and, until paid,
shall be added to the Obligation; provided,however, Borrower shall not be
liable to Lender for any amounts incurred as the result of contamination
caused, contributed to or exacerbated by Lender, its agents, representatives
or employees in performing the Work.

(d) Borrower shall, upon Lender's request, (i) provide Lender with an
Environmental Report necessary to meet the Lender's needs from a consultant
mutually acceptable to Lender and Borrower, with respect to any Eligible
Collateral or any Real Estate submitted to Lender to be added as Eligible
Collateral, and (ii) make available to Lender copies of each Environmental
Report that Borrower performs internally or commissions from an outside
environmental consulting or engineering firm that are not subject to a claim
of privilege with respect to any parcel of Real Estate owned, leased or
operated by Borrower.

6.15 STAY, EXECUTION AND USURY LAWS. Borrower covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law, wherever enacted, now or at any time
hereafter in force, that may affect its duty to pay the Obligations, and
Borrower (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law insofar as such law applies to the
Obligations, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to Lender,
but will suffer and permit the execution of every such power as though no
such law had been enacted.

6.16 REAL ESTATE SALES FROM AFFILIATES. All transfers of Real Estate
to Borrower from Affiliates of Borrower shall be made at Fair Market Value.
The amount to be paid to any Affiliate for such Real Estate (or any Affiliate
holders of Liens on such Real Estate) shall be the Fair Market Value of such
Real Estate reduced by the sum of (a) the amount of Indebtedness paid by
Borrower to non-Affiliates at the time of such transfer to release Liens or
obtain subordination of Liens on such Real Estate, plus (b) the amount of any
Indebtedness which Borrower assumes or subject to which Borrower takes the
Real Estate. Except at such times as the amount of Revolving Credit Advances
outstanding is zero (during which Borrower may pay cash, at its sole
discretion), such amount so determined shall be payable pursuant to a
promissory note in the form of EXHIBIT D attached hereto (the "CARRYBACK
PURCHASE NOTE"), and secured by Subordinate Liens in form and substance
acceptable to Lender. Borrower shall make payments on Carryback Purchase
Notes in accordance with

<PAGE>

terms and a payment schedule approved by Lender. All payments on the
Carryback Purchase Notes shall be applied first to interest and then to
principal. In any event, all indebtedness under the Carryback Purchase Notes
shall be due and payable 30 days following the Termination Date.
Notwithstanding the foregoing, no payments shall be made on Carryback
Purchase Notes if, at the time of, or after giving effect to such payments,
(i) a Default or Event of Default exists or would exist, or (ii) a Default or
Event of Default exists or would exist under the Guaranty (as such terms are
defined in the Guaranty). Not later than the date of making any payments
under Section 6.16, Borrower shall deliver to Lender a certificate of
Borrower in a form satisfactory to Lender stating that such payment is
permitted and setting forth the basis upon which the calculations required by
the applicable provisions were computed, which calculations may be based
upon Borrower's latest available financial statements.

6.17 SOLVENCY CERTIFICATE OF AFFILIATE. Prior to any transfer of Real
Estate to Borrower from an Affiliate of Borrower, Borrower shall deliver to
Lender a certificate signed by the chief financial officer of such Affiliate,
satisfactory in form and substance to Lender, stating that after giving
effect to such transfer, such Affiliate (i) will be solvent, (ii) will have
sufficient assets and capital for its business, and (iii) will have the
ability to pay its debts as they become due.

7. NEGATIVE COVENANTS

Borrower covenants and agrees that, without Lender's prior written
consent, from and after the date hereof and until the Termination Date:

7.1 MERGERS, ETC. Borrower shall not, directly or indirectly, by
operation of law or otherwise, merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine
with, any Person or form any new entity.

7.2 INVESTMENTS; LOANS AND ADVANCES. Except as otherwise provided
herein, Borrower shall not make Investments in, (i) an Affiliate or (ii) any
other Person; PROVIDED, HOWEVER, that at any time when the amount of
Revolving Credit Advances outstanding is zero, Borrower may make Permitted
Investments through the Disbursement Account.

7.3 PAYMENTS TO AFFILIATES. Borrower shall not make any payments
whatsoever (whether by loan, dividend, distributions, for the purchase of
Real Estate or other property, for services or otherwise) to or on behalf of
Affiliates or make any Restricted Payments, except as follows:

(a) Payments pursuant to Carryback Purchase Notes;

(b) Aggregate compensation and distributions to employees and
officers (A) not to increase by more than fifteen percent (15%) per year for
any employee or officer whose compensation exceeds $100,000; provided further
that compensation and distributions

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to members of the families of Edward F. Havlik and Virgil W. Owings shall be
consistent with compensation to employees and officers with similar
responsibilities;

(d) Payments for stock repurchases from the ESOP as provided under
the ESOP;

(e) Payment of dividends on preferred stock issued by Guarantor in
consideration for the transfer to Guarantor of certain land in Kalamazoo,
Michigan; provided (i) that such land has been developed, (ii) that such
dividends are payable entirely out of cash flow from such land, and (iii) such
dividends shall not exceed $108,000 per year; and

(f) Payments to United Homes, Inc., an Arizona corporation, United
Homes of Illinois, Inc., an Illinois corporation, and United Homes of Michigan,
Inc., a Michigan corporation, made in the ordinary course of business and for
reasonably equivalent value.

Notwithstanding the foregoing, no payments shall be permitted (i) under
Section 7.3 if, at the time of, or after giving effect to such payments, a
Default or Event of Default exists or would exist under this Agreement, or (ii)
under Section 7.3 (a) if, at the time of, or after giving effect to such
payments, a Default or Event of Default exists or would exist under the Guaranty
(as such terms are defined in the Guaranty).

Not later than the date of making any payments under Section 7.3 (a),
Borrower shall deliver to Lender an Officer's Certificate in a form satisfactory
to Lender stating that such payment is permitted and setting forth the basis
upon which the calculations required by the applicable provisions were computed,
which calculations may be based upon Borrower's latest available financial
statements.

7.4 INDEBTEDNESS. Except as otherwise expressly permitted by this
Section 7.4 or by any other section of this Agreement, Borrower shall not
create, incur, assume or permit to exist any Indebtedness of it on any date,
whether recourse or non-recourse, and whether superior or junior, resulting
from borrowings, loans, advances or the granting of credit, whether secured
or unsecured, unless, after giving effect thereto, the aggregate amount of
Other Indebtedness outstanding on such date plus the outstanding Revolving
Credit Advances on such date is $55,000,000 or less.

7.5 RELEASE OR SUBORDINATION OF PERMITTED ENCUMBRANCES. Borrower shall
not use any monies advanced by Lender to obtain a release or a subordination of
any Permitted Encumbrance in an amount greater than the actual amount required
to be paid by Borrower to obtain such release or subordination.

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7.6 CAPITAL STRUCTURE. Borrower shall not make any changes in its capital
structure (including, without limitation, in the terms of its outstanding
Stock), amend its certificate of incorporation or by-laws, make any changes in
any of its business objectives, purposes, or operations which could reasonably
be expected to adversely affect the repayment of the obligations or have a
Material Adverse Effect. Borrower shall not issue any Stock.

7.7 MAINTENANCE OF BUSINESS. Borrower shall not engage in any business
other than the business currently engaged in by Borrower.

7.8 TRANSACTIONS WITH AFFILIATES. Except for those transactions described
on Schedule 7.8 attached hereto, Borrower shall not enter into or be a party to
any transaction with any Affiliate of Borrower except in the ordinary course of,
and pursuant to the reasonable requirements of, Borrower's business and upon
fair and reasonable terms that are fully disclosed to Lender and are no less
favorable to Borrower than Borrower would obtain in a comparable arm's length
transaction with a Person not an Affiliate of Borrower.

7.9 GUARANTEED INDEBTEDNESS. Borrower shall not create, incur, assume or
permit to exist any Guaranteed Indebtedness except (i) by endorsement of
instruments or items of payment for deposit to the general account of Borrower,
and (ii) for Guaranteed Indebtedness incurred for the benefit of Borrower, if
the primary obligation is permitted by this Agreement.

7.10 LIENS. Borrower shall not create or permit any Lien on any of its
properties or assets except:

(a) presently existing or hereinafter created Liens in favor of
Lender; and

(b) Permitted Encumbrances.

7.11 CAPITAL EXPENDITURES. Borrower shall not make Consolidated Capital
Expenditures that, in the aggregate, exceed $200,000 in any Fiscal Year.

7.12 SALE OF ASSETS. Borrower shall not sell, transfer, convey or
otherwise dispose of any assets or properties or engage in any
sale-leasebacks or similar transactions involving such assets or properties
(collectively referred to as "DISPOSITIONS"), provided, however, that the
foregoing shall not prohibit (i) dispositions in the ordinary course of
Borrower's business, (ii) dispositions resulting from any casualty or
condemnation of assets or properties, (iii) dispositions of those assets and
properties listed on Schedule 7.12, or (iv) dispositions of assets or
properties out of the ordinary course of Borrower's business at the Fair
Market Value of such assets or properties.

7.13 CANCELLATION OF INDEBTEDNESS. Borrower shall not cancel any claim or
debt owing to it, except for commercially reasonable consideration and in the
ordinary course of business (other than settlement of intercompany accounts due
from Borrower).

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7.14 HEDGING TRANSACTIONS. Borrower shall not engage in any speculative
interest rate hedging swaps, caps or similar transaction.

7.15 RESTRICTED PAYMENTS. Borrower shall not make any Restricted
Payments, except to the extent such payments are permitted pursuant to
Section 7.3.

7.16 COMPENSATION AND MANAGEMENT. Borrower, together with Guarantors,
shall not pay Compensation to any relatives of Edward F. Havlik and Virgil W.
Owings (including relatives by marriage) except those listed on Schedule
7.16, in an amount in excess of $100,000 per year.

7.17 ERISA. Borrower shall not, and shall not permit any ERISA Affiliate
to, directly or indirectly, establish, maintain or become obligated to
contribute to any Pension Plan, Title IV Plan, Multiemployer Plan or Retiree
Welfare Plan. Borrower shall not establish, maintain or become obligated to
contribute to any new Welfare Plan or modify any existing Welfare Plan for
retirees, which would result in the present value of future liabilities under
any such plans to increase. Borrower shall not, directly or indirectly, and
shall not permit any ERISA Affiliate to (a) satisfy any liability under any
Qualified Plan by purchasing annuities from an insurance company, or (b)
invest the assets of any Qualified Plan with an insurance company, unless, in
each case, such insurance company is rated AA by Standard & Poor's
Corporation and the equivalent by each other nationally recognized rating
agency at the time of the investment.

7.18 PREPAYMENT OF INDEBTEDNESS. Except for prepayments in connection
with Permitted Refinancing Indebtedness, Borrower shall not make any
prepayment of principal or interest except prior to the date of the First
Revolving Credit Advance or as permitted in Sections 2.2 or 2.3 hereof, on
account of any Indebtedness of Borrower in excess of $100,000 in the
aggregate in any one calendar year.

7.19 VENDOR NOTES. Borrower shall not enter into any agreement or
arrangement with any vendor to pay for any services or materials provided
with respect to any Eligible Collateral on terms other than normal trade
credit customarily obtained by Borrower and in no case shall Borrower issue
any note for any such obligation or agree to pay any vendor on the sale of
Eligible Collateral.

7.20 ESOP. Borrower shall not amend or permit the amendment of the ESOP
without the prior written consent of Lender.

8. TERM

8.1 TERMINATION. Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated hereby in respect of the Loan shall be in
effect until the Commitment Termination Date.

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8.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENT.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties,
or liabilities of Borrower or the rights and powers of Lender relating to any
transaction or event occurring prior to such termination. Except as otherwise
expressly provided herein or in any other Loan Document, all of Borrower's
undertakings, agreements, covenants, warranties and representations contained in
the Loan Documents shall survive (with respect to representations and warranties
as of the date made or deemed made only) such termination or cancellation and
shall continue in full force and effect until all of the obligations have been
paid in full in accordance with the terms of the agreements creating such
obligations, at which time the same shall terminate.

9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "EVENT OF
DEFAULT" hereunder;

(a) Borrower shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, the Loan or any of the
other Obligations when due and payable or declared due and payable, except that
with respect to expenses payable under this Agreement, or other Obligations
owing under any Loan Document other than this Agreement, such failure shall have
remained unremedied for five (5) days after Borrower has received notice of such
failure from Lender.

(b) Borrower shall fail to perform or observe any of the covenants
contained in Articles 5 or 7 of this Agreement.

(d) Borrower or Guarantor shall contest the validity or priority of
any Lien created under the Collateral Documents.

(e) Borrower shall fail to perform or observe any of the covenants
contained in Sections 6.3, 7.2, 7.3, 7.4, 7.9, 7.10, 7.11 or 7.12 of this
Agreement (each a "FINANCIAL COVENANT"). Borrower shall be unable to
demonstrate that it has complied with such Financial Covenant as of no later
than the end of the second succeeding quarterly period.

(f) Borrower shall fail or neglect to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents, and the
same shall remain unremedied for a period ending on the first to occur of ten
(10) days after Borrower shall receive written notice of any such failure from
any Lender or twenty (20) days after Borrower shall become aware thereof.

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(g) Any representation or warranty herein or in any Loan Document or
in any other written statement pursuant thereto or hereto, report, financial
statement or certificate made or delivered to Lender by Borrower shall be untrue
or incorrect in any material respect, as of the date when made or deemed made
(including those made or deemed made pursuant to Section 3.2).

(h) Any other event or condition shall have occurred which would have
a Material Adverse Effect and Lender shall have given Borrower at least five (5)
days' notice thereof.

(i) A Change of Control, to which Lender has not consented, shall
have occurred.

(j) Edward F. Havlik or Virgil W. Owings shall cease for any reason
to serve actively in such capacity as he serves as of the date hereof (except
that it is understood that Edward F. Havlik is serving as chief executive
officer of United Homes of Illinois, Inc. on an-interim basis only) and the
responsibilities formerly held by Edward F. Havlik or Virgil W. Owings to cease
to so serve, as the case may be, shall not be assumed by one or more individuals
reasonably acceptable to Lender, in the exercise of its discretion.

(k) With respect to any Plan, (i) a prohibited transaction with the
meaning of Section 4975 of the IRC or Section 406 of ERISA occurs which in the
reasonable determination of the Lender could result in direct or indirect
liability to the Borrower, (ii) with respect to any Qualified Plan, the Borrower
or any ERISA Affiliate shall incur an accumulated funding deficiency or request
a funding waiver from the IRS; provided, however, that the events listed in
clauses (i) and (ii) hereof shall constitute Events of Default only if the
liability, deficiency or waiver request of Borrower or any ERISA Affiliate,
whether or not assessed, would have Material Adverse Effect.

(l) Any material provision of any Collateral Document or the
Guaranty, after delivery thereof pursuant to Section 3.1, shall for any reason
cease to be valid or enforceable in accordance with its terms, or any Lien
created under any Collateral Document shall cease to be a valid and perfected
first priority Lien (except as otherwise stated therein and except for Ordinary
Course Liens) in any of the Collateral purported to be covered thereby and
aggregate value of all such Collateral on which Lender's Lien is so adversely
affected exceeds $50,000 at any one time.

(m) A default other than those defaults existing as of the date
hereof and specified on Schedule 4.8 shall occur under any other agreement,
document or instrument to which Borrower is a party or by which Borrower or
Borrower's property is bound, and such default (i) involves the failure to make
any payment (whether of principal, interest or otherwise) due within the grace
period provided for in such agreement, document or instrument (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) in
respect of an Indebtedness of Borrower in an aggregate amount exceeding

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$50,000 (which failure continues beyond any applicable grace period), or (ii)
causes Indebtedness of Borrower or a portion thereof in an aggregate amount
exceeding $200,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.

(n) Any of the Collateral (other than the DE MINIMIS amount thereof)
subject to any seizure or attachment, or other legal proceedings.

(o) A judgment shall be entered against Borrower or Guarantor in an
amount in excess of $100,000 and such judgment shall become final.

(p) Borrower shall (i) file a petition seeking relief under the
Bankruptcy Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Borrower or of any substantial part of its properties or (iii) take any
corporate action in furtherance of any such action.

(q) There shall exist outstanding "stop notices" not fully bonded
within 10 days of issuance in excess of $50,000, in the aggregate.

Lender shall have no obligation to make Revolving Credit Advances
during any cure period afforded Borrower in this Section 9.1 until Borrower
cures the Default.

9.2 REMEDIES. If any Event of Default shall have occurred and be
continuing, Lender may, without notice, (i) terminate this facility with respect
to further Revolving Credit Advances whereupon no Revolving Credit Advances may
be made or incurred hereunder, (ii) declare all Obligations to be due and
payable, whereupon all obligations shall become and be due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and/or (iii) exercise all rights and remedies
allowed by applicable laws of the United States and of any state thereof,
including, without limitation, the Code; provided, however, upon the occurrence
of an Event of Default specified in Sections 9.1(m) or (n) hereof, the
Obligations shall become due and payable without declaration, notice or demand
by Lender.

9.3 WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement and applicable law, Borrower waives (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender or any Assignee Lender on which Borrower may in any
way be liable and hereby ratifies and confirms whatever Lender or any Assignee
Lender may do in this regard, (ii) all rights to notice and a hearing prior to
Lender's taking

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possession or control of, or to Lender's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior to
allowing Lender to exercise any of its remedies, and (iii) the benefit of all
valuation, appraisal and exemption laws. Borrower acknowledges that it has been
advised by counsel of its choice with respect to this Agreement, the other Loan
Documents and the transactions evidenced by this Agreement and the other Loan
Documents.

9.4 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
any Event of Default, Lender and each Assignee Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held after crediting other indebtedness or
amounts of any kind at any time owing by Lender or such Assignee Lender to or
for the credit or the account of Borrower against any and all of the Obligations
of Borrower now or hereafter existing under this Agreement, and the Note held by
Lender or such Assignee Lender, irrespective of whether or not Lender or such
Assignee Lender shall have made any demand under this Agreement or the Note and
although such obligations may be unmatured.

10. MISCELLANEOUS

10.1 COMPLETE AGREEMENT: MODIFICATION OF AGREEMENT: SALE OF INTEREST.
The Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and may not be modified, altered or amended
except by an agreement in writing signed by Borrower and Lender. Borrower may
not sell, assign or transfer any of the Loan Documents or any portion thereof,
including, without limitation, Borrower's rights, title, interests, remedies,
powers and duties hereunder or thereunder. Lender and each Assignee Lender may
undertake the sale of participations, assignment, transfer or other disposition,
at any time or times, of any of the Loan Documents or of any portion thereof or
interest therein, including, without limitation, Lender's and each Assignee
Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced by a writing or not and the sale, assignment, transfer or
other disposition of all or a portion of the Loan; provided, that (i) neither
Lendernor any Assignee Lender shall transfer any interest under this Agreement
or in or to the Obligations to any Person that is not (a) a United States
resident or citizen or a corporation or partnership formed under the laws of
the United States or any of the states and (b) subject to United States
taxation with respect to the payments received hereunder and (ii) Lender shall,
at all times, retain whatever interest may be necessary in order to give Lender
the sole right to grant waivers or consents, declare Events of Default or
exercise remedies under any of the Loan Documents. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or of any portion thereof or interest
therein, including, without limitation, assistance in the preparation of
appropriate disclosure documents or placement memoranda.

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If Lender or any Assignee Lender assigns or otherwise transfers all or any
part of the Note, Borrower shall, upon the request of Lender or such Assignee
Lender, issue one or more new Notes, as the case may be, to effectuate such
assignment or transfer.

Lender may sell, assign, transfer or negotiate to one or more other
lenders, commercial banks, insurance companies or other financial institutions
all or a portion of the rights and obligations under the Note and this
Agreement.

No amendment or waiver of any provision of this Agreement or the Note or any
other Loan Document, nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by Lender
and all Assignee Lenders affected thereby do any of the following: (i) increase
the Maximum Loan or subject the Lender or any Assignee Lender to any additional
obligations, (ii) reduce the principal of, or interest on, the Note or other
amounts payable hereunder other than those payable only to Lender which may be
reduced by Lender unilaterally, (iii) postpone any date fixed for any payment of
principal of, or interest on, the Note or other amounts payable hereunder, other
than those payable only to Lender which may be postponed by Lender unilaterally,
(iv) change the aggregate unpaid principal amount of the Note, or the number of
Lenders and Assignee Lenders which shall be required for the Lenders and
Assignee Lenders or any of them to take any action hereunder, (v) release or
discharge any Person liable for the performance of any obligations of any Loan
Party hereunder or under any of the Loan Documents, or (vi) amend this Section
10.1; and provided, further, however, that no amendment, waiver or consent
shall, unless in writing and signed by all Lenders holding an interest in the
Note, increase the Maximum Loan; and provided, further, however, that no
amendment, waiver or consent shall, unless in writing and signed by Lender,
affect the rights or duties of the Lender under this Agreement, the Note or
any Loan Document.

10.2 FEES AND EXPENSES. Borrower shall, upon execution of this Agreement,
and thereafter pay all reasonable out-of-pocket expenses of Lender in connection
with the preparation of the Loan Documents (including the reasonable fees and
expenses of all of its counsel and advisors retained in connection with the Loan
Documents and the transactions contemplated thereby and advice in connection
therewith). If, at any time or times, regardless of the existence of an Event
of Default (except with respect to subparagraphs (iv) and (v), which shall be
subject to an Event of Default having occurred and being continuing), Lender (or
in the case of subparagraphs (iv) and (v) below, any Assignee Lender) shall
employ counsel or other advisors for advice or other representation or shall
incur reasonable legal or other costs and expenses in connection with:

(i) any sale of participations, assignment, transfer or other
disposition of Lender's interest in the Loan or any of the Loan Documents or
any portion thereof, but only as to one-half of any such expenses;

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(ii) any amendment, interpretation of, modification or waiver, or
consent with respect to, any of the Loan Documents or advice in connection
with the administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;

(iii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender or any Assignee Lender, Borrower or any other
Person) in any way relating to the Collateral, any of the Loan Documents or
any other agreements to be executed or delivered in connection herewith;

(iv) any attempt to enforce any rights of Lender or any Assignee
Lender against Borrower or any other Person, that may be obligated to
Lender by virtue of any of the Loan Documents;

(v) any attempt to verify, protect, value, collect, sell, liquidate
or otherwise dispose of the Collateral;

then, and in any such event, the attorneys' and other parties' fees arising from
such services, including those of any appellate proceedings, and all expenses,
costs, charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or actions
described in this Section shall be payable, on demand, by Borrower to Lender
(or as provided above to an Assignee Lender) and shall be additional obligations
secured under this Agreement and the other Loan Documents; provided, however,
the (a) so long as no Event of Default exists, Borrower shall be responsible for
fees, expenses, costs, charges and other fees incurred with respect to
subparagraph (ii) above only if Borrower shall have consented to paying for such
matters in advance and (b) in any direct action between Borrower and Lender
pursuant to subparagraph (iii) or (iv) above, all fees, expenses (including,
without limitation, all reasonable attorneys' fees and expenses), costs and
charges of the prevailing party (who shall be deemed to be the party who obtains
substantially the relief sought by such party, whether by settlement, compromise
or judgment) shall be paid by the nonprevailing party. Without limiting the
generality of the foregoing, such reasonable expenses, costs, charges and fees
may include: appraisers, liquidators, paralegal fees, costs and expenses;
accountants' and investment bankers' fees, costs and expenses; photocopying and
duplicating expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal
services.

10.3 NO WAIVER LENDER. Lender's or any Assignee Lender's failure, at any
time or times, to require strict performance by any Loan Party of any provision
of this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Lender or Assignee Lender of
an Event of Default by any Loan Party under the Loan Documents shall not
suspend, waive or affect any other Event of Default by any Loan Party under this
Agreement and any of the other Loan Documents whether the same is prior or

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subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of any Loan
Party contained in this Agreement or any of the other Loan Documents and no
Event of Default by Borrower under this Agreement and no defaults by any Loan
Party under any of the other Loan Documents shall be deemed to have been
suspended or waived by Lender or Assignee Lender, unless such suspension or
waiver is by an instrument in writing signed by an officer of Lender and
directed to such Loan Party specifying such suspension or waiver.

10.4 REMEDIES. Lender's and each Assignee Lender's rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which Lender and Assignee Lenders may have under any other
agreement, including without limitation, the Loan Documents, by operation of law
or otherwise. Recourse to the Collateral prior to the exercise of other
remedies shall not be required.

10.5 WAIVER OF JURY TRIAL. The parties hereto waive all right to trial by
jury in any action or proceeding to enforce or defend any rights under the Loan
Documents.

10.6 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

10.7 PARTIES. This Agreement and the other Loan Documents shall be binding
upon, and inure to the benefit of, the successors of Borrower, Lender and any
Assignee Lender and the assigns, transferees and endorsees of Lender and any
Assignee Lender.

10.8 CONFLICT OF TERMS. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

10.9 AUTHORIZED SIGNATURE. Until Lender shall be notified by Borrower to
the contrary, the signature upon any document or instrument delivered pursuant
hereto of an officer of Borrower listed in Schedule 10.9 hereto shall bind
Borrower and be deemed to be the act of Borrower affixed pursuant to and in
accordance with resolutions duly adopted by Borrower's Board of Directors.

10.10 GOVERNING LAW. Except as otherwise expressly provided in any of the
Loan Documents, in all respects, including all matters of construction, validity
and performance, this Agreement and the Obligations arising hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of

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laws, and any applicable laws of the United States of America. Lender, each
Assignee Lender and Borrower agree to submit to personal jurisdiction and to
waive any objection as to venue in the County of Cook, State of Illinois.
Service of process on Borrower, Lender or any Assignee Lender in any action
arising out of or relating to any of the Loan Documents shall be effective if
mailed to such party at the address listed in Section 10.11 hereof. Nothing
herein shall preclude Lender, any Assignee Lender or Borrower from bringing suit
or taking other legal action in any other jurisdiction.

10.11 NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another or whenever any of the parties desires to give or serve
upon another any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person with
receipt acknowledged or by registered or certified mail, return receipt
requested, postage prepaid, or telecopied and confirmed by telecopy answerback
addressed as follows:

(a) If to Lender at

Genel Company, Inc.
c/o General Electric Capital Corporation
13455 Noel Road
Suite 1750
Two Galleria Tower, LB24
Dallas, Texas 75240
Attention: Investment Manager
Telecopy No.: (214)788-1775

With copies to:

General Electric Capital Corporation
292 Long Ridge Road
Stanford, Connecticut 06902
Attention: Counsel, Commercial Real Estate Financing
Telecopy No.: (203)357-6768

and

Vinson & Elkins L.L.P
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201-2975
Attention: Michael R. Boulden, Esq.
Telecopy No.: (214) 220-7716

68
<PAGE>

(b) If to Borrower, at

United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4240
Attention: Mr. Edward F. Havlik
Telecopy No.: (708) 427-2450

With copies to:

Shefsky & Froelich, Ltd.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: David L. Feltman
Telecopy No.: (312) 527-9285

or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three (3) Business Days after the same shall have been deposited in the United
States mail. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.

10.12 SURVIVAL. The representations and warranties of Borrower in this
Agreement shall survive the execution, delivery and acceptance hereof by the
parties hereto and the closing of the transactions described herein or related
hereto.

10.13 SECTION TITLES. The Section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.

10.14 COUNTERPARTS. This Agreement may be signed in more than one (1)
counterpart, each of which shall be considered an original and all of which
together shall constitute one agreement.

10.15 TRANSFER OF NOTE AND LIENS. Lender may transfer the Note and the
Liens securing the same at any time without notice to or consent by Borrower.

<PAGE>

10.16 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
person or entity, each shall be jointly and severally liable to Lender for the
full and faithful performance of all obligations contemplated by this Agreement.

10.17 NO ORAL AGREEMENTS. THIS WRITTEN LOAN AGREEMENT AND THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY, NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.

"Borrower"

UNITED HOMES, INC., an Illinois corporation,

By:/s/ William J Crock
------------------------------------------
William J Crock, Secretary

"Lender"

GENEL COMPANY, INC., an Oregon corporation

By:/s/ Mark T. LaCourse,
------------------------------------------
Mark T. LaCourse, Attorney-in-Fact

70
<PAGE>

EXHIBIT A

FORM OF NOTE

$25,000,000.00 Chicago, Illinois
May ____, 1995

FOR VALUE RECEIVED, the undersigned, UNITED HOMES, INC., an Illinois
corporation ("BORROWER") hereby PROMISES TO PAY to the order of GENEL COMPANY,
INC., an Oregon corporation ("LENDER") or its assigns, at 13455 Noel Road, Suite
1750, Dallas, Texas 75240 or at such other place as the holder of this Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the amount of TWENTY-FIVE MILLION
DOLLARS ($25,000,000), or such lesser principal amount of the Loan (as
hereinafter defined) as may be outstanding pursuant to the Credit Agreement
(as hereinafter defined), together with interest on the unpaid principal
amount of this Note outstanding from time to time from the date hereof at the
rate or rates provided in the Credit Agreement.

This Note is issued pursuant to that certain Revolving Credit Agreement
dated as of May___,1995 between Borrower and Lender (the "CREDIT AGREEMENT") is
referred to as the Note in the Credit Agreement and is entitled to the benefit
and security of the Loan Documents provided for therein, to which reference is
hereby made for a statement of all of the terms and conditions under which the
loan evidenced hereby is made. All capitalized terms, unless otherwise defined
herein, shall have the meanings ascribed to them in the Credit Agreement.

The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the Credit Agreement. Interest
thereon shall be paid until such principal amount is paid in full at such
interest rates and at such times as are specified in the Credit Agreement.

If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the applicable rate during such extension.

If any payment of principal or interest, or any amount due under the Credit
Agreement or the other Loan Documents is not timely made and remains overdue and
payable after the expiration of any applicable cure period, interest shall
thereafter accrue on the principal amount at the Default Rate until such amounts
are paid. On the occurrence of an Event of Default (inclusive of any cure
periods with respect thereto) under the terms of any Loan Document, Borrower,
without notice or demand by Lender, shall

A-1
<PAGE>

thereafter pay interest at the Default Rate until the Event of Default is cured.
Borrower recognizes that its default in making payments as provided herein or in
the Credit Agreement as agreed to be paid when due, or otherwise causing an
Event of Default to occur hereunder or under any other Loan Document, will
require Lender to incur additional expense in servicing the Loan, in loss to
Lender of the use of the money due and in frustration to Lender in meeting its
other financial and loan commitments and that damages caused thereby would be
extremely difficult and impractical to ascertain. Borrower agrees that an
amount equal to the accrual of interest at the Default Rate is a reasonable
estimate of the damage to Lender in the event of late payment and that the
accrual of interest at the Default Rate following any other default is a
reasonable estimate of the damage to Lender in the event of such other default,
regardless of whether there has been an acceleration of the Loan. Nothing in
this paragraph shall be construed as an obligation on the part of Lender to
accept, at any time, less than the full amount then due hereunder, or as a
waiver or limitation of Lender's rights to compel prompt performances.

During the continuance of an Event of Default, this Note may, as provided
in the Credit Agreement, and without demand, notice or legal process of any
kind, be declared, and immediately shall become, due and payable.

Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.

This Note has been executed, delivered and accepted at Chicago, Illinois
and shall be interpreted, governed by and construed in accordance with, the laws
of the State or Illinois.

UNITED HOMES, INC., an Illinois corporation,

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

A-2

<PAGE>

EXHIBIT B

NOTICE OF REVOLVING CREDIT ADVANCE

[Date]

Genel Company, Inc.
c/o General Electric Capital Corporation
13455 Noel Road, Suite 1750
One Galleria Tower, LB 24
Dallas, Texas 75240
Attention: Investment Manager

Ladies and Gentlemen:

The undersigned, United Homes, Inc., an Illinois corporation
("BORROWER"), refers to that certain Revolving Credit Agreement, dated as of
May___, 1995 (as amended or modified, the "CREDIT AGREEMENT", the terms
defined therein being used herein as therein defined), between Borrower and
Genel Company, Inc. and hereby gives you notice, irrevocably, pursuant to
Section 2.1 of the Credit Agreement, that the undersigned hereby requests a
Revolving Credit Advance under the Credit Agreement, and in that connection
sets forth below the information relating to such Revolving Credit Advance as
required by Section 2.1(c) of the Credit Agreement:

(i) The date of the requested Revolving Credit Advance shall be
_________, 199__.

(ii) The aggregate amount of the requested Revolving Credit Advance is
$__________.

The undersigned hereby certifies that the statements contained in Section
3.2 of the Credit Agreement are true on the date hereof, and will be true on the
date of the requested Revolving Credit Advance before and after giving effect
thereto and to the application of the proceeds therefrom.

B-1

<PAGE>

"Borrower"
UNITED HOMES, INC., an Illinois corporation

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

B-2
<PAGE>

EXHIBIT C

May __, 1995

VIA CERTIFIED MAIL RECEIPT
NO._______________________
[Name of Bank]
[Address]

Re: United Homes, Inc. - Concentration Account Number ___________

Dear Bank Officer:

Please be advised that, pursuant to that certain Revolving Credit Agreement
(the "AGREEMENT") dated as of May __, 1995, between United Homes, Inc.
("BORROWER"), and Genel Company, Inc. ("LENDER"), Borrower has agreed to deposit
certain proceeds in the above-referenced account (the "CONCENTRATION ACCOUNT"),
in which security interests have also been granted to Lender.

You are hereby irrevocably directed to transfer, by wire, on each day that
is not a Saturday, a Sunday or a day on which banks are required or permitted to
be closed in the States of Illinois or New York, all collected and available
funds on deposit in the Concentration Account to Bankers Trust Company account
number _______ in the name of GECC/RCL United, ABA No. 021 001 033 (the
"DEPOSITORY ACCOUNT"). You are further directed that any funds remaining in the
Concentration Account after the daily transfer to the Depository Account shall
be invested overnight in government securities or federal funds. Except as set
forth in the two immediately preceding sentences, you are hereby further
directed not to transfer any other funds, and not to allow any other
withdrawals, from the Concentration Account, except, in either case, pursuant to
written instructions received by you from both Lender and Borrower, jointly.

[NAME OF BANK] (i) confirms that it is not the holder of any pledge or
assignment of the Concentration Account and has received no notice of any other
pledge or assignment of the Concentration Account and (ii) acknowledges and
agrees that any right of offset or claim that it may have against the
Concentration Account or any funds, cash, instruments or securities now or
hereafter deposited therein shall be subject, junior and subordinate to

<PAGE>

- ------------------------
[Name of Bank]
May __, 1995
Page 2

the interest of Lender in the Concentration Account and all funds, cash,
instruments or securities now or hereafter deposited therein.

Please acknowledge your receipt of this letter and your agreement to its
terms by executing this letter in the space provided below and returning an
executed copy by facsimile to Lender at fascimile number (214) 788-1775 Attn:
Investment Manager.

Very truly yours,

UNITED HOMES, INC., an Illinois corporation

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

GENEL COMPANY, INC., an Oregon corporation

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

Agreed and Acknowledged:

[NAME OF COLLECTION ACCOUNT BANK]

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

<PAGE>

EXHIBIT D

FORM OF CARRYBACK PURCHASE NOTE

$___________ _________,Illinois
__________ _____, 199___

FOR VALUE RECEIVED, the undersigned, UNITED HOMES, INC., an Illinois
corporation, and (hereinafter collectively referred to as "MAKER") hereby
PROMISES TO PAY to the order of [___________, a ____________] ("HOLDER") or its
registered assigns, at _________________or at such other place as Holder may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the amount of [AMOUNT IN DOLLARS]
($_______________), together with interest on the unpaid principal amount of
this Note outstanding from time to time from the date hereof at the rate equal
to the Index Rate plus _____ percent (___%) per annum, calculated on the basis
of the actual number of days elapsed and on the basis of a 365 day year. This
Note is one of the notes referred to as the "CARRYBACK PURCHASE NOTES" in that
certain Revolving Credit Agreement dated as of May ___, 1995 between Maker and
General Electric Capital Corporation (as amended or otherwise modified from time
to time, the "CREDIT AGREEMENT"). All capitalized terms, unless otherwise
defined herein, shall have the meanings ascribed to them in the Credit
Agreement.

Payments of all indebtedness due under this Note shall be due and payable
30 days following the Termination Date; provided, however, that Maker may elect
to prepay at any time any portion of indebtedness due under this Note without
premium or penalty. To the extent Maker elects to make payments on an earlier
date, Maker shall only be entitled to make payments upon such terms and
conditions as set forth in the Credit Agreement.

If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day.

<PAGE>

This Note has been executed, delivered and accepted at Chicago, Illinois
and shall be interpreted, governed by and construed in accordance with, the laws
of the State of Illinois.

UNITED HOMES, INC., an Illinois corporation

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

Accepted and acknowledged by:

GENEL COMPANY, INC., any Oregon corporation

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

<PAGE>

SCHEDULE 1.1

"BORROWING BASE" shall mean all Eligible Collateral that Lender has not
rejected in its sole discretion as constituting a portion of the Borrowing
Base and with respect to which (a) Lender has a first priority Lien perfected
as contemplated by the terms of this Agreement, subject only to Liens
specifically approved in writing by Lender; (b) Lender has received a binding
mortgagee's policy of title insurance on ALTA Form B (1970) (or equivalent)
and otherwise in form and content satisfactory to Lender, to be obtained at
Borrower's expense, insuring that the Lien of the Collateral Documents
constitutes a valid Lien encumbering the Real Estate, free and clear of all
defects and encumbrances (including any mechanics' liens claims, whether
recorded or unrecorded) except for such other Liens as Lender shall approve
and naming Lender as insured, issued by a nationally recognized title
insurance company acceptable to Lender, with no exceptions or exclusions
other than as may be approved by Lender (together with legible copies of all
permitted title exceptions), and in an amount not less than the Market Value
with the total amount of the title policies to be issued in Lender's favor to
be in a maximum aggregate amount equal to the maximum principal amount of
$25,000,000. Each title policy shall include such affirmative insurance as
Lender may require and shall be in form and substance satisfactory to
Lender's legal counsel. The title insurance policy shall be reinsured with
such title companies, in such amounts and in such manner and form as shall be
acceptable to Lender. In the event that a Lien is filed against any Eligible
Collateral subsequent to its admission to the Borrowing Base (whether or not
such Lien is subordinate to the Lien perfected by Lender as contemplated by
this Agreement), in addition to all other rights and remedies that Lender may
have under this Agreement or the other Loan Documents, Lender shall be
entitled, in its sole discretion, to remove the Eligible Collateral affected
by such Lien from the Borrowing Base, effective immediately.

1.1-1

<PAGE>

SCHEDULE 2.9(a)

CONCENTRATION ACCOUNT

- --------------------------------------------------------------------------------

ACCOUNT ACCOUNT
BANK NAME NUMBER
- --------------------------------------------------------------------------------
AMERICAN NATIONAL BANK United Homes, Inc.
AND TRUST COMPANY OF
CHICAGO
33 North LaSalle Street
Chicago, Illinois 60690
- --------------------------------------------------------------------------------

<PAGE>

SCHEDULE 2.9(b)

DISBURSEMENT ACCOUNTS

- --------------------------------------------------------------------------------

ACCOUNT ACCOUNT
BANK NAME NUMBER
- --------------------------------------------------------------------------------
AMERICAN NATIONAL United Homes, Inc.
BANK AND TRUST
COMPANY OF CHICAGO
33 North LaSalle Street
Chicago, Illinois 60690
- --------------------------------------------------------------------------------
BYRON CENTER STATE United Homes, Inc.
BANK
2445-84th S.W.
Byron Center, Michigan 49315
- --------------------------------------------------------------------------------
BANK OF AMERICA United Homes, Inc.
P.O. Box 1165
Carefree, Arizona 85377
- --------------------------------------------------------------------------------

<PAGE>

SCHEDULE 4.2

EXECUTIVE OFFICES

Illinois: 2100 Golf Road
Rolling Meadows, Illinois 60008

Michigan: 4525 Broadmoor
Grand Rapids, Michigan 49512

Arizona: 3260 North Hayden
Scottsdale, Arizona 85251

<PAGE>

SCHEDULE 4.3

SUBSIDIARIES AND GUARANTOR

United Homes, Inc., an Arizona corporation
United Homes of Illinois, Inc., an Illinois corporation
United Homes of Michigan, Inc., a Michigan corporation
United Development Management Company, an Illinois corporation

<PAGE>

SCHEDULE 4.5(d)

MATERIAL ADVERSE CHANGES AND STOCK RELATED TRANSACTIONS
SINCE FEBRUARY 28, 1995

None

<PAGE>

SCHEDULE 4.7(a)

ENCUMBRANCES ON REAL ESTATE

To be attached from Title Commitments

<PAGE>

SCHEDULE 4.7(b)

RIGHTS OF FIRST REFUSAL

None

<PAGE>

SCHEDULE 4.7(d)

PENDING OR THREATENED CONDEMNATION PROCEEDINGS

None

<PAGE>

SCHEDULE 4.7(e)

CASUALTY AND FLOOD HAZARD AREA

None

<PAGE>

SCHEDULE 4.8

DEFAULTS

None

<PAGE>

SCHEDULE 4.11

OTHER VENTURES

PARTNERSHIP:

The Gilberts Associates United Partnership
The Williams Glens Partnership
United/RBG II L.P.
The Red Dog Ranch Limited Partnership

<PAGE>

SCHEDULE 4.14

TAX MATTERS

Nothing Pending

<PAGE>

SCHEDULE 4.15

ERISA

None

<PAGE>

SCHEDULE 4.16

LITIGATION

<PAGE>

SCHEDULE 4.18

OUTSTANDING OPTIONS

None

<PAGE>

SCHEDULE 4.19

EMPLOYMENT MATTERS

None

<PAGE>

SCHEDULE 4.20

PATENTS AND TRADEMARKS

None

<PAGE>

SCHEDULE 4.23

MATERIAL ADVERSE EFFECT

None

<PAGE>

SCHEDULE 4.24

ENVIRONMENTAL MATTERS

None

<PAGE>

SCHEDULE 5.1(f)

OPERATING REPORTS

Audited financial statement as of September 30, 1994

Unaudited financial as of February 28, 1995

<PAGE>

SCHEDULE 6.7

INSURANCE

Certificate of Insurance dated May 12, 1995, from Arthur
J. Gallagher & Co.

[describe insurance]

<PAGE>

CERTIFICATE OF INSURANCE ISSUE DATE
//05/23/95

PRODUCER THE CERTIFICATE IS ISSUED AS A MATTER
ARTHUR J. GALLAGHER & CO OF INFORMATION ONLY AND CONFERS NO RIGHTS
ATTN: MARY WRAY UPON THE CERTIFICATE HOLDER. THE
(708) 517-3906 CERTIFICATE DOES NOT AMEND, EXTEND OR
1450 E. AMERICAN LANE ALTER THE COVERAGE AFFORDED BY THE POLICY
SCHAUMBURG IL 60173 BELOW
--------------------------------------------
COMPANIES AFFORDING COVERAGE
- ------------------------------------------------------------------------------
INSURED COMPANY A
UNITED HOMES, INC LETTER NORTHBROOK PROPERTY & CASUALTY
2100 GOLF ROAD --------------------------------------------
SUITE 110 COMPANY B
ROLLING MEADOWS, IL 60008 LETTER COMMERCIAL UNDERWRITERS (J. NEBEL)
--------------------------------------------
COMPANY C
LETTER FEDERAL INSURANCE COMPANY (CHUBB)
--------------------------------------------
COMPANY D
LETTER
--------------------------------------------
COMPANY E
LETTER
--------------------------------------------
- ------------------------------------------------------------------------------
COVERAGE
- ------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER
DOCUMENT WITH RESPECT TO WHICH THE CERTIFICATE MAY BE ISSUED OR MAY PERTAIN.
THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
TERMS, COLLECTIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE
BEEN REDUCED BY PAID CLAIM.
- ------------------------------------------------------------------------------

POLICY EFFECTIVE POLICY EXPIRATION
TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY) ALL LIMITS IN THOUSANDS
- ----------------------------- -------------- ----------------- ------------------ -------------------------------------
<S> <C> <C> <C> <C>

A GENERAL LIABILITY 91453316 02/01/95 02/01/96 GENERAL AGGREGATE $ 2,000
B /X/ COMMERCIAL GENERAL LIABILITY EWC1000034 02/01/95 02/01/96 PRODUCTS-COMP/OPS/AGGR. $ 1,000
/ / CLAIMS MADE /X/ OCCUR PERSONAL & ADVERTISING INJURY $ 1,000
/ / OWNERS & CONTRACTOR'S PROT. EACH OCCURRANCE $ 1,000
----------------- FIRE DAMAGE (ANY ONE FIRE) $ 50
- ----------------------------------------------------------------------------------------------------------------------------
A AUTOMOBILE LIABILITY CA0437484-95 02/01/95 02/01/96 COMBINED SINGLE LIST $ 1,000
/ /ANY AUTO BODILY INJURY (PER PERSON) $
/ /ALL OWNED AUTOS BODILY INJURY (PER ???) $
/X/SCHEDULED AUTOS PROPERTY DAMAGE $
/X/HIRED AUTOS
/X/NON-OWNED AUTOS
/ /GARAGE LIABILITY
/X/PHYSICAL DAMAGE
- ----------------------------------------------------------------------------------------------------------------------------
C EXCESS LIABILITY 9679714773 02/01/95 02/01/96
/X/Y UMBRELLA FORM EACH OCCUR $10,000
OTHER THAN UMBRELLA FORM AGGREGATE $10,000
- ----------------------------------------------------------------------------------------------------------------------------
A WORKER'S COMPENSATION 91-453320 02/01/95 02/01/96 STATUTORY
AND // 500 (EACH ACCOUNT)
EMPLOYERS' LIABILITY // 500 (COVERAGE POLICY LIMIT)
// 500 (PURCHASE-EACH EMPLOYED)
- ----------------------------------------------------------------------------------------------------------------------------
A OTH. ALL RISK PROP. IM91439992 02/01/95 02/01/96 $17,469
REAL & PERSONAL IM91437876 02/01/95 02/01/96 (IN 1,000)
AND BUILDERS $10,000 PER
RISK COVERAGES SITE & OCCUR.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF OPERATION/LOCATION/VEHICLES/SPECIAL/ITEMS

THE CERTIFICATE HOLDER, AS LENDER, IS ADDITIONAL INSURED ON GENERAL LIABILITY
& LOSS PAYEE/MORTGAGEE ON PROPERTY & BUILDER'S RISK WITH REGARD TO THEIR
INTERESTS, ALL POLICY TERMS & CONDITIONS APPLY.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
GE CAPITAL SHOULD ANY OF THE ABOVE DESCRIBED POLICIES
1750 TWO GALLERIA TOWER BE CANCELLED BEFORE THE EXPIRATION DATE
13455 NOEL ROAD THEREOF, THE ISSUED COMPANY WILL ENDEAVOR
DALLAS, TX 75240 TO MAIL 30 DAYS WRITTEN NOTICE TO THE
- -------------------------------- CERTIFICATE HOLDER NAMED TO THE LEFT.

------------------------------------------
AUTHORIZED REPRESENTATIVE

/S/ ILLEGIBLE
- -------------------------

<PAGE>

SCHEDULE 7.8

TRANSACTIONS WITH AFFILIATES

None, except as to United Development Management Company

<PAGE>

SCHEDULE 7.16

EMPLOYEES AND OFFICERS WHOSE ANNUAL
COMPENSATION EXCEEDS $100,000

None

<PAGE>

SCHEDULE 10.9

AUTHORIZED SIGNATURES

William J. Crock, Jr.

<PAGE>
TUESDAY, MAY 30, 1995 AVAILABILITY BY SUBDIVISION Page 1

BORROWER: UNITED HOMES RECORDED SUBVISIONS AS OF 5/30/95

- ---------------------------------------------------------------------------------------------------------------------------------
DIVISION COUNTY MASTER- SUB- NO. LOT BUILD- CONST AVAILABILITY MAXIMUM CURRENT
PLAN DIVISION OF AVAIL OUT AVAIL SUBTOTAL AVAIL AVAIL
LOTS AVAIL
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CHICAGO N/A N/A BRISTOL PARK-1 4 $65,937.00 $0.00 $443,126.00 $509,063.00 $525,375.00 $500,4343.75
CHICAGO N/A N/A BRISTOL PARK-1 37 $609,917.25 $0.00 $2,342,548.45 $2,952,465.70 $4,214,124.50 $2,938,426.35
CHICAGO N/A N/A HARVEST RUN 5 $206,250.00 $0.00 $582,208.40 $788,459.40 $929,399.25 $0.00
CHICAGO N/A N/A PRAIRIE VILLAGE 33 $590,700.00 $0.00 $411,253,05 $1,001,953.05 $2,676,412.40 $0.00
CHICAGO N/A N/A ROYAL HILL 27 $752,605.00 $0.00 $2,743,001.20 $3,495,608.20 $4,045,957.50 $3,213,007.95
CHICAGO N/A N/A ROYAL HILL #8 4 $76,000.00 $0.00 $494,395.00 $570,395.00 $589,875.00 $564,679.00
CHICAGO N/A N/A WILLIAMS GLEN 32 $912,000.00 $0.00 $1,646,244.95 $2,558,244.95 $4,179,221.50 $0.00
CHICAGO N/A N/A WILLOW LAKE 32 $625,700.00 $0.00 $2,135,738.05 $2,761,438.05 $3,525,872.50 $2,698,695.50
GRAND RAPIDS N/A N/A BAYBERRY FARM 18 $398,000.00 $0.00 $318,600.00 $714,000.00 $1,885,968.00 $881,425.00
GRAND RAPIDS N/A N/A WINDCREST 17 $127,500.00 $0.00 $249,300.00 $376,600.00 $1,145,373.25 $376,800.00
PHOENIX N/A N/A ARISSONA 3 $202,500.00 $0.00 $162,926.70 $385,426.70 $799,683.75 $385,426.70
PHOENIX N/A N/A AUTUMN RIDGE 17 $261,375.00 $0.00 $256,975.50 $518,350.50 $1,111,423.00 $502,551.30
PHOENIX N/A N/A DESERT WINDS 18 $290,250.00 $0.00 $427,339.20 $717,589.20 $1,254,353.25 $519,810.45
PHOENIX N/A N/A RED DOG RANCH 12 $747,600.00 $0.00 $320,481.45 $1,068,081.45 $2,503,429.50 $1,068,081.45
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL: 259 $5,864,334.25 $0.00 $12,534,138.95 $16,396,473.20 $29,366,488.40 $13,529,338.45
OUTSTANDING LOAN BALANCE $0.00

NET AVAILABILITY $13,529,338.45

</TABLE>
<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 1

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: BRISTOL PARK - I

County: N/A State: IL

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A 007 025 $0.00 $16,484.25 $22,000.00 $16,484.25
N/A N/A N/A N/A 007 026 $0.00 $16,484.25 $22,000.00 $16,484.25
N/A N/A N/A N/A 007 027 $0.00 $16,484.25 $22,000.00 $16,484.25
N/A N/A N/A N/A 007 028 $0.00 $16,484.25 $22,000.00 $16,484.25
- --------------------------------------------------------------------------------
TOTAL 4 $0.00 $65,937.00 $88,000.00 $85,937.00

- ------------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $122,270.00 $138,764.25 $148,125.00 $138,754.25 9
N/A $0.00 $105,883.00 $122,367.25 $131,250.00 $122,367.25 9
N/A $0.00 $102,829.00 $119,313.25 $126,000.00 $119,313.25 9
N/A $0.00 $112,144.00 $128,628.25 $120,000.00 $120,000.00 9
- ------------------------------------------------------------------------
TOTAL $0.00 $443,126.00 $509,083.00 $525,375.00 $500,434.75

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: BRISTOL PARK - II

County: N/A State: IL

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A 198-B 135 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-B 136 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-B 137 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-B 138 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-C 139 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-C 140 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-C 141 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 198-C 142 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 216 057 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 216 058 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 216 059 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 216 060 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 217 061 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 217 062 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 217 063 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 218 064 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 218 065 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 218 066 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 218 067 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 219 068 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 219 069 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 219 070 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 219 071 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 220 072 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 220 073 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 220 074 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 221 075 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 221 076 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 221 077 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 221 078 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 222 079 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 222 080 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 222 081 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 223 082 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 223 083 $0.00 $16,484.25 $28,000.00 $16,484.25
N/A N/A N/A N/A 223 084 $0.00 $16,484.25 $28,000.00 $16,484.25
- ---------------------------------------------------------------------------------

- -----------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $97,816.00 $114,300.25 $142,579.50 $114,300.25 5
N/A $0.00 $84,706.40 $101,190.65 $125,156.25 $101,190.65 5
N/A $0.00 $82,283.20 $98,747.45 $119,706.00 $98,747.45 5
N/A $0.00 $89,715.20 $106,199.45 $116,390.50 $106,199.45 5
N/A $0.00 $16,340.50 $34,824.75 $129,322.50 $34,824.75 1
N/A $0.00 $15,882.45 $32,365.70 $107,992.50 $32,365.70 1
N/A $0.00 $15,882.45 $32,365.70 $92,943.50 $32,365.70 1
N/A $0.00 $16,340.50 $34,824.75 $132,453.00 $34,824.75 1
N/A $0.00 $36,681.00 $53,165.25 $130,514.25 $53,165.25 2
N/A $0.00 $31,764.90 $48,248.15 $92,943.50 $48,248.15 2
N/A $0.00 $30,848.70 $47,332.95 $111,315.00 $47,332.95 2
N/A $0.00 $33,843.20 $50,127.45 $121,417.50 $50,127.45 2
N/A $0.00 $36,681.00 $53,165.25 $110,688.50 $53,165.25 2
N/A $0.00 $31,764.90 $48,249.15 $92,943.50 $48,249.15 2
N/A $0.00 $33,643.20 $50,127.45 $114,221.25 $50,127.45 2
N/A $0.00 $61,135.00 $77,619.25 $125,036.25 $77,619.25 3
N/A $0.00 $52,941.50 $69,425.75 $109,467.00 $69,425.75 3
N/A $0.00 $51,414.50 $67,898.75 $109,511.25 $67,898.75 3
N/A $0.00 $56,072.00 $72,556.25 $112,143.75 $72,556.25 3
N/A $0.00 $73,362.00 $89,846.25 $128,370.75 $89,846.25 4
N/A $0.00 $63,529.80 $80,014.05 $112,986.00 $80,014.05 4
N/A $0.00 $63,529.80 $80,014.05 $107,242.50 $80,014.05 4
N/A $0.00 $67,992.60 $84,476.85 $116,905.00 $84,476.85 4
N/A $0.00 $67,992.80 $84,476.85 $117,210.00 $84,476.85 4
N/A $0.00 $63,529.80 $80,014.05 $92,943.50 $80,014.05 4
N/A $0.00 $67,286.40 $83,770.65 $92,943.50 $83,770.65 4
N/A $0.00 $97,816.00 $114,300.25 $131,871.75 $114,300.25 5
N/A $0.00 $84,706.40 $101,190.65 $113,261.25 $101,190.65 5
N/A $0.00 $82,263.20 $98,747.45 $109,594.50 $98,747.45 5
N/A $0.00 $89,715.20 $105,199.45 $92,943.50 $92,943.50 5
N/A $0.00 $97,816.00 $114,300.25 $120,292.50 $114,300.25 5
N/A $0.00 $84,706.40 $101,190.65 $120,030.75 $101,190.65 5
N/A $0.00 $89,715.20 $106,199.45 $107,242.50 $106,199.45 5
N/A $0.00 $96,322.85 $112,807.10 $116,100.00 $112,807.10 6
N/A $0.00 $90,000.55 $106,484.80 $111,217.50 $106,484.80 6
N/A $0.00 $87,404.65 $103,888.90 $111,200.25 $103,888.90 6
- -----------------------------------------------------------------------

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 3

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: HARVEST RUN

County: N/A State: IL

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A 1 N/A 101 N/A N/A $0.00 $41,250.00 $42,066.00 $41,250.00
N/A 1 N/A 102 N/A N/A $0.00 $41,250.00 $42,066.00 $41,250.00
N/A 1 N/A 103 N/A N/A $0.00 $41,250.00 $42,066.00 $41,250.00
N/A 1 N/A 138 N/A N/A $0.00 $41,250.00 $42,066.00 $41,250.00
N/A 1 N/A 139 N/A N/A $0.00 $41,250.00 $42,066.00 $41,250.00
- -----------------------------------------------------------------------------------
TOTAL 5 $0.00 $206,250.00 $210,330.00 $206,250.00

- ----------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $207,490.50 $248,740.50 $251,250.00 $0.00 7
N/A $0.00 $160,561.00 $191,811.00 $174,000.00 $0.00 7
N/A $0.00 $154,761.30 $196,011.30 $175,500.00 $0.00 7
N/A $0.00 $44,634.00 $85,884.00 $148,196.25 $0.00 2
N/A $0.00 $24,762.60 $68,012.60 $180,453.00 $0.00 1
- ----------------------------------------------------------------------
TOTAL $0.00 $582,209.40 $788,459.40 $929,399.25 $0.00

</TABLE>

<PAGE>
Page 4

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: PRAIRIE VILLAGE

County: N/A State: IL

- --------------------------------------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT BUILDOUT
RESIDUAL APPRAISED BOOK AVAIL AVAIL
SUBTTL SUBTTL SUBTTL
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

N/A N/A N/A N/A 014 062 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 014 063 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 014 064 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 014 065 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 014 066 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 015 067 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 015 068 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 015 069 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 015 070 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 015 071 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 015 072 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 016 073 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 016 074 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 016 075 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 016 076 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 016 077 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 016 078 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 017 079 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 017 080 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 017 081 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 017 082 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 018 083 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 018 084 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 018 085 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 018 086 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 018 087 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 018 088 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 019 089 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 019 090 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 019 091 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 019 092 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 019 093 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
N/A N/A N/A N/A 019 094 $0.00 $21,528.00 $17,900.00 $17,900.00 $0.00
- -------------------------------------------------------------------------------------------------------------

TOTAL 33 $0.00 $710,424.00 $590,700.00 $590,700.00 $0.00

- --------------------------------------------------------------------------------
CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

$13,547.25 $31,447.25 $96,675.00 $0.00 1
$10,636.95 $28,536.95 $87,425.00 $0.00 1
$12,204.60 $30,104.60 $82,425.00 $0.00 1
$12,493.95 $30,393.95 $74,685.00 $0.00 1
$13,656.45 $31,556.45 $88,425.00 $0.00 1
$13,656.45 $31,556.45 $90,307.50 $0.00 1
$12,204.60 $30,104.60 $82,425.00 $0.00 1
$12,493.95 $30,393.95 $87,675.00 $0.00 1
$11,683.70 $29,583.70 $74,926.00 $0.00 1
$10,636.95 $28,536.95 $60,642.40 $0.00 1
$13,547.25 $31,447.25 $96,675.00 $0.00 1
$13,656.45 $31,556.45 $88,425.00 $0.00 1
$12,204.60 $30,104.60 $83,771.25 $0.00 1
$12,493.95 $30,393.95 $86,175.00 $0.00 1
$11,683.70 $29,583.70 $74,925.00 $0.00 1
$10,636.95 $28,536.95 $67,425.00 $0.00 1
$13,547.25 $31,447.25 $95,550.00 $0.00 1
$13,547.25 $31,447.25 $92,550.00 $0.00 1
$12,204.60 $30,104.60 $84,896.25 $0.00 1
$12,493.95 $30,393.95 $87,300.00 $0.00 1
$13,656.45 $31,556.45 $89,550.00 $0.00 1
$13,656.45 $31,556.45 $89,550.00 $0.00 1
$12,204.60 $30,104.60 $83,550.00 $0.00 1
$12,493.95 $30,393.95 $74,685.00 $0.00 1
$11,663.70 $29,563.70 $75,675.00 $0.00 1
$10,636.95 $28,536.95 $59,085.00 $0.00 1
$13,547.25 $31,447.25 $79,235.00 $0.00 1
$13,656.45 $31,556.45 $89,550.00 $0.00 1
$12,204.60 $30,104.60 $83,550.00 $0.00 1
$12,493.95 $30,393.95 $74,685.00 $0.00 1
$11,663.70 $29,563.70 $75,675.00 $0.00 1
$10,636.95 $28,536.95 $59,085.00 $0.00 1
$13,547.25 $31,447.25 $79,235.00 $0.00 1
- --------------------------------------------------------------------------------

$411,253.05 $1,001,953.05 $2,876,412.40 $0.00

</TABLE>

<PAGE>

Page 5

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: ROYAL HILL

County: N/A State: IL

- -------------------------------------------------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT BUILDOUT CONST
RESIDUAL APPRAISED BOOK AVAIL AVAIL AVAIL
SUBTTL SUBTTL SUBTTL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A 011 N/A 610 N/A N/A $0.00 $31,855.50 $19,862.00 $19,862.00 $0.00 $127,066.00
N/A 011 N/A 649 N/A N/A $0.00 $31,855.50 $19,862.00 $19,862.00 $0.00 $141,338.70
N/A 011 N/A 663 N/A N/A $0.00 $31,855.50 $19,862.00 $19,862.00 $0.00 $153,569.70
N/A 011 N/A 665 N/A N/A $0.00 $31,855.50 $19,862.00 $19,862.00 $0.00 $152,689.00
N/A 011 N/A 679 N/A N/A $0.00 $31,855.50 $19,862.00 $19,862.00 $0.00 $127,068.00
N/A 012 N/A 759 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $23,338.50
N/A 012 N/A 760 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $25,422.60
N/A 012 N/A 762 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $106,612.80
N/A 012 N/A 763 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $119,320.20
N/A 012 N/A 765 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $19,886.70
N/A 012 N/A 772 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $129,960.75
N/A 012 N/A 774 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $79,548.80
N/A 012 N/A 776 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $93,590.40
N/A 012 N/A 780 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $35,098.40
N/A 012 N/A 783 N/A N/A $0.00 $31,045.50 $31,131.00 $31,045.50 $0.00 $47,257.10
N/A 013 N/A 684 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $179,480.00
N/A 013 N/A 685 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $157,043.00
N/A 013 N/A 686 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $161,314.00
N/A 013 N/A 687 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $127,070.00
N/A 013 N/A 695 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $24,197.10
N/A 013 N/A 698 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $161,314.00
N/A 013 N/A 702 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $114,363.00
N/A 013 N/A 712 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $45,806.70
N/A 013 N/A 713 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $108,009.50
N/A 013 N/A 714 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $101,656.00
N/A 013 N/A 716 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $161,314.00
N/A 013 N/A 717 N/A N/A $0.00 $31,087.50 $28,570.00 $28,570.00 $0.00 $19,658.25
- -------------------------------------------------------------------------------------------------------------------------

TOTAL 27 $0.00 $842,782.50 $753,460.00 $752,605.00 $0.00 $2,743,001.20

<CAPTION>
- --------------------------------------------------------------
UNIT MAXIMUM UNIT ST
AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- --------------------------------------------------------------
<S> <C> <C> <C>

$148,930.00 $115,842.75 $115,842.75 9
$161,200.70 $159,911.25 $159,911.25 7
$173,431.70 $163,361.25 $163,361.25 7
$172,551.00 $134,485.00 $134,485.00 9
$146,930.00 $140,458.50 $140,458.50 9
$54,384.00 $168,408.75 $54,384.00 1
$58,478.10 $179,161.50 $56,458.10 1
$137,658.30 $137,847.75 $137,658.30 5
$150,365.70 $149,162.25 $149,162.25 7
$50,932.20 $140,062.50 $50,932.20 1
$161,006.25 $163,871.25 $161,006.25 6
$110,592.30 $197,096.25 $110,592.30 4
$124,635.90 $118,113.75 $118,113.75 5
$66,141.90 $126,221.25 $66,141.90 2
$78,312.60 $156,703.50 $78,312.60 2
$208,050.00 $181,050.00 $181,050.00 9
$185,613.00 $170,100.00 $170,100.00 9
$189,884.00 $160,350.00 $160,350.00 9
$155,640.00 $138,825.00 $138,825.00 9
$52,767.10 $164,475.00 $52,767.10 1
$189,884.00 $154,731.00 $154,731.00 9
$142,933.00 $114,530.00 $114,530.00 7
$ 74,376.70 $157,590.00 $74,376.70 2
$136,579.50 $139,261.50 $136,579.50 6
$130,226.00 $119,258.25 $119,258.25 5
$189,884.00 $165,381.75 $165,381.75 9
$46,228.25 $129,697.50 $48,228.25 1
- -------------------------------------------------------------

$3,495,606.20 $4,045,957.50 $3,213,007.95

</TABLE>

<PAGE>

Page 6

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: ROYAL HILL #8

County: N/A State: IL

N/A 8 N/A 487 N/A N/A $0.00 $30,000.00 $19,000.00 $19,000.00 $0.00 $108,059.00
N/A 8 N/A 488 N/A N/A $0.00 $30,000.00 $19,000.00 $19,000.00 $0.00 $104,559.00
N/A 8 N/A 489 N/A N/A $0.00 $30,000.00 $19,000.00 $19,000.00 $0.00 $140,466.00
N/A 8 N/A 490 N/A N/A $0.00 $30,000.00 $19,000.00 $19,000.00 $0.00 $141,311.00
- -------------------------------------------------------------------------------------------------------------------------

TOTAL 4 $0.00 $120,000.00 $76,000.00 $76,000.00 $0.00 $494,395.00

- --------------------------------------------------------------
UNIT MAXIMUM UNIT ST
AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- --------------------------------------------------------------

<S> <C> <C> <C>
$127,059.00 $136,675.00 $127,059.00 9
$123,559.00 $134,250.00 $123,559.00 9
$159,466.00 $153,750.00 $153,750.00 9
$160,311.00 $165,000.00 $160,311.00 9
- --------------------------------------------------------------

$570,395.00 $589,675.00 $584,679.00

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 7

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: WILLIAMS GLEN

County: N/A State: IL

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT
RESIDUAL APPRAISED BOOK
SUBTTL SUBTTL SUBTTL
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N/A 4 012 043 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 4 012 047 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 4A 013 017 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5A 013 006 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 002 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 003 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 004 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 005 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 007 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 008 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 009 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 016 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 017 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 025 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 027 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 028 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 029 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 030 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 012 032 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 014 002 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 014 003 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 014 004 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 014 005 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 014 006 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 015 001 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5B 016 004 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5C 015 009 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5C 016 011 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5C 016 014 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5C 016 016 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5C 016 018 N/A N/A $0.00 $28,500.00 $29,000.00
N/A 5C 016 019 N/A N/A $0.00 $28,500.00 $29,000.00
- -----------------------------------------------------------------
TOTAL 32 $0.00 $912,000.00 $928,000.00

<CAPTION>
- ----------------------------------------------------------------------
LOT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$28,500.00 $0.00 $36,482.10 $64,982.10 $139,227.00 $0.00 2
$28,500.00 $0.00 $17,862,75 $46,362.75 $126,240.25 $0.00 1
$28,500.00 $0.00 $41,629,80 $70,129.80 $131,175.00 $0.00 2
$28,500.00 $0.00 $121,560.00 $150,060.00 $0.00 $0.00 5
$28,500.00 $0.00 $17,881.80 $46,381.60 $116,725.00 $0.00 1
$28,500.00 $0.00 $33,131.70 $51,631.70 $126,666.25 $0.00 2
$28,500.00 $0.00 $18,014.10 $48,514.10 $134,628.75 $0.00 1
$28,500.00 $0.00 $22,615.00 $51,315.90 $162,727.50 $0.00 1
$28,500.00 $0.00 $59,542.50 $88,042.50 $131,622.75 $0.00 3
$28,500.00 $0.00 $18,773.55 $47,273.55 $129,466.75 $0.00 1
$28,500.00 $0.00 $16,565.86 $45,066.85 $115,929.75 $0.00 1
$28,500.00 $0.00 $18,241.05 $45,741.05 $113,035.00 $0.00 1
$28,500.00 $0.00 $18.014.10 $46,514.10 $129,931.50 $0.00 1
$28,500.00 $0.00 $21,911.85 $50,411.65 $175,974.75 $0.00 1
$28,500.00 $0.00 $37,743.00 $86,243.00 $134,049.75 $0.00 2
$28,500.00 $0.00 $136,755.00 $165,255.00 $145,050.00 $0.00 7
$28,500.00 $0.00 $17,885.80 $46,366.60 $125,052.00 $0.00 1
$28,500.00 $0.00 $66,958.00 $95,458.00 $129,432.00 $0.00 3
$28,500.00 $0.00 $38,482.10 $64,982.10 $126,665.25 $0.00 2
$28,500.00 $0.00 $119,085.00 $147,585.00 $131,662.75 $0.00 9
$28,500.00 $0.00 $134,128.00 $182,628.00 $149,991.00 $0.00 9
$28,500.00 $0.00 $146,079.00 $174,579.00 $145,717.50 $0.00 9
$28,500.00 $0.00 $91,283.60 $119,763.80 $162,727.50 $0.00 4
$28,500.00 $0.00 $17,666.80 $46,366.80 $124,302.00 $0.00 1
$28,500.00 $0.00 $131,471.10 $159,971.10 $146,717.50 $0.00 7
$28,500.00 $0.00 $35,725.50 $54,225.50 $131,622.76 $0.00 2
$28,500.00 $0.00 $35,733.60 $64,233.60 $124,302.00 $0.00 2
$28,500.00 $0.00 $43,823.70 $72,323.70 $163,703.25 $0.00 2
$28,500.00 $0.00 $17,888.80 $48,366.80 $124,302.00 $0.00 1
$28,500.00 $0.00 $17,888.80 $48,366.80 $124,567.50 $0.00 1
$28,500.00 $0.00 $37,547.10 $56,047.10 $130,975.50 $0.00 2
$28,500.00 $0.00 $59,556.00 $88,058.00 $125,052.00 $0.00 3
- --------------------------------------------------------------------
$912,000.00 $0.00 $1,646,244.95 $2,558,244.95 $4,179,221.50 $0.00

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 8

Borrower: UNITED HOMES

Division: CHICAGO Masterplan: N/A Subdivision: WILLOW LAKE

County: N/A State: IL

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT
RESIDUAL APPRAISED BOOK
SUBTTL SUBTTL SUBTTL
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N/A 001 N/A 020 N/A N/A $0.00 $21,022.50 $9,152.00
N/A 001 N/A 021 N/A N/A $0.00 $21,022.50 $9,152.00
N/A 001 N/A 022 N/A N/A $0.00 $21,022.50 $9,152.00
N/A 001 N/A 025 N/A N/A $0.00 $21,022.50 $9,152.00
N/A 002 N/A 057 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 064 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 065 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 066 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 070 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 073 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 074 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 075 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 076 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 077 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 078 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 079 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 083 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 086 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 087 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 088 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 114 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 116 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 120 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 131 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 134 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 138 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 139 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 140 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 141 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 142 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 153 N/A N/A $0.00 $21,039.00 $26,684.00
N/A 002 N/A 154 N/A N/A $0.00 $21,039.00 $26,684.00
- -----------------------------------------------------------------
TOTAL 32 $0.00 $673,162.00 $783,760.00

<CAPTION>
- -----------------------------------------------------------------------------
LOT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$9,152.00 $0.00 $107,443.00 $116,585.00 $118,749.75 $116,586.00 9
$9,152.00 $0.00 $110,244.00 $119,396.00 $116,749.75 $116,749.75 9
$9,152.00 $0.00 $107,102.00 $116,254.00 $116,749.75 $116,254.00 9
$21,039.00 $0.00 $27,691.50 $36,843.50 $84,500.00 $36,843.50 2
$21,039.00 $0.00 $85,355.30 $106,394.30 $90,350.00 $90,350.00 6
$21,039.00 $0.00 $85,946.40 $106,985.40 $121,353.00 $106,985.40 5
$21,039.00 $0.00 $29,601.30 $50,540.30 $105,470.00 $50,640.30 2
$21,039.00 $0.00 $107,102.00 $128,141.00 $109,697.50 $109,697.50 9
$21,039.00 $0.00 $91,038.70 $112,075.70 $113,718.75 $112,075.70 8
$21,039.00 $0.00 $30,125.40 $51,164.40 $118,987.50 $51,164.40 2
$21,039.00 $0.00 $91,036.70 $94,583.00 $104,976.75 $112,075.70 6
$21,039.00 $0.00 $31,484.70 $107,888.60 $117,495.00 $107.888.60 5
$21,039.00 $0.00 $73,844.00 $112,075.70 $118,053.00 $112,075.70 6
$21,039.00 $0.00 $86,849.60 $107,888.60 $117,495.00 $107,888.60 5
$21,039.00 $0.00 $91,038.70 $50,640.30 $103,987.50 $50,640.30 2
$21,039.00 $0.00 $86,849.60 $113,344.00 $101,940.00 $101,940.00 9
$21,039.00 $0.00 $29,601.30 $122,785.90 $112,351.50 $112,351.60 9
$21,039.00 $0.00 $92,305.00 $94,883.00 $100,352.25 $94,863.00 2
$21,039.00 $0.00 $101,746.90 $128,472.00 $132,699.00 $128,472.00 9
$21,039.00 $0.00 $73,844.00 $67,191.50 $108,371.25 $57,191.50 3
$21,039.00 $0.00 $107,433.00 $34,884.75 $104,426.25 $34,884.75 1
$21,039.00 $0.00 $48,152.50 $52,523.70 $113,955.00 $52,523.70 2
$21,039.00 $0.00 $13,645.75 $53,159.50 $107,502.00 $53,160.00 2
$21,039.00 $0.00 $31,484.70 $94,683.00 $100,256.25 $94,883.00 5
$21,039.00 $0.00 $32,130.00 $106,720.00 $100,750.50 $100,750.50 5
$21,039.00 $0.00 $73,844.00 $53,034.60 $104,667.75 $53,169.60 2
$21,039.00 $0.00 $85,681.00 $53,159.50 $118,650.25 $94,883.00 5
$21,039.00 $0.00 $31,995.00 $76,161.00 $110,196.75 $53,034.60 2
$21,039.00 $0.00 $32,130.60 $53,159.60 $118,650.25 $53,169.60 2
$21,039.00 $0.00 $55,122.00 $76,161.00 $110,196.75 $76,161.00 3
$21,039.00 $0.00 $53,551.00 $74,590.00 $108,437.25 $74,590.00 3
$21,039.00 $0.00 $32,130.00 $53,169.60 $103,922.25 $53,169.00 2
- -----------------------------------------------------------------------------
$625,700.00 $0.00 $2,135,738.05 $2,761,438.05 $3,525,872.50 $2,698,695.50

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 9

Borrower: UNITED HOMES

Division: GRAND RAPIDS Masterplan: N/A Subdivision: BAYBERRY FARMS

County: N/A State: MI

<CAPTION>
- -----------------------------------------------------------------------
LOT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$22,000.00 $0.00 $102,000.00 $124,000.00 $106,125.00 $106,125.00 9
$22,000.00 $0.00 $104,000.00 $126,000.00 $110,700.00 $110,700.00 9
$22,000.00 $0.00 $0.00 $22,000.00 $110,250.00 $22,000.00 0
$22,000.00 $0.00 $12,900.00 $34,900.00 $90,750.00 $34,900.00 1
$22,000.00 $0.00 $0.00 $22,000.00 $119,175.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $105,750.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $103,500.00 $22,000.00 0
$22,000.00 $0.00 $47,500.00 $59,500.00 $93,535.00 $69,500.00 3
$22,000.00 $0.00 $28,500.00 $22,000.00 $101,250.00 $50,000.00 2
$22,000.00 $0.00 $0.00 $45,400.00 $108,750.00 $22,000.00 0
$22,000.00 $0.00 $23,400.00 $22,000.00 $74,685.00 $45,000.00 2
$22,000.00 $0.00 $0.00 $22,000.00 $114,675.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $110,250.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $110,175.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $102,123.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $101,175.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $96,675.00 $22,000.00 0
$22,000.00 $0.00 $0.00 $22,000.00 $106,425.00 $22,000.00 0
- -----------------------------------------------------------------------
$396,000.00 $0.00 $316,600.00 $714,600.00 $1,865,956.00 $881,425.00

</TABLE>
<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 10

Borrower: UNITED HOMES

Division: GRAND RAPIDS Masterplan: N/A Subdivision: WINDCREST

County: N/A State: MI

- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A A 003 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A A 004 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A B 005 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A B 006 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A B 007 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A B 008 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A G 025 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A G 026 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A G 027 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A G 028 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A H 029 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A H 030 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A H 031 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A H 032 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A I 033 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A I 034 $0.00 $7,500.00 $10,000.00 $7,500.00
N/A N/A N/A N/A I 035 $0.00 $7,500.00 $10,000.00 $7,500.00
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------

TOTAL 17 $0.00 $127,500.00 $170,000.00 $127,500.00

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $22,500.00 $30,000.00 $84,935.00 $30,000.00 2
N/A $0.00 $23,400.00 $30,900.00 $71,435.00 $30,900.00 2
N/A $0.00 $23,400.00 $30,900.00 $89,250.00 $30,900.00 2
N/A $0.00 $22,500.00 $30,000.00 $90,750.00 $30,000.00 2
N/A $0.00 $0.00 $7,500.00 $85,500.00 $7,500.00 2
N/A $0.00 $23,400.00 $30,900.00 $71,435.00 $30,900.00 2
N/A $0.00 $0.00 $7,500.00 $7,500.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $7,500.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $7,500.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $97,659.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $83,250.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $88,500.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $89,250.00 $7,500.00 0
N/A $0.00 $0.00 $7,500.00 $7,500.00 $7,500.00 0
N/A $0.00 $74,100.00 $81,600.00 $100,184.25 $81,600.00 8
N/A $0.00 $60,000.00 $87,600.00 $91,500.00 $87,500.00 5
N/A $0.00 $0.00 $7,500.00 $91,725.00 $7,500.00 5
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

TOTAL $0.00 $249,300.00 $376,600.00 $1,145,373.25 $376,800.00

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 13

Borrower: UNITED HOMES

Division: PHOENIX Masterplan: N/A Subdivision: DESERT WINDS

County: N/A State: AZ

- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A 010 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 011 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 040 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 045 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 046 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 051 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 052 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 053 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 054 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 055 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 056 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 057 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 060 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 068 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 071 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 077 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 080 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
N/A N/A N/A 101 N/A N/A $0.00 $16,125.00 $16,690.00 $16,125.00
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------

TOTAL 18 $0.00 $290,250.00 $304,020.00 $290,250.00

- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $11,241.30 $27,366.30 $74,437.50 $27,366.30 1
N/A $0.00 $10,736.20 $28,860.20 $28,962.50 $28,850.20 1
N/A $0.00 $84,480.30 $80,605.30 $0.00 $0.00 8
N/A $0.00 $74,935.00 $91,060.00 $82,298.25 $82,298.25 9
N/A $0.00 $10,697.25 $26,822.25 $70,494.00 $28,822.25 1
N/A $0.00 $11,708.10 $27,833.10 $78,225.00 $27,833.10 1
N/A $0.00 $21,425.40 $37,550.40 $69,712.50 $37,550.40 2
N/A $0.00 $10,697.25 $26,822.25 $69,712.50 $28,822.25 1
N/A $0.00 $10,708.20 $26,833.20 $71,962.50 $26,833.20 1
N/A $0.00 $58,953.60 $76,078.60 $76,650.00 $78,078.60 5
N/A $0.00 $64,249.20 $80,374.20 $71,962.50 $71,962.50 7
N/A $0.00 $10,712.70 $26,837.70 $71,212.50 $26,837.70 1
N/A $0.00 $10,712.70 $26,837.70 $70,462.50 $26,837.70 1
N/A $0.00 $10,712.70 $26,837.70 $71,775.00 $26,837.70 1
N/A $0.00 $10,708.20 $26,833.20 $74,154.00 $26,833.20 1
N/A $0.00 $11,708.10 $27,833.10 $82,032.00 $27,833.10 1
N/A $0.00 $11,241.30 $27,366.30 $78,087.50 $27,366.30 1
N/A $0.00 $10,712.70 $26,837.70 $71,212.50 $26,837.70 1
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------

TOTAL $0.00 $427,339.20 $717,589.20 $1,254,363.25 $619,810.46

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT Page 11

Borrower: UNITED HOMES

Division: PHOENIX Masterplan: N/A Subdivision: ARISSONA

County: N/A State: AZ

TOTAL 3 $0.00 $202,500.00 $270,000.00 $202,500.00

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $117,616.60 $185,016.60 $275,672.25 $185,018.60 7
N/A $0.00 $22,705.05 $90,205.05 $273,085.25 $90,205.05 1
N/A $0.00 $22,705.05 $90,205.05 $260,946.25 $90,205.05 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TOTAL $0.00 $162,928.70 $365,426.70 $799,683.75 $385,426.70

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT PAGE 12

BORROWER: UNITED HOMES

DIVISION: PHOENIX MASTERPLAN: N/A SUBDIVISION: AUTUMN RIDGE

COUNTY: N/A STATE: AZ

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A 030 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 032 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 034 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 036 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 045 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 046 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 047 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 048 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 049 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 051 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 052 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 053 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 056 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 057 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 060 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 061 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
N/A N/A N/A 063 N/A N/A $0.00 $15,375.00 $17,000.00 $15,375.00
- ----------------------------------------------------------------------------------------
Total 17 $0.00 $261,375.00 $269,000.00 $261,375.00

- -----------------------------------------------------------------
BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL. AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- -----------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$0.00 $ 7,485.90 $22,860.90 $63,300.00 $22,860.90 1
$0.00 $10,130.70 $25,505.70 $66,541.00 $25,505.70 1
$0.00 $11,467.50 $26,842.50 $63,310.00 $26,642.50 1
$0.00 $9,687.75 $25,062.75 $66,949.50 $25,062.75 1
$0.00 $10,473.15 $25,848.15 $71,188.50 $25,848.15 1
$0.00 $9,251.25 $24,626.25 $64,074.75 $24,626.25 1
$0.00 $9,251.25 $24,626.25 $60,423.00 $24,626.25 1
$0.00 $63,297.00 $78,672.00 $66,119.25 $66,119.25 7
$0.00 $8,598.75 $23,973.75 $68,541.00 $23,973.75 1
$0.00 $8,598.75 $23,973.75 $67,425.00 $23,973.75 1
$0.00 $8,616.75 $23,991.75 $67,600.00 $23,991.75 1
$0.00 $7,485.90 $22,860.90 $61,622.50 $22,860.90 1
$0.00 $8,598.75 $23,973.75 $68,741.25 $23,973.75 1
$0.00 $56,798.70 $72,173.70 $68,927.25 $68,927.25 6
$0.00 $9,687.75 $25,062.75 $69,710.25 $25,062.75 1
$0.00 $7,910.70 $23,285.70 $66,675.00 $23,285.70 1
$0.00 $9,634.95 $25,009.95 $48,174.75 $25,009.95 1
- -----------------------------------------------------------------
$0.00 $258,975.50 $518,350.50 $1,111,423.00 $502,551.30

</TABLE>

<PAGE>

TUESDAY, MAY 30, 1995 AVAILABILITY REPORT PAGE 12

BORROWER: UNITED HOMES

DIVISION: PHOENIX MASTERPLAN: N/A SUBDIVISION: RED DOG RANCH

COUNTY: N/A STATE: AZ

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
TRACT PH. BLOCK LOT BLDG UNIT LOT LOT LOT LOT
RESIDUAL APPRAISED BOOK AVAIL
SUBTTL SUBTTL SUBTTL
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N/A N/A N/A 015 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 016 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 025 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 026 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 027 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 029 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 030 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 041 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 042 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 043 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 048 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
N/A N/A N/A 050 N/A N/A $0.00 $86,250.00 $62,300.00 $62,300.00
- ------------------------------------------------------------------------------------
Total 12 $0.00 $1,035,000.00 $747,600.00 $747,600.00

- ----------------------------------------------------------------------------
TRACT BUILDOUT CONST UNIT MAXIMUM UNIT ST
AVAIL AVAIL AVAIL AVAIL CURRENT G
SUBTOTAL AVAIL RPT
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
N/A $0.00 $27,656.10 $89,868.10 $203,743.50 $89,858.10 1
N/A $0.00 $22,994.85 $85,294.85 $208,557.75 $85,294.85 1
N/A $0.00 $29,568.00 $91,868.00 $228,618.00 $91,658.00 1
N/A $0.00 $22,894.85 $85,294.85 $212,319.00 $85,294.85 1
N/A $0.00 $22,994.85 $85,294.85 $183,180.00 $85,294.85 1
N/A $0.00 $25,694.85 $87,994.85 $210,517.50 $87,994.85 1
N/A $0.00 $27,401.10 $89,701.10 $224,017.50 $89,701.10 1
N/A $0.00 $29,568.00 $91,868.00 $204,051.75 $91,668.00 1
N/A $0.00 $29,568.00 $91,868.00 $206,231.25 $91,668.00 1
N/A $0.00 $29,568.00 $91,868.00 $220,922.25 $91,658.00 1
N/A $0.00 $22,994.85 $85,294.85 $197,325.00 $85,294.85 1
N/A $0.00 $29,568.00 $91,868.00 $203,946.00 $91,868.00 1
- ----------------------------------------------------------------------------
Total $0.00 $320,481.45 $1,068,081.45 $2,503,429.50 $1,068,081.45

</TABLE>

<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

LOAN AGREEMENT

DATED AS OF MARCH 14, 1997

BETWEEN

UNITED HOMES, INC.,
AN ILLINOIS CORPORATION,
UNITED HOMES, INC.,
AN ARIZONA CORPORATION,
UNITED HOMES OF ILLINOIS, INC.,
AN ILLINOIS CORPORATION
AND
UNITED HOMES OF MICHIGAN, INC.,
A MICHIGAN CORPORATION

COLLECTIVELY, "BORROWER"

AND

RESIDENTIAL FUNDING CORPORATION
A DELAWARE CORPORATION
"LENDER"

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

ARTICLE I DEFINITIONS............................................ 2
Section 1.1 Certain Defined Terms.................................. 2

ARTICLE II THE LOAN............................................... 17
Section 2.1 Agreement to Lend and Borrow; Revolving Loan;
Evidence of Indebtedness and Maturity.................. 17
Section 2.2 Disbursements of the Loan.............................. 17
Section 2.3 Use of Disbursements................................... 17
Section 2.4 Commitment Fee and Servicing Fee....................... 17
Section 2.5 No Reduction in Commitment Fee......................... 18
Section 2.6 Interest............................................... 18
Section 2.7 Interest Rate Limitation............................... 19
Section 2.8 Cash Collections; Depository Account................... 20
Section 2.9 Payments............................................... 20
Section 2.10 Application of Payments................................ 20
Section 2.11 Mandatory Prepayment of Principal...................... 21
Section 2.12 Optional Prepayment of the Loan........................ 21
Section 2.13 Commitment Period and Conversion Date.................. 21
Section 2.14 Extension.............................................. 21
Section 2.15 Security............................................... 22
Section 2.16 Books and Records of Lender; Accounting................ 22
Section 2.17 Adjustments to Loan Amount and Related Loan Amount..... 22

ARTICLE III COLLATERAL; PROCEDURES RELATING TO COLLATERAL AND
DISBURSEMENTS.......................................... 24
Section 3.1 Collateral............................................. 24
Section 3.2 Project Approval....................................... 24
Section 3.3 Pledging of Borrowing Base Collateral.................. 25
Section 3.4 WIP Reports............................................ 26
Section 3.5 Determination of Borrowing Base Amount................. 26
Section 3.6 Determination of Allowable Disbursement Amount......... 28
Section 3.7 Procedure for Disbursements............................ 28
Section 3.8 Conditions Precedent to Disbursements.................. 28
Section 3.9 Disbursement Account................................... 29
Section 3.10 Lender May Make Disbursement Notwithstanding
Noncompliance.......................................... 30
Section 3.11 Provisions Applicable to Initial Borrowing Base
Collateral............................................. 30

ARTICLE IV REPRESENTATIONS AND WARRANTIES......................... 32
Section 4.1 Consideration.......................................... 32
Section 4.2 Organization........................................... 32
Section 4.3 Authorization.......................................... 32

(i)

<PAGE>

Section 4.4 Governmental Consents................................. 32
Section 4.5 Validity.............................................. 32
Section 4.6 Financial Position.................................... 33
Section 4.7 Governmental Regulations.............................. 33
Section 4.8 Employee Benefit Plans................................ 33
Section 4.9 Securities Activities................................. 33
Section 4.10 No Material Adverse Change............................ 33
Section 4.11 Payment of Taxes...................................... 33
Section 4.12 Litigation............................................ 33
Section 4.13 Environmental Matters................................. 33
Section 4.14 No Burdensome Restrictions............................ 34
Section 4.15 Full Disclosure....................................... 34
Section 4.16 Adequate Consideration................................ 34

ARTICLE V COVENANTS............................................. 35
Section 5.1 Consideration......................................... 35
Section 5.2 Affirmative Covenants................................. 35
Section 5.3 Negative Covenants.................................... 38
Section 5.4 Financial Covenants................................... 39
Section 5.5 Insurance............................................. 39

ARTICLE VI THE BORROWING BASE COLLATERAL......................... 42
Section 6.1 Consideration......................................... 42
Section 6.2 Title................................................. 42
Section 6.3 No Prior Liens or Claims.............................. 42
Section 6.4 Access to the Borrowing Base Collateral............... 42
Section 6.5 Compliance with Laws and Regulations.................. 42
Section 6.6 Covenants, Zoning, Codes, Permits and Consents........ 43
Section 6.7 Utilities............................................. 43
Section 6.8 Map, Permits, Licenses and Approvals.................. 43
Section 6.9 Approval of Plans and Specifications and Budget....... 43
Section 6.10 Construction Start and Completion..................... 44
Section 6.11 Contractors and Contracts............................. 44
Section 6.12 Evidence of Ownership of Materials.................... 44
Section 6.13 Changes to Plans and Specifications and Budget........ 44
Section 6.14 Lender Inspections, Appraisal and Information......... 45
Section 6.15 Correction of Defects................................. 45
Section 6.16 Protection Against Lien Claims........................ 46
Section 6.17 Conveyance, Lease or Encumbrance...................... 46
Section 6.18 Security Instruments.................................. 47
Section 6.19 Further Assurances; Cooperation....................... 47
Section 6.20 Signs................................................. 47
Section 6.21 Sales Agreements...................................... 47

(ii)

<PAGE>

Section 6.22 Sales and Closings..................................... 47
Section 6.23 Sales Operations and Seller's Obligations.............. 48
Section 6.24 Model Units............................................ 48

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES......................... 49
Section 7.1 Events of Default...................................... 49
Section 7.2 Acceleration........................................... 52
Section 7.3 Other Remedies......................................... 52
Section 7.4 General Provisions Applicable to Remedies.............. 55
Section 7.5 Authorization to Apply Assets to Payment of Loan....... 55

ARTICLE VIII MISCELLANEOUS.......................................... 56
Section 8.1 Successors and Assigns; No Assignment by Borrower...... 56
Section 8.2 Notices................................................ 56
Section 8.3 Changes, Waivers, Discharge and Modification in
Writing................................................ 57
Section 8.4 No waiver; Remedies Cumulative......................... 57
Section 8.5 Costs, Expenses and Taxes.............................. 58
Section 8.6 Disclaimer by Lender; No Joint Venture................. 58
Section 8.7 Indemnification........................................ 59
Section 8.8 Consultants............................................ 60
Section 8.9 Governing Laws......................................... 60
Section 8.10 Titles and Headings.................................... 60
Section 8.11 Counterparts........................................... 60
Section 8.12 Participations......................................... 60
Section 8.13 Confidentiality........................................ 60
Section 8.14 Times is of the Essence................................ 61
Section 8.15 No Third Parties Benefitted............................ 61
Section 8.16 Severability........................................... 61
Section 8.17 Jurisdiction........................................... 61
Section 8.18 Waiver of Jury Trial................................... 61
Section 8.19 Interpretation......................................... 62
Section 8.20 Entire Agreement....................................... 62
Section 8.21 Related Loan........................................... 62

(iii)

<PAGE>

EXHIBIT A
CONDITIONS TO OBLIGATIONS OF LENDER TO MAKE LOAN...................... A-1

EXHIBIT B
PROJECT REQUIREMENTS.................................................. B-1

EXHIBIT C
PROJECT UNDERWRITING DOCUMENTS........................................ C-1

EXHIBIT D
APPROVED PROJECTS..................................................... D-1

EXHIBIT E
FORM OF PROJECT COMMITMENT............................................ E-1

EXHIBIT F
BORROWING BASE COLLATERAL REQUIREMENTS................................ F-1

EXHIBIT G
FORM OF REQUEST TO ADD COLLATERAL..................................... G-1

EXHIBIT H
STAGED DRAW SCHEDULE.................................................. H-1

EXHIBIT I
FORM OF WIP REPORT.................................................... I-1

EXHIBIT J
FORM OF DRAW REQUEST CERTIFICATION.................................... J-1

EXHIBIT K
LETTER OF INSTRUCTIONS TO AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO.................................................... K-1

EXHIBIT L
FORM OF EXTENSION REQUEST............................................. L-1

EXHIBIT M
INITIAL BORROWING BASE COLLATERAL..................................... M-1

(iv)

<PAGE>

LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Loan Agreement") is made as of March 14,
1997, by and between UNITED HOMES, INC., an Illinois corporation, UNITED
HOMES, INC., an Arizona corporation, UNITED HOMES OF ILLINOIS, INC., an
Illinois corporation and UNITED HOMES OF MICHIGAN, INC., a Michigan
corporation (collectively, the "Borrower") and RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation (the "Lender").

R E C I T A L S:

A. Borrower has applied to Lender for a revolving loan to finance
the residential construction activities of the Borrower in the Chicago and
Phoenix metropolitan areas and in western Michigan, and to fund other costs
associated therewith, which loan is to be secured by a lien on real and
personal property owned and pledged by the Borrower.

B. Lender is willing to make the requested loan upon and subject to
the terms and conditions set forth in this Loan Agreement.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:

<PAGE>

ARTICLE I
DEFINITIONS

Section 1.1 CERTAIN DEFINED TERMS. As used herein (including any
Exhibits attached hereto), the following terms shall have the meanings set
forth below (unless expressly stated to the contrary):

"ADDITIONAL LOTS" shall mean Lots which (i) were not part of the Initial
Borrowing Base Collateral, (ii) are located within an Approved Project, (iii)
the Borrower desires be made a part of the Borrowing Base Collateral, and
(iv) become encumbered by the lien of the Mortgage by means of the execution,
delivery and recording of a Mortgage Modification Agreement relating thereto.

"ADDITIONAL UNITS" shall mean Units which (i) were not part of the
Initial Borrowing Base Collateral, (ii) are located within an Approved
Project, (iii) the Borrower desires be made a part of the Borrowing Base
Collateral, and (iv) become encumbered by the lien of the Mortgage by means
of the execution, delivery and recording of a Mortgage Modification Agreement
relating thereto.

"AFFILIATE" shall mean a Person that, directly or indirectly, controls,
is controlled by, or is under common control with, a referenced Person.

"ALLOWABLE DISBURSEMENT AMOUNT" shall mean, on any date, the amount of
the Loan available to be disbursed to the Borrower which amount shall equal
the Borrowing Base Amount less the principal amount of the Loan outstanding.

"ALLOWABLE OUTSTANDING PRINCIPAL AMOUNT" shall mean, on any date, the
amount of the Loan which may be outstanding, which amount shall equal the
Borrowing Base Amount.

"APPRAISAL REPORT" shall mean a real estate appraisal report which (i)
has been prepared by an Appraiser, (ii) at the time it is submitted to the
Lender is not more than three (3) months old, or was updated by letter
not more than three (3) months prior to the date of submission to the Lender,
(iii) states that it is prepared in accordance with the applicable standards
of the American Institute of Real Estate Appraisers for such reports, (iv)
provides an appraisal of the value of the Approved Project or the portion
thereof required to be appraised thereunder, and (v) employs a customary
methodology and provides limiting conditions satisfactory to the Lender.

"APPRAISER" shall mean a Person who is qualified to appraise property
similar in size and scope to the Approved Project, which such Person is
acceptable to the Lender in its sole and absolute discretion.

"APPROVED PROJECT" shall mean the residential subdivisions listed in
EXHIBIT D and any other residential subdivision as to which the Lender has
issued a Project Commitment.

<PAGE>

"ASSETS" shall mean (i) all personal property (other than fixtures) now
or hereafter located in, upon or about or collected or used in connection
with the Borrowing Base Collateral, together with all present and future
attachments, accessions, replacements, substitutions and additions thereto or
therefor, and the cash and noncash proceeds thereof, and (ii) the
Disbursement Account.

"ASSIGNMENT" shall mean the Assignment of Construction Agreements and
Development Items dated of even date herewith executed by the Borrower in
favor of Lender, as the same may be amended or otherwise modified from time
to time.

"BANK LETTER OF INSTRUCTIONS" shall mean the Letter of Instructions to
American National Bank and Trust Company of Chicago in the form of EXHIBIT K,
executed by the Lender, the Borrower and American National Bank and Trust
Company of Chicago.

"BORROWER" shall mean, collectively, United Arizona, United Homes,
United Illinois and United Michigan.

"BORROWING BASE AMOUNT" shall mean, on any Business Day, the value
assigned to the Borrowing Base Collateral on such Business Day pursuant to
and in accordance with the terms of SECTION 3.5.

"BORROWING BASE COLLATERAL" shall mean (i) the Lots and Units and all
personal property and fixtures located thereon or associated therewith which
are encumbered by the lien of the Mortgage and (ii) any proceeds from the
sale of Lots or Units held by the Title Company for the benefit of the Lender
pursuant to and in accordance with the terms of the Title Procedures
Agreement.

"BORROWING BASE COLLATERAL REQUIREMENTS" shall mean, for purposes
of determining whether a Lot or Unit may become part of the Borrowing Base
Collateral, the requirements listed in EXHIBIT F.

"BUSINESS DAY" shall mean a day other than Saturday, Sunday or a day on
which national banks are legally closed for business in the States of
Arizona, Illinois, Michigan or Minnesota.

"BUSINESS HOUR" shall mean the hours of 8:00 a.m. to 5:00 p.m. on a
Business Day.

"CHANGE" shall mean any material extra work not contemplated by the
Plans and Specifications, the installation of materially additional or
different materials from that set forth in the Plans and Specifications, or
any other material change in the Plans and Specifications.

"COLLATERAL" shall mean the real and personal property pledged and
assigned to Lender pursuant to the Security Documents, which such real and
personal property required to be pledged is defined in SECTION 3.1.

<PAGE>

"COMMITMENT FEE" shall mean the fee required to paid, in advance, to
Lender pursuant to SECTION 2.4(a) which fee (i) prior to the Conversion Date
is an annual fee in an annual amount equal to 0.5% of the Loan Amount, but
which amount may be paid quarterly in an amount equal to 0.1250% of the Loan
Amount and (ii) on and after the Conversion Date is a quarterly fee in a
quarterly amount equal to 0.125% of the Loan Amount.

"COMMITMENT PERIOD" shall mean the period commencing on the date of this
Loan Agreement and ending on that date which is thirty six (36) months from
the date of this Loan Agreement, as such date may be extended by Lender and
Borrower from time to time in accordance with the terms of SECTION 2.14.

"CONVERSION DATE" shall mean the first Business Day following the last
day of the Commitment Period.

"COST" shall mean, with respect to a Home, that amount which is
determined by adding (i) the cost of permits and fees, materials and labor
for the construction of the Home, plus (ii) the planning costs, soft costs,
general and administrative expenses and interest costs for the Home.

"DEBT" shall mean, for any Person, without duplication, the sum of all
(i) indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the
sale of the same or substantially similar securities or property, (vi)
obligations of such Person to reimburse any bank or other Person in respect
of amounts actually paid under a letter of credit or similar instrument,
(vii) indebtedness or obligations of others secured by a lien on any asset of
such Person, whether or not such indebtedness or obligations are assumed by
such Person (to the extent of the value of the asset), (viii) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in CLAUSES (i) THROUGH (vii) above, and (ix)
liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.

"DEPOSITORY ACCOUNT" shall mean that certain deposit account designated
as Account Number 55-81907 in the name of the Lender held at The First
National Bank of Chicago, a national banking association.

"DEVELOPMENT WORK" shall mean, with respect to a Lot, all work and
construction necessary to be completed on the Lot in order to allow for the
construction of a Home on such Lot, including but not limited to, the
substantial completion of the appurtenant roads, sewers and utilities and
all other work necessary in order for a building permit to be issued with
respect to such Lot.

<PAGE>

"DISBURSEMENT ACCOUNT" shall mean that certain checking account of the
Borrower designated as Account Number _____ held at American National Bank
and Trust Company of Chicago in the name of the Borrower and Lender, as
secured party, or such other account of the Borrower permitted pursuant to
the terms of SECTION 3.9.

"DRAW REQUEST CERTIFICATION" shall mean a certification of Borrower
delivered to the Lender requesting a disbursement of proceeds of the Loan,
which certification shall be in substantially the form attached hereto as
EXHIBIT I.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and rulings issued
thereunder.

"ENVIRONMENTAL INDEMNITY" shall mean the Hazardous Substances
Remediation and Indemnification Agreement dated of even date herewith
executed by the Borrower in favor of the Lender, as the same may be amended
or otherwise modified from time to time.

"EXCLUDED UNITS" shall mean Units which are part of the Borrowing Base
Collateral, but which are excluded for purposes of determining the Borrowing
Base Amount for any of the following reasons:

(a) Borrower fails to complete construction of the Unit within
nine (9) months after the date of the pouring of the foundation is
completed;

(b) Borrower fails to begin construction of the Home within
nine (9) months from the date the related Lot was first pledged as part
of the Borrowing Base Collateral;

(c) Borrower fails to obtain a certificate of occupancy or its
equivalent within two (2) months after completion of the Home;

(d) the Home is physically damaged or destroyed, or the Land is
the subject of eminent domain action;

(e) subject to the terms of SECTION 6.16, a lien or a "stop
notice" is filed against the Lot or Unit; or

(f) Lender determines that the Approved Project in which the
Lot or Unit is located is "inactive", i.e. a sale has not occurred within
the Approved Project during any ninety (90) day period of time beginning
from the commencement of on site sales activity at the Approved Project.

"EVENT OF DEFAULT" shall mean the occurrence, if not cured within
any applicable grace period, of any of the events listed in SECTION 7.1.

<PAGE>

"FORCE MAJEURE EVENT" shall mean fire, flood, labor dispute, weather,
governmental action or other cause beyond the reasonable control of the
Borrower that shall delay the completion of the construction of the Homes.

"GAAP" shall mean procedures consistent with generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession prevalent in
the United States of America.

"HAZARDOUS MATERIALS" shall mean the following:

(a) any oil, flammable substances, explosives, radioactive
materials, hazardous wastes or substances, toxic wastes or substances or any
other materials or pollutants, exposure to which is prohibited, limited or
regulated by any governmental authority pursuant to any Hazardous Materials
Law;

(b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million, exposure to which is prohibited, limited or
regulated by any governmental authority pursuant to any Hazardous Materials
Law;

(c) any chemical, material or substance defined as or included in
the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", or
"toxic substances" or words of similar import under any Hazardous Material
Laws; and

(d) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority pursuant to
any Hazardous Materials Law.

"HAZARDOUS MATERIALS CLAIMS" shall mean any and all enforcement,
clean-up, removal or other governmental or regulatory actions or orders
threatened, instituted or completed pursuant to any Hazardous Materials Laws,
together with all claims made or threatened by any third party relating to
damage, contribution, cost recovery compensation, loss or injury resulting
from any Hazardous Materials.

<PAGE>

the Clean Air Act, 42 U.S.C. Sec. 9401, ET SEQ.; the Clean Water Act, 33
U.S.C. Sec. 7401, ET. SEQ.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601, ET. SEQ., as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sec. 11001, ET. SEQ.; the Federal Water Pollution Control Act, 33
U.S.C. Sec. 1251, ET. SEQ.; the Hazardous Materials Transportation Act, 49
U.S.C. Sec. 1801, ET. SEQ.; the Resource Conservation and Recovery Act, 42
U.S.C. Sec. 6901, ET. SEQ.; the Safe Drinking Water Act, 42 U.S.C. Secs. 300f
to 300j; the Solid Waste Disposal Act, 42 U.S.C. Sec. 3251, ET.SEQ.; and the
Toxic Substances Control Act, 15 U.S.C. Sec. 2601, ET SEQ.

"HOMES" shall mean the single family residences, condominium homes and/or
attached townhouses that will be constructed by the Borrower on the Lots and
offered for sale to individuals and families.

"INDEMNIFIED PARTY" shall mean the Lender and any Participants and each
of their officers, directors, employees, agents, attorneys, consultants,
advisors and Affiliates.

"INITIAL BORROWING BASE COLLATERAL" shall mean the Borrowing Base
Collateral pledged to the Lender simultaneous with the execution and delivery
of this Loan Agreement, which Borrowing Base Collateral is set forth in
EXHIBIT M.

"INSPECTOR" shall mean such inspector(s) or engineer(s) engaged by the
Lender, at the expense of the Borrower, to provide to Lender consultation
services in connection with the Borrowing Base Collateral.

"LAND" shall mean the real property subject to the lien of the Mortgage.

"LAND BANKING" shall mean the practice of acquiring unimproved real
property and not commencing the initial phase of development of such real
property within four (4) months after the date of acquisition.

"LAND SPECULATION" shall mean the practice of acquiring either (i)
unimproved real property and reselling such real property without adding
value by development of such real property, or (ii) real property for which a
plat has not been obtained or which is not substantially entitled for the
development of a residential project.

"LAWS AND REGULATIONS" shall mean, with respect to the Borrowing Base
Collateral, (i) all laws, regulations, orders, codes, ordinances, rules,
statutes and policies of all local, regional, county, state and federal
governmental authorities having jurisdiction over the Borrowing Base
Collateral and (ii) all restrictive covenants and other title encumbrances,
permits and approvals, leases and other rental agreements which in any case
relate to the development, construction, occupancy, ownership, management,
use, and/or operation of the Borrowing Base Collateral.

"LENDER" shall mean Residential Funding Corporation, a Delaware
corporation.

<PAGE>

"LOAN" shall mean the revolving loan described in this Loan Agreement in
a principal amount not to exceed the Loan Amount.

"LOAN AGREEMENT" shall mean this Loan Agreement, as this agreement may be
amended or otherwise modified from time to time in accordance with the terms
hereof.

"LOAN AMOUNT" shall mean Twenty Five Million Dollars ($25,000,000) or
such higher amount as is elected by the Borrower pursuant to the provisions
of SECTION 2.17.

"LOAN DOCUMENTS" shall mean, as to the Loan, all documents, instruments,
agreements, assignments and certificates executed by Borrower, or from
Borrower, relating thereto, including, without limitation, any and all loan
credit agreements, promissory notes, deeds of trust, mortgages, security
agreements, assignments of rents, assignments of leases, assignments of
contracts, environmental indemnities, guaranties, contractor's consent
agreements, evidences of authorization or incumbency and escrow instructions
to be executed (and acknowledged where applicable), by Borrower and/or Lender
(where applicable), and UCC-1 financing statements from Borrower, in
connection with Lender making the Loan to Borrower, as the same may be
amended or otherwise modified from time to time in accordance with this Loan
Agreement. The Loan Documents shall include, but not be limited to, the
following:

(a) this Loan Agreement;

(b) the Note;

(d) the Security Agreement;

(e) the UCC-1 Financing Statement;

(f) the Environmental Indemnity;

(g) the Assignment;

(h) the Project Commitments;

(i) the Title Procedures Agreement;

(j) the Bank Letter of Instructions, or any substitute letter of
instructions delivered pursuant to the terms of SECTION 3.9; and

(k) the Related Loan Documents.

<PAGE>

"LOTS" shall mean the parcels of real property within the Land located in
an Approved Project which form or may form a part of the Borrowing Base
Collateral, and shall include the Lots forming a part of the Initial
Borrowing Base Collateral, and all Additional Lots, less any Lots released
from the lien of the Mortgage.

"MAP" shall mean, with respect to the Borrowing Base Collateral, the
final subdivision or parcel maps consistent with the Plans and
Specifications and with the Laws and Regulations.

"MATERIAL ADVERSE CHANGE" shall mean any material and adverse change in,
or a change which has a material adverse effect upon, any of:

(a) the business, properties, operations or condition (financial
or otherwise) of any of the entities which comprise the Borrower since
either or both of (i) July 31, 1996, or (ii) the date of the most recent
financial statements delivered to Lender in connection with the Loan;

(b) the legal or financial ability of any of the entities which
comprise the Borrower to perform its obligations under the Loan Documents
and to avoid any Potential Default or Event of Default; or

(c) the legality, validity, binding effect or enforceability
against any of the entities which comprise the Borrower of any Loan
Document.

"MATURITY DATE" shall mean the first to occur of (i) the date which is
forty (48) months from the date of this Loan Agreement (as such date may be
extended by Lender and Borrower from time to time, either in accordance with
SECTION 2.14 or otherwise), or (ii) the date on which the Loan is required to
be repaid pursuant to SECTION 7.2.

"MODEL UNIT" shall mean any Unit within an Approved Project which is not
subject to a Sales Agreement and which is to be used as a model home to sell
and market such Approved Project.

"MORTGAGE" shall mean, collectively, the following instruments:

(a) the Construction Mortgage, Security Agreement and Fixture
Filing with Assignment of Rents, Proceeds and Agreements dated of even
date herewith from United Homes, as mortgagor, to the Lender, as
mortgagee, encumbering the Borrowing Base Collateral located in the State
of Illinois;

(b) the Construction Mortgage, Security Agreement and Fixture
Filing with Assignment of Rents, Proceeds and Agreements dated of even
date herewith from United Homes, as mortgagor, to the Lender, as
mortgagee, encumbering the Borrowing Base Collateral located in the State
of Michigan;

<PAGE>

(c) the Construction Deed of Trust, Security Agreement and Fixture
Filing with Assignment of Rents, Proceeds and Agreements dated of even
date herewith from United Homes, as grantor, to the Lender, as
beneficiary, encumbering the Borrowing Base Collateral located in the
State of Arizona; and

(d) any other such mortgage or deed of trust executed by any of
the entities constituting the Borrower for the benefit of the Lender,
encumbering the Borrowing Base Collateral,

as such documents shall be amended by the Mortgage Modification
Agreements and as the same may be further amended or otherwise further
modified from time to time.

"MORTGAGE MODIFICATION AGREEMENT" shall mean, with respect to an
Additional Lot or an Additional Unit, the Mortgage Modification Agreement or
Deed of Trust Modification Agreement relating thereto to be executed by
United Homes in connection with the addition of the Additional Lots or the
Additional Units to the lien of the Mortgage.

"NET SALES PROCEEDS" shall mean the sales proceeds which the Borrower is
entitled to receive upon consummation of the sale of any part of the
Borrowing Base Collateral, whether in the form of cash, cash equivalents,
checks, notes, drafts or any other items of payment or collection, net of (i)
deductions for typical costs of the closing generally seen in the sale of
single family homes or townhouses and apportionments in the area in which the
applicable Lot or Unit is located and (ii) and other amounts specified in the
Project Commitment relating to the applicable Project, it being understood
that no other amounts may be deducted from the sales proceeds unless the
Project Commitment or another written statement from the Lender expressly
allows for such deductions.

"NET WORTH" shall mean the net worth of the Borrower reported
on a consolidated basis accounted for in accordance with GAAP.

"NON-LENDER PROJECTS" shall mean all other development or construction
projects then being developed or constructed by the Borrower and its
Affiliates, which such projects are not being financed through proceeds of
the Loan or the Related Loan.

"NOTE" shall mean that certain Revolving Promissory Note dated of even
date herewith and executed by the Borrower, as maker, and made payable to the
order of Lender, as holder, to evidence the Loan, which such Revolving
Promissory Note is in the amount of Twenty Five Million Dollars ($25,000,000)
and matures on the Maturity Date, as such Revolving Promissory Note may be
amended or otherwise modified from time to time.

"PARTICIPANT" shall mean any financial institution to whom the Lender,
in accordance with and subject to SECTION 8.12, at any time sells, assigns,
grants or otherwise transfers a participation interest in all or part of the
obligations of the Borrower under the Loan Documents.

<PAGE>

"PERCENTAGE COMPLETED" shall mean, with respect to a Home, the
percentage of the construction of the Home which has been completed, which
such percentages shall be based upon the percentages in the Staged Draw
Schedule and shall be set forth in the most recent WIP Report.

"PERMITTED EXCEPTIONS" shall mean, with respect to the Borrowing Base
Collateral, (i) real estate taxes and assessments not yet due and payable and
possible supplemental assessments for improvements constructed on the Land,
(ii) exceptions to title which are approved by the Lender and which do not
adversely affect the value of the Land, the marketability of title to the
Land or the use to which the Land is intended to be put, (iii) easements for
the installation and maintenance of utilities servicing the Approved Project
which do not adversely affect the value of the Land, the marketability of
title to the Land or the use to which the Land is intended to be part and
(iv) the exceptions listed in the Title Policy.

"PERSON" shall mean an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.

"PLANS AND SPECIFICATIONS" shall mean, with respect to the Borrowing
Base Collateral, the final set of architectural, structural, mechanical and
electrical plans and specifications for each type and/or floor plan of Home
to be included within the Borrowing Base Collateral, including all
supplements, amendments and modifications thereto signed and affixed with the
architect's registration stamp or seal, all in form and substance reasonably
satisfactory to the Lender and the Inspector.

"POTENTIAL DEFAULT" shall mean the existence of any event which with the
giving of notice, the passage of time, or both, would constitute an Event of
Default hereunder or an event of default (however described) under any other
of the Loan Documents.

"PREPAYMENT PRICE" shall mean an amount paid by the Borrower pursuant to
the terms of SECTION 2.12, which amount shall equal (i) the principal amount
of the Loan to be prepaid, as requested by the Borrower, with no premium
thereon, plus (ii) all accrued interest to the date of prepayment on the
principal amount prepaid, plus (iii) prior to the Conversion Date, any due
and owing, but unpaid Commitment Fee.

"PRIME RATE" shall mean the rate that is indicated in the Telerate as
the prime lending rate announced from time to time by The First National Bank
of Chicago, a national banking association, as in effect from time to time,
it being understood that the Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any
customer. In the event that such rate is no longer shown in the Telerate,
Borrower and Lender shall reasonably agree on a substitute source for
determining the prime lending rate of The First National Bank of Chicago.

"PROJECT COMMITMENT" shall mean, with respect to a proposed project
approved by the Lender in accordance with SECTION 3.2, the letter (i) issued
by the Lender to the Borrower approving the proposed project as an Approved
Project, subject to the terms and conditions of this Loan Agreement

<PAGE>

and (ii) accepted by the Borrower. The Project Commitments shall specify the
Values to be initially attributed to the Vacant Lots, the Spec Homes and the
Model Homes within the Approved Projects and shall be substantially in the
form of EXHIBIT E.

"PROJECT REQUIREMENTS" shall mean, for any residential subdivision
proposed to be included as an Approved Project pursuant to the terms of this
Loan Agreement, the requirements listed in EXHIBIT B.

"PROJECT UNDERWRITING DOCUMENTS" shall mean, for any project proposed to
be included as an Approved Project pursuant to the terms of this Loan
Agreement, the documents listed in EXHIBIT C and any other documents relating
to the proposed project which Lender reasonably requests, all in form and
substance reasonably satisfactory to the Lender.

"RECEIPTS" shall mean the Net Sales Proceeds, whether in the form of
cash, cash equivalents, checks, notes, drafts or any other items of payment
or collection received by any Person by or on behalf of the Borrower,
including but not limited to the Title Company, or by any officer, employee
or agent of the Borrower or other Person acting for or in concert with the
Borrower to make collections relating to the Borrowing Base Collateral on the
Borrower's behalf.

"RELATED LOAN" shall mean the loan made by Lender to Borrower pursuant
to the terms of the Related Loan Agreement in the principal amount of the
Related Loan Amount.

"RELATED LOAN AGREEMENT" shall mean the Loan Agreement dated as of May
28, 1996, as amended March 14, 1997, between the Lender and the Borrower, as
such agreement may be further amended or modified from time to time.

"RELATED LOAN AMOUNT" shall mean Twenty Five Million Dollars
($25,000,000) or such lower amount as is elected by the Borrower pursuant to
the provisions of SECTION 2.17.

"RELATED LOAN DOCUMENTS" shall have the meaning given the term "Loan
Documents" in the Related Loan Agreement.

"RELATED LOAN SECURITY INSTRUMENTS" shall have the meaning given the
term "Project Security Instruments" in the Related Loan Agreement.

"REQUEST TO ADD COLLATERAL" shall mean a written request from the
Borrower to the Lender and the Title Company to add Additional Lots and/or
Additional Units to the Borrowing Base Collateral, which written request
shall be in substantially the form of EXHIBIT G.

"SALES AGREEMENT" shall mean a written agreement for the sale of a Lot
or a Unit between the Borrower and a person who is not an Affiliate of the
Borrower and who has been pre-approved for the financing necessary to
purchase such Lot or Unit, which agreement shall (i) be binding upon such
purchaser, (ii) require such purchaser to deposit with the Borrower an "at
risk" deposit (which such

<PAGE>

deposit may be returned to the purchaser, and shall not be "at risk", in the
event the contingencies specified in the agreement are not satisfied), (iii)
contain no contingencies to the obligation of such purchaser to purchase such
Lot or Unit, other than contingencies related to financing and the sale of
another residence, and (iv) conform to all applicable laws, regulations,
codes and ordinances, including those requiring disclosures to prospective
and actual buyers.

"SECURITY AGREEMENT" shall mean the Security Agreement dated of even
date herewith from the Borrower, as pledgor, to the Lender, as secured party,
granting to Lender a security interest in the Assets, as such agreement may
be amended or otherwise modified from time to time.

"SECURITY DOCUMENTS" shall mean, with respect to the Collateral, all
pledge agreements, guaranties, deeds of trust, mortgages, security
agreements, assignments and other agreements or instruments executed by
Borrower, or from Borrower, granting in favor of Lender a lien or encumbrance
on or a security interest in any property or right or interest of Borrower as
security for the Loan, as the same may be amended or otherwise modified from
time to time in accordance with this Loan Agreement, including but not
limited to the following:

(a) the Mortgage;

(b) the Security Agreement;

(d) the Assignment; and

(e) the Related Loan Security Instruments.

"SERVICING FEE" shall mean the monthly fee required to paid, in arrears,
to Lender pursuant to SECTION 2.4(c), which fee shall be a monthly amount
equal to Three Thousand Dollars ($3,000).

"SOLD UNIT" shall mean any Unit which is subject to a Sales Agreement.

"SPEC UNIT" shall mean any Unit, other than a Model Unit, which is not
subject to a Sales Agreement.

"STAGED DRAW SCHEDULE" shall mean the Borrower's schedule for the
various stages of construction of the Homes as set forth in EXHIBIT H.

<PAGE>

"STALE UNITS" shall mean Units which have not been sold by the Borrower
and therefore remain part of the Borrowing Base Collateral after the
following periods of time:

Sold Units 2 months from the date construction on the Home is
completed

Spec Units 6 months from the date construction on the Home is
completed

Model Units 24 months from the date construction on the Home is
completed;

provided however that in the event a Spec Unit becomes a Stale Unit and after
such date the Borrower receives a Sales Agreement relating to such Unit, then
such Unit shall become a Sold Unit and shall cease to be classified as a
Stale Unit; provided further however that no Unit, other than Model Units,
shall remain as part of the Borrowing Base Collateral for a period of time
longer than eight (8) months, aggregating all periods of time that such Unit
was part of the Borrowing Base Collateral as a Spec Unit and as a Sold Unit.

"TITLE COMPANY" shall mean Chicago Title Insurance Company.

"TITLE POLICY" shall mean, collectively, the ALTA loan form policies of
title insurance and the related endorsements thereto issued by the Title
Company, as accepted by the Lender, simultaneous with the execution of this
Loan Agreement, meeting the requirements of PARAGRAPH 3 of EXHIBIT A,
together with all subsequently issued Title Policy Endorsements.

"TITLE POLICY ENDORSEMENT" shall mean an endorsement to the Title Policy
to be delivered to Lender in connection with the pledge of Additional Lots or
Additional Units as part of the Borrowing Base Collateral, which endorsement
shall be in substantially the form of EXHIBIT D to the Title Procedures
Agreement.

"TITLE PROCEDURES AGREEMENT" shall mean the Title Procedures Agreement
dated of even date herewith by and among the Title Company, the Borrower and
the Lender, as such agreement may be amended or otherwise modified from time
to time.

"UCC-1 FINANCING STATEMENT" shall mean, with respect to the pledging of
the Collateral, the UCC-1 financing statement from the Borrower, as debtor,
in favor of Lender, as secured party, as such UCC-1 financing statement may
be amended or otherwise modified from time to time.

"UNIT" shall mean a Lot and the Home constructed thereon which form a
part of the Borrowing Base Collateral, and shall include the Units forming a
part of the Initial Borrowing Base Collateral, and all Additional Units, less
any Units released from the lien of the Mortgage.

<PAGE>

"UNITED ARIZONA" shall mean United Homes, Inc., an Arizona corporation.

"UNITED HOMES" shall mean United Homes, Inc., an Illinois corporation.

"UNITED ILLINOIS" shall mean United Homes of Illinois, Inc., an Illinois
corporation.

"UNITED MICHIGAN" shall mean United Homes of Michigan, Inc., a Michigan
corporation.

"VACANT LOT" shall mean a Lot within an Approved Project with respect to
which the Borrower is entitled to receive a building permit, but upon which
no construction of a Home has been commenced.

"VACANT LOT AMOUNT" shall mean, for each Vacant Lot which forms a part
of the Collateral, the amount of the Borrowing Base Amount which is
attributable to that Vacant Lot.

"VALUE" shall mean the following:

(a) for each Sold Unit, the price set forth in the Sales Agreement
for the Sold Unit;

(b) for each Spec Unit, the value for the Spec Unit agreed upon
between Borrower and Lender from time to time, based upon such factors
as (i) the sales history in the applicable Approved Project, (ii) the
most recent Appraisal Report delivered to and/or required by Lender, or
(iii) other considerations deemed relevant by Borrower and Lender;

(c) for each Model Unit, the value for the Model Unit agreed upon
between Borrower and Lender from time to time, based upon such factors
as (i) the sales history in the applicable Approved Project, (ii) the
most recent Appraisal Report delivered to and/or required by Lender, or
(iii) other considerations deemed relevant by Borrower and Lender; and

(d) for each Vacant Lot, the value for the Vacant Lot agreed upon
between Borrower and Lender from time to time, based upon such factors
as (i) the sales history in the applicable Approved Project, (ii) the
most recent Appraisal Report delivered to and/or required by Lender, or
(iii) other considerations deemed relevant by Borrower and Lender.

"WIP REPORT" shall mean the Work in Process Report delivered by the
Borrower to the Lender in accordance with SECTION 3.4. The WIP Report shall
be in substantially the form attached hereto as EXHIBIT I.

<PAGE>

Section 1.2 OTHER DEFINITIONAL PROVISIONS.

(a) Accounting terms not defined herein shall have the respective
meanings given to them under GAAP. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms
under GAAP, the definitions contained herein shall control.

(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Loan Agreement shall refer to this Loan Agreement as
a whole and not to any particular provision of this Loan Agreement.

(c) In this Loan Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from but not
including" and the words "to" and "until" each means "to and including".

(d) For purposes of making calculations with respect to the Borrowing
Base Collateral, the Borrowing Base Amount and the Allowable Disbursement
Amount which are determined based upon a stated number of months, each such
month shall consist of a period of thirty (30) days.

<PAGE>

ARTICLE II
THE LOAN

Section 2.1 AGREEMENT TO LEND AND BORROW; REVOLVING LOAN; EVIDENCE OF
INDEBTEDNESS AND MATURITY.

(a) Lender agrees, on the terms and conditions hereinafter set forth, to
make the Loan to Borrower of the purpose of funding the residential
construction activities of the Borrower in the Chicago and Phoenix
metropolitan areas and in western Michigan, and to fund other costs
associated therewith; provided however, that the obligation of the Lender to
make the Loan is conditioned upon the Lender to make the Loan is conditioned
upon the Lender's receipt of the documents set forth in EXHIBIT A attached
hereto. The Borrower shall repay the Loan pursuant to SECTIONS 2.8 and 2.11
and may prepay the Loan pursuant to SECTION 2.12.

(b) The Loan is a revolving loan, and principal amounts of the Loan which
are repaid may be borrowed in accordance with and subject to the terms of
ARTICLE III.

(c) Concurrent with the execution and delivery of this Loan Agreement,
the Borrower shall execute and deliver to the Lender the Note, evidencing the
indebtedness incurred by the Borrower pursuant to the terms of this Loan
Agreement.

(d) The outstanding principal balance of the Loan, together with accrued
and unpaid interest thereon and all other amounts payable by Borrower under
the terms of the Loan Documents, shall be due and payable on the Maturity
Date.

Section 2.2. DISBURSEMENTS OF THE LOAN. The Lender shall make
disbursements of the Loan in accordance with and subject to the terms of
ARTICLE III hereof; provided however that the amount of the Loan which may be
outstanding at any time shall be limited to an amount equal to the lesser of
(i) the Allowable Outstanding Principal Amount and (ii) the Loan Amount.

Section 2.3. USE OF DISBURSEMENTS. Borrower may use the proceeds of the
Loan to fund the residential construction activities of the Borrower in the
Chicago and Phoenix metropolitan areas and in western Michigan and to fund
other costs associated therewith; provided that proceeds of the Loan may not
be used to acquire or improve assets that are subject to a lien in favor of
a party other than the Lender.

Section 2.4. COMMITMENT FEE AND SERVICING FEE.

(a) The Commitment Fee, which prior to the Converstion Date is an annual
fee, is due and owing to the Lender, prior to the Conversion Date, on an
annual basis, in advance for each annual period. The Borrower may, however,
pay the Commitment Fee to Lender on a quarterly basis, in advance for each
quarterly period in which the Commitment Fee is required to be paid, although
it is expressly understood that this provision does not alter the character
of the Commitment Fee as an annual fee prior to the Conversion Date. On and
after the Conversion Date, the Commitment Fee

<PAGE>

is a quarterly fee. The first Commitment Fee ($31, 250) shall be due upon
execution of this Loan Agreement, and the subsequent quarterly payments shall
be due in equal increments on March 14, June 14, September 14 and December 14
of each year, commencing June 14, 1997.

(b) On each day on which the Commitment Fee is due, commencing with June
14, 1997, the Lender shall send to Borrower a statement setting forth the
amount of the Commitment Fee due on such date. Borrower shall pay the
Commitment Fee on the day of its receipt of the Lender's statement; provided
however that in the event on the day the Commitment Fee is due, the Allowable
Disbursement Amount is equal to or in excess of the amount of the Commitment
Fee due, then the Lender's statement relating to the Commitment Fee shall
reflect that the Commitment Fee will be paid from proceeds of the Loan, and
the Lender shall on such day make a disbursement from the Loan to pay the
Commitment Fee due; provided further however that if on any day on which the
Commitment Fee is due the Allowable Disbursement Amount is not sufficient to
pay the Commitment Fee and the Borrower shall pay such Commitment Fee from
its own funds.

(c) The Servicing Fee, which is a monthly fee, is due and owing to the
Lender on or before the first Business Day of each month, for the previous
month. On each day on which the Servicing Fee is due, commencing with April 3,
1997, the Lender shall send to Borrower a statement setting forth the amount
of the Servicing Fee due on such date. Borrower shall pay the Servicing Fee
on the day of its receipt of the Lender's statement; provided however that in
the event on the day the Servicing Fee is due, the Allowable Disbursement
Amount is equal to or in excess of the amount of Servicing Fee due, then the
Lender's statement relating to the Servicing Fee shall reflect that the
Servicing Fee will be paid from proceeds of the Loan, and the Lender shall on
such day make a disbursement from the Loan to pay the Servicing Fee due;
provided further however that if on any day on which the Servicing Fee is due
the Allowable Disbursement Amount is not sufficient to pay the Servicing Fee,
the Lender shall not make a disbursement from the Loan to pay the Servicing
Fee and the Borrower shall pay such Servicing Fee from its own funds.

Section 2.5 NO REDUCTION IN COMMITMENT FEE. The Borrower acknowledges
that the Commitment Fee required to be paid to the Lender pursuant to the
provisions of SECTION 2.4 shall be due and owing to the Lender in advance,
prior to the Conversion Date for each annual period and on and after the
Conversion Date for each quarterly period, regardless of whether the Loan
remains outstanding for the entire annual or quarterly period and regardless
of whether the Loan Amount decreases during such annual or quarterly period,
and in the event either the Borrower repays or is required to repay the Loan
prior to the end of such annual or quarterly period or the Loan Amount
decreases prior to the end of such annual or quarterly period, the Borrower
shall not be entitled to any refund of the Commitment Fee previously paid.
Upon termination of this Loan Agreement or upon the occurrence of an Event of
Default which results in the Lender exercising its remedy to cease making
disbursements of proceeds of the Loan, no additional Commitment Fees shall
thereafter be due to the Lender.

Section 2.6 INTEREST.

<PAGE>

(a) The Loan shall bear interest from the date of disbursement
hereunder on the unpaid principal at the per annum rate of the Prime Rate
plus one and one-quarter percent (1.25%) and such interest shall be due and
payable monthly. Throughout the term of the Loan, interest shall be
calculated on a the basis of a 360-day year and shall be computed for the
actual number of days in the period for which interest is charged.

(1) in the vent that on the Business Day on which the Lender sends
to Borrower the statement of interest due, the Allowable Disbursement
Amount is equal to or in excess of the amount of interest due on the
Loan as determined by the Lender on such Business Day, then the Lender's
statement of interest due shall reflect that the interest due will be paid
from proceeds of the Loan, and the Lender shall on such Business Day make
a disbursement from the Loan to pay the interest due on the Loan; and

(2) in the event that on the Business Day on which the Lender
sends to Borrower the statement of interest due, the Allowable
Disbursement Amount is not sufficient to pay the interest, then the
following provisions shall apply:

(A) the Lender shall not make a disbursement from the Loan to
pay the interest due on the Loan and the Borrower shall pay such
interest from its own funds within ten (10) Business Days of its
receipt of the Lender's statement of interest due; or

(B) if, prior to Lender receiving the Borrower's funds, on
any Business Day the Allowable Disbursement Amount is sufficient to
pay the interest due, then Lender shall on such Business Day make a
disbursement from the Loan to pay the interest due on the Loan and
the Borrower shall not be required to pay the interest due from its
own funds.

Section 2.7 INTEREST RATE LIMITATION. The provisions of this Loan
Agreement and the other Loan Documents are hereby expressly limited so that
in no contingency or event whatever shall the amount paid or agreed to be
paid to Lender for the use, forbearance or detention of the sums evidenced by
this Loan Agreement exceed the maximum amount permissible under applicable
law. If from any circumstance whatever the performance or fulfillment of any
provision of this Loan Agreement or of any other Loan Document should involve
or purport to require any payment in excess of the limit prescribed by law,
then the obligation to be performed or fulfilled is hereby reduced to the
limit of such validity, and if, from any circumstance whatever, Lender should
ever receive as interest an amount which would exceed the highest lawful rate
under applicable law, then the amount which would be excessive interest shall
be applied as an optional reduction of principal in accordance

<PAGE>

with the terms of SECTION 2.12 of this Loan Agreement (or, at Lender's
option, be paid over to Borrower), and shall not be counted as interest.

Section 2.8 CASH COLLECTIONS: DEPOSITORY ACCOUNT. The Borrower shall
effect the daily collection of all Receipts by depositing, or causing the
deposit of, the Receipts in the Depository Account. Amounts deposited to the
Depository account shall be applied to reduce the outstanding principal
amount of the Loan.

Section 2.9 PAYMENTS.

(a) All computations of interest and fees under the Loan Documents
shall be made by Lender on the basis of a year of 360 days, for the actual
number of days occurring in the period for which such interest or fees are
payable.

(b) If any payment of fees, interest or principal to be made by Borrower
shall become due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in computing any interest with respect to such payment.

(c) For purposes of computing interest on the Loan and determining the
amount of the Loan available to be disbursed to Borrower pursuant to
SECTION 3.7, all payments shall be applied by Lender on the day payment has
been credited to the Depository Account in immediately available funds,
provided that any payment received to the Depository Account after 4:00 p.m.
(Minneapolis time) shall be deemed received by the Lender on the next
Business Day.

Section 2.10 APPLICATION OF PAYMENTS.

(a) Lender and Borrower agree that Lender shall apply all payments
credited to the Depository Account as a payment of principal of the Loan.
Principal repaid in accordance with this SUBPARAGRAPH (a) may be reborrowed,
subject to and upon compliance with the terms of this Loan Agreement.

(b) Notwithstanding anything to the contrary contained herein, after
the occurrence and during the continuation of an Event of Default, all
amounts received by Lender from any party shall be applied in such order as
Lender, in its sole discretion, may elect.

(c) If any installment of interest and/or the payment of principal is
not received by Lender within ten (10) days after the due date thereof, then
in addition to the remedies conferred upon Lender pursuant to SECTION 7.2
hereof and the other Loan Documents, a late charge of four percent (4%) of
the amount of the installment due and unpaid will be added to the delinquent
amount to compensate Lender for the expense of handling the delinquency.
Borrower and Lender agree that such late charge represents a good faith and
fair and reasonable estimate of the probable cost to Lender of such
delinquency. Borrower acknowledges that during the time that any such amount
shall be in default, Lender will incur losses which are impracticable, costly
and inconvenient to ascertain

<PAGE>

and that such late charge represents a reasonable sum considering all of the
circumstances existing on the date of the execution of this Loan Agreement
and represents a reasonable estimate of the losses Lender will incur by
reason of late payment. Borrower further agrees that proof of actual losses
would be costly, inconvenient, impracticable and extremely difficult to fix.
Acceptance of such late charge shall not constitute a waiver of the default
with respect to the overdue installment, and shall not prevent Lender from
exercising any of the other rights and remedies available hereunder.

Section 2.11 MANDATORY PREPAYMENT OF PRINCIPAL. In the event that the
outstanding balance of the Loan shall, at any time, exceed the lesser of
(i) the Allowable Outstanding Principal Amount or (ii) the Loan Amount, the
Loan shall be immediately prepaid by the amount of such excess.

Section 2.12 OPTIONAL PREPAYMENT OF THE LOAN. Borrower shall have the
right to prepay the Loan at any time, in full or in part at a price equal to
the Prepayment Price. Payments with respect to the Note made pursuant to
SECTION 2.8 shall not constitute optional prepayments of the Loan.

Section 2.13 COMMITMENT PERIOD AND CONVERSION DATE.

(a) During the Commitment Period, the Borrower may request (i) that a
residential subdivision or a phase thereof be approved as an "Approved
Project" by complying with the terms and conditions of SECTION 3.2, thus
allowing the Lots and Units therein to be eligible as Borrowing Base
Collateral and (ii) that additional Borrowing Base Collateral be pledged to
the Lender in order to be included in the determination of the Borrowing Base
Amount. During the Commitment Period, adjustments to the Borrowing Base Amount
shall be made in accordance with the terms and conditions of SECTION 3.5 (b).

(b) Commencing on the Conversion Date, the Borrower may not request the
approval of new Approved Projects, neither Lots nor Units may be added as
part of the Borrowing Base Collateral and new Homes, commenced on or after
the Conversion Date on Lots which are already part of the Borrowing Base
Collateral, shall not become part of the Borrowing Base Collateral. After the
Conversion Date, adjustments to the Borrowing Base Amount shall be made in
accordance with the terms and conditions of SECTION 3.5 (c).

Section 2.14 EXTENSION. Borrower may, six (6) months prior to
Conversion Date (as it may be extended from time to time pursuant to this
SECTION 2.14), request that the Commitment Period and the Maturity Date be
extended for twelve (12) months by giving written notice to Lender in the
form of EXHIBIT L attached hereto. Lender may, in its sole and absolute
discretion, consent or not consent to such request by giving written notice
thereof to Borrower not less than ninety (90) days prior to the Conversion
Date. If Lender fails to give such notice Lender shall be deemed not to have
consented to such extension. If the Lender consents to such request, the
Commitment Period, the Conversion Date and the Maturity Date shall each be
extended twelve (12) months, without the requirement of any further action by
Borrower or Lender.

<PAGE>

Section 2.15 SECURITY. Payment of the Loan by Borrower and performance
of Borrower's other obligations under the Loan Documents shall be secured by
the Collateral pledged pursuant to the Security Documents, which Borrower
warrants shall create a valid and first-lien position with respect to the
Collateral, subject only to Permitted Exceptions.

Section 2.16 BOOKS AND RECORDS OF LENDER; ACCOUNTING.

(a) The determinations of the Allowable Disbursement Amount, the
Allowable Outstanding Principal Amount, the Borrowing Base Collateral Amount,
the dates and amounts of each disbursement of proceeds of the Loan and the
dates and amounts of each payment of interest and principal with respect to
the Loan shall be recorded on the books and records of the Lender, which
books and records shall constitute PRIMA FACIE evidence of the accuracy of
the information contained therein recorded, absent manifest error therein.

(b) Lender will provided to Borrower a monthly accounting of all
transactions under and relating to the Loan. Each and every such accounting
shall (absent manifest error) be deemed final, binding and conclusive upon
Borrower in all respects as to all matters reflected therein, unless
Borrower, within thirty (30) days after the date any such accounting is
rendered, shall notify Lender in writing of any objection which Borrower may
have to any such accounting, describing the basis for such objection with
specificity. In that even, only those items expressly objected to in such
notice shall be deemed to be disputed by Borrower. Lender's determination,
based upon the facts available, of any item objected to by Borrower in such
notice shall (absent manifest error) be final, binding and conclusive on
Borrower, unless Borrower shall commence a judicial proceeding to resolve
such objection within thirty (30) days following Lender's notice to Borrower
of such determination.

Section 2.17 ADJUSTMENTS TO LOAN AMOUNT AND RELATED LOAN AMOUNT. Upon
delivery to the Lender of thirty (30) days' prior written notice, the
Borrower may elect to adjust the Loan Amount and the Related Loan Amount,
subject to the following terms and conditions:

(a) the Borrower's written notice shall specify (i) the Loan
Amount, which amount shall not be less that Twenty-Five Million Dollars
($25,000,000) nor more than Forty Million Dollars ($40,000,000), (ii) the
Related Loan Amount, which amount shall not be less than Ten Million
Dollars ($10,000,000) nor more than Twenty Five Million Dollars
($25,000,000) and (iii) the total of the Loan Amount and the Related Loan
Amount, which amount shall be all times equal Fifty Million Dollars
($50,000,000);

(b) each adjustment in the Loan Amount and the Related Loan Amount
shall be in the minimum amount of, and an integral multiple of, One
Million Dollars ($1,000,000);

(c) the Related Loan Amount shall never be decreased to an amount
less than the amount necessary to fund projects previously approved for
financing pursuant to the terms of the Related Loan Agreement;

<PAGE>

(d) the Borrower shall deliver to the Lender (i) a new Note and a
new note for the Related Loan reflecting the adjustments to the Loan
Amount and the Related Loan Amount, (ii) an endorsement to the Title
Policy reflecting any increases in the amount of insurance for the Title
Policy, as required by the Lender, and (iii) such other documents as
Lender may reasonably require; and

(e) the Borrower shall make such adjustments to the Loan Amount
and the Related Loan Amount no more frequently than four (4) times per
year.

23
<PAGE>
ARTICLE III
COLLATERAL; PROCEDURES RELATING
TO COLLATERAL AND DISBURSEMENTS

Section 3.1. COLLATERAL. The Collateral for the Loan shall consist of
the following:

(a) the Borrowing Base Collateral, which shall consist of (i)
the Initial Borrowing Base Collateral, plus (ii) Additional Lots and
Additional Units located in Approved Projects approved by the Lender
prior to execution and delivery of this Loan Agreement, as set forth in
EXHIBIT D, which such Additional Lots and Additional Units shall be
pledged to Lender in accordance with the terms of SECTION 3.3, plus
(iii) Additional Lots and Additional Units located in Approved Projects
approved by the Lender in accordance with the terms of SECTION 3.2, which
such Additional Lots and Additional Units shall be pledged to Lender in
accordance with the terms of SECTION 3.3, less (iv) Lots and Units
released from the lien of the Mortgage;

(b) the Assets encumbered by the lien of the Security Agreement
simultaneous with the execution and delivery of this Loan Agreement; and

(c) all real and personal property pledged to secure the Related
Loan pursuant to the terms of the Related Loan Security Instruments.

Section 3.2. PROJECT APPROVAL

(a) The Lender has approved certain residential subdivisions as
"Approved Projects", which such Approved Projects are listed in EXHIBIT D.
During the Commitment Period, the Borrower may submit to Lender additional
projects proposed to be included as Approved Projects, all pursuant to and in
accordance with the terms of this Loan Agreement. Lots and Units within any
Approved Project may be pledged as part of the Borrowing Base Collateral,
subject to the terms of SECTION 3.3.

(b) In order to include a proposed project as an Approved Project,
Borrower shall submit to Lender a complete description of the proposed
project, including the Project Underwriting Documents, and evidence that the
proposed project complies with the Project Requirements.

(c) Upon its receipt of the Project Underwriting Documents, Lender shall
have thirty (30) days to review and, in its sole and absolute discretion,
approve or disapprove the proposed project as an Approved Project. Upon any
such approval, Lender shall deliver to the Borrower a Project Commitment with
respect thereto and upon acceptance of the Project Commitment by the Borrower
such proposed project shall become an Approved Project for purposes of this
Loan Agreement. Failure of the Lender to deliver to the Borrower a Project
Commitment within such thirty (30) day period shall be deemed a disapproval
by the Lender of the proposed project. Failure of the Borrower to accept such
Project Commitment within ten (10) days after delivery by the Lender shall be
deemed to constitute the rejection by the Borrower of the terms of the
Project Commitment.

<PAGE>

(d) The Borrower's submission to the Lender of a proposed project for
consideration as an Approved Project may identify such such proposed project
as one which is included in the Borrower's "winter construction program",
which such program shall be limited to those projects located in the States
of Illinois and Michigan. The Borrower's submission relating to such proposed
project may request that the Lender waive for the project (i) that certian
requirement of the Borrowing Base Collateral Requirements which states that
the ratio of (A) the number of Sold Units pledged as Borrowing Base
Collateral, to (B) the number of Model Units plus Spec Units pledged as
Borrowing Base Collateral shall not be less than 2:1 and (ii) such other of
the Project Requirements and/or Borrowing Base Collateral Requirements as the
Borrower deems necessary. The Project Underwriting Documents for any such
proposed project shall include such information as the Lender shall request
with respect to the "winter construction program". The Lender shall review
all materials and documents which the Borrower submits with respect to such
proposed project being included in the Borrower's "winter construction
program", provided however that nothing herein shall require that the Lender
grant the Borrower's requested waiver(s), which waiver(s) the Lender may
grant or deny in its sole and absolute discretion. In the event the Lender
approves the proposed project as an Approved Project and grants the requested
waiver(s) due to the Approved Project being part of the "winter construction
program", the Project Commitment issued with respect to such Approved Project
shall so state and shall specify the terms, conditions and length of such
waiver(s).

Section 3.3. PLEDGING OF BORROWING BASE COLLATERAL.

(a) On the date of execution and delivery of this Loan Agreement, the
Borrowing Base Collateral shall consist of the Initial Borrowing Base
Collateral. The Borrower may pledge Additional Lots and Additional Units as
part of the Borrowing Base Collateral, subject to the terms of this SECTION
3.3 and SECTION 3.11.

(b) Subject to the terms of SECTION 3.11, no Additional Lot or
Additional Unit may become part of the Borrowing Base Collateral unless,
after the addition of such Additional Lot or Additional Unit, the pool of
Borrowing Base Collateral continues to comply with the Borrowing Base
Collateral Requirements.

(c) In order to pledge an Additional Lot or Additional Unit as part of
the Borrowing Base Collateral, the Borrower shall be required to meet the
following conditions precedent with respect to such pledge:

(1) the Additional Lot or Additional Units must be located in an
Approved Project;

(2) at least seven (7) days prior to the intended date on
which the Borrower intends such Additional Lot or Additional Unit to
become part of the Borrowing Base Collateral, the Borrower shall deliver
to the Lender and Title Company a Request to Include Collateral, in
accordance with the and subject to the terms of the Title Procedures
Agreement; and

<PAGE>

(3) the Borrower delivers to the Lender the Mortgage
Modification Agreement relating to such Additional Lot or Additional
Unit and a Title Policy Endorsement, in accordance with and subject to
the terms of the Title Procedures Agreement.

Section 3.4. WIP REPORTS.

(a) On such Business Days as the Borrower determines, the Borrower may
deliver to the Lender updated WIP Reports, provided that Borrower may deliver
the WIP Reports to Lender no more often than one time per Business Day. Until
such time as the Lender has received and approved, in accordance with
SUBSECTION (b) below, an updated WIP Report, the Lender shall utilize the
most recently approved WIP Report in determining the Borrowing Base Amount.

(b) The Lender shall make every reasonable effort to review the WIP
Report within four (4) Business Hours of its receipt of the WIP Report. The
Lender shall make such adjustments and modifications to the WIP Report as it
deems necessary, and shall, within the same time frame as set forth in the
previous sentence, adjust the Borrowing Base Amount to account for changes in
the Borrowing Base Collateral as reflected in the WIP Report. In no event
shall a WIP Report be deemed received by the Lender unless and until such WIP
Report has been received in its entirety by the Lender.

(c) The Lender may, on any date it determines, deliver a copy of the
most recently received WIP Report to the Inspector. The Inspector shall take
such actions as Lender and Inspector deem necessary to verify the status of
the Borrowing Base Collateral as set forth in such WIP Report. Borrower shall
take any and all actions requested by Lender or Inspector to enable the
Inspector to make such verifications, including but not limited to taking
such actions as are necessary to allow the Inspector access to the Approved
Projects.

Section 3.5. DETERMINATION OF BORROWING BASE AMOUNT.

(a) The Lender shall, on a daily basis, determine the Borrowing Base
Amount, taking into account all Borrowing Base Collateral pledged pursuant to
SECTION 3.3, increases in the value of the Borrowing Base Collateral as
reflected in the WIP Reports delivered pursuant to SECTION 3.4, decreases in
the value of the Borrowing Base Collateral as a result of the release of
Borrowing Base Collateral and adjustments to the value of the Borrowing Base
Collateral based upon the reports the Lender receives from the Inspector.

(b) Subject to the terms of SECTION 3.11 which relate to the Initial
Borrowing Base Collateral, the Borrowing Base Amount shall be that amount
which is equal to the following:

(1) for each Lot pledged as part of the Borrowing Base
Collateral located in a project which WAS NOT financed with the proceeds
of the Related Loan, an amount for the Lot equal to the lower of (i)
seventy five percent (75%) of the Value of the Lot or (ii) one

<PAGE>

hundred percent (100%) of the amount necessary to be paid to release
the Lot from any existing liens; or

(2) for each Lot pledged as part of the Borrowing Base
Collateral located in a project which WAS financed with the proceeds of
the Related Loan, an amount for the Lot equal to one hundred percent
(100%) of the amount required to be paid the Lender pursuant to the
terms of the Related Loan Documents to repay the principal amount of the
Related Loan attributable to acquisition and development of such Lot,
and construction of a home on such Lot if appliable, but specifically
excluding from such amount any additional loan fee due to the Lender
pursuant to the terms of the Related Loan Documents; provided however
that after such time as the principal amount of the Related Loan
attributable to the Lot has been paid, due to the principal repayment
acceleration provisions of the Related Loan, the amount attributable
to such Lot shall be an amount equal to seventy five percent (75%) of
the Value of the Lot;

PLUS

(3) for each Model Unit and Spec Unit pledged as part of the
Borrowing Base Collateral, an amount for the Home equal to seventy five
percent (75%) of the Value of the Unit (less the amount determined for
the related Lot in accordance with SUBPARAGRAPH (1) or (2) above) times
the Percentage Completed;

PLUS

(4) for each Sold Unit pledged as part of the Borrowing Base
Collateral, an amount for the Home equal to eighty percent (80%) of the
Value of the Unit (less the amount determined for the related Lot in
accordance with SUBPARAGRAPH (1) or (2) above) times the Percentage
Completed;

provided that Stale Units and Excluded Units shall be excluded in
determining the Borrowing Base Amount, although such Stale Units and
Excluded Units shall remain as part of the Borrowing Base Collateral
until such Stale Unit or Excluded Unit is released from the lien of the
Mortgage in accordance with its terms.

(c) Prior to the Conversion Date, the Borrowing Base Amount shall be
adjusted (i) daily to reflect Lots and/or Units which have been removed as
Borrowing Base Collateral and Units which have become Stale Units or Excluded
Units, (ii) to reflect additional construction of the Homes, as set forth in
the most recently delivered WIP Report, and (iii) daily to reflect the pledge
of Additional Lots and/or Additional Units as part of the Borrowing Base
Collateral.

(d) On and after the Conversion Date and until the Maturity Date, the
Borrower may continue to draw proceeds of the Loan, although the amount of
the Loan which may be outstanding at any time shall be limited to an amount
equal to the lesser of the Allowable Outstanding Principal

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Amount and the Loan Amount. On and after the Conversion Date, the Borrowing
Base Amount shall be adjusted (i) daily to reflect Lots and/or Units which
have been removed as Borrowing Base Collateral and Units which have become
Stale Units or Excluded Units and (ii) to reflect additional construction of
the Homes, as set forth in the most recently delivered WIP Report;
provided that it is understood that after the Conversion Date the following
provisions shall apply:

(1) neither Lots nor Units may be added as part of the Borrowing
Base Collateral;

(2) new Homes, commenced on or after the Conversion Date on
Lots which are already part of the Borrowing Base Collateral, shall not
become part of the Borrowing Base Collateral; and

(3) all adjustments to the Borrowing Base Amount shall be
based upon changes in the Borrowing Base Collateral as it existed on
the Conversion Date.

Section 3.6. DETERMINATION OF ALLOWABLE DISBURSEMENT AMOUNT. The Lender
shall, on a daily basis, determine the Allowable Disbursement Amount, taking
into account changes in the Borrowing Base Amount as determined pursuant to
SECTION 3.5 and the outstanding principal amount of the Loan on that day.

Section 3.7. PROCEDURE FOR DISBURSEMENTS.

(a) On each Business Day, the Borrower may either (i) submit to the
Lender a Draw Request Certification requesting that proceeds of the Loan be
disbursed on such Business Day, or (ii) telephone the Lender to request the
disbursement of proceeds of the Loan on such Business Day, which such oral
request shall be followed immediately thereafter by submission of the Draw
Request Certification. Oral requests received by the Lender at or before 12:00
noon (Minneapolis time), followed by the submission of the Draw Request
Certification by 1:00 p.m. (Minneapolis time) on such date, shall be
reviewed by the Lender on the Business Day of receipt and the Lender shall
wire proceeds of the Loan, in the amount determined by Lender to be
appropriate, to the Disbursement Account no later than 2:00 p.m. (Minneapolis
time) on such Business Day. Draw Request Certifications received by the
Lender after 1:00 p.m. (Minneapolis time) shall be reviewed by the Lender on
the next Business Day following receipt and the Lender shall wire proceeds of
the Loan, in the amount determined by Lender to be appropriate, to the
Disbursement Account on such Business Day.

(b) In the event that at the close of business on any day, funds in
excess of Twenty Five Thousand Dollars ($25,000) remain in the Disbursement
Account, Borrower will, by the next Business Day, deliver by wire transfer
such excess funds to the Depository Account.

Section 3.8. CONDITIONS PRECEDENT TO DISBURSEMENTS. The obligation of
Lender to make disbursements of the Loan subject to fulfillment of the
following conditions precedent:

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(a) Lender shall not be obligated to make any disbursements if:

(1) the outstanding balance of the Loan exceeds, or would
following the contemplated disbursement exceed, the face amount of
the Note; or

(2) the amount of the Loan which may be outstanding after such
disbursement would exceed the lesser of (i) the Allowable Outstanding
Principal Amount and (ii) the Loan Amount, and in such event the
Lender shall disburse only such amounts as will result in the
outstanding amount of the Loan equaling the lesser of such amounts;

(b) Lender shall not be obligated to disburse any Loan proceeds to
the extent that the Borrowing Base Collateral does not comply with the
Borrowing Base Collateral Requirements or to the extent that any liens
have been filed against the Collateral, except as permitted by
SECTION 6.16;

(c) Lender shall not be obligated to disburse any Loan proceeds
unless all statements made in the applicable Draw Request Certification
are true and correct on and as of the date of the requested disbursement,
before and after giving effect thereto and to the application of the
proceeds therefrom;

(d) except as the Borrower has disclosed otherwise to the Lender in
writing, the representations and warranties of Borrower contained in the
Loan Documents shall be true and correct in all material respects on and
as of the date of the requested disbursement, before and after giving
effect thereto and to the application of the proceeds therefrom, as though
made on and as of such date;

(e) the terms of the Bank Letter of Instructions, or its equivalent
approved by the Lender pursuant to SECTION 3.9, shall be in full force and
effect; and

(f) no Event of Default or Potential Default has occurred and is
continuing, or would result from such disbursement or from the application
of the proceeds therefrom.

Section 3.9. DISBURSEMENT ACCOUNT. The Disbursement Account shall
initially be maintained with American National Bank and Trust Company of
Chicago, which such bank shall be required to execute and deliver to Lender
the Bank Letter of Instructions. The Borrower shall maintain the Disbursement
Account with American National Bank and Trust Company of Chicago for so long
as such bank agrees to abide by the terms of the Bank Letter of Instructions.
In the event either (i) American National Bank and Trust Company of Chicago
notifies the Lender that it will no longer abide by the terms of the Bank
Letter of Instructions or is terminating the Bank Letter of Instructions, or
(ii) the Borrower notifies the Lender that it desires to move the
Disbursement Account to another bank, then the following provisions shall
apply:

<PAGE>

(a) the Borrower shall select another bank or financial institution
to hold the Disbursement Account, the identity of which such bank or
financial institution shall be approved by the Lender; and

(b) such bank or financial institution shall be required to sign a
letter of instructions in substantially the form of the Bank Letter of
Instructions, pursuant to which such bank or financial institution shall
acknowledge the security interest of the Lender in the Disbursement Account.

In the event that, for any reason, the Lender determines that the terms of
the Bank Letter of Instructions, or its equivalent approved by the Lender
pursuant to the terms of this SECTION 3.9, are not being adhered to, the
Lender may immediately terminate further disbursements of proceeds of the
Loan and exercise any other remedies available to it pursuant to SECTIONS 7.2
or 7.3.

Section 3.10. LENDER MAY MAKE DISBURSEMENT NOTWITHSTANDING
NONCOMPLIANCE. Notwithstanding the failure of any condition precedent to
Lender's obligation to make any disbursement hereunder, Lender may make such
disbursement if Lender, in its sole discretion, determines the making of the
same to be advisable. The making of any disbursment, either before or after
the satisfaction of all conditions precedent with respect to Lender's
obligation to make the same, shall not be deemed to constitute an approval or
acceptance by Lender of any construction work theretofore completed or a
waiver of such condition with respect to a subsequent disbursement.

SECTION 3.11. PROVISIONS APPLICABLE TO INITIAL BORROWING BASE COLLATERAL.

(a) Notwithstanding the provisions of SECTION 3.5(b), the Borrowing Base
Amount for the Initial Borrowing Base Collateral shall be that amount which
is equal to the following:

(1) for each Lot pledged as part of the Initial Borrowing Base
Collateral, an amount for the Lot equal to eighty percent (80%) of the
Value of the Lot;

PLUS

(2) for each Sold Unit, Model Unit and Spec Unit pledged as part of
the Initial Borrowing Base Collateral, an amount for the Home equal to
eighty percent (80%) of the Value of the Unit (less the amount determined
for the related Lot in accordance with SUBPARAGRAPH (1) above, times the
Percentage Completed;

provided that Stale Units and Excluded Units shall be excluded in
determining the Borrowing Base Amount, although such Stale Units and
Excluded Units shall remain as part of the Borrowing Base Collateral until
such Stale Unit or Excluded Unit is released from the lien of the Mortgage
in accordance with its terms.

<PAGE>

The foregoing percentages shall apply to the Lots and Units forming the
Initial Borrowing Base Collateral from the date of the initial pledge until
the release of such Borrowing Base Collateral, but in no event shall the
provisions of this SECTION 3.11(a) apply to any portion of the Borrowing Base
Collateral other than the Initial Borrowing Base Collateral.

(b) The following requirements shall not apply to the Initial Borrowing
Base Collateral:

(1) that requirement of the Borrowing Base Collateral Requirements
which states that the ratio of (i) the number of Sold Units pledged as
Borrowing Base Collateral, to (ii) the number of Model Units plus Spec
Units pledged as Borrowing Base Collateral shall not be less than 2:1;

(2) as to the Royal Hill subdivision, that requirement of the
Borrowing Base Collateral Requirements which restricts the number of
Vacant Lots per Approved Project to twenty (20); and

(3) as to the Bayberry multifamily subdivision, that requirement
of the Borrowing Base Collateral Requirements which restricts the
number of Model Units, together with the number of Spec Units, to ten
(10) such Units per Approved Project.

(c) Commencing with the Business Day after the pledge of the Initial
Borrowing Base Collateral, and continuing until that date on which all of the
requirements of the Borrowing Base Collateral Requirements described in
SUBPARAGRAPH (b) have been met, the Borrower may pledge as Borrowing Base
Collateral only Additional Units which are Sold Units; provided however that
in the event such Additional Units are attached Units located in a townhouse,
requiring the pledge to Lender of all Units located in such townhouse, such
Additional Units may be pledged as part of the Borrowing Base Collateral
notwithstanding that some of the Units in such townhouse are Spec Units, so
long as at least fifty percent (50%) of the Additional Units are Sold Units.

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<PAGE>

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Section 4.1. CONSIDERATION. As an inducement to Lender to execute this
Loan Agreement, make the Loan and disburse the proceeds of the Loan, Borrower
represents and warrants to Lender the truth and accuracy of the matters set
forth in this ARTICLE IV.

Section 4.2. ORGANIZATION. United Homes and United Illinois are each
duly organized, validly existing and in good standing as corporations under
the laws of the State of Illinois. United Arizona is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Arizona. United Michigan is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Michigan. Each of
United Homes, United Arizona, United Illinois and United Michigan is duly
qualified to do business and is in good standing in every jurisdiction where
its business or properties require such qualification and has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted or proposed to be conducted.

Section 4.3. AUTHORIZATION. The execution, delivery and performance by
Borrower of the Loan Documents have been duly authorized by all necessary
action and do not and will not (i) contravene the charter documents of any of
entities constituting the Borrower; (ii) contravene any law, rule or
regulation or any order, writ, judgment, injunction or decree or any
contractual restriction binding on or affecting any of the entities
constituting the Borrower, (iii) require any approval or consent of any
partner, shareholder or any other Person other than approvals or consents
which have been previously obtained and disclosed in writing to Lender; (iv)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which any of
entities constituting the Borrower is a party or by which any such entity or
its properties may be bound or affected, or (v) result in, or require the
creation or imposition of, any lien of any nature (other than the liens
contemplated hereby) upon or with respect to any of the properties now owned
or hereafter acquired by any of entities constituting the Borrower; and none
of such entities is in default under any such law, rule, regulation, order,
writ, judgment, injunction, decree or contractual restriction or any such
indenture, agreement, lease or instrument.

Section 4.4. GOVERNMENTAL CONSENTS. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery and
performance by any of entities constituting the Borrower of the Loan
Documents or any other document executed pursuant thereto or in connection
therewith.

Section 4.5. VALIDITY. The Loan Documents have been duly executed and
delivered by and constitute the legal, valid and binding obligations of each
of the entities constituting the Borrower, enforceable in accordance with
their respective terms.

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<PAGE>

Section 4.6. FINANCIAL POSITION. As of the dates prepared, the financial
statements and all financial data heretofore delivered to Lender in
connection with the Loan and/or relating to the entities which comprise the
Borrower are true, correct and complete in all material respects and were
prepared in accordance with GAAP consistently applied. Such financial
statements fairly present the financial position of the Persons who are the
subject thereof as of the dates thereof.

Section 4.7. GOVERNMENTAL REGULATIONS. None of the entities which
comprise the Borrower is subject to regulation under the Investment Company
Act of 1940, the Federal Power Act, the Public Utility Holding Company Act of
1935, the Interstate Commerce Act, as the same may be amended from time to
time, or any federal or state statute or regulation limiting the ability of
such entities to incur Debt.

Section 4.8. EMPLOYEE BENEFIT PLANS. None of the entities which comprise
the Borrower maintain any pension, retirement, profit sharing or similar
employee benefit plan that is subject to ERISA, other than a plan pursuant to
which the contribution requirement of such entity is made concurrently with
the employees' contributions.

Section 4.9. SECURITIES ACTIVITIES. None of the entities which comprise
the Borrower is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
any margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System in effect from time to time) and not more than
twenty-five percent (25%) of the value of the assets of any such entity
consists of such margin stock.

Section 4.10. NO MATERIAL ADVERSE CHANGE. No Material Adverse Change
has occurred since July 31, 1996.

Section 4.11. PAYMENT OF TAXES. All tax returns and reports required to
be filed by the entities which comprise the Borrower have been timely filed,
or proper extensions for filing have been obtained, and all taxes,
assessments, fees and other governmental charges upon such entities and their
respective properties, assets, income and franchises which are due and
payable have been paid when due and payable, or proper extensions for payment
have been obtained, except to the extent that such taxes, assessments, fees
and other governmental charges or the failure to pay the same would not
result in a Material Adverse Change. None of the entities which comprise the
Borrower has any knowledge of any proposed tax assessment against such entity
that could result in a Material Adverse Change.

Section 4.12. LITIGATION. There is no pending or, to the knowledge of
any of the entities constituting the Borrower, threatened action, suit,
proceeding or arbitration against or affecting any of the entities
constituting the Borrower before any court, governmental agency or
arbitrator, which may result in a Material Adverse Change.

Section 4.13. ENVIRONMENTAL MATTERS. The operations of the entities
which comprise the Borrower comply in all respects with all Hazardous
Materials Laws except such noncompliance which

33
<PAGE>

would not (if enforced in accordance with applicable law) reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Change. As of the date of this Loan Agreement, (i) none of the entities which
comprise the Borrower nor their present properties or operations is subject
to any outstanding written order from or settlement or consent agreement with
any governmental authority or other Person, nor is any of the foregoing
subject to any judicial or docketed administrative proceeding respecting any
Hazardous Materials Law, Hazardous Materials Claim or Hazardous Material, and
(ii) there are no other conditions or circumstances known to any of the
entities which comprise the Borrower which may give rise to any Hazardous
Materials Claim arising from the operations of any of the entities which
comprise the Borrower.

Section 4.14. NO BURDENSOME RESTRICTIONS. None of the entities which
comprise the Borrower is party to or bound by any contract or agreement, or
subject to any charter or corporate restriction or any requirement of law,
which would reasonably be expected to result in a Material Adverse Change.

Section 4.15. FULL DISCLOSURE. None of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of
Borrower in connection with the Loan Documents contains any untrue statement
of a material fact, or omits any material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading; provided, however,
that it is recognized by Lender that projections and forecasts provided and
to be provided by Borrower, while reflecting Borrower's good faith
projections or forecasts based upon methods and data Borrower believes to be
reasonable and accurate, are not to be viewed as facts and that actual
results during the period or periods covered by any such projections and
forecasts may differ from the projected or forecasted results.

Section 4.16. ADEQUATE CONSIDERATION. Each of the entities which
comprise the Borrower represents and warrants to Lender that prior to
entering into this Loan Agreement, it has reviewed the benefits to be
provided to it as a result of the Lender making the Loan and has concluded
that such benefits are reasonably equivalent in value to the collateral to be
pledged to secure the Loan and the obligations assumed and to be assumed such
entity pursuant to the Loan Documents.

<PAGE>

ARTICLE V
COVENANTS

Section 5.1. CONSIDERATION. As an inducement to Lender to execute this
Loan Agreement, make the Loan and make each disbursement of the Loan,
Borrower hereby covenants as set forth in this ARTICLE V.

Section 5.2. AFFIRMATIVE COVENANTS. So long as any amount payable
hereunder or under any other Loan Document shall remain unpaid or Lender
shall have any commitment to disburse the Loan hereunder, Borrower shall,
unless Lender shall otherwise consent in writing:

(a) REPORTING REQUIREMENTS. Furnish or cause to be furnished to
Lender the following notices and reports:

(1) MONTHLY REPORTS. On a monthly basis, the following
reports:

(A) On or about the twentieth (20th) day of each month,
a status report for the previous month (i) describing for all
Approved Projects, all projects being financed with the
proceeds of the Related Loan and all Non-Lender Projects, the
progress of development and construction, (ii) describing
for all such projects sales activity and other material
developments and (iii) with respect to the Approved Projects
and the projects being financed with the proceeds of the
Related Loan only, describing substantial deviations in the
Construction Improvements from the Plans and Specifications,
or the existence of defective workmanship or materials
incorporated into the Construction Improvements; and

(B) within thirty (30) days after the end of each month,
an aged accounts payable report;

(2) QUARTERLY REPORTS. As soon as possible and in any event
within forty five (45) days after the end of each fiscal quarter
of United Homes (other than the last quarter of any fiscal year),
the following: (i) unaudited financial statements of United Homes
on a fully consolidated basis, which financial statements shall
include (A) a balance sheet as at the end of such fiscal quarter,
(B) statements of income and cash flow for such fiscal quarter and
the period from the beginning of the then current fiscal year to
the end of such fiscal quarter and setting forth in comparative
form figures for the corresponding period(s) of the preceding
fiscal year, all in reasonable detail and in accordance with GAAP
consistently applied and certified by the chief financial officer
of United Homes to fairly present the financial condition of
United Homes on a fully consolidated basis as at the end of such
fiscal quarter and the results of the operations of United Homes
on a fully consolidated basis for the period ending on such
date; (ii) a summary report of accounts payable aging; and (iii)
a written

35
<PAGE>

statement certifying that Borrower is in compliance with the terms
of the Loan Documents, or if the Borrower is not in compliance,
specifying the details of the non-compliance and the action which
Borrower is taking to correct such non-compliance;

(3) ANNUAL REPORTS. As soon as possible and in any event
within one hundred twenty (120) days after the end of each fiscal
year of United Homes, audited financial statements of the United
Homes on a fully consolidated basis, which financial statements
shall include a balance sheet of United Homes on a fully
consolidated basis as at the end of such fiscal year, statements of
income, shareholders' equity and cash flow of United Homes on a
fully consolidated basis for such fiscal year, and setting forth
in each case in comparative form figures for the preceding fiscal
year, all in reasonable detail and in accordance with GAAP
consistently applied and accompanied by an unqualified opinion
issued by an independent certified public accountant acceptable
to Lender;

(4) NOTICE OF LABOR CONTROVERSY. As soon as possible and in
any event within five (5) days after Borrower has knowledge of its
occurrence, written notice of any labor controversy resulting in
a material strike, work stoppage, shutdown or other material
labor disruption against or involving Borrower or any Approved
Project;

(5) NOTICE OF MATERIAL ADVERSE CHANGE. Promptly upon its
occurrence, written notice and a description of any matter which
has resulted, or will result, in a Material Adverse Change;

(6) NOTICE OF DEFAULTS OR POTENTIAL DEFAULTS. As soon as
possible and in any event within five (5) days after Borrower has
knowledge of the occurrence of any Potential Default (however
described) or Event of Default hereunder or an event of default
(however described) under any other of the Loan Documents, written
notice and a description of such Potential Default, Event of
Default or event of default and the action which Borrower proposes
to take with respect thereto;

(7) NOTICES OF DEFAULT REGARDING OTHER DEVELOPMENT PROJECTS.
As soon as possible and in any event within five (5) days after
Borrower has knowledge of the occurrence of any event of default
under any loan or other financing facility, including seller
financing, made for any development or construction project
comparable to an Approved Project or a project being financed with
proceeds of the Related Loan and involving Borrower, which event
of default might result in a Material Adverse Change;

(8) NOTICE OF LITIGATION. As soon as possible and in any
event within five (5) days after institution thereof, written notice
and a description of any materially adverse litigation, action or
proceeding commenced against Borrower or relating to

36
<PAGE>

any Approved Project, and any adverse determination in any such
litigation, action or proceeding;

(9) NOTICES REGARDING HAZARDOUS MATERIALS. Promptly upon its
occurrence, written notice and a description of the release of any
Hazardous Material, or any liability with respect thereto, on,
under or in connection with any Approved Project and the action
which Borrower proposes to take with respect thereto;

(10) NOTICES REGARDING APPROVED PROJECTS. Promptly and in any
event within five (5) days after receipt by Borrower, copies of all
(A) notices of violation relating to and materially adversely
affecting any Approved Project that Borrower receives from any
governmental agency or authority, (B) notices of default that
Borrower receives under any material agreement relating to and
materially adversely affecting any Approved Project, and (C) notices
of default that Borrower receives under any agreement relating to
the borrowing of money by Borrower for any Approved Project from
any Person; and

(11) OTHER INFORMATION. Such other information respecting the
business, properties, assets, operations and condition, financial or
otherwise, of Borrower, the Approved Projects or the Borrowing Base
Collateral, including, without limitation, copies of Approved
Project construction and sales reports, and any other rights or
interests subject to the Loan Documents, as Lender may from time to
time reasonably request.

(b) COMPLIANCE WITH LAWS AND REGULATIONS ETC. Comply in all
material respects, with the Laws and Regulations, the noncompliance with
which might result in a Material Adverse Change.

(c) PAYMENT OF TAXES AND CLAIMS. Subject to the rights granted
pursuant to SECTION 6.16, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets
or in respect of any of its franchises, business, income or profits
before any penalty accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law have or may
become a lien upon any of its properties or assets.

(d) MAINTENANCE OF PROPERTIES: BOOKS AND RECORDS. Maintain or cause
to be maintained.

(1) in good repair, working order and condition all properties
and assets material to the continued conduct of the business of
Borrower, and from time to time make or cause to be made all
necessary repairs, renewals and replacements thereof; and

37
<PAGE>

(2) proper books, records and accounts in which full, true and
correct entries in accordance with GAAP consistently applied are
made of all financial transactions and matters involving its
assets and business.

(e) MAINTENANCE OF EXISTENCE. Maintain and preserve the existence
of each of the entities constituting the Borrower and all rights,
privileges, qualifications, permits, licenses, franchises and other
rights material to each of its business.

(f) FURTHER ASSURANCES. Execute and deliver at any time and from
time to time any and all instruments, agreements and documents, and shall
take such other action as Lender reasonably requires to maintain, perfect
or insure Lender's security provided for under the Loan Documents,
including, without limitation, the execution of amendments to the Loan
Documents.

(g) MANAGEMENT. At all times ensure that Edward J. Havlik remains
employed as President of United Homes, involved in the day to day
operations of the Borrower.

(h) FIRST RIGHT TO FINANCE. Provide to Lender the first right to
finance all of the Borrower's construction activities, with the exception
of (i) the project now planned at Darien, Illinois, (ii) Williams Glen
in Bolingbrook, Illinois and (iii) the project now planned at Round Lake,
Illinois; provided however that in the event the Borrower requests that
the Lender finance the construction activity relating to a project upon
terms and conditions other than as set forth in this Loan Agreement, and
the Lender does not approve such project on the requested terms and
conditions, the Borrower may finance such project upon those terms and
conditions rejected by the Lender through another lender; provided
further however that in all events the Borrower shall use the proceeds
of the Loan to finance the construction activity for all projects as
to which the acquisition and development financing was provided with
proceeds of the Related Loan.

Section 5.3 NEGATIVE COVENANTS. So long as any amount payable hereunder
or any other Loan Document still remains unpaid or Lender shall have any
commitment to disburse the Loan hereunder, Borrower shall not, unless Lender
shall otherwise consent in writing:

(a) LIENS. Subject to the rights granted pursuant to SECTION 6.16,
create, assume or suffer to exist any lien, security interest or other
charge or encumbrance, or any other type or preferential arrangement,
upon the Collateral, other than Permitted Exceptions.

(b) SALES, ETC. OF ASSETS: OWNERSHIP OF COLLATERAL. Sell, lease,
transfer or otherwise dispose of (i) all or substantially all of its
assets (in a single transaction or a series of related transactions), or
(ii) any of the Collateral, except in the normal course of business and
except as expressly permitted by the Loan Documents.

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<PAGE>

(c) TRANSFERS, PLEDGES OR LOANS OF ASSETS. Agree to any transfer,
pledge or loan of assets, other than to entities controlled by and
consolidated with (for reporting purposes) United Homes, except that the
Borrower shall be permitted to pledge assets to other lenders of the
Borrower in the normal course of business; provided however that in no
event shall the Borrower be allowed to grant subordinate liens or
security interests on the Collateral.

(d) CHANGE IN NATURE OF BUSINESS. Make any change in the nature of
its business as carried on at the date hereof.

(e) LAND BANKING OR LAND SPECULATION. The Borrower will not use the
proceeds of the Loan for Land Banking or Land Speculation.

(f) USE OF PROCEEDS. Use any part of the proceeds of the Loan to
(i) purchase or carry any margin stock (within the meaning of Regulation
U issued by the Board of Governors of the Federal Reserve System),
(ii) repay or otherwise refinance indebtedness of Borrower or others
incurred to purchase or carry any margin stock, (iii) extend credit for
the purpose of purchasing or carrying any margin stock, or (iv)
acquire any security in any transaction that is subject to Section 13
or 14 of the Securities Exchange Act of 1934, as amended, and regulations
promulgated thereunder.

Section 5.4 FINANCIAL COVENANTS. Borrower shall comply with, or ensure
compliance with, each of the following financial covenants:

(a) NET WORTH. United homes shall, on a consolidated basis, at all
times maintain a Net Worth equal to or in excess of (i) prior to September
30, 1997, Nine Million Dollars ($9,000,000) and (ii) on and after
September 30, 1997, Ten Million Dollars ($10,000,000).

(b) LIMITATION ON DISTRIBUTIONS. United Homes shall not distribute
dividends, bonuses or profit participations to officers or stockholders
greater than thirty percent (30%) of year-end, audited, pre-tax profits
generated in any one year.

(c) RATIO OF LIABILITIES TO ADJUSTED NET WORTH. At all times, the
ratio of United Homes' total liabilities (reported on a consolidated basis)
to its Adjusted Net Worth shall not exceed 5.0 to 1.0.

(d) POSITIVE NET INCOME. The Borrower shall ensure that the pre-tax
net income for the Borrower, on a consolidated basis, shall not be
negative for any four consecutive calendar quarters on a cumulative basis.

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<PAGE>

current Best's Key Ratings of not less than A/IX and written in form and
content acceptable to Lender, providing the following minimum insurance
coverages:

(a) For each Approved Project, all-risk course of construction
insurance (non-reporting form) in the minimum amount of the proposed
construction cost for such Approved Project on a replacement cost
basis against loss or damage by hazards customarily included within
"extended coverage" policies, and any other risks or hazards which
in Lender's reasonable judgment should be insured against, with a
Lender's Loss Payable Endorsement naming Lender as an additional
insured together with a full replacement cost endorsement (without
provisions for co-insurance).

(b) "Comprehensive General Liability" insurance in the minimum
"general aggregate" amount of Two Million Dollars ($2,000,000), in the
minimum "occurrence" limit of One Million Dollars ($1,000,000) and in
the minimum "umbrella" amount of Ten Million Dollars ($10,000,000),
all against claims for "personal injury" liability, including bodily
injury, death or damage to the project liability, including completed
operations and contractual liability and also including owners' and
contractors' protective coverage naming Lender as an additional insured.

(c) Workers' compensation insurance as prescribed by the laws of
each state in which the borrower is required to maintain such insurance,
and employers' liability with limits as prescribed by law.

(d) For each Approved Project, flood insurance in the maximum
coverage available, designating Lender as payee, or evidence satisfactory
to Lender that the Approved Project is not located within an area
designated as within the 100 year flood plain under the National Flood
Insurance Program.

(e) Insurance with respect to its properties, assets and business
against loss or damage of the kinds customarily insured against by
Persons of established reputation engaged in the same or similar
business and similarly situated, of such types and in such amounts as
are customarily carried under similar circumstances by such other
Persons, all in accordance with reasonably prudent industry standards.

Each policy of insurance required under this SECTION 5.5 shall contain
the "standard non-contributory mortgagee clause" and the "standard lenders'
loss payable clause," or their equivalents, in favor of Lender, and shall
provide that it shall not be modified or canceled without thirty (30) days'
prior written notice to Lender. Borrower shall also furnish Lender with
receipts for the payment of premiums on such policies or other evidence of
such payment reasonably satisfactory to Lender. In the event Borrower does
not deposit with Lender a new policy of insurance with evidence of payment of
premiums thereon at least thirty (30) days prior to the expiration of any
expiring policy, then Lender may, but shall not be obligated to, procure such
insurance, and Borrower shall pay the premiums thereon to Lender promptly
upon demand. Lender shall not, by the fact of approving,

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disapproving, accepting, preventing, obtaining or failing to obtain any such
insurance, incur any liability for the form or legal sufficiency of insurance
contracts, solvency of insurers or payment of losses, and Borrower hereby
expressly assumes full responsibility therefor and all liability related
thereto, if any.

<PAGE>

ARTICLE VI
THE BORROWING BASE COLLATERAL

Section 6.1. CONSIDERATION. As an inducement to Lender to execute this
Loan Agreement and to make each disbursement of the Loan, Borrower represents
and warrants to the Lender the truth and accuracy of the matters regarding
the Borrowing Base Collateral set forth in this ARTICLE VI and hereby
covenants regarding the Borrowing Base Collateral as set forth in this
ARTICLE VI.

Section 6.2. TITLE. Borrower is the sole legal and beneficial owner of
the Borrowing Base Collateral, free and clear of all claims, liens and
encumbrances other than Permitted Exceptions. All of the personal property
which forms or will form a part of the Borrowing Base Collateral is or will
be vested solely in Borrower, free and clear of all claims, liens and
encumbrances, subject only to Permitted Exceptions and the security interest
of Lender in such personal property is a first lien thereon, subject only to
Permitted Exceptions.

Section 6.3. NO PRIOR LIENS OR CLAIMS. Prior to recordation of the
Mortgage, the Borrower has (i) commenced on the Approved Projects
construction of the development and construction, and grading and site
clearance related thereto, (ii) purchased, contracted for and otherwise
brought upon the Land materials, specially fabricated or otherwise, to be
incorporated into the Homes, and/or (iii) entered into contracts and
arrangements, the performance of which by any of the other parties thereto
could give rise to a lien or claim on the Borrowing Base Collateral or a
portion thereof. Except as previously disclosed in writing to the Lender,
none of the activities described in the previous sentence have given rise to
any existing liens upon the Borrowing Base Collateral or to the best
knowledge of Borrower after due investigation, possible claims with respect
thereto. The Borrower has provided to the Title Company all necessary
information to allow the Title Company to issue the Title Policy, providing
to the Lender certain mechanics' lien coverage as specified in the Title
Policy.

Section 6.4. ACCESS TO THE BORROWING BASE COLLATERAL. Except as
otherwise disclosed to Lender, all roads, streets, traffic turn lanes, and
access ways necessary for the full utilization of the Borrowing Base
Collateral for its intended purpose either have been or will be completed or
the necessary rights of way either have been or will be acquired by the
appropriate governmental authority or have been or will be dedicated to
public use and accepted by the appropriate governmental authority, and all
necessary steps have been or will be taken by Borrower and the appropriate
governmental authority to assure the complete construction and installation
thereof by the time needed for construction and/or occupancy and operation of
the Borrowing Base Collateral.

Section 6.5. COMPLIANCE WITH LAWS AND REGULATIONS. The Borrowing Base
Collateral, the proposed and actual use thereof, and the Homes when completed
will comply with the Laws and Regulations, and there is no action or
proceeding pending or, to the knowledge of Borrower (after due inquiry),
threatened before any court, quasi-judicial body or administrative agency at
the time of any disbursement by Lender relating to the validity of the Loan
or the proposed or actual use of the Borrowing Base Collateral.

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<PAGE>

Section 6.6. COVENANTS, ZONING, CODES, PERMITS AND CONSENTS. Borrower
is familiar with and has complied with or will comply with all of the Laws
and Regulations to be complied with in connection with the Borrowing Base
Collateral. All permits, licenses, consents, approvals or authorizations by,
or registrations, declarations, withholding of objections or filings with any
governmental body necessary in connection with the valid execution, delivery
and performance of this Loan Agreement, the Loan Documents, and any and all
other documents executed in connection with any of the foregoing, necessary
for the construction of the Homes, and necessary for the marketing and sale
of the Homes, have been or will be obtained and are or will be valid,
adequate and in full force and effect. Construction of the Homes and the
intended use thereof will in all respects conform to and comply with all Laws
and Regulations, including without limitation all applicable zoning,
subdivision, environmental protection, use and building codes, laws,
regulations and ordinances.

Section 6.7. UTILITIES. All utility services and facilities necessary
for the construction, sale and occupancy of the Homes are either available at
the boundaries of the Land, or, if not, all necessary steps have been or will
be taken by Borrower and the local authority or public utility company which
provides such services to assure the complete installation and availability
thereof when needed for construction, sale, occupancy and operation of the
Homes.

Section 6.8. MAP, PERMITS, LICENSES AND APPROVALS. Borrower has
obtained the Maps. Borrower shall properly comply with and take such steps as
are within its control to keep in effect the Maps and all permits, licenses
and approvals which are required to be obtained from governmental bodies in
order to construct, occupy, operate, market and sell the Homes. Upon the
Lender's request, Borrower shall promptly deliver copies of the Maps and all
such permits, licenses and approvals to Lender.

Section 6.9. APPROVAL OF PLANS AND SPECIFICATIONS AND BUDGET.

(a) The Plans and Specifications are a true, complete and accurate
reflection of the Homes that Borrower will construct. The Plans and
Specifications are satisfactory to Borrower and have been reviewed and
approved by Borrower and the general contractors for the Homes (if different
from the Borrower), and have also been approved as required by all
governmental bodies or agencies having jurisdiction (including, without
limitation, any local design review boards) and by the beneficiary of any
restrictive covenant affecting the Homes. There are no structural defects in
the Homes as shown in the Plans and Specifications, and no violation of any
of the Laws and Regulations exists with respect to the Plans and
Specifications.

(b) After diligent investigation of all relevant conditions and due
consultation with such parties as Borrower deems appropriate, Borrower
represents that it has prepared and approved budgets for the Homes which
identify on a line item basis all costs to be incurred in connection with the
construction of the Homes and all applicable costs. The budgets will at all
times reflect Borrower's best, true, accurate and complete estimate of the
costs shown therein and of the costs estimated to be necessary to complete
the construction of the Homes in accordance with the Plans and Specifications.

<PAGE>

Section 6.10. CONSTRUCTION START AND COMPLETION.

(a) Borrower shall diligently proceed with construction and
completion of the Homes in a good and workmanlike manner in accordance with
the Plans and Specifications and its construction progress schedules,
provided however that in the event construction of the Homes is subject to
delays caused by any Force Majeure Event and the delay cannot be made up
within the construction progress schedule, the Borrower shall provide to the
Lender written notice of such delay, and if such delay will not exceed one
hundred twenty (120) days in the aggregate or is otherwise reasonable in
length, giving consideration to Force Majeure Events, the Borrower shall not
be deemed in default of its obligations assumed pursuant to this Loan
Agreement solely by reason of such delay.

(b) The Borrower shall cause the Homes at all times to materially
conform to the Laws and Regulations and shall accomplish completion of the
Homes in accordance with its construction progress schedules, subject to the
delays described in the preceding SUBPARAGRAPH (a).

(c) Borrower shall cooperate at all times with Lender in bringing
about the timely completion of each element of the construction of the Homes,
and Borrower shall resolve all disputes arising during the work of
construction in a manner which shall allow work to proceed expeditiously.

Section 6.11. CONTRACTORS AND CONTRACTS. Upon demand by Lender, the
Borrower shall furnish to Lender, from time to time, correct lists of all
contractors and subcontractors employed in connection with the Borrowing Base
Collateral. Each such list shall show the name, address and telephone number
of each such contractor or subcontractor, a general statement of the nature
of the work to be done, the labor and materials to be supplied, the names of
materialmen, if known, and the approximate dollar value of such labor, work
and materials with respect to each. Upon an Event of Default, Lender shall
have the right, and at any time the Inspector shall have the right (in both
cases without either the obligation or the duty), to contact directly each
contractor, subcontractor and materialman to verify the facts disclosed by
said list or for any other purpose.

Section 6.12. EVIDENCE OF OWNERSHIP OF MATERIALS. If requested by
Lender, Borrower shall promptly deliver to Lender any bills of sale,
statements, receipts, contracts or agreements under which Borrower claims
title to any materials, fixtures or articles incorporated into the Borrowing
Base Collateral.

Section 6.13. CHANGES TO PLANS AND SPECIFICATIONS AND BUDGET.

(a) In the event that (i) the Borrower makes a Change to the Plans
and Specifications for any Home which will increase the cost to construct
such the Home, and (ii) the amount of the increased costs, less an amount
equal to the increase in the sales price for the Home, is equal to or in
excess of Five Thousand Dollars ($5,000), then the Borrower shall obtain the
prior written approval of Lender for such Change, provided that the foregoing
shall not apply to upgrades and options. Borrower agrees to provide Lender
with copies of all additional documents that Lender may

<PAGE>

require in order to evaluate a request for approval of a Change of a type
described in this SUBPARAGRAPH (a).

(b) Lender may take a reasonable time to evaluate any requests for
approval of a Change submitted pursuant to SUBPARAGRAPH (a), 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, and agrees that so long as any delays caused by Lender are not
unreasonable in duration, they shall not affect Borrower's obligation to
complete construction of the Homes in a timely manner.

(c) The Borrower shall also provide written notice to Lender of any
other changes to the Plans and Specifications (excluding changes to the Plans
and Specifications for any Home which are made at the request of the
purchaser of such Home) and of all changes to the budgets for the base plans
for the Homes (except that notice of changes to the budget for any Home which
are made at the request of the purchaser of such Home shall be given to
Lender in the WIP Reports).

(d) Borrower shall obtain from the appropriate persons or entities
approvals of any alterations in the Map, the Plans and Specifications or any
work, materials or contracts that are required by any of the Laws and
Regulations.

Section 6.14. LENDER INSPECTIONS, APPRAISAL AND INFORMATION. During
normal business hours, the Borrower shall arrange for the Lender, the
Inspector or any other authorized representative of Lender, at the expense of
Borrower, to visit, inspect or appraise the Borrowing Base Collateral, the
materials to be used thereon or therein, contracts, records, plans,
specifications and shop drawings relating thereto, whether kept at Borrower's
offices or at the construction sites or elsewhere, and the books, records,
accounts and other financial and accounting records of Borrower wherever
kept, and to make copies and take extracts thereof and therefrom as often as
may be requested at Borrower's cost and expense. Borrower will cooperate with
Lender to enable Lender and Inspector to conduct such visits, inspections and
appraisals. The cost of the Inspector and of such inspections shall be borne
by Borrower and shall be paid within thirty (30) days of Borrower's receipt
of any invoice with respect thereto.

Section 6.15. CORRECTION OF DEFECTS. If Lender in its reasonable
judgment determines that any portion of the Borrowing Base Collateral fails
to conform to the Map, any Laws and Regulations, the Plans and Specifications
or sound building practices, or that such nonconforming work and any other
work which is dependent upon or directly related to the work requiring
correction otherwise departs from any of the requirements of this Loan
Agreement, Lender may require the work on that portion of the Borrowing Base
Collateral to be stopped and withhold disbursements for that portion of the
Borrowing Base Collateral until the matter is corrected. If this occurs,
Borrower shall promptly correct the work to Lender's satisfaction, and
pending completion of such corrective work shall not allow any other work
which is dependent upon or directly related to the work requiring correction
to proceed. No such action by Lender shall affect the obligation of the
Borrower to complete each

<PAGE>

element of the Homes within the times required by this Loan Agreement. The
advance of any Loan proceeds shall not constitute a waiver of Lender's right
to require compliance with this covenant.

Section 6.16. PROTECTION AGAINST LIEN CLAIMS.

(a) Borrower shall pay and discharge, or cause to be paid and
discharged, promptly and fully all claims for labor done and materials and
services furnished in connection with the Borrowing Base Collateral, and take
or cause to be taken all reasonable steps to forestall the assertion of
claims of lien against the Borrowing Base Collateral or any part thereof.

(b) Borrower shall obtain a lien waiver with respect to each payment
by or to the Borrower and each of the various subcontractors and materialmen
(and the major subcontractors and submaterialmen under them), and Lender, at
any time, at its option, may require that Borrower make any payments for
which disbursements are made hereunder by joint check made payable to the
Borrower and the subcontractor or sub-subcontractor for whose account such
payment is to be made, as joint payees.

(c) Nothing herein contained shall require Borrower to pay any
claims for labor, materials, or services which Borrower in good faith
disputes and which Borrower, at its own expense, currently and diligently
contest; provided that Borrower shall, for each such case where a notice of
intent to file a lien in excess of Five Thousand Dollars ($5,000), has been
filed, within thirty (30) days after the Borrower's actual receipt of notice
of filing of any such claim of lien, (i) file or cause to be filed with the
court in the county in which the applicable real estate is located a surety
bond sufficient to release said claim of lien, or (ii) make or cause to be
made a deposit of cash in the amount of 150% of the claim of lien with
Lender, or (iii) deliver or cause to be delivered to Lender a specific
endorsement to the Title Policy which insures Lender against any loss by
reason of such claim of lien, or (iv) deliver or cause to be delivered to
Lender such other assurance as may be acceptable to Lender.

Section 6.17. CONVEYANCE, LEASE OR ENCUMBRANCE. Subject to the rights
granted pursuant to SECTION 5.3(b), Borrower shall not sell, agree to sell,
convey, transfer, dispose of or further encumber the Borrowing Base
Collateral or any portion thereof or interest therein (other than the sales
of the Lots and Units), or enter into a lease covering all or any portion
thereof or interest therein, either voluntarily, involuntarily or otherwise,
or enter into an agreement to do so, without the prior written consent of
Lender being first had and obtained. All easements, declarations, convenants,
conditions, restrictions and dedications affecting the Borrowing Base
Collateral shall be submitted to Lender for its approval, accompanied by a
drawing or survey showing the precise location thereof, and such approval
shall be obtained prior to the execution of granting of any thereof by
Borrower. Borrower shall not execute any lease of any portion of the
Borrowing Base Collateral without the prior written consent of Lender.
Borrower shall promptly notify Lender of any event of default or cancellation
under any lease now or hereafter in effect.

<PAGE>

Section 6.18. SECURITY INSTRUMENTS. From time to time, upon the request
of Lender, Borrower shall execute and deliver to Lender a security instrument
or instruments naming Lender as secured party covering all contracts of any
kind entered into in connection with the Borrowing Base Collateral and all
other property of any kind whatsoever owned by the Borrower and used, or to
be used, in the use and enjoyment of the Borrowing Base Collateral and
concerning which Lender may have any doubt as to its being subject to the
lien of the Security Documents.

Section 6.19. FURTHER ASSURANCES; COOPERATION. Borrower will at any
time and from time to time upon request of Lender take or cause to be taken
any action, execute, acknowledge, deliver or record any further documents,
opinions, mortgages, security agreements, financing statements or other
instruments or obtain such additional insurance as Lender in its discretion
deems necessary or appropriate to carry out the purposes of this Loan
Agreement and to preserve, protect and perfect the security interest intended
to be created and preserved in the Borrowing Base Collateral.

Section 6.20. SIGNS. Upon the request of Lender, Borrower shall erect
and place on or in the vicinity of the Borrowing Base Collateral a sign or
signs indicating that Lender has provided construction financing for the
Borrowing Base Collateral; provided that any such sign shall comply with any
applicable local ordinances or regulations and with any reasonable
requirements of Borrower. Said sign(s) shall remain the property of Lender
and shall be required to be removed only after the construction has been
completed.

Section 6.21. SALES AGREEMENTS. Each Lot and Unit shall be sold under a
Sales Agreement. Each Sales Agreement must require full payment in cash to
Borrower at closing. No Lot or Unit may be leased, sold or conveyed under any
lease, conditional sales contract or other arrangement where Borrower retains
a deferred portion of the purchase price or any residual or contingent
interest in the Lot or Unit, including any purchase money security interest,
without the express prior written consent of Lender in each instance.

Section 6.22. SALES AND CLOSINGS. Borrower may enter into Sales
Agreements in the ordinary course of business with bona fide third party
buyers and without Lender's prior written consent if:

(a) a Sales Agreement is executed with the buyer which conforms to
the requirements of this Loan Agreement; and

(b) Borrower, acting in good faith following exercise of due
diligence, has determined that the buyer is financially capable of performing
all of its obligations under the Sales Agreement.

Upon the request of Lender, the Borrower shall furnish to the Lender
copies of all Sales Agreements immediately after execution of such Sales
Agreement by all Persons who are parties thereto. Lender in the exercise of
its sole discretion may consider any sale to be unsatisfactory if the sale
fails to meet any of the requirements of this Loan Agreement. If this
happens, or if any Event of Default has occurred and is continuing, Lender
may make written demand on Borrower to submit

<PAGE>

future Sales Agreements for Lender's approval prior to execution, together in
each instance with accompanying financial statements or other information
that Borrower may have pertaining to the prospective buyer. Borrower shall
comply immediately with any such demand by Lender. In the event of such
demand, Lender shall review each Sales Agreement submitted to it immediately
upon receipt, and shall notify Borrower no later than four (4) Business Days
after receipt as to whether such Sales Agreement has been approved. The
Lender's failure to deliver such notice to Borrower by the end of the fourth
(4th) Business Day shall constitute approval by the Lender of the Sales
Agreement.

The Borrower will ensure that all sales of Lots and Units will be closed
by independent third-party closing agents acceptable to the Lender in its
sole and absolute discretion, which such agents shall agree to remit the
Receipts, on a daily basis, to the Depository Account.

Section 6.23. SALES OPERATIONS AND SELLER'S OBLIGATIONS. Borrower shall
at all times maintain adequate marketing capability for the sale of the
Homes, and shall perform all obligations required to be performed by it under
each Sales Agreement.

Section 6.24. MODEL UNITS. So long as any proceeds of the Loan remain
outstanding, the Borrower shall construct and if necessary, modify, Homes
within the Approved Projects in such a manner as to accomodate their use as
model homes for the selling and marketing of the applicable Approved
Project, and at least one of such model homes shall include therein a sales
office, provided however that in the event the Borrower determines that a
model home is no longer necessary for an Approved Project due to the fact
that the Approved Project is nearing completion or otherwise, the Borrower
may request that the Lender waive the requirements contained in this SECTION
6.24, which waiver the Lender shall not unreasonably withhold. The Borrower
shall insure that sufficient adjacent parking for customers exists within the
vicinity of the model homes. The model homes may be Model Units, or may be
model homes which Borrower leases from another entity and in the case of such
lease of a model home or the furnishings therein, the Borrower shall (i)
notify the Lender of such fact and any other pertinent facts related to such
leased model homes or furnishings, (ii) provide to Lender a copy of such
lease, the form and substance of which shall be acceptable to Lender in its
reasonable discretion, which such assignments shall, among other matters,
provide to Lender the opportunity to cure any default by Borrower pursuant to
the terms of such lease. So long as any Unit remains a Model Unit, such Model
Unit shall be used solely as a model display (including landscaping and
walkways), as a sales office and for parking, all in connection with the
marketing and sale of Homes. Borrower shall maintain the interiors and
exteriors of the Model Units in good condition, repair and order, except for
ordinary wear and tear.

Section 6.25.

<PAGE>
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES

Section 7.1. EVENTS OF DEFAULT. The occurrence and continuance of any of
the following events shall constitute an "Event of Default" hereunder:

(a) Borrower shall fail to pay any installment of principal on
the Loan when due, whether at stated maturity, as a result of a mandatory
prepayment requirement, upon acceleration or otherwise, or pay when due any
interest, fees or other amounts payable hereunder or under the other Loan
Documents; or

(b) any representation or warranty made by any of the entities
constituting the Borrower herein or in any other Loan Document shall at any
time be incorrect in any material respect; or

(c) Borrower shall fail to perform or observe any term, covenant
or agreement contained in this Loan Agreement or any other Loan Document
(other than failure described elsewhere in this SECTION 7.1), and such
failure shall remain unremedied for thirty (30) days after notice thereof
from Lender to Borrower, provided that in the event Borrower commences and
is diligently pursuing to completion action to cure the failure, such
thirty (30) day period may be extended for such period of time as is
necessary to cure the failure, but in no event longer than one hundred
twenty (120) days from the date of the Lender's notice; provided further
however, that in the event (i) Lender determines that the failure to
immediately declare an Event of Default could materially and adversely harm
the rights of the Lender hereunder or under any other Loan Document, or
the rights of the Lender with respect to the Collateral, or (ii) Lender
reasonably determines that the failure to perform or observe the terms of
this Loan Agreement or any other Loan Document cannot be remedied with the
passage of one hundred twenty (120) days, then Lender may declare an
immediate Event of Default in its notice given pursuant to this
SECTION 7.1(c); or

(d) Any of the entities constituting the Borrower shall assert
the invalidity or unenforceability of any Loan Document or any Loan
Document shall be adjudicated to be invalid or unenforceable in any
material respect; or

(e) Any of the entities constituting the Borrower shall fail to
pay any Debt, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; or any other default under any agreement or instrument relating to
any such Debt, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if such failure to pay, default or event could result in the acceleration,
or permits the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or is required to be prepaid
(other than by a regularly scheduled required

49
<PAGE>

prepayment) prior to the stated maturity thereof; provided however that
none of the foregoing events or inactions shall constitute an Event of
Default unless such event or inaction is likely to result in a Material
Adverse Change; or

(f) Any of the entities constituting the Borrower shall
generally not pay its Debts as such Debts become due, or shall admit in
writing its inability to pay its Debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any of the entities constituting the Borrower
seeking to adjudicate such party as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of such party's Debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for such party or for any
substantial part of such party's property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of thirty (30)
days (whether or not consecutive), or any of the actions sought in such
proceeding (including, without, limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur, or Borrower shall take any action to authorize any of the
actions set forth above; or

(g) any event of default (however described) under any other
Loan Document or any Related Loan Document shall occur and not be cured
within the applicable grace period; or

(h) any Security Document, for any reason, ceases to create a
valid and perfected lien on or in the Collateral relating thereto as
described in the Loan Documents, or any of the entities constituting the
Borrower shall so state in writing; or

(i) the dissolution or winding up of any of the entities
constituting the Borrower; or

(j) any judgment or order for the payment of money in excess of
One Hundred Thousand Dollars ($1000,000), singularly or in the aggregate,
shall be rendered against Borrower, and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment, or (ii) there
shall be a period of fifteen (15) days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or

(k) a Material Adverse Change shall occur; or

(l) the Borrower shall fail to comply with any of the financial
covenants set forth in SECTION 5.4; or

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<PAGE>

(m) the assignment by the Borrower of the rents or the income of
the Borrowing Base Collateral, or any part thereof or of any other revenues
or sales proceeds relating to the Borrowing Base Collateral (other than to
Lender); or

(n) there shall occur substantial deviations in the Homes from
the Plans and Specifications without the prior approval of Lender, or the
existence of materially adverse defective workmanship or materials
incorporated into the Homes which deviations or defects are not corrected
within thirty (30) days after written notice thereof to Borrower such
deviations and defects to be conclusively determined by Lender after
consultation with the Inspector; or

(o) the Homes are not, in Lender's judgment, being carried out
in accordance with the construction progress schedule (subject to delays
not to exceed ninety (90) days or to delays of which Lender has been
properly notified in accordance with the provisions of SECTION 6.10);

(p) a court of competent jurisdiction enters an order enjoining
construction of the Homes, or such a court or an authorized governmental
agency orders that sales of the Lots and/or Units be suspended or halted,
or any required approval, license or permit is withdrawn or suspended, and
the order, withdrawal or suspension remains in effect for a period of
fifteen (15) days; provided however that none of the foregoing events shall
constitute an Event of Default unless such event or inaction is likely to
result in a Material Adverse Change; or

(q) there occurs any attachment, levy, execution or other
judicial seizure of any portion of the Collateral, or any substantial
portion of the other assets of any of the entities constituting the
Borrower, which is not released, expunged, discharged or dismissed prior to
the earlier of (i) twenty (20) days after such attachment, levy execution
or seizure, or (ii) the sale of the assets affected thereby; or

(r) any surety obligated for any Borrowing Base Collateral is
called upon to perform its obligations, if such event could result in a
Material Adverse Change, and/or any person demands funds pursuant to any
"set-aside" letter or "cash in lieu of bond agreement" issued by Lender
with respect to the Loan; or

(s) there occurs, in Lender's reasonable judgment, a materially
detrimental change in the operations or value of the Borrowing Base
Collateral, including without limitation, a reduction in the sales prices
from the projected offering prices for the Homes to such an extent that
existing sales to date or continued sales at such price reductions,
together with actual and anticipated disbursements of Loan funds, cause or
will cause the Borrower to have insufficient funds to make required
payments with respect to the Loan.

The Event of Default specified in SUBSECTION (g) above is for purpose of
cross default (and cross-collateralization pursuant to the Mortgage) only;
nothing contained herein shall be construed

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<PAGE>

as imposing as obligation upon Lender, or as evidencing Lender's intention, to
make proceeds of the Related Loan available to Borrower for any other project.
In addition, Borrower acknowledges and agrees that any Related Loan Documents
shall provide or be amended to provide that a default under each such Related
Loan Document shall be a default hereunder, and that a default under the Loan
Documents shall be a default under Related Loan Documents.

Borrower acknowledges and agrees that all material non-monetary defaults
are conclusively deemed to be and are defaults which impair the security of the
Mortgage, and that Lender shall be entitled to exercise any appropriate remedy,
including without limitation, foreclosure of the Mortgage upon the occurrence of
any such material non-monetary default.

Section 7.2. ACCELERATION.

(a) Upon the occurrence of an Event of Default specified in SECTION
7.1(f), the Lender's commitment to fund the Loan shall terminate and the
indebtedness evidenced by the Note shall and any other amounts payable under
this Loan Agreement and the other Loan Documents shall immediately and
automatically become due and payable, whereupon the Loan, all such interest and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower.

(b) Upon the occurrence of any other Event of Default, Lender may, at its
option, by notice to Borrower, terminate its commitment to fund the Loan and
declare the Loan, all interest thereon, and all other amounts payable under this
Loan Agreement and the other Loan Documents to be due and payable, whereupon the
Loan, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower.

Section 7.3. OTHER REMEDIES. Upon the occurrence of any Event of
Default, Lender may, in addition to the remedy of acceleration specified in
SECTION 7.2, and in addition to any other remedies which Lender may have
hereunder or under the Loan Documents or by law or in equity, at its option, but
without prior notice or demand, take any or all of the following actions:

(a) Immediately terminate any further advance of Loan funds
hereunder, and from time to time apply all or any portion of the
undisbursed Loan funds to payment of accrued interest under the Note and/or
upon any other obligations of Borrower hereunder or under the Loan
Documents. Lender may also withhold any one or more disbursements after an
event or condition occurs that with notice or the passage of time could
become an Event of Default, unless Borrower cures or corrects the event or
condition to the reasonable satisfaction of Lender prior to the occurrence
of an Event of Default.

(b) Make any disbursements after the happening of any one or
more Events of Default, without thereby waiving its right to demand payment
of the Note and all other sums owing to Lender with respect to the Loan
Documents or any other rights or remedies

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<PAGE>

described herein, and without liability to make any other or further
disbursements, notwithstanding Lender's previous exercise of any such
rights and remedies.

(c) Enter upon the Borrowing Base Collateral and take possession
of the Borrowing Base Collateral, remove Borrower and all employees,
contractors and agents of Borrower therefrom, and complete or attempt to
complete construction of the Homes in accordance with the Plans and
Specifications with such changes, additions or corrections therein as
Lender may from time to time and in its judgment deem appropriate, and
market, sell or lease the Borrowing Base Collateral, at the risk and
expense of Borrower. Lender shall have the rights at any time to
discontinue any work commenced by it in respect to the Homes or to change
any course of action undertaken by it and not be bound by any limitations
or requirements of time whether set forth herein or otherwise. Lender
shall have the right and power (but shall not be obligated) to assume any
construction contract made by or on behalf of Borrower in any way relating
to the Borrowing Base Collateral and to take over and use all or any part
of the labor, materials, supplies and equipment contracted for, by or on
behalf of Borrower whether or not previously incorporated into the
Borrowing Base Collateral, in the discretion of Lender. Lender may also
modify or terminate any contractual arrangements, subject to its right at
any time to discontinue any work without liability. If Lender chooses to
complete the construction of the Homes, Lender shall not assume any
liability to Borrower or any other person for completing them, or for the
manner or quality of their construction, and Borrower expressly waives any
such liability. In connection with any work of construction undertaken by
Lender pursuant to the provisions of this SUBSECTION (c), Lender may
do any of the following:

(1) engage builders, contractors, subcontractors, architects,
engineers, suppliers, inspectors, consultants and others for the
purpose of furnishing labor, materials, equipment and other services
in connection with the work of construction, for the protection or
clearance of title to the Borrowing Base Collateral, or for the
protection of Lender's interest with respect thereto;

(2) pay, settle or compromise all bills or claims which may
become liens against the Borrowing Base Collateral or which have been
or may be incurred in any manner in connection with completing
construction of the Homes or for the protection or clearance of title
to the Borrowing Base Collateral, or for the protection of Lender's
interests with respect thereto;

(3) prosecute and defend all actions and proceedings in
connection with the Borrowing Base Collateral;

(4) execute, acknowledge and deliver all other instruments and
documents in the name of Borrower that are necessary or desirable, to
exercise Borrower's rights under contracts concerning the Borrowing
Base Collateral; and

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<PAGE>

(5) take such other action, including the employment of security
personnel to protect the Borrowing Base Collateral, or refrain from
taking action under this Loan Agreement as Lender may in its
discretion determine from time to time.

Until such time, if ever, that Lender acquires title to the Borrowing Base
Collateral, Borrower shall be liable to Lender for sums paid or incurred
for completing the construction of the Homes, whether the same shall be
paid or incurred pursuant to the provisions of this Section or otherwise,
and all payments made or liabilities incurred by Lender hereunder of any
kind whatsoever shall be paid by Borrower to Lender upon demand with
interest at the rate set forth in the Note, and all of the foregoing shall
be deemed and shall constitute disbursements under this Loan Agreement and
be secured by the Loan Documents. For the purpose of carrying out the
provisions and excercising the rights, powers and privileges granted by
this SUBSECTION (c), Borrower hereby unconditionally and irrevocably
constitutes and appoints Lender its true and lawful attorney-in-fact to
enter into such contracts, perform such acts and incur such liabilities as
are referred to in said Section in the name and on behalf of Borrower.
This Power of attorney is coupled with an interest.

(d) Where substantial deviations from the Plans and Specifications
appear which have not been approved as set forth herein, or where defective
or unworkmanlike labor or materials are being used in the construction of
the Homes, or upon receipt of knowledge of encroachments to which there has
been no consent, or if Lender determines that the Homes are not being
constructed in accordance with any governmental requirements or any
covenants, conditions, restrictions, agreements or other matters, whether
or not of record, affecting the condition of title to the Borrowing Base
Collateral, Lender shall have the right to immediately order stoppage of
the construction with respect to the affected portion of the Borrowing Base
Collateral and demand that such conditions be corrected. After issuance of
such an order in writing, no further work shall be done on that portion of
the Homes where there is a substantial deviation from the Plans and
Specifications which has not been approved as set forth herein, where there
is defective or unworkmanlike labor or materials, or which does not comply
with governmental requirements or matters affecting title to the Borrowing
Base Collateral, without the prior written consent of Lender, which consent
shall not be unreasonably withheld, unless and until said condition has
been fully corrected.

(e) Foreclose on any security for the Loan without waiving its rights
to proceed against any other security or other entities or individuals
directly or indirectly responsible for repayment of the Loan, or waive any
and all security for the Loan as Lender may in its discretion so determine,
and pursue any such other remedy or remedies as Lender may so determine to
be in its best interest.

(f) If Lender spends its funds in exercising or enforcing any of its
rights or remedies under the Loan Documents, the amount of funds spent
shall be payable to Lender upon demand, together with interest at the rate
applicable to the principal balance of the Note,

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<PAGE>

from the date such funds were spent until repaid. Such amounts shall be
deemed secured by the Mortgage and the other Loan Documents.

Section 7.4. GENERAL PROVISIONS APPLICABLE TO REMEDIES.

(a) Whether or not Lender elects to employ any or all of the remedies
available to it in connection with an Event of Default, Lender shall not be
liable for (i) the construction of or failure to construct, complete or protect
the Homes, (ii) the payment of any expense incurred in connection with the
exercise of any remedy available to Lender or the construction or completion of
the Homes, or (iii) the performance or non-performance of any other obligation
of Borrower.

(b) All remedies of Lender provided for herein and in any other Loan
Document are cumulative and shall be in addition to all other rights and
remedies provided by law or in equity. The exercise of any right or remedy by
Lender hereunder shall not in any way constitute a cure or waiver of default
hereunder, under any other Loan Documents or invalidate any act done pursuant to
any notice of default, or prejudice Lender in the exercise of any of its rights
hereunder, under any other Loan Documents unless, in the exercise of its rights,
Lender realizes amounts owed to it under such Loan Documents. If Lender
exercises any of the rights or remedies provided in this ARTICLE VII, that
exercise shall not make Lender, or cause Lender to be deemed to be, a partner or
joint venturer of Borrower. No disbursement of Loan funds by Lender shall cure
any default of Borrower, unless Lender agrees otherwise in writing in each
instance.

(c) Upon the occurrence of any Event of Default, all of Borrower's
obligations under the Loan Documents may become immediately due and payable
without notice of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor, or other notices or demands of any kind or character,
at Lender's option, exercisable in its sole discretion. If such acceleration
occurs, Lender may apply the undisbursed Loan funds to the obligations of
Borrower under the Loan Documents, in any order and proportions that Lender in
its sole discretion may choose.

Section 7.5. AUTHORIZATION TO APPLY ASSETS TO PAYMENT OF LOAN. The
Borrower hereby authorizes the Lender, following the occurrence of an Event of
Default, without notice or demand, to apply any property, balances, credits,
accounts or moneys of the Borrower or any Affiliate of the Borrower then in the
possession of Lender, or standing to the credit of the Borrower or any Affiliate
of the Borrower to the payment of the Loan.

55
<PAGE>

ARTICLE VIII
MISCELLANEOUS

Section 8.1. SUCCESSORS AND ASSIGNS; NO ASSIGNMENT BY BORROWER. The
provisions of this Loan Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that Borrower may not assign or transfer any of its rights or
obligations under this Loan Agreement or any of the other Loan Documents
without the prior written consent of Lender, which consent may be granted or
withheld in Lender's sole discretion.

Section 8.2. Notice. All notices, request and demands to be made
hereunder to the parties hereto shall be in writing (at the addresses set
forth below) and shall be given by any of the following means:

(a) personal delivery;

(b) reputable overnight courier service;

(c) electronic communications, whether by telex, telegram or
telecopying (if confirmed in writing sent by registered or certified,
first class mail, return receipt requested);

(d) registered or certified, first class mail, return receipt
requested.

Any notice, demand or request sent pursuant to SUBSECTION (a) OR (c) hereof
shall be deemed received upon such personal delivery or upon dispatch by
electronic means, and if sent pursuant to SUBSECTION (d) shall be deemed
received three (3) days following deposit in the mail, and if sent pursuant
to SUBSECTION (b) shall be deemed received on the next Business Day following
delivery to the courier service.

The addresses for notices are as follows:

To Lender: Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, Minnesota 55437
Attention: Managing Director
Construction Finance
Telephone No.: (612) 832-7435
Telecopier No.: (612) 832-7254

56
<PAGE>

With
a copy to: Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, Minnesota 55437
Attention: General Counsel
Telephone No.: (612) 832-7415
Telecopier No.: (612) 832-7190

To Borrower: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: Edward F. Havlik, President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

With
copies to: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: William J. Crock, Jr., Vice-President
David Feltman, In-House Counsel
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

Such addresses may be changed by notice to the other parties given in the
same manner as provided above.

Section 8.3. CHANGES, WAIVERS, DISCHARGE AND MODIFICATIONS IN WRITING.
No provision of this Loan Agreement or any of the other Loan Documents may be
changed, waived, discharged or modified except by an instrument in writing
signed by the Lender and the party against whom enforcement of the change,
waiver, discharge or modification is sought.

Section 8.4. NO WAIVER; REMEDIES CUMULATIVE. No disbursement of
proceeds of the Loan shall constitute a waiver of any conditions to Lender's
obligation to make further disbursements nor, in the event Borrower is unable
to satisfy any such conditions, shall any such waiver have the effect of
precluding Lender from thereafter declaring such inability to constitute an
Event of Default (however described) under this Loan Agreement or any other
Loan Document. No failure or delay on the part of Lender in the exercise of
any power, right or privilege hereunder or under this Loan Agreement or any
other Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any Event of Default (however described) or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof, or
of any other right, power or privilege. Except as specifically provided
herein, all rights

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<PAGE>

and remedies existing under this Loan Agreement or any other Loan Document
are cumulative to and not exclusive of any rights or remedies otherwise
available.

Section 8.5. COSTS, EXPENSES AND TAXES. Borrower agrees to pay the
costs, and all expenses incurred by Lender in connection with the
preparation, execution , delivery, administration, modification and amendment
of this Loan Agreement, the other Loan Documents and any other documents to
be delivered hereunder, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for Lender with respect thereto and
with respect to advising Lender as to its rights and responsibilities under
this Loan Agreement and the other Loan Documents.

Borrower further agrees to pay all costs and expenses of Lender
(including, without limitation, reasonable counsel fees and expenses, court
costs and all other litigation expenses, including, but not limited to,
reasonable expert witness fees, document copying expenses, exhibit
preparation, courier expenses, postage expenses and communication expense) in
connection with the enforcement of this Loan Agreement, the other Loan
Documents and any other documents delivered hereunder, including, without
limitation, costs and expenses incurred in connection with any bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar
proceeding, or any refinancing or restructuring in the nature of a "workout"
of the Loan Documents and any other documents delivered by Borrower related
thereto. In addition, Borrower shall pay any and all stamp and other taxes
payable or determined to be payable in connection with the execution and
delivery of this Loan Agreement, the other Loan Documents and the other
documents to be delivered hereunder, and agrees to hold Lender harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.

Whenever Borrower is obligated to pay or reimburse Lender for any
attorney's fees, those fees shall include the allocated costs for services of
Lender's in-house counsel.

Payments from the Borrower of amounts due pursuant to this SECTION 8.5
shall be due ten (10) days after it has received from the Lender written
notice of the nature of the item for which payment is required and the amount
due, other than amounts due pursuant to the last sentence of the previous
paragraph which amounts shall be due on demand.

Section 8.6. DISCLAIMER BY LENDER; NO JOINT VENTURE. Borrower
acknowledges, understands and agrees as follows:

(a) the relationship between Borrower and Lender is, and shall
at all times remain, solely that of borrower and lender, and Lender
neither undertakes nor assumes any responsibility for or duty to Borrower
to select, review, inspect, supervise, pass judgment upon or inform
Borrower of the quality, adequacy or suitability of any matter or thing
submitted to Lender for its approval;

(b) Lender owes no duty of care to protect Borrower or any
other Person against negligent, faulty, inadequate or defective building
or construction; and

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<PAGE>

(c) Borrower is not and shall not be an agent of Lender for
any purpose and Lender is not a joint venture partner with Borrower in any
manner whatsoever.

Any approvals granted by Lender for any matters covered under this Loan
Agreement shall be narrowly construed to cover only the parties and facts
identified in any such approval.

Section 8.7. INDEMNIFICATION. Borrower agrees to protect, indemnify,
defend and hold harmless each Indemnified Party from and against any and all
claims (including, without limitation, Hazardous Materials Claims), damages,
losses, liabilities, obligations, penalties, actions, judgments, suits, costs,
disbursements and expenses (including, without limitation, reasonable fees
and expenses of counsel and consultants and allocated costs of internal
counsel) that may be incurred by or asserted against any Indemnified Party,
in each case arising out of or in connection with or related to any of the
following:

(a) the Loan, this Loan Agreement or any other Loan Document,

(b) the use of funds advanced under the Loan Documents,

(c) the failure of Borrower or any other party (other than
Lender) to comply fully with any and all laws applicable to it (including,
without limitation, Hazardous Materials Laws), or

(d) any use, handling, production, transportation, disposal or
storage of any Hazardous Materials in, under or on any of the Borrowing
Base Collateral or any part thereof by any Person, including, without
limitation,

(1) all damages directly or indirectly arising out of (A)
the use, generation, storage, discharge or disposal of Hazardous
Materials by any owner or operator of said property or any Person or
or about said property, or (B) any residual contamination affecting
any natural resource or the environment, and

(2) the costs of any required or necessary repair,
cleanup, or detoxification of said property and the preparation of
any closure or other required plans,

whether or not an Indemnified Party is a party thereto and whether or not the
transactions contemplated hereby are consummated, except to the extent such
claims, damages, losses, liabilities, obligations, penalties, actions,
judgments, suits, costs, obligations, penalties, disbursements and expenses
are found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the negligence of willful misconduct of
the Indemnified Party.

Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this
SECTION 8.7 shall (i) survive the termination of this Loan Agreement and the
other Loan Documents and the payment in full of the Loan and (ii)

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<PAGE>

be in addition to the indemnification obligations contained in the
Environmental Indemnity; provided however that with respect to the
indemnification contained in this SECTION 8.7 relating to Hazardous Materials
Claims, in the event the provisions of this SECTION 8.7 conflict with the
provisions of the Environmental Indemnity, the provisions of the
Environmental Indemnity shall control.

Section 8.8. CONSULTANTS. Borrower shall pay any and all valid claims
of any consultants, advisors, brokers or agents whom it has retained or with
whom it has initiated contact with respect to the Loan who claims a right to
any fees in connection with the Loan, and shall indemnify, defend and hold
Lender harmless from such claims, whether or not they are valid.

Section 8.9. GOVERNING LAW. This Loan Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois.

Section 8.10. TITLES AND HEADINGS. The titles and headings of sections
of this Loan Agreement are intended for convenience only and shall not in any
way affect the meaning or construction of any provisions of this Loan
Agreement.

Section 8.11. COUNTERPARTS. This Loan Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same agreement with the same effect as if
all parties had signed the same signature page.

Section 8.12. PARTICIPATIONS. Lender may at any time sell, assign, grant
or transfer to a Participant participations in all or part of the obligations
of Borrower under the Loan Documents. Lender agrees that, in the event that
it sells, assigns, grants or transfers to any Person all or a portion of its
interest in the Loan, (i) Lender will retain such rights as allow it to
remain, and will in fact remain, the primary contact party with Borrower with
regard to administrative and servicing of the Loan, unless the Borrower
otherwise agrees and (ii) Lender will obtain from such Participant its
agreement to keep confidential information Participant receives relating to
Borrower, the form and substance of which such agreement of Participant need
only be satisfactory to Lender in the exercise of its reasonable discretion.
Without limitation of the exclusive right of Lender to enforce such
obligations, Borrower agrees that each disposition will give rise to a
debtor-creditor relationship of Borrower to the Participant, and Borrower
authorizes each Participant, upon the occurrence of an Event of Default, to
proceed directly by right of setoff, bankers' lien, or otherwise, against any
assets of Borrower which may be in the hands of such Participant; provided
however that the preceding clauses of this sentence shall not be construed to
give to any Participant any rights which are in addition to the rights such
Participant would derive from the participation arrangement between Lender
and Participant. Borrower authorizes Lender to disclose to any prospective
Participant any and all information in Lender's possession concerning
Borrower, this Loan Agreement and the other Loan documents or the Collateral.
The Lender shall obtain from every Participant its covenant to comply with
the terms of SECTION 8.13 hereof.

Section 8.13. CONFIDENTIALITY. Borrower and Lender shall mutually agree
on the contents of any press release, public announcement or other public
disclosure regarding this Loan Agreement and

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<PAGE>

the transaction contemplated hereunder to be made following the mutual
execution and delivery of this Loan Agreement, provided that Lender may
disclose the terms hereof and give copies of the Loan Documents to assignees
and Participants and to prospective assignees and Participants. If either
party fails to respond to the other party in writing with either an approval
or a disapproval within five (5) Business Days of a party's receipt of the
other party's request for consent or approval as expressly contemplated
pursuant to this SECTION 8.13, which request shall have been sent to the
other party's notice addressees in the manner set forth in SECTION 8.2, then
such consent or approval shall be deemed to have been given, provided that
such five (5) Business Day period shall not commence to run unless and until
the other party shall have received all informatioN, materials, documents and
other matters required to be submitted to it hereunder with respect to such
consent or approval and all other information, materials, documents and other
matters reasonably essential to its decision process.

Section 8.14. TIME IS OF THE ESSENCE. Time if of the essence of this
Loan Agreement.

Section 8.15. NO THIRD PARTIES BENEFITTED. This Loan Agreement is made
and entered into for the sole protection and legal benefit of Borrower,
Lender, Indemnified Parties and the Participants and their permitted
successors and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or claim
in connection with, this Loan Agreement or any of the other Loan Documents.
Lender shall not have any obligation to any Person not a party to this Loan
Agreement or the other Loan Documents.

Section 8.16. SEVERABILITY. The illegality or unenforceability of any
provision of its Loan Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Loan Agreement or any
instrument or agreement required hereunder.

Section 8.17. JURISDICTION. Any legal action or proceeding with respect
to this Loan Agreement or any of the other Loan Documents may be brought in
the courts of the State of Illinois or of the United States for the District
of Illinois, and by execution and delivery of this Loan Agreement, each of
Borrower and Lender consents, for itself and in respect of its property, to
the jurisdiction of those courts. Each of Borrower and Lender irrevocable
waives any objection, including any objection to the laying of venue or based
on the grounds of forum non conveniens which it may now or hereafter have to
the bringing of any action or proceeding in such jurisdiction in respect of
this Loan Agreement or any document related hereto. Service of any summons,
complaint or other process may be made upon Borrower and/or Lender by any
means permitted by Illinois law. Nothing in this SECTION 8.17 shall affect
the right of Lender to serve legal process in any other manner permitted by
law or limit the right of Lender to bring any action or proceeding against
Borrower or its property in the courts of any other jurisdiction.

Section 8.18. WAIVER OF JURY TRIAL. BORROWER AND LENDER WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OR ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS LOAN AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR

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<PAGE>

THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY PARTY AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. BORROWER AND LENDER AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS LOAN AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISIONS HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.

Section 8.19. INTERPRETATION. This Loan Agreement and the other Loan
Documents shall not be construed against Lender merely because of Lender's
involvement in the preparation of such documents and agreements.

Section 8.20. ENTIRE AGREEMENT. This Loan Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding among
Borrower and Lender and supersedes all prior or contemporaneous agreements
and understandings of such persons, verbal or written, relating to the
subject matter hereof and thereof except for any prior arrangements made with
respect to the payment of Borrower of (or any indemnification for) any fees,
costs or expenses payable to or incurred (or to be incurred) by or on behalf
of Lender.

Section 8.21. RELATED LOAN. The Borrower specifically acknowledges that
this Loan is cross defaulted and cross collateralized with the Related Loan
and the Related Loan Documents. Notwithstanding such fact, nothing contained
herein shall be construed as imposing an obligation upon Lender, or as
evidencing Lender's intention, to make proceeds of the Related Loan available
to Borrower for any other project. In addition, Borrower acknowledges and
agrees, upon the request of the Lender, to amend any existing Related Loan
Documents to specifically provide that a default under each such Related Loan
Document shall be a default hereunder, and that a default under the Loan
Documents shall be a default under Related Loan Documents.

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IN WITNESS WHEREOF, Lender and Borrower have caused this Loan Agreement
to be duly executed and delivered as of the date first above written.

LENDER:

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

By:
-------------------------------------
Printed Name:
---------------------------
Title:
-----------------------------------

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

By: /s/ William J. Crock, Jr.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Secretary
-----------------------------------

UNITED HOMES, INC.,
an Arizona corporation

By: /s/ William J. Crock, Jr.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Assistant Secretary
-----------------------------------

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UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By: /s/ William J. Crock, Jr.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Secretary
-----------------------------------

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

By: /s/ William J. Crock, Jr.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Assistant Secretary
-----------------------------------

<PAGE>

EXHIBIT A TO LOAN AGREEMENT
CONDITIONS TO OBLIGATION OF LENDER TO MAKE LOAN

The obligation of the Lender to make the Loan is conditioned upon the
Lender having received, in form and substance satisfactory to Lender, each
of the following:

1. The Loan Documents duly authorized and executed by Borrower.

2. Evidence that the Security Documents have been recorded and/or
filed in or with the appropriate county recorder of the counties in which
the Land is located and with the Secretary of the State of Illinois.

3. Evidence satisfactory to the Lender that the Title Company is
obligated to issue to the Lender the Title Policy, in the form of the
"proforma" title policies previously approved by Lender.

4. Such financial statements, budgets, reports, studies, data and
information concerning the Approved Projects set forth in EXHIBIT D as
Lender shall require.

5. A favorable opinion from counsel for Borrower with respect to
the following:

(a) United Homes and United Illinois are each duly organized,
validly existing and in good standing as corporations under the laws of
the State of Illinois. United Arizona is duly organized, validly existing
and in good standing as a corporation under the laws of the State of
Arizona. United Michigan is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Michigan. Each of
United Homes, United Arizona, United Illinois and United Michigan is each
duly qualified to do business and is in good standing in every
jurisdiction where its business or properties require such qualification
and has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted.

(b) Each of the entities comprising the Borrower has the power and
authority to execute and deliver, and perform its obligations under, the
Loan Documents.

(c) The execution, delivery and performance by Borrower of the
Loan Documents have been duly authorized by all necessary action and do
not and will not (i) contravene the charter documents of any of the
entities comprising the Borrower; (ii) contravene any law, rule or
regulation or, to such counsel's knowledge, any order, writ, judgment,
injunction or decree or any contractual restriction binding on or
affecting any of the entities comprising the Borrower; (iii) require any
approval or consent of any partner or any other Person other than
approvals or consents which have been previously obtained and disclosed
in writing to Lender; (iv) to such counsel's actual knowledge, result in
a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument

A-1
<PAGE>

to which any of the entities comprising the Borrower is a party or by
which any such entity or its properties may be bound or affected; or (v)
to such counsel's actual knowledge, result in, or require the creation or
imposition of, any lien of any nature (other than the liens contemplated
hereby) upon or with respect to any of the properties now owned or
hereafter acquired by any of the entities comprising the Borrower; and,
to such counsel's knowledge, none of such entities is in default under
any such law, rule, regulation, order, writ, judgment, injunction, decree
or contractual restriction or any such indenture, agreement, lease or
instrument.

(d) The Loan Documents have been duly executed and delivered
and constitute the legal, valid and binding obligations of each of the
entities comprising the Borrower, enforceable in accordance with their
respective terms.

(e) To such counsel's knowledge, no authorization or approval
or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery
and performance by any of the entities comprising the Borrower of the
Loan Documents or any other document executed pursuant thereto or in
connection therewith.

(f) To such counsel's actual knowledge, there is no pending or
threatened action, suit, proceeding or arbitration against or affecting
any of the entities comprising the Borrower or any of their Affiliates
before any court, governmental agency or arbitrator which, if adversely
determined, would result in a Material Adverse Change.

(g) The amounts received or to be received by Lender under the
Note and the other Loan Documents shall not constitute usurious or
otherwise unlawful interest;

(h) The steps necessary to perfect the security interests
granted pursuant to the Security Documents under applicable law.

(i) Such other opinions as Lender shall request.

6. Copies of the Articles of Incorporation, By-Laws and a Certificate
of Good Standing for each of United Homes, United Arizona, United Illinois
and United Michigan.

7. Copies of the resolutions adopted by each of United Homes, United
Arizona, United Illinois and United Michigan authorizing the Borrower to
obligate itself with respect to the Loan and authorizing certain officers to
execute and deliver this Loan Agreement and the other Loan Documents.

8. Payment of costs and expenses incurred by Lender, including,
without limitation, the fees and costs of its in-house and outside legal
counsel, in connection with the preparation, execution, delivery and
recordation/filing of the Loan Documents.

A-2
<PAGE>

EXHIBIT B TO LOAN AGREEMENT

PROJECT REQUIREMENTS

<S> <C>
- -------------------------------------------------------------------------------
GEOGRAPHIC REGION All Approved Projects shall be located in the Chicago or
Phoenix metropolitan areas or in western Michigan.
- -------------------------------------------------------------------------------
ENTITLEMENTS All Approved Projects shall be suitable for and
substantially entitled for the construction of Homes.
- -------------------------------------------------------------------------------
SALES PRICES The base sales prices (without the inclusion of options
or lot premiums) for the Units shall not exceed $350,000
- -------------------------------------------------------------------------------
HOMES The Homes shall be "for sale" single family residences or
attached town homes or condominiums; rental units may not
be included as a "Approved Project".

- -------------------------------------------------------------------------------
</TABLE>

B-1
<PAGE>

EXHIBIT C TO LOAN AGREEMENT

PROJECT UNDERWRITING DOCUMENTS

A. GENERAL PROJECT INFORMATION:

B. CONSTRUCTION INFORMATION AND DOCUMENTS:

1. Site plan.
2. Evidence of site plan approval and proper zoning.
3. Plans and Specifications and renderings/elevations of Plans and
Specifications.
4. ALTA survey.
5. Phase I environmental report.
6. Soils report.
7. Letters regarding utility availability.
8. Proof of entitlement.
9. Building permits.

C. PROJECT LEGAL DOCUMENTS

1. Proposed or recorded covenants, conditions and restrictions.
2. If a condominium, a copy of the homeowner's association articles of
incorporation, by-laws and budget.

C-1
<PAGE>

EXHIBIT D TO LOAN AGREEMENT

APPROVED PROJECTS

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NAME OF PROJECT # UNITS COUNTY
- -------------------------------------------------------------------------------
<S> <C> <C>
ARIZONA
- -------------------------------------------------------------------------------
Altezza Maricopa
- -------------------------------------------------------------------------------
Desert Wind Maricopa
- -------------------------------------------------------------------------------
Red Dog Ranch Maricopa
- -------------------------------------------------------------------------------

ILLINOIS
- -------------------------------------------------------------------------------
Royal Hill McHenry
- -------------------------------------------------------------------------------
Sienna Pointe McHenry
- -------------------------------------------------------------------------------

MICHIGAN
- -------------------------------------------------------------------------------
Bayberry -- Multifamily Kent
- -------------------------------------------------------------------------------
Bayberry -- Single Family Kent
- -------------------------------------------------------------------------------
Woodside -- Multifamily Ottawa
- -------------------------------------------------------------------------------
Woodside -- Single Family Ottawa
- -------------------------------------------------------------------------------
</TABLE>

D-1
<PAGE>

EXHIBIT E TO LOAN AGREEMENT

FORM OF PROJECT COMMITMENT

PROJECT COMMITMENT

[DATE]

United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: Edward F. Havlik, President
William J. Crock, Jr., Vice-President
David Feltman, In-House Counsel

Gentlemen:

In accordance with and subject to the terms and conditions of the Loan
Agreement dated as of March 14, 1997 (the "Loan Agreement") between
Residential Funding Corporation, a Delaware corporation (the "Lender") and
United Homes, Inc., an Illinois corporation, United Homes, Inc., an Arizona
corporation, United Homes of Illinois, Inc., an Illinois corporation and
United Homes of Michigan, Inc., a Michigan corporation, the Lender is pleased
to confirm that the Lender agrees that the project specified below has been
approved as an Approved Project, and that Lots and Units within such Approved
Project may be pledged to Lender to become part of the Borrowing Base
Collateral.

Capitalized terms used herein shall have the meanings assigned those
terms in the Loan Agreement.

- -------------------------------------------------------------------------------
APPROVED PROJECT [name]
- -------------------------------------------------------------------------------
<S> <C>
NUMBER OF UNITS WITHIN APPROVED NUMBER PREVIOUSLY ACQUIRED:
PROJECT NUMBER TO BE ACQUIRED:
TOTAL: -------
-------
- -------------------------------------------------------------------------------
TYPE OF HOUSING PRODUCT [single family residences / attached town
homes or condominiums]
- -------------------------------------------------------------------------------
</TABLE>

E-1
<PAGE>

<S> <C>
- -------------------------------------------------------------------------------
WINTER CONSTRUCTION PROGRAM [specify whether (i) not applicable or
(ii) the terms and conditions applicable
to the Approved Project and the length of
time such terms and conditions are
applicable]
- -------------------------------------------------------------------------------
PERMITTED MODEL UNITS IN THIS
PROJECT five (5)
- -------------------------------------------------------------------------------
AGGREGATE NUMBER OF PERMITTED
MODEL UNITS AND SPEC UNITS IN
THIS PROJECT ten (10)
- -------------------------------------------------------------------------------
PERMITTED VACANT LOTS IN THIS
PROJECT twenty (20)
- -------------------------------------------------------------------------------
VALUES FOR SPEC UNITS [specify values agreed upon between Lender
and Borrower]
- -------------------------------------------------------------------------------
VALUES FOR MODEL UNITS [specify values agreed upon between Lender
and Borrower]
- -------------------------------------------------------------------------------
PROJECTS NOT FINANCED WITH [specify values agreed upon between Lender
PROCEEDS OF THE RELATED LOAN: and Borrower OR the releases prices, as
DETERMINED AMOUNT PER LOT applicable]
- -------------------------------------------------------------------------------
PROJECTS FINANCED WITH PROCEEDS [specify release price]
OF THE RELATED LOAN: RELEASE
PRICE PER LOT
- -------------------------------------------------------------------------------
ADDITIONAL AMOUNTS WHICH MAY [specify amounts and to whom OR not
BE NETTED FROM SALES PROCEEDS applicable]
TO DETERMINE "NET SALES
PROCEEDS"
- -------------------------------------------------------------------------------
ADDITIONAL REQUIREMENTS [specify additional requirements, if any]
- -------------------------------------------------------------------------------
EXCEPTIONS FROM PROJECT [specify exceptions, if any]
REQUIREMENTS OR BORROWING
BASE COLLATERAL REQUIREMENTS
- -------------------------------------------------------------------------------
</TABLE>

By its acceptance of this Project Commitment Borrower hereby represents,
warrants and certifies to Lender as follows:

(a) No Event of Default or Potential Default presently exists
under the Loan Agreement or any other Loan Document.

E-2
<PAGE>

(b) Except as has been otherwise disclosed to Lender in writing,
all of the representations and warranties of Borrower under the Loan
Agreement and the other Loan Documents are hereby remade and restated.

(i) the Borrower has satisfied all conditions precedent to
the funding of Loan and the approval of the Approved Project as set
forth in the Loan Documents;

(ii) the Loan Documents are in full force and effect;

(iii) the Loan is, and upon the pledge of property within
the Approved Project will be, secured by a first priority lien on
the Borrowing Base Collateral and by liens on the other Collateral
described in the Loan Documents, subject only to Permitted
Exceptions;

(iv) all contractors, subcontractors, vendors, materialmen
and other Persons entitled to payment with respect to the Borrowing
Base Collateral within the Approved Project, have been paid or will
be paid, subject to retainage, with the proceeds of the Loan.

(d) All insurance required to be maintained by Borrower, including
insurance with respect to the Approved Project, is in full force in
effect, of the types, in the amounts and issued by insurers as previously
approved by Lender.

E-3
<PAGE>

Sincerely,

RESIDENTIAL FUNDING CORPORATION

By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------

TERMS ACCEPTED:

UNITED HOMES, INC.,
an Illinois corporation

By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------

UNITED HOMES, INC.,
an Arizona corporation

By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------

E-4
<PAGE>

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------

E-5

<PAGE>

EXHIBIT F TO LOAN AGREEMENT

BORROWING BASE COLLATERAL REQUIREMENTS

----------------------------------------------------------------------------
| MODEL UNITS PER | The number of Model Units which may be pledged |
| APPROVED PROJECT | as Borrowing Base Collateral is limited to 5 |
| | Model Units per Approved Project. |
|-----------------------|----------------------------------------------------|
| MODEL UNITS AND | The number of Model Units, together with the |
| SPEC UNITS PER | number of Spec Units, is limited to 10 such |
| APPROVED PROJECT | Units per Approved Project. |
|-----------------------|----------------------------------------------------|
| MODEL UNITS AND | Subject to the terms of SECTION 3.2(d), |
| SPEC UNITS WITHIN | relating to winter construction programs, the |
| THE BORROWING | ratio of (i) the number of Sold Units pledged |
| BASE COLLATERAL | as Borrowing Base Collateral, to (ii) the |
| | number of Model Units plus Spec Units pledged |
| | as Borrowing Base Collateral shall not be |
| | less than 2:1. |
|-----------------------|----------------------------------------------------|
| ATTACHED HOUSING | At least 50% of the Units in each building |
| | located in an Approved Project which contains |
| | "attached" housing shall be Sold Units. |
|-----------------------|----------------------------------------------------|
| VACANT LOTS | The number of Vacant Lots which may be pledged |
| | as Borrowing Base Collateral is limited to |
| | (i) 20 Vacant Lots per Approved Project, (ii) |
| | 50 Vacant Lots in the Phoenix and Grand |
| | Rapids, Michigan metropolitan areas, on a |
| | combined basis, (iii) 100 Vacant Lots in the |
| | Chicago metropolitan area and (iv) that |
| | number which will result in the aggregate of |
| | the Vacant Lot Amounts not exceeding the |
| | lesser of (1) 25% of the Borrowing Base Amount |
| | or (2) $2,500,000. |
----------------------------------------------------------------------------

F-1

<PAGE>

EXHIBIT G TO LOAN AGREEMENT

FORM OF REQUEST TO ADD COLLATERAL

REQUEST TO ADD COLLATERAL

DATE: ____________________, 199___

RESIDENTIAL FUNDING CORPORATION CHICAGO TITLE INSURANCE COMPANY
8400 NORMANDALE BOULEVARD _______________________________
SUITE 600 SUITE ________
MINNEAPOLIS, MINNESOTA 55437 _______________________________
ATTENTION: DIRECTOR OF OPERATIONS, ATTENTION:_____________________
CONSTRUCTION FINANCE
ASSOCIATE COUNSEL, CONSTRUCTION FINANCE

RE: UNITED HOMES, INC.

PURSUANT TO THE TERMS AND CONDITIONS OF THE LOAN AGREEMENT DATED AS OF
MARCH 14, 1997 BETWEEN UNITED HOMES, INC., AN ILLINOIS CORPORATION, UNITED
HOMES, INC., AN ARIZONA CORPORATION, UNITED HOMES OF ILLINOIS, INC., AN
ILLINOIS CORPORATION AND UNITED HOMES OF MICHIGAN, INC., A MICHIGAN
CORPORATION AND RESIDENTIAL FUNDING CORPORATION, A DELAWARE CORPORATION,
PLEASE ACCEPT THIS LETTER AS A REQUEST TO ALLOW THE ADDITIONAL LOTS AND/OR
ADDITIONAL UNITS DESCRIBED BELOW TO BE ADDED AS PART OF THE BORROWING BASE
COLLATERAL:

G-1

<PAGE>

------------------------------------------------------------------------------------------------------------------------------
| | DESCRIPTION OF ADDITIONAL COLLATERAL |
|--------------|---------------------------------------------------------------------------------------------------------------|
| | | | | BLOCK/ | TYPE OF | | SALES | CLOSING |
| PROJECT | COMPLETE PROPERTY ADDRESS | PHASE | LOT | SECTION | COLLATERAL(1) | SELLER | PRICE | DATE |
|--------------|----------------------------|---------|--------|----------|-----------------|----------|---------|-------------|
| <S> | <C> | <C> | <C> | <C> | <C> | <C> | <C> | <C> |
|--------------|----------------------------|---------|--------|----------|-----------------|----------|---------|-------------|
| | | | | | | | | |
|--------------|----------------------------|---------|--------|----------|-----------------|----------|---------|-------------|
| | | | | | | | | |
|--------------|----------------------------|---------|--------|----------|-----------------|----------|---------|-------------|
| | | | | | | | | |
|--------------|----------------------------|---------|--------|----------|-----------------|----------|---------|-------------|
| | | | | | | | | |
|-------------------------------------------------------------------------|-----------------|----------|---------|-------------|
| (1) Vacant Lot, Sold Unit, Spec Unit or Model Unit | | | | |
------------------------------------------------------------------------------------------------------------------------------

</TABLE>

-------------------------------------------------------------------------------------------------------
| TITLE COMPANY: Chicago Title | ADDRESS: |
| <S> Insurance Company | <C> |
|------------------------------------|------------------------------------------------------------------|
| ESCROW OFFICER: | PHONE #: | FAX #: |
| | | |
|------------------------------------|----------------------------|-------------------------------------|
| TITLE OFFICER: | PHONE #: | FAX #: |
| | | |
-------------------------------------------------------------------------------------------------------

</TABLE>

PLEASE CONTACT ________________________ IN OUR OFFICE AT (____) ___________
FOR FURTHER INFORMATION WITH REGARD TO THIS REQUEST TO ADD COLLATERAL.

G-2

<PAGE>

EXHIBIT H TO LOAN AGREEMENT

STAGED DRAW SCHEDULE

------------------------------------------------
| MICHIGAN |
|------------------------------------------------|
| STAGE | CATEGORY | % |
|---------|-----------------------------|--------|
| 1 | Permits | 15 |
|---------|-----------------------------|--------|
| 2 | Foundation | 35 |
|---------|-----------------------------|--------|
| 3 | Subfloor | 40 |
|---------|-----------------------------|--------|
| 4 | Trusses | 50 |
|---------|-----------------------------|--------|
| 5 | Framing | 60 |
|---------|-----------------------------|--------|
| 6 | Roofing | 65 |
|---------|-----------------------------|--------|
| 7 | Mechanical | 75 |
|---------|-----------------------------|--------|
| 8 | Drywall | 85 |
|---------|-----------------------------|--------|
| 9 | Carpentry | 90 |
|---------|-----------------------------|--------|
| 10 | Flooring | 95 |
|---------|-----------------------------|--------|
| 11 | Final Inspection | 100 |
------------------------------------------------

H-1

<PAGE>

------------------------------------------------
| ARIZONA AND ILLINOIS |
|------------------------------------------------|
| STAGE | CATEGORY | % |
|---------|-----------------------------|--------|
| 1 | Permits | 15 |
|---------|-----------------------------|--------|
| 2 | Foundation | 30 |
|---------|-----------------------------|--------|
| 3 | Framing | 50 |
|---------|-----------------------------|--------|
| 4 | Roofing | 60 |
|---------|-----------------------------|--------|
| 5 | Mechanical | 80 |
|---------|-----------------------------|--------|
| 6 | Drywall | 85 |
|---------|-----------------------------|--------|
| 7 | Carpentry | 90 |
|---------|-----------------------------|--------|
| 8 | Flooring | 95 |
|---------|-----------------------------|--------|
| 9 | Final Inspection | 100 |
------------------------------------------------

H-2

<PAGE>

EXHIBIT I TO LOAN AGREEMENT

FORM OF WIP REPORT

I-1

<PAGE>

EXHIBIT J TO LOAN AGREEMENT

FORM OF DRAW REQUEST CERTIFICATION

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

DRAW REQUEST NUMBER
-------
[DATE]

LENDER: RESIDENTIAL FUNDING CORPORATION

BORROWER: UNITED HOMES, INC., an Illinois corporation
UNITED HOMES, INC., an Arizona corporation
UNITED HOMES OF ILLINOIS, INC., an Illinois corporation
UNITED HOMES OF MICHIGAN, INC., a Michigan corporation

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

Reference is made to that certain Loan Agreement dated as of March 14,
1997 between Lender and Borrower (the "Loan Agreement"). Capitalized terms
used herein without definition shall have the meanings set forth in the Loan
Agreement, unless the context shall require otherwise.

Borrower requests from Lender a disbursement of proceeds of the Loan in
the amount of $ .
-----------

In connection with such requested disbursement, Borrower hereby
represents, warrants and certifies to Lender as follows:

(a) No Event of Default or Potential Default presently exists under
the Loan Agreement or any other Loan Document.

(i) the Borrower has satisfied all conditions precedent to
the funding of Loan as set forth in the Loan Documents;

(ii) the Loan Documents are in full force and effect;

J-1

<PAGE>

(iii) the Loan is secured by a first priority lien on the
Borrowing Base Collateral and by liens on the other Collateral
described in the Loan Documents, subject only to Permitted
Exceptions;

(iv) all contractors, subcontractors, vendors, materialmen
and other Persons entitled to payment with respect to the Borrowing
Base Collateral have been paid or will be paid, subject to retainage,
with the proceeds of the requested disbursement.

(d) All insurance required to be maintained by Borrower remains in
full force in effect, of the types, in the amounts and issued by insurers as
previously approved by Lender.

(e) All of the information contained in the most recent WIP Report
delivered to Lender is true, complete and accurate, and such WIP Report does
not contains any untrue statement of a material fact, or omit any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not
misleading.

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
------------------------------------------------------

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

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
------------------------------------------------------

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

J-2

<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

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

Printed Name:
------------------------------------------------------

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

UNITED HOMES OF MICHIGAN, INC.,
an Michigan corporation

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

Printed Name:
------------------------------------------------------

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

J-3

<PAGE>

EXHIBIT K TO LOAN AGREEMENT

LETTER OF INSTRUCTIONS TO
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO

K-1

<PAGE>

EXHIBIT L TO LOAN AGREEMENT

FORM OF EXTENSION REQUEST

Residential Funding Corporation
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, Minnesota 55437
Attention: Managing Director, Construction Finance

Gentlemen/Ladies:

In accordance with SECTION 2.14 of that certain Loan Agreement dated as
of March 14, 1997 (the "Loan Agreement"), between the undersigned and you,
the undersigned hereby notifies you of its election to request a twelve-month
extension of the Conversion Date to _________________, 199___ and of the
Maturity Date to ____________, 199____ (as those terms are defined in the Loan
Agreement).

Please indicate Lender's consent to such twelve-month extension by
signing the attached copy of this letter in the space provided below and
returning the same to the undersigned.

Very truly yours,

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
-----------------------------

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

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
-----------------------------

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

L-1

<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

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

Printed Name:
-----------------------------

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

UNITED HOMES OF MICHIGAN, INC.,
an Michigan corporation

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

Printed Name:
-----------------------------

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

L-2

<PAGE>

CONSENT TO EXTENSION

RESIDENTIAL FUNDING CORPORATION (the "Lender"), as lender under the Loan
Agreement dated as of March 14, 1997 between the Lender and the parties
identified above, consents to the extension of the Conversion Date to
______________________, 199____ and of the Maturity Date to

______________________, 19___.

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

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

Printed Name:
-----------------------------

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

L-3

<PAGE>

EXHIBIT M TO LOAN AGREEMENT

INITIAL BORROWING BASE COLLATERAL

M-1

<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

LOAN AGREEMENT

DATED AS OF MAY 28, 1996

BETWEEN

COLLECTIVELY, "BORROWER"

AND

RESIDENTIAL FUNDING CORPORATION,
A DELAWARE CORPORATION

"LENDER"

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS

ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . 2
Section 1.2. Other Definitional Provisions.. . . . . . . . . . . . . .16

ARTICLE II THE LOAN. . . . . . . . . . . . . . . . . . . . . . . . .17
Section 2.1. Agreement to Lend and Borrow; Evidence of Indebtedness
and Maturity. . . . . . . . . . . . . . . . . . . . . . .17
Section 2.2. Disbursements of the Loan.. . . . . . . . . . . . . . . .17
Section 2.3. Use of Disbursements. . . . . . . . . . . . . . . . . . .19
Section 2.4. Commitment Fee. . . . . . . . . . . . . . . . . . . . . .19
Section 2.5. No Reduction in Commitment Fee. . . . . . . . . . . . . .19
Section 2.6. Repayment of Principal. . . . . . . . . . . . . . . . . .19
Section 2.7. Interest. . . . . . . . . . . . . . . . . . . . . . . . .20
Section 2.8. Prepayment of the Loan. . . . . . . . . . . . . . . . . .21
Section 2.9. Security. . . . . . . . . . . . . . . . . . . . . . . . .21
Section 2.10. Payments. . . . . . . . . . . . . . . . . . . . . . . . .21
Section 2.11. Extension . . . . . . . . . . . . . . . . . . . . . . . .21
Section 2.12. Applications of Payments; Late Charges. . . . . . . . . .21
Section 2.13. Interest Rate Limitation. . . . . . . . . . . . . . . . .22
Section 2.14. Revolving Nature of Loan. . . . . . . . . . . . . . . . .23

ARTICLE III APPROVAL OF PROJECTS AND DISBURSEMENTS
FOR PROJECTS. . . . . . . . . . . . . . . . . . . . . . .24
Section 3.1. Project Approval and Project Commitments. . . . . . . . .24
Section 3.2. Processes Relating to Disbursements . . . . . . . . . . .24
Section 3.3. Application of Disbursements. . . . . . . . . . . . . . .24
Section 3.4. Lender May Make Disbursement Notwithstanding
Noncompliance . . . . . . . . . . . . . . . . . . . . . .25

ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . .26
Section 4.1. Consideration . . . . . . . . . . . . . . . . . . . . . .26
Section 4.2. Organization. . . . . . . . . . . . . . . . . . . . . . .26
Section 4.3. Authorization . . . . . . . . . . . . . . . . . . . . . .26
Section 4.4. Governmental Consents . . . . . . . . . . . . . . . . . .26
Section 4.5. Validity. . . . . . . . . . . . . . . . . . . . . . . . .26
Section 4.6. Financial Position. . . . . . . . . . . . . . . . . . . .26
Section 4.7. Governmental Regulations. . . . . . . . . . . . . . . . .27
Section 4.8. Employee Benefit Plans. . . . . . . . . . . . . . . . . .27
Section 4.9. Securities Activities . . . . . . . . . . . . . . . . . .27
Section 4.10. No Material Adverse Change. . . . . . . . . . . . . . . .27
Section 4.11. Payment of Taxes. . . . . . . . . . . . . . . . . . . . .27
Section 4.12. Litigation. . . . . . . . . . . . . . . . . . . . . . . .27

<PAGE>

Section 4.13. Environmental Matters . . . . . . . . . . . . . . . . . .27
Section 4.14. No Burdensome Restrictions. . . . . . . . . . . . . . . .28
Section 4.15. Full Disclosure . . . . . . . . . . . . . . . . . . . . .28

ARTICLE V COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . .29
Section 5.1. Consideration . . . . . . . . . . . . . . . . . . . . . .29
Section 5.2. Affirmative Covenants . . . . . . . . . . . . . . . . . .29
Section 5.3. Negative Covenants. . . . . . . . . . . . . . . . . . . .32
Section 5.4. Financial Covenants . . . . . . . . . . . . . . . . . . .33
Section 5.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . .33

ARTICLE VI EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . .35
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . .35
Section 6.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . .37
Section 6.3. Authorization to Apply Assets to Payment of Loan. . . . .37

ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . .38
Section 7.1. Successors and Assigns; No Assignment by Borrower . . . .38
Section 7.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 7.3. Changes, Waivers, Discharge and Modifications in
Writing . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 7.4. No Waiver; Remedies Cumulative. . . . . . . . . . . . . .39
Section 7.5. Costs, Expenses and Taxes . . . . . . . . . . . . . . . .40
Section 7.6. Disclaimer by Lender; No Joint Venture. . . . . . . . . .40
Section 7.7. Indemnification . . . . . . . . . . . . . . . . . . . . .41
Section 7.8. Consultants . . . . . . . . . . . . . . . . . . . . . . .42
Section 7.9. Governing Law . . . . . . . . . . . . . . . . . . . . . .42
Section 7.10. Titles and Headings . . . . . . . . . . . . . . . . . . .42
Section 7.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . .42
Section 7.12. Participations. . . . . . . . . . . . . . . . . . . . . .42
Section 7.13. Confidentiality . . . . . . . . . . . . . . . . . . . . .42
Section 7.14. Time is of the Essence. . . . . . . . . . . . . . . . . .43
Section 7.15. No Third Parties Benefitted . . . . . . . . . . . . . . .43
Section 7.16. Severability. . . . . . . . . . . . . . . . . . . . . . .43
Section 7.17. Jurisdiction. . . . . . . . . . . . . . . . . . . . . . .43
Section 7.18. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . .43
Section 7.19. Interpretation. . . . . . . . . . . . . . . . . . . . . .44
Section 7.20. Entire Agreement. . . . . . . . . . . . . . . . . . . . .44
Section 7.21. Joint and Several Liability . . . . . . . . . . . . . . .44
Section 7.22. Releases of Model Homes . . . . . . . . . . . . . . . . .44
Section 7.23. Lender's Approvals. . . . . . . . . . . . . . . . . . . .44

iii

<PAGE>

EXHIBIT A TO LOAN AGREEMENT
CONDITIONS TO OBLIGATION OF LENDER TO MAKE LOAN. . . . . . . . . . . . A-1

EXHIBIT B TO LOAN AGREEMENT
PROJECT REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . B-1

EXHIBIT C TO LOAN AGREEMENT
PROJECT UNDERWRITING DOCUMENTS . . . . . . . . . . . . . . . . . . . . C-1

EXHIBIT D TO LOAN AGREEMENT
FORM OF PROJECT COMMITMENT . . . . . . . . . . . . . . . . . . . . . . D-1

EXHIBIT E TO LOAN AGREEMENT
FORM OF EXTENSION REQUEST. . . . . . . . . . . . . . . . . . . . . . . E-1

EXHIBIT F TO LOAN AGREEMENT
FORM OF MODEL HOME DRAW REQUEST CERTIFICATION. . . . . . . . . . . . . E-1

<PAGE>

LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Loan Agreement") is made as of May 28, 1996, by
and between UNITED HOMES, INC., an Illinois corporation ("United Homes"), UNITED
HOMES, INC., an Arizona corporation ("United Arizona"), UNITED HOMES OF
ILLINOIS, INC., an Illinois corporation ("United Illinois") and UNITED HOMES OF
MICHIGAN, INC., a Michigan corporation ("United Michigan") (United Homes, United
Arizona, United Illinois and United Michigan are collectively referred to herein
as the "Borrower") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
(the "Lender").

R E C I T A L S:

A. Borrower has applied to Lender for a revolving loan in connection with
various acquisition, development and construction projects which Borrower
anticipates undertaking, and the refinancing of certain model homes, which loan
is to be secured by a lien on the real property related to such projects and
owned by United Homes, United Arizona, United Illinois and/or United Michigan,
including the real property which is to be acquired and/or improved by the
Borrower with the proceeds of the loan.

B. Lender is willing to make the requested loan upon and subject to the
terms and conditions set forth in this Loan Agreement.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:

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ARTICLE I
DEFINITIONS

Section 1.1. CERTAIN DEFINED TERMS. As used herein (including any
Exhibits attached hereto), the following terms shall have the meanings set forth
below (unless expressly stated to the contrary):

"ACQUISITION AND DEVELOPMENT AMOUNT" shall mean, with respect to a Project,
the portion of the Project Amount which is available to be disbursed for
Qualified Project Expenditures which relate to the acquisition of the Land and
the Development Work.

"ADDITIONAL LOAN FEE" shall mean, with respect to a High Advance Rate
Project, the additional fee the Borrower will be required to pay to Lender as a
condition precedent to the Lender's release of its lien on any Lot or Unit
located in the Project, which amount shall equal two percent (2%) of the gross
base selling price of such Lot or Unit.

"ADJUSTED NET WORTH" shall mean the Net Worth of United Homes plus any
minority interests included on the balance sheet of United Homes.

"ADVANCE RATE" shall mean, with respect to disbursements of the Loan for a
Project, the following:

(a) with respect to High Advance Rate Projects (i) ninety percent
(90%) of the Qualified Project Expenditures which relate to the acquisition
of Land and (ii) one hundred percent (100%) of the Qualified Project
Expenditures of a Project which relate to Development Work or Construction
Improvements; and

(b) with respect to Conventionally Financed Projects, (i) sixty five
percent (65%) of the Qualified Project Expenditures which relate to the
acquisition of Land and (ii) one hundred percent (100%) of the Qualified
Project Expenditures of a Project which relate to Development Work or
Construction Improvements.

"AFFILIATE" shall mean a Person that, directly or indirectly, controls, is
controlled by, or is under common control with, a referenced Person.

"APPRAISAL REPORT" shall mean, with respect to a Project or a Model Home, a
real estate appraisal report which (i) has been prepared by an Appraiser, (ii)
at the time it is submitted to the Lender is not more than three (3) months old,
or was updated by letter not more than three (3) months prior to the date of
submission to the Lender, (iii) states that it is prepared in accordance with
the applicable standards of the American Institute of Real Estate Appraisers for
such reports, (iv) provides an appraisal of the Value of the Project, portion
thereof or Model Home required to be appraised thereunder, and (v) employs a
customary methodology and provides limiting conditions satisfactory to the
Lender.

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<PAGE>

"APPRAISER" shall mean, with respect to a Project or a Model Home, a Person
who is qualified to appraise property similar in size and scope to the Project
or Model Home, which such Person is acceptable to the Lender in its sole and
absolute discretion.

"APPROVAL PERIOD" shall mean the period of time during which new Projects
may be approved for funding and Model Homes may be refinanced from proceeds of
the Loan, which period shall commence on the date of this Loan Agreement and
shall end on the date twelve (12) months after the date of this Loan Agreement,
as such period may be extended pursuant to the terms of Section 2.11.

"ASSIGNMENT" shall mean, with respect to a Project, that certain assignment
of construction agreements and development items to be executed by the Borrower
in favor of Lender, as the same may be amended or otherwise modified from time
to time.

"AVAILABLE AMOUNT" shall mean the amount of the Loan which is available
with respect to any project which is proposed to be included as a Project or
with respect to any Model Home to be refinanced, which amount shall equal the
following:

(a) with respect to Projects, the sum of (i) the Loan Amount less the
total of all Project Amounts and less the total of all Model Home Amounts,
plus (ii) the total principal repayments of all Acquisition and Development
Amounts; and

(b) with respect to Model Homes, the Model Home Sub-Limit less the
total of all Model Home Amounts.

provided, however, that the total of the aggregate Project Amounts plus the
aggregate Model Home Amounts shall not exceed the Loan Amount.

"BORROWER" shall mean, collectively, United Homes, United Arizona, United
Illinois and United Michigan.

"BUDGET" shall mean, with respect to a Project, the itemized budget for
such Project submitted to and approved by the Lender and included as a schedule
to the Project Commitment issued with respect to the Project which budget shall
set forth the Acquisition and Development Amount, the Construction Amount and
the total Project Costs, as such budget may be amended in accordance with the
provisions of the Loan Agreement Supplement.

"BUSINESS DAY" shall mean a day other than Saturday, Sunday or a day on
which national banks are legally closed for business in the States of Arizona,
Illinois, Michigan or Minnesota.

"CHANGE" shall mean, with respect to a Project, any material extra work not
contemplated by the Plans and Specifications, the installation of materially
additional or different materials from that set forth in the Plans and
Specifications, or any other material change in the Plans and Specifications.

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<PAGE>

"COMMITMENT FEE" shall mean an annual amount, payable in advance on the
dates set forth in SECTION 2.4(a), equal to one half of one percent (0.5%) of
the Loan Amount.

"CONSTRUCTION AGREEMENTS" shall mean, with respect to a Project, all
agreements (including, without limitation, construction contracts) entered into
between the Borrower and any contractor, architect, engineer, supplier or other
Person with respect to the development or construction of the Project, as such
agreements may be amended or otherwise modified from time to time in accordance
with the Loan Agreement Supplement.

"CONSTRUCTION AMOUNT" shall mean, with respect to a Project, the portion of
the Project Amount which is available to be disbursed for Qualified Project
Expenditures which relate to the Construction Improvements.

"CONSTRUCTION IMPROVEMENTS" shall mean, with respect to a Project, the
Homes which are to be constructed on or with respect to the Land by or on behalf
of the Borrower in accordance with the Plans and Specifications, but
Construction Improvements shall not include the Development Work.

"CONSTRUCTION PROGRESS SCHEDULE" shall mean, with respect to a Project, the
schedule for the Development Work and the Construction Improvements prepared by
the Borrower, as such schedule may be adjusted in accordance with the provisions
of the Loan Agreement Supplement.

"CONVENTIONALLY FINANCED PROJECT" shall mean a Project (i) the Advance Rate
for which is described in SUBPARAGRAPH (b) of the definition of Advance Rate and
(ii) as to which no Additional Loan Fee is due.

"DEBT" shall mean, for any Person, without duplication, the sum of all
(i) indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the sale
of the same or substantially similar securities or property, (vi) obligations of
such Person to reimburse any bank or other Person in respect of amounts actually
paid under a letter of credit or similar instrument, (vii) indebtedness or
obligations of others secured by a lien on any asset of such Person, whether or
not such indebtedness or obligations are assumed by such Person (to the extent
of the value of the asset), (viii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in
CLAUSES (i) THROUGH (vii) above, and (ix) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA.

"DEED OF TRUST" shall mean, with respect to a Project or a Model Home, that
certain construction deed of trust or mortgage, security agreement and fixture
filing with assignment of rents, proceeds and agreements to be executed by
Project Owner, with respect to a Project, or Model

4
<PAGE>

Home Owner, with respect to a Model Home, as trustor or mortgagor, for the
benefit of the Lender, as beneficiary or mortgagee, as the same may be amended
or otherwise modified from time to time.

"DEVELOPMENT WORK" shall mean, with respect to a Project, the work of
development to be performed on or with respect to the Land (including, without
limitation, the installation of utilities, roads and all related on-site and
off-site improvements) in connection with the development of the Land for the
subsequent construction thereon of Homes, all of which work and construction
shall be completed by or on behalf of the Borrower in accordance with the Plans
and Specifications, but shall not include the Construction Improvements.

"DRAW REQUEST CERTIFICATION" shall mean, with respect to a requested
disbursement of the Loan to fund Qualified Project Expenditures, a certification
of Borrower delivered to the Lender in the form required by the Loan Agreement
Supplement.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and rulings issued thereunder.

"ENVIRONMENTAL INDEMNITY" shall mean, with respect to a Project, that
certain hazardous substances remediation and indemnification agreement to be
executed by the Borrower in favor of the Lender, as the same may be amended or
otherwise modified from time to time.

"EVENT OF DEFAULT" shall mean the occurrence, after any applicable grace
period, of any of the events listed in SECTION 6.1.

"FORCE MAJEURE EVENT" shall mean fire, flood, labor dispute, weather,
governmental action or other cause beyond the reasonable control of the
Borrower that shall delay the Development Work or the completion of the
Construction Improvements.

"GAAP" shall mean procedures consistent with generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession prevalent in the United States of America.

"HAZARDOUS MATERIALS" shall mean the following:

(a) any oil, flammable substances, explosives, radioactive materials,
hazardous wastes or substances, toxic wastes or substances or any other
materials or pollutants, exposure to which is prohibited, limited or
regulated by any governmental authority pursuant to any Hazardous Materials
Law;

5
<PAGE>

which is prohibited, limited or regulated by any governmental authority
pursuant to any Hazardous Materials Law;

(c) any chemical, material or substance defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", or
"toxic substances" or words of similar import under any Hazardous Material
Laws; and

(d) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority pursuant to
any Hazardous Materials Law.

"HAZARDOUS MATERIALS CLAIMS" shall mean any and all enforcement, clean-up,
removal or other governmental or regulatory actions or orders threatened,
instituted or completed pursuant to any Hazardous Materials Laws, together with
all claims made or threatened by any third party relating to damage,
contribution, cost recovery compensation, loss or injury resulting from any
Hazardous Materials.

"HAZARDOUS MATERIALS LAWS" shall mean any federal, state or local laws,
ordinances and the regulations, policies or publications promulgated pursuant
thereto relating to (i) the environment, (ii) health and safety, (iii) any
Hazardous Materials (including, without limitation, the use, handling,
transportation, production, disposal, discharge or storage thereof), (iv)
industrial hygiene or (v) environmental conditions on, under or about property,
including, without limitation, soil and groundwater conditions; including, but
not limited to, the following, as now or hereafter amended: the Clean Air Act,
42 U.S.C. Sec. 9401, ET SEQ.; the Clean Water Act, 33 U.S.C. Sec. 7401, ET.
SEQ.; the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601, ET. SEQ., as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. Sec. 11001, ET. SEQ.; the Federal
Water Pollution Control Act, 33 U.S.C. Sec. 1251, ET. SEQ.; the Hazardous
Materials Transportation Act, 49 U.S.C. Sec. 1801, ET. SEQ.; the Resource
Conservation and Recovery Act, 42 U.S.C. Sec. 6901, ET. SEQ.; the Safe Drinking
Water Act, 42 U.S.C. Secs. 300f to 300j; the Solid Waste Disposal Act, 42 U.S.C.
Sec. 3251, ET.SEQ.; and the Toxic Substances Control Act, 15 U.S.C. Sec. 2601,
ET SEQ.

"HIGH ADVANCE RATE PROJECT" shall mean a Project (i) the Advance Rate for
which is described in SUBPARAGRAPH (a) of the definition of Advance Rate and
(ii) as to which the Additional Loan Fee is due.

"HOMES" shall mean, with respect to a Project, the single family
residences, condominium homes and/or attached townhouses that will be
constructed by the Borrower with certain of the proceeds of the Loan, which
Homes the Borrower shall construct on the Land and offer for sale to individuals
and families.

"INDEMNIFIED PARTY" shall mean the Lender and any Participants and each of
their officers, directors, employees, agents, attorneys, consultants, advisors
and Affiliates.

6
<PAGE>

"INSPECTOR" shall mean, with respect to a Project, the inspector(s) or
engineer(s) engaged by the Lender, at the expenses of the Borrower, to provide
to Lender consultation services in connection with the Project.

"INTEREST DUE DATE" shall mean the fifteenth (15th) calendar day of each
month in which the Lender has sent a statement of interest due pursuant to the
terms of SECTION 2.7(b).

"INTEREST RESERVE" shall mean, with respect to a Project, the amount within
the Budget which has been designated as available to pay interest on the Project
Amount for a period of time not to exceed the lesser of (i) six (6) months from
the date of the first disbursement of proceeds of the Loan for the Project or
(ii) the time period between the date of the first disbursement of proceeds of
the Loan for the Project and the date on which the first Unit in the Project is
sold and closed.

"LAND" shall mean, (i) with respect to a Project, that certain real
property which is suitable for and substantially entitled for the construction
of Homes thereon and related on and off-site improvements and upon which the
Borrower will perform the Development Work and construct the Construction
Improvements, as such real property is legally described in the applicable Deed
of Trust, and (ii) with respect to a Model Home, that certain real property upon
which the Model Home is constructed, as such real property is legally described
in the applicable Deed of Trust.

"LAND SPECULATION" shall mean the practice of acquiring either
(i) unimproved real property and reselling such real property without adding
value by development of such real property, or (ii) real property for which a
plat has not been obtained or which is not substantially entitled for the
development of a residential project.

"LAWS AND REGULATIONS" shall mean, with respect to a Project or a Model
Home, (i) all laws, regulations, orders, codes, ordinances, rules, statutes and
policies of all local, regional, county, state and federal governmental
authorities having jurisdiction over the Project or Model Home and (ii) all
restrictive covenants and other title encumbrances, permits and approvals,
leases and other rental agreements which in any case relate to the development,
occupancy, ownership, management, use, and/or operation of the Project or Model
Home.

"LENDER" shall mean Residential Funding Corporation, a Delaware
corporation.

"LENDER'S RELEASE PRICE" shall mean the following:

(a) with respect to a Project, and with respect to any parcel of the
Land which the Borrower requests the Lender to release from the lien of the
Deed of Trust, the amount required to be paid to the Lender prior to such
release, which amount shall equal, for each Lot and/or Unit located in the
Project, (i) the amount specified in SECTION 2.6(a), (b) or (c),

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<PAGE>

as applicable, plus (ii) if the Project is a High Advance Rate Project, the
Additional Loan Fee for such Lot and/or Unit; and

(b) with respect to any Model Home which the Borrower requests the
Lender to release from the lien of the Deed of Trust, the amount required
to be paid to the Lender prior to such release, which amount shall equal the
amount specified in SECTION 2.6(d).

"LOAN" shall mean the revolving loan described in this Loan Agreement in a
principal amount not to exceed the Loan Amount.

"LOAN AGREEMENT" shall mean this Loan Agreement, as this loan agreement may
be amended or otherwise modified from time to time in accordance with the terms
hereof.

"LOAN AGREEMENT SUPPLEMENT" shall mean, with respect to a Project, a
supplement to this Loan Agreement to be entered into between the Borrower and
the Lender, as the same may be amended or otherwise modified from time to time.

"LOAN AMOUNT" shall mean Twenty Five Million Dollars ($25,000,000).

"LOAN DOCUMENTS" shall mean, as to the Loan, all documents, instruments,
agreements, assignments and certificates relating thereto, including, without
limitation, any and all loan or credit agreements, promissory notes, deeds of
trust, mortgages, security agreements, assignments of rents, assignments of
leases, assignments of contracts, environmental indemnities, guaranties,
contractor's consent agreements, lender's title insurance policies, opinions of
counsel, evidences of authorization or incumbency, escrow instructions,
architect's consent agreements, and UCC-1 financing statements to be executed
(and acknowledged where applicable) by Borrower, Project Owner, Model Home Owner
and/or Lender (where applicable) in connection with Lender making the Loan to
Borrower, as the same may be amended or otherwise modified from time to time in
accordance with this Loan Agreement. The Loan Documents shall include, but not
be limited to, the following:

(a) this Loan Agreement;

(b) the Note;

(d) the Model Home Documents.

"LOAN TO VALUE RATIO" shall mean (i) with respect to a Project or any part
thereof as to which a Loan to Value Ratio is being determined, the ratio of the
Project Amount to the Value and (ii) with respect to a Model Home, the ratio of
the amount of the Model Home Amount to the Value.

"LOTS" shall mean, with respect to a Project, the tracts of real property
within the Land that have been or will be developed for the subsequent
construction thereon of Homes.

8
<PAGE>

"MAP" shall mean, with respect to a Project, a final subdivision or parcel
map consistent with the Plans and Specifications and with the Laws and
Regulations.

"MATERIAL ADVERSE CHANGE" shall mean any material and adverse change in, or
a change which has a material adverse effect upon, any of:

(a) the business, properties, operations or condition (financial or
otherwise) of Borrower since either or both of (i) May 2, 1996, or (ii) the
date of the most recent financial statements delivered to Lender in
connection with the Loan;

(b) the legal or financial ability of Borrower to perform its
obligations under the Loan Documents and to avoid any Potential Default or
Event of Default; or

"MATURITY DATE" shall mean the first to occur of (i) the date which is
forty two (42) months from the date of this Loan Agreement (as such date may be
extended in writing by Lender and Borrower from time to time), or (ii) the date
on which the Loan is required to be repaid pursuant to SECTION 6.2.

"MODEL HOME" shall mean a single family residence, condominium home and/or
attached townhouse which is complete and which the Borrower has designated as a
model home to be used in marketing the associated housing subdivision, the
construction financing for which such housing subdivision has been provided by a
lender other than the Lender.

"MODEL HOME AMOUNT" shall mean, with respect to a Model Home, the amount of
the Loan disbursed to refinance the Model Home, which amount shall not exceed
seventy five percent (75%) of the Value of the Model Home.

"MODEL HOME DOCUMENTS" shall mean, with respect to a Model Home, all
documents, instruments, agreements, assignments and certificates relating
thereto, including, without limitation, any and all loan or credit agreements,
promissory notes, deeds of trust, mortgages, security agreements, assignments of
rents, assignments of leases, assignments of contracts, environmental
indemnities, guaranties, contractor's consent agreements, lender's title
insurance policies, opinions of counsel, evidences of authorization or
incumbency, escrow instructions, architect's consent agreements, and UCC-1
financing statements to be executed (and acknowledged where applicable) by
Borrower, Model Home Owner and/or Lender (where applicable) in connection with
Lender making proceeds of the Loan available to the Borrower for the Model Home,
as the same may be amended or otherwise modified from time to time in accordance
with this Loan Agreement. The Model Home Documents shall include, but not be
limited to, the following:

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<PAGE>

(a) the Deed of Trust;

(b) the UCC-1 Financing Statement; and

The Model Home Documents shall include those forms of documents, instruments,
agreements, assignments and certificates for the States of Arizona, Illinois and
Michigan which the Lender and Borrower approve at the time of their execution
and delivery of this Loan Agreement, as evidenced by a written certificate of
the Lender and Borrower. The forms of the Model Home Documents may be
supplemented or amended from time to time to add or amend form Model Home
Documents approved by Lender.

"MODEL HOME DRAW REQUEST CERTIFICATION" shall mean, with respect to a
requested disbursement of the Loan to refinance a Model Home, a certification of
Borrower delivered to the Lender substantially in the form set forth in EXHIBIT
F.

"MODEL HOME OWNER" shall mean, with respect to a Model Home, the owner of
the Land, which such owner shall be United Homes, United Arizona, United
Illinois and/or United Michigan.

"MODEL HOME SECURITY INSTRUMENTS" shall mean, with respect to a Model Home,
all pledge agreements, guaranties, deeds of trust, mortgages, security
agreements, assignments and other agreements or instruments executed by Borrower
and/or Model Home Owner granting in favor of Lender a lien or encumbrance on or
a security interest in any property or right or interest of Borrower and/or
Model Home Owner as security for the Loan, as the same may be amended or
otherwise modified from time to time in accordance with this Loan Agreement,
including but not limited to the following:

(a) the Deed of Trust; and

(b) the UCC-1 Financing Statement.

"MODEL HOME SUB-LIMIT" shall mean the amount of the Loan which is available
for the refinancing of Model Homes, which amount shall equal Five Million
Dollars ($5,000,000).

"NET WORTH" shall mean the net worth of the Borrower reported on a
consolidated basis accounted for in accordance with GAAP.

"NON-LENDER PROJECTS" shall mean all other development or construction
projects then being developed or constructed by the Borrower and its Affiliates,
which such projects are not being financed through proceeds of the Loan.

"NOTE" shall mean that certain Promissory Note dated of even date herewith
and executed by the Borrower, as maker, and made payable to the order of Lender,
as holder, in the amount of

10
<PAGE>

Twenty Five Million Dollars ($25,000,000) and maturing on the Maturity Date, to
evidence the Loan, as such Promissory Note may be amended or otherwise modified
from time to time.

"PARTICIPANT" shall mean any financial institution to whom the Lender, in
accordance with and subject to SECTION 7.12, at any time sells, assigns, grants
or otherwise transfers a participation interest in all or part of the
obligations of the Borrower under the Loan Documents.

"PERMITTED EXCEPTIONS" shall mean, with respect to a Project or a Model
Home, (i) real estate taxes and assessments not yet due and payable and possible
supplemental assessments for improvements constructed on the Land, (ii) unfiled
mechanics' and materialmen's liens (to the extent applicable), but only if
affirmative mechanics' lien coverage is provided by the Title Policy, (iii)
exceptions to title which are approved by the Lender and which do not adversely
affect the value of the Land, the marketability of title to the Land or the use
to which the Land is intended to be put, (iv) easements for the installation and
maintenance of utilities servicing the Project which do not adversely affect the
value of the Land, the marketability of title to the Land or the use to which
the Land is intended to be part and (v) the additional permitted exceptions
listed as an exhibit to the applicable Deed of Trust.

"PERSON" shall mean an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.

"PLANNING COSTS" shall mean, with respect to a Project, the fees and
planning costs, such as engineering and architectural fees, incurred in
connection with the planning for the Development Work and Construction
Improvements, to the extent reflected in the Budget.

"PLANS AND SPECIFICATIONS" shall mean, with respect to a Project, the final
set of architectural, structural, mechanical, electrical, grading, sewer, water,
street and utility plans and specifications for the Development Work and the
Construction Improvements to be included within such Project, including all
supplements, amendments and modifications thereto signed and affixed with the
architect's registration stamp or seal, all in form and substance reasonably
satisfactory to the Lender and the Inspector.

"PREPAYMENT PRICE" shall mean an amount equal to (i) the principal amount
of the Loan to be prepaid, as requested by the Borrower, with no premium
thereon, plus (ii) if a Lot or Unit is to be released in conjunction with such
prepayment, and if the Lot or Unit is in a High Advance Rate Project, the
Additional Loan Fee applicable to such release, plus (iii) all accrued interest
to the date of prepayment on the principal amount prepaid.

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"PRIME RATE" shall mean the rate that is indicated in the Telerate as the
prime lending rate announced from time to time by The First National Bank of
Chicago, a national banking association, as in effect from time to time, it
being understood that the Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
In the event that such rate is no longer shown in the Telerate, Borrower and
Lender shall reasonably agree on a substitute source for determining the prime
lending rate of The First National Bank of Chicago.

"PROJECT" shall mean any acquisition, development and/or construction
project as to which the Lender has issued a Project Commitment and made proceeds
of the Loan available for disbursement, which such project shall include (i) the
Land and (ii) the Development Work and/or Construction Improvements to be
completed on the Land.

"PROJECT AMOUNT" shall mean, as to any Project at any time, the principal
amount of the Loan outstanding with respect to such Project, plus any
additional amounts of the Loan available to be disbursed with respect to such
Project, as such amount is set forth in the Project Commitment.

"PROJECT COMMITMENT" shall mean, with respect to a Project, the commitment
issued by the Lender to the Borrower for the Project, wherein the Lender agrees,
subject to the terms and conditions of this Loan Agreement and such commitment,
to make proceeds of the Loan available for the Project. The Project Commitments
shall be substantially in the form of EXHIBIT D.

"PROJECT DOCUMENTS" shall mean, with respect to a Project, all documents,
instruments, agreements, assignments and certificates relating thereto,
including, without limitation, any and all loan or credit agreements, promissory
notes, deeds of trust, mortgages, security agreements, assignments of rents,
assignments of leases, assignments of contracts, environmental indemnities,
guaranties, contractor's consent agreements, lender's title insurance policies,
opinions of counsel, evidences of authorization or incumbency, escrow
instructions, architect's consent agreements, and UCC-1 financing statements to
be executed (and acknowledged where applicable) by Borrower, Project Owner
and/or Lender (where applicable) in connection with Lender making proceeds of
the Loan available to the Borrower for the Project, as the same may be amended
or otherwise modified from time to time in accordance with this Loan Agreement.
The Project Documents shall include, but not be limited to, the following:

(a) the Project Commitment;

(b) the Loan Agreement Supplement;

(d) the Environmental Indemnity;

(e) the UCC-1 Financing Statement;

(f) the Assignment;

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(g) the Title Policy; and

(h) the Plans and Specifications.

The Project Documents shall include those forms of documents, instruments,
agreements, assignments and certificates for the States of Arizona, Illinois and
Michigan which the Lender and Borrower approve at the time of their execution
and delivery of this Loan Agreement, as evidenced by a written certificate of
the Lender and Borrower. The forms of the Project Documents may be supplemented
or amended from time to time to add or amend form Project Documents approved by
Lender.

"PROJECT MATURITY DATE" shall mean, with respect to a Project, the first to
occur of (i) the date which is thirty (30) months from the date of the Loan
Agreement Supplement (as such date may be extended in writing by the Lender and
the Borrower from time to time), or (ii) the date on which the Loan is required
to be repaid pursuant to SECTION 7.2.

"PROJECT MODEL HOME" shall mean, with respect to a Project, any Home which
is not subject to a Sales Agreement and which the Borrower has designated as a
model home to be used in marketing the Project, the number of which such model
homes shall be limited as set forth in the Project Commitment.

"PROJECT OWNER" shall mean, with respect to a Project, the owner of the
Land, which such owner shall be United Homes, United Arizona, United Illinois
and/or United Michigan.

"PROJECT REQUIREMENTS" shall mean, for any project proposed to be included
as a Project pursuant to the terms of this Loan Agreement, the requirements
listed in EXHIBIT B.

"PROJECT SECURITY INSTRUMENTS" shall mean, with respect to a Project, all
pledge agreements, guaranties, deeds of trust, mortgages, security agreements,
assignments and other agreements or instruments executed by Borrower and/or
Project Owner granting in favor of Lender a lien or encumbrance on or a security
interest in any property or right or interest of Borrower and/or Project Owner
as security for the Loan, as the same may be amended or otherwise modified from
time to time in accordance with this Loan Agreement, including but not limited
to the following:

(a) the Deed of Trust;

(b) the UCC-1 Financing Statement; and

"PROJECT UNDERWRITING DOCUMENTS" shall mean, for any project proposed to be
included as a Project pursuant to the terms of this Loan Agreement, the
documents listed in EXHIBIT C and any other documents relating to the proposed
project which Lender reasonably requests, all in form and

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substance reasonably satisfactory to the Lender and, as to items A5, A8, B1, B3
and B6, in form and substance reasonably satisfactory to the Inspector.

"QUALIFIED PROJECT EXPENDITURES" shall mean, with respect to a Project, the
costs for which proceeds of the Loan may be disbursed, which such costs shall be
limited to the following:

(a) the cost of acquiring the Land or the Lots;

(b) Planning Costs;

(c) the cost of materials and labor for Development Work and
Construction Improvements in place for the Project, but excluding any costs
for materials delivered to the Land which have not yet been put in place;

(d) the Interest Reserve; and

(e) Soft Costs.

The particular amounts which may be disbursed for each of the categories set
forth in PARAGRAPHS (a) through (e) above shall be set forth in the Budget for
the Project. Amounts in the Budget which are not listed in any of the
categories set forth in PARAGRAPHS (a) through (e) above shall not be Qualified
Project Expenditures and proceeds of the Loan may not be disbursed for any such
costs.

"SALES AGREEMENT" shall mean, with respect to a Project, a written
agreement for the sale of a Lot or a Unit between the Borrower and a Person who
is not an Affiliate of the Borrower, which agreement (i) shall be binding upon
such Person, (ii) shall require such Person to deposit with the Borrower an "at
risk" deposit, (iii) shall conform to all applicable laws, regulations, codes
and ordinances, including those requiring disclosures to prospective and actual
buyers and (iv) shall not contain any contingencies, except that such agreement
may be contingent on such Person's ability to obtain financing for the purchase,
but only if such Person has been pre-approved for financing prior to entering
into such agreement.

"SOFT COSTS" shall mean, with respect to a Project, the Borrower's
overhead, general and administrative expenses and other "soft costs" incurred in
the development, construction, marketing and sale of the Project, to the extent
reflected in the Budget.

"SPEC HOMES" shall mean Homes which are not subject to a Sales Agreement.

"STAGE" shall mean, with respect to a Project, the various stages of the
Construction Improvements which such stages, and the components of the
Construction Improvements which fit within each stage, shall be specified in the
Project Commitment.

"TITLE POLICY" shall mean, with respect to a Project or a Model Home, an
ALTA loan form (1970 form, unrevised or the equivalent thereof) of title
insurance policy in the amount of the Project

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Amount or the Model Home Amount, as applicable, and issued by a title insurance
company acceptable to the Lender, insuring the Lender that the applicable Deed
of Trust is an enforceable first lien against marketable fee simple title to the
Project or Model Home, as applicable, subject only to Permitted Exceptions,
which such title insurance policy will provide mechanics' lien coverage, will
have all standard exceptions deleted therefrom and will have appended thereto a
usury endorsement and such other endorsements as are generally required by
lenders in the area in which the Project or Model Home is located.

"TOTAL PROJECT COSTS" shall mean, with respect to a Project, the sum of (i)
the Qualified Project Expenditures plus (ii) all other costs necessary to
acquire the Land, construct the Development Work and the Construction
Improvements in accordance with the Plans and Specifications and complete the
Project.

"UCC-1 FINANCING STATEMENT" shall mean, with respect to a Project or a
Model Home, a UCC-1 financing statement to be executed by Project Owner with
respect to a Project, or Model Home Owner, with respect to a Model Home, as
debtor, in favor of Lender, as secured party, in connection with Lender making
proceeds of the Loan available to the Borrower for the Project or Model Home, as
applicable, as such UCC-1 financing statement may be amended or otherwise
modified from time to time.

"UNIT" shall mean, with respect to a Project, a Lot and the Home
constructed on such Lot.

"UNITED ARIZONA" shall mean United Homes, Inc., an Arizona corporation.

"UNITED HOMES" shall mean United Homes, Inc., an Illinois corporation.

"UNITED ILLINOIS" shall mean United Homes of Illinois, Inc., an Illinois
corporation.

"UNITED MICHIGAN" shall mean United Homes of Michigan, Inc., a Michigan
corporation.

"VALUE" shall mean, with respect to a Project or a Model Home, the
following:

(a) with respect to a Project and for purposes of determining whether
or not the Loan to Value Ratio complies with the Project Requirements, the
lower of (i) the value which an Appraiser assigns to the Project, as set
forth in an Appraisal Report, which Appraisal Report shall determine the
values of each Unit, whether or not the Construction Improvements have been
completed, based on the "as-completed" appraised value of such Unit and
(ii) the sales prices for the Units as set forth in Sales Agreements; and

(b) with respect to a Model Home, the value which an Appraiser
assigns to the Model Home, as set forth in an Appraisal Report (which such
value shall be used to determine the amount of the Loan which may be
disbursed to refinance the Model Home), the value of which Model Home,
whether or not such home has been completed, shall be

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determined based on the "as-completed" appraised value of such home,
excluding furnishings, wall and window coverings and decorations.

Section 1.2. OTHER DEFINITIONAL PROVISIONS.

(a) Accounting terms not defined herein shall have the respective meanings
given to them under GAAP. To the extent that the definitions of accounting
terms herein are inconsistent with the meanings of such terms under GAAP, the
definitions contained herein shall control.

(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Loan Agreement shall refer to this Loan Agreement as a
whole and not to any particular provision of this Loan Agreement.

(c) In this Loan Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding".

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ARTICLE II
THE LOAN

Section 2.1. AGREEMENT TO LEND AND BORROW; EVIDENCE OF INDEBTEDNESS AND
MATURITY.

(a) Lender agrees, on the terms and conditions hereinafter set forth, to
make the Loan to Borrower for the purpose of providing financing for Projects
and refinancing for Model Homes; provided however, that the obligation of the
Lender to make the Loan is conditioned upon the Lender's receipt of the
documents set forth in EXHIBIT A attached hereto. The Borrower shall repay the
Loan pursuant to SECTION 2.6 and may prepay the Loan pursuant to SECTION 2.8.
Principal amounts of the Loan which are repaid may be reborrowed in accordance
with and subject to the terms of SECTION 2.14.

(b) Concurrent with the execution and delivery of this Loan Agreement, the
Borrower shall execute and deliver to the Lender the Note, evidencing the
indebtedness incurred by the Borrower pursuant to the terms of this Loan
Agreement.

(c) The outstanding principal balance of the Loan, together with accrued
and unpaid interest thereon and all other amounts payable by Borrower under the
terms of the Loan Documents, shall be due and payable on the Maturity Date.

(d) The Loan is to provide interim construction financing only and the
Note is to be paid off on or before the Maturity Date from such sources as may
be necessary to pay the Loan, and any sums outstanding or payable under any of
the Loan Documents, in full.

Section 2.2. DISBURSEMENTS OF THE LOAN.

(a) The Lender shall make disbursements of the Loan for the Projects in
accordance with and subject to the terms of ARTICLE III hereof.

(b) During the Approval Period, the Lender shall make disbursements of the
Loan to refinance Model Homes as follows:

(1) Each disbursement request shall be evidenced by a Model Home Draw
Request Certification and be accompanied by the following:

(A) an Appraisal Report which sets forth a Value for the Model
Home which will result in the Model Home Amount being equal to or less
than seventy five percent (75%) of such Value;

(B) a Title Policy; and

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<PAGE>

(3) Provided that no Event of Default or Potential Default exists and
that the Model Home Security Instruments have been duly filed and recorded,
and subject to the terms and conditions set forth herein, the Lender will
use its reasonable best efforts to disburse to the Borrower the amount
requested within five (5) Business Days after receipt of a Model Home Draw
Request Certification meeting the requirements of this Loan Agreement,
provided that in the event the Lender is unable to make the disbursement
within such time period, the Lender will disburse the proceeds of the Loan
as soon thereafter as possible. All disbursements shall be delivered to
Borrower by federal funds wire transfer as instructed by Borrower.

(4) The obligation of Lender to make disbursements of the Loan to
refinance a Model Home is subject to fulfillment of the following
conditions precedent:

(A) Lender shall not be obligated to make any disbursements of
the Loan to the extent that the requested disbursement relates to
costs which are not costs of the refinancing, which such costs shall
be paid from additional funds provided by Borrower.

(B) Lender shall not be obligated to make any disbursements if:

(I) the outstanding balance of the Loan exceeds, or would
following the contemplated disbursement exceed, the face amount
of the Note; or

(II) the outstanding balance of the Loan attributable to
the Model Home exceeds, or would following the contemplated
disbursement exceed, the Model Home Amount.

(5) Lender shall not be obligated to disburse any Loan proceeds
unless all statements made in the applicable Model Home Draw Request
Certification are true and correct on and as of the date of the requested
disbursement, before and after giving effect thereto and to the application
of the proceeds therefrom.

(6) The representations and warranties of Borrower contained in the
Loan Documents are true and correct in all material respects on and as of
the date of the requested disbursement, before and after giving effect
thereto and to the application of the proceeds therefrom, as though made on
and as of such date.

(7) No Event of Default or Potential Default has occurred and is
continuing, or would result from such disbursement or from the application
of the proceeds therefrom.

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Section 2.3. USE OF DISBURSEMENTS. Borrower shall ensure the use of
disbursements of the Loan only for Qualified Project Expenditures and for the
refinancing of Model Homes.

Section 2.4. COMMITMENT FEE.

(a) The Borrower shall pay to Lender the Commitment Fee on the dates and
for the periods set forth in this SUBPARAGRAPH (a). The Commitment Fees are
payable in advance for each of the periods indicated. The initial Commitment
Fee in the amount of $125,000 shall be payable upon execution of this Loan
Agreement for the first annual period (May 28, 1996 through and including May
27, 1997). The subsequent annual Commitment Fees shall be payable annually on
each May 28 for the succeeding one-year period.

(b) If Borrower fails to pay any Commitment Fee as required under this
SECTION 2.4 in a timely manner, Borrower hereby authorizes Lender to disburse to
itself proceeds of the Loan to pay such Commitment Fee, provided that the
foregoing shall not be construed as granting to the Borrower the right to draw
proceeds of the Loan to pay the Commitment Fee. Lender in its sole discretion
(but without any obligation to do so) may make such disbursements
notwithstanding the existence of an Event of Default or Potential Default. Such
disbursements shall be added to the outstanding principal balance of the Loan.
The authorization hereby granted is irrevocable, and no further direction or
authorization from Borrower is necessary for Lender to make such disbursements.
If Lender disburses to itself Loan proceeds to pay itself a Commitment Fee
without first having received a request from Borrower to make such a
disbursement, then Lender shall send to Borrower a statement that shows the
amount of Loan proceeds disbursed to pay such Commitment Fee and an explanation
of Lender's calculation of the amount thereof.

Section 2.5. NO REDUCTION IN COMMITMENT FEE. The Borrower acknowledges
that the Commitment Fees required to be paid to the Lender pursuant to the
provisions of SECTION 2.4 shall be due and owing to the Lender in advance for
each annual period, regardless of whether the Loan remains outstanding for the
entire annual period and regardless of whether the Committed Balance decreases
during such annual period, and in the event either the Borrower repays or is
required to repay the Loan prior to the end of such annual period or the
Committed Balance decreases prior to the end of such annual period, the Borrower
shall not be entitled to any refund of the Commitment Fee previously paid. Upon
termination of this Loan Agreement or upon the occurrence of an Event of Default
which results in the Lender exercising its remedy to cease making disbursements
of proceeds of the Loan, no additional Commitment Fees shall thereafter be due
to the Lender.

Section 2.6. REPAYMENT OF PRINCIPAL. Principal of the Loan shall be due
and payable as follows:

(a) upon the sale of a Lot and/or Unit in a Project, the Borrower
shall repay the principal amount of the Loan (i) at the rate of one hundred
fifteen percent (115%) of (A) the total amount of the Loan disbursed for
the acquisition of such Lot plus (B) the total amount of the Loan budgeted
for the Development Work related to such Lot, and (ii) at the rate of one
hundred percent (100%) of the total amount of the Loan disbursed for the
Construction

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Improvements related to the Home on such Lot, until such time as the total
amount of the Loan disbursed for such Project has been paid in full; during
the Approval Period, principal repaid in accordance with this SUBPARAGRAPH
(a) may be reborrowed subject to and upon compliance with the terms of this
Loan Agreement;

(b) upon disbursement of proceeds of the Loan for a Home within a
Project, the principal amount of the Loan (i) disbursed to acquire the
related Lot, (ii) budgeted for the Development Work related to such Lot,
and (iii) disbursed for the Construction Improvements related to the Home
on such Lot, is required to be repaid twelve (12) months from the date Loan
proceeds are first disbursed for the Construction Improvements for such
Home, unless the Unit sells prior to such date, in which event the
principal shall be repaid in accordance with SUBPARAGRAPH (a) above; during
the Approval Period, principal repaid in accordance with this SUBPARAGRAPH
(b) may be reborrowed subject to and upon compliance with the terms of this
Loan Agreement;

(c) if the amount of the Loan disbursed for a Project has not been
repaid on or before the date Project Maturity Date, the Borrower shall on
such date repay the entire principal amount of the Loan allocable to such
Project; during the Approval Period, principal repaid in accordance with
this SUBPARAGRAPH (c) may be reborrowed subject to and upon compliance with
the terms of this Loan Agreement;

(d) upon the sale or refinancing of a Model Home, the Borrower shall
repay the principal amount of the Loan at the rate of one hundred percent (100%)
of the total amount of the Loan disbursed for the Model Home; during the
Approval Period, principal repaid in accordance with this SUBPARAGRAPH (d) may
be reborrowed subject to and upon compliance with the terms of this Loan
Agreement; and

(e) on the Maturity Date, the Borrower shall repay the entire
remaining principal amount of the Loan.

Section 2.7. INTEREST.

(a) The Loan shall bear interest from the date of disbursement hereunder
on the unpaid principal at the per annum rate of the Prime Rate plus one and
one-quarter percent (1.25%). Throughout the term of the Loan, interest shall be
calculated on a the basis of a 360-day year and shall be computed for the actual
number of days in the period for which interest is charged.

(b) On or before the fifth (5th) Business Day of each month, commencing
with the first month after the Lender has disbursed proceeds of the Loan, the
Lender shall send to Borrower a statement setting forth the amount of interest
due for the previous month. Borrower shall pay the interest due for the
previous month on or before the Interest Due Date; provided however that if the
Borrower has elected, with respect to any Project, to include in the Budget for
such Project an Interest Reserve, the Lender shall make a disbursement from the
Loan to pay the interest due on the Loan; provided further however that after
such time as proceeds of the Loan in an amount equal to

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<PAGE>

the Interest Reserve have been expended to pay interest, the Lender shall make
no further disbursements from the Loan to pay the interest due on the Loan and
the Borrower shall pay such interest from its own funds.

Section 2.8. PREPAYMENT OF THE LOAN. Borrower shall have the right to
prepay the Loan at any time, in full or in part at a price equal to the
Prepayment Price. Any partial prepayment of the Loan shall be accompanied by a
statement wherein the Borrower specifies (i) to which Project or Model Home such
prepayment is to be applied and (ii) if the prepayment relates to a Project, the
particular categories with the Budget or the particular Lots and/or Units, to
which such prepayment is to be applied.

Section 2.9. SECURITY. Payment of the Loan by Borrower and performance
of Borrower's other obligations under the Loan Documents shall be secured by the
collateral described in the Project Security Instruments and Model Home Security
Instruments, which Borrower warrants shall create a valid and first-lien
position with respect to the Projects and the Model Homes, subject to Permitted
Exceptions.

Section 2.10. PAYMENTS. All payments of principal and interest on the
Loan shall be made to the Lender by federal funds wire transfer as instructed by
the Lender in immediately available funds not later than 1:00 p.m. (Minneapolis
time) on the dates such payments are to be made. Any payment received after
1:00 p.m. (Minneapolis time) shall be deemed received by the Lender on the next
Business Day. All computations of interest and fees under the Loan Documents
shall be made by Lender on the basis of a year of 360 days, for the actual
number of days occurring in the period for which such interest or fees are
payable. If any payment of fees, interest or principal to be made by Borrower
shall become due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall be included
in computing any interest with respect to such payment.

Section 2.11. EXTENSION. Borrower may, not earlier than ninety (90) days
and not later than forty five (45) days prior to the last day of the then
effective Approval Period (as it may be extended from time to time pursuant to
this SECTION 2.11), request that the Approval Period be extended for twelve (12)
months by giving written notice to Lender in the form of EXHIBIT E attached
hereto. Lender may, in its sole and absolute discretion, consent or not consent
to such request by giving written notice thereof to Borrower not less than
thirty (30) days prior to the last day of the then effective Approval Period.
If Lender fails to give such notice Lender shall be deemed not to have consented
to such extension. If the Lender consents to such request, the Approval Period
shall be extended twelve (12) months from the last day of the then effective
Approval Period, without the requirement of any further action by Borrower or
Lender.

Section 2.12. APPLICATIONS OF PAYMENTS; LATE CHARGES.

(a) Payments received by Lender pursuant to the terms hereof shall be
applied in the following manner:

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<PAGE>

(1) first, to the payment of all expenses, charges, costs and fees
incurred by or payable to Lender and for which Borrower is obligated
pursuant to the terms of the Loan Documents;

(2) second, to the payment of all interest accrued to the date of
such payment, except that the payments made pursuant to SECTION 2.6(a)
through (d) shall be applied to the payment of principal in accordance with
SUBPARAGRAPH (3) below and not to the payment of interest; and

(3) third, to the payment of principal.

Notwithstanding anything to the contrary contained herein, after the occurrence
and during the continuation of an Event of Default, all amounts received by
Lender from any party shall be applied in such order as Lender, in its sole
discretion, may elect.

(b) If any installment of interest and/or the payment of principal is not
received by Lender within five (5) days after the due date thereof, then in
addition to the remedies conferred upon Lender pursuant to SECTION 6.1 hereof
and the other Loan Documents, a late charge of four percent (4%) of the amount
of the installment due and unpaid will be added to the delinquent amount to
compensate Lender for the expense of handling the delinquency. Borrower and
Lender agree that such late charge represents a good faith and fair and
reasonable estimate of the probable cost to Lender of such delinquency.
Borrower acknowledges that during the time that any such amount shall be in
default, Lender will incur losses which are impracticable, costly and
inconvenient to ascertain and that such late charge represents a reasonable sum
considering all of the circumstances existing on the date of the execution of
this Loan Agreement and represents a reasonable estimate of the losses Lender
will incur by reason of late payment. Borrower further agrees that proof of
actual losses would be costly, inconvenient, impracticable and extremely
difficult to fix. Acceptance of such late charge shall not constitute a waiver
of the default with respect to the overdue installment, and shall not prevent
Lender from exercising any of the other rights and remedies available hereunder.

Section 2.13. INTEREST RATE LIMITATION. The provisions of this Loan
Agreement and the other Loan Documents are hereby expressly limited so that in
no contingency or event whatever shall the amount paid or agreed to be paid to
Lender for the use, forbearance or detention of the sums evidenced by this Loan
Agreement exceed the maximum amount permissible under applicable law. If from
any circumstance whatever the performance or fulfillment of any provision of
this Loan Agreement or of any other Loan Document should involve or purport to
require any payment in excess of the limit prescribed by law, then the
obligation to be performed or fulfilled is hereby reduced to the limit of such
validity, and if, from any circumstance whatever, Lender should ever receive as
interest an amount which would exceed the highest lawful rate under applicable
law, then the amount which would be excessive interest shall be applied as an
optional reduction of principal in accordance with the terms of SECTION 2.8 of
this Loan Agreement (or, at Lender's option, be paid over to Borrower), and
shall not be counted as interest.

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<PAGE>

Section 2.14. REVOLVING NATURE OF LOAN.

(a) The Loan is a revolving loan, and during the Approval Period, any
amounts which are repaid may, subject to the terms of this Loan Agreement
limiting the amounts which may be drawn for any Project or Model Home and the
terms restricting disbursements of proceeds of the Loan, be redrawn for another
Project or another Model Home.

(b) With respect to any Project, repaid principal of the Loan which is all
or a portion of the Construction Amount of the Project Amount shall be available
to be reborrowed with respect to further Construction Improvements for the
Project. Upon repayment in full of the Construction Amount of the Project
Amount, and during the Approval Period, such repaid principal shall be added to
the Available Amount. Repaid principal of the Loan which is all or a portion of
the Acquisition and Development Amount of the Project Amount shall not be
available to be reborrowed with respect to the Project, but during the Approval
Period shall be added to the Available Amount.

(c) During the Approval Period, repaid principal of the Loan which is a
repayment of the Model Home Amount shall be added to the Available Amount.

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ARTICLE III
APPROVAL OF PROJECTS AND DISBURSEMENTS FOR PROJECTS

Section 3.1. PROJECT APPROVAL AND PROJECT COMMITMENTS.

(a) During the Approval Period, the Borrower may submit to Lender projects
proposed to be included as Projects, all pursuant to and in accordance with the
terms of this Loan Agreement, and upon approval as a Project, disbursements of
the Loan may be made with respect to the Qualified Project Expenditures for such
Project.

(b) In order to include a proposed project as a Project, Borrower shall
submit to Lender a complete description of the proposed project, including the
Project Underwriting Documents, and evidence that the proposed project complies
with the Project Requirements.

(c) Upon its receipt of the Project Underwriting Documents, Lender shall
have thirty (30) days to review and, in its sole and absolute discretion,
approve or disapprove the proposed project as a Project which may be financed
from proceeds of the Loan. Upon any such approval, Lender shall issue a Project
Commitment with respect thereto and such proposed project shall become a Project
for purposes of this Loan Agreement; provided however, that no Project
Commitment shall be issued with respect to any proposed project unless the
Available Amount is at least equal to the amount required to complete such
proposed project. In the event a Project includes both (i) acquisition of Land
and Development Work and (ii) Construction Improvements, the Project Commitment
will specify (y) the Acquisition and Development Amount, which amount once
disbursed and repaid cannot be disbursed again with respect to that Project, and
(z) the Construction Amount, which amount once disbursed and repaid may be
disbursed again with respect to additional Construction Improvements in that
Project.

(d) It shall be the intent of the Borrower and the Lender that, by the
completion of the ninth month after the date of this Loan Agreement, the
locations of the projects presented to the Lender for approval as Projects will
be generally the same as the geographical diversification of all of the projects
owned by the Borrower, on a consolidated basis.

Section 3.2. PROCESSES RELATING TO DISBURSEMENTS. All requests for
disbursements of proceeds of the Loan for the Projects shall be evidenced by a
Draw Request Certification and shall comply with the terms of the applicable
Loan Agreement Supplement and Project Commitment.

Section 3.3. APPLICATION OF DISBURSEMENTS. All Loan proceeds disbursed
to Borrower as Qualified Project Expenditures pursuant to this Loan Agreement
and the Loan Agreement Supplements will be used only for payment of those items
specified in the Draw Request Certification for which the particular
disbursement was made. Borrower will not use any such disbursement to pay or
reimburse itself, directly or indirectly, for any amounts paid by Borrower or
any other Person but not included in the applicable Budget.

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Section 3.4. LENDER MAY MAKE DISBURSEMENT NOTWITHSTANDING NONCOMPLIANCE.
Notwithstanding the failure of any condition precedent to Lender's obligation to
make any disbursement hereunder or under the Loan Agreement Supplements, Lender
may make such disbursement if Lender, in its sole discretion, determines the
making of the same to be advisable. The making of any disbursement, either
before or after the satisfaction of all conditions precedent with respect to
Lender's obligation to make the same, shall not be deemed to constitute an
approval or acceptance by Lender of the Development Work or the Construction
Improvements theretofore completed or a waiver of such condition with respect to
a subsequent disbursement.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Section 4.2. ORGANIZATION. United Homes and United Illinois are each duly
organized, validly existing and in good standing as corporations under the laws
of the State of Illinois. United Arizona is duly organized, validly existing and
in good standing as a corporation under the laws of the State of Arizona.
United Michigan is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Michigan. Each of United Homes,
United Arizona, United Illinois and United Michigan is duly qualified to do
business and is in good standing in every jurisdiction where its business or
properties require such qualification and has all requisite power and authority
to own and operate its properties and to carry on its business as now conducted
or proposed to be conducted.

Section 4.3. AUTHORIZATION. The execution, delivery and performance by
Borrower of the Loan Documents have been duly authorized by all necessary action
and do not and will not (i) contravene the charter documents of any of United
Homes, United Arizona, United Illinois or United Michigan; (ii) contravene any
law, rule or regulation or any order, writ, judgment, injunction or decree or
any contractual restriction binding on or affecting the Borrower; (iii) require
any approval or consent of any partner, shareholder or any other Person other
than approvals or consents which have been previously obtained and disclosed in
writing to Lender; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which the Borrower or its
properties may be bound or affected; or (v) result in, or require the creation
or imposition of, any lien of any nature (other than the liens contemplated
hereby) upon or with respect to any of the properties now owned or hereafter
acquired by the Borrower; and Borrower is not in default under any such law,
rule, regulation, order, writ, judgment, injunction, decree or contractual
restriction or any such indenture, agreement, lease or instrument.

Section 4.4. GOVERNMENTAL CONSENTS. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
Borrower of the Loan Documents or any other document executed pursuant thereto
or in connection therewith.

Section 4.5. VALIDITY. The Loan Documents have been duly executed and
delivered by and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.

Section 4.6. FINANCIAL POSITION. As of the dates prepared, the financial
statements and all financial data heretofore delivered to Lender in connection
with the Loan and/or relating to Borrower

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are true, correct and complete in all material respects and were prepared in
accordance with GAAP consistently applied. Such financial statements fairly
present the financial position of the Persons who are the subject thereof as of
the dates thereof.

Section 4.7. GOVERNMENTAL REGULATIONS. Borrower is not subject to
regulation under the Investment Company Act of 1940, the Federal Power Act, the
Public Utility Holding Company Act of 1935, the Interstate Commerce Act, as the
same may be amended from time to time, or any federal or state statute or
regulation limiting its ability to incur Debt.

Section 4.8. EMPLOYEE BENEFIT PLANS. Borrower maintains no pension,
retirement, profit sharing or similar employee benefit plan that is subject to
ERISA other than a plan pursuant to which the Borrower's contribution
requirement is made concurrently with the employees' contributions.

Section 4.9. SECURITIES ACTIVITIES. Borrower is not engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System in effect
from time to time) and not more than twenty-five percent (25%) of the value of
Borrower's assets consists of such margin stock.

Section 4.10. NO MATERIAL ADVERSE CHANGE. No Material Adverse Change has
occurred since May 2, 1996.

Section 4.11. PAYMENT OF TAXES. All tax returns and reports required to
be filed by Borrower have been timely filed, or proper extensions for filing
have been obtained, and all taxes, assessments, fees and other governmental
charges upon Borrower and its respective properties, assets, income and
franchises which are due and payable have been paid when due and payable, or
proper extensions for payment have been obtained, except to the extent that such
taxes, assessments, fees and other governmental charges or the failure to pay
the same would not result in a Material Adverse Change. Borrower has no
knowledge of any proposed tax assessment against Borrower that could result in a
Material Adverse Change.

Section 4.12. LITIGATION. There is no pending or, to Borrower's
knowledge, threatened action, suit, proceeding or arbitration against or
affecting Borrower before any court, governmental agency or arbitrator, which
may result in a Material Adverse Change.

Section 4.13. ENVIRONMENTAL MATTERS. The operations of Borrower comply in
all respects with all Hazardous Materials Laws except such noncompliance which
would not (if enforced in accordance with applicable law) reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Change. As
of the date of this Loan Agreement, (i) neither Borrower nor its present
properties or operations is subject to any outstanding written order from or
settlement or consent agreement with any governmental authority or other Person,
nor is any of the foregoing subject to any judicial or docketed administrative
proceeding respecting any Hazardous Materials Law, Hazardous Materials Claim or
Hazardous Material, and (ii) there are no other conditions or

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circumstances known to Borrower which may give rise to any Hazardous Materials
Claim arising from the operations of Borrower.

Section 4.14. NO BURDENSOME RESTRICTIONS. Borrower is not a party to or
bound by any contract or agreement, or subject to any charter or corporate
restriction or any requirement of law, which would reasonably be expected to
result in a Material Adverse Change.

Section 4.15. FULL DISCLOSURE. None of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of Borrower
in connection with the Loan Documents contains any untrue statement of a
material fact, or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading; provided, however, that it is
recognized by Lender that projections and forecasts provided and to be provided
by Borrower, while reflecting Borrower's good faith projections or forecasts
based upon methods and data Borrower believes to be reasonable and accurate, are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or
forecasted results.

Section 4.16. ADEQUATE CONSIDERATION. Borrower represents and warrants to
Lender that prior to entering into this Loan Agreement, it has reviewed the
benefits to be provided to it as a result of the Lender making the Loan and has
concluded that such benefits are reasonably equivalent in value to the
collateral to be pledged to secure the Loan and the obligations assumed and to
be assumed by the Borrower pursuant to the Loan Documents.

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ARTICLE V
COVENANTS OF BORROWER

Section 5.1. CONSIDERATION. As an inducement to Lender to execute this
Loan Agreement, make the Loan and make each disbursement of the Loan, Borrower
hereby covenants as set forth in this ARTICLE V.

Section 5.2. AFFIRMATIVE COVENANTS. So long as any amount payable
hereunder or under any other Loan Document shall remain unpaid or Lender shall
have any commitment to disburse the Loan hereunder, Borrower shall, unless
Lender shall otherwise consent in writing:

(a) REPORTING REQUIREMENTS. Furnish or cause to be furnished to
Lender the following notices and reports:

(1) MONTHLY, QUARTERLY AND ANNUAL PROJECT STATUS REPORTS. The
following reports:

(A) on or about the twentieth (20th) day of each month, a
status report for the previous month (i) describing for all
Projects and all Non-Lender Projects, the progress of development
and construction, (ii) describing for all Projects and all
Non-Lender Projects, sales activity and other material
developments and (iii) with respect to the Projects only,
describing substantial deviations in the Development Work or the
Construction Improvements from the Plans and Specifications, or
the existence of defective workmanship or materials incorporated
into the Construction Improvements;

(B) on or about the forty-fifth (45th) day after the end
of each fiscal quarter, a status report with respect to the
Projects only which sets forth the actual costs of the Project as
compared with the Budget; and

(C) on or about the forty-fifth (45th) day after the end
of each fiscal year, with respect to the Projects only, the
projected cash flow analysis for the remainder of each Project;

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financial officer of United Homes to fairly present the financial
condition of United Homes on a fully consolidated basis as at the end
of such fiscal quarter and the results of the operations of United
Homes on a fully consolidated basis for the period ending on such
date; (ii) a summary report of accounts payable aging; and (iii) a
written statement certifying that the Borrower is in compliance with
the terms of the Loan Documents, or if the Borrower is not in
compliance, specifying the details of the non-compliance and the
action which Borrower is taking to correct such non-compliance;

(3) ANNUAL REPORTS. As soon as possible and in any event within
one hundred twenty (120) days after the end of each fiscal year of
United Homes, audited financial statements of the United Homes on a
fully consolidated basis, which financial statements shall include a
balance sheet of United Homes on a fully consolidated basis as at the
end of such fiscal year, statements of income, shareholders' equity
and cash flow of United Homes on a fully consolidated basis for such
fiscal year, and setting forth in each case in comparative form
figures for the preceding fiscal year, all in reasonable detail and in
accordance with GAAP consistently applied and accompanied by an
unqualified opinion issued by an independent certified public
accountant acceptable to Lender;

(4) NOTICE OF LABOR CONTROVERSY. As soon as possible and in
any event within five (5) days after Borrower has knowledge of its
occurrence, written notice of any labor controversy resulting in a
material strike, work stoppage, shutdown or other material labor
disruption against or involving Borrower or any Project;

(5) NOTICE OF MATERIAL ADVERSE CHANGE. Promptly upon its
occurrence, written notice and a description of any matter which has
resulted, or will result, in a Material Adverse Change;

(6) NOTICE OF DEFAULTS OR POTENTIAL DEFAULTS. As soon as
possible and in any event within five (5) days after Borrower has
knowledge of the occurrence of any Potential Default (however
described) or Event of Default hereunder or an event of default
(however described) under any other of the Loan Documents, written
notice and a description of such Potential Default, Event of Default
or event of default and the action which Borrower proposes to take
with respect thereto;

(7) NOTICES OF DEFAULT REGARDING OTHER DEVELOPMENT PROJECTS.
As soon as possible and in any event within five (5) days after
Borrower has knowledge of the occurrence of any event of default under
any loan or other financing facility, including seller financing, made
for a development project comparable to a Project and involving
Borrower, which event of default might result in a Material Adverse
Change;

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(9) NOTICES REGARDING HAZARDOUS MATERIALS. Promptly upon its
occurrence, written notice and a description of the release of any
Hazardous Material, or any liability with respect thereto, on, under
or in connection with any Project or Model Home and the action which
Borrower proposes to take with respect thereto;

(10) NOTICES REGARDING PROJECTS AND MODEL HOMES. Promptly and
in any event within five (5) days after receipt by Borrower, copies of
all (A) notices of violation relating to and materially adversely
affecting any Project or Model Home that Borrower receives from any
governmental agency or authority, (B) notices of default that Borrower
receives under the Construction Agreements or any other material
agreement relating to and materially adversely affecting any Project
or Model Home, and (C) notices of default that Borrower receives under
any agreement relating to the borrowing of money by Borrower for any
Project or Model Home from any Person; and

(11) OTHER INFORMATION. Such other information respecting the
business, properties, assets, operations and condition, financial or
otherwise, of Borrower, the Projects and the Model Homes, including,
without limitation, copies of Project construction and sales reports,
and any other rights or interests subject to the Loan Documents, as
Lender may from time to time reasonably request.

(b) COMPLIANCE WITH LAWS AND REGULATIONS ETC. Comply in all material
respects, with the Laws and Regulations, the noncompliance with which might
result in a Material Adverse Change.

(c) PAYMENT OF TAXES AND CLAIMS. Pay all taxes, assessments and
other governmental charges imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income or profits
before any penalty accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or may become a
lien upon any of its properties or assets.

(d) MAINTENANCE OF PROPERTIES; BOOKS AND RECORDS. Maintain or cause
to be maintained:

(1) in good repair, working order and condition all properties
and assets material to the continued conduct of the business of
Borrower, and from time to time

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make or cause to be made all necessary repairs, renewals and
replacements thereof; and

(2) proper books, records and accounts in which full, true and
correct entries in accordance with GAAP consistently applied are made
of all financial transactions and matters involving its assets and
business.

(e) MAINTENANCE OF EXISTENCE. Maintain and preserve its existence
and all rights, privileges, qualifications, permits, licenses, franchises
and other rights material to its business.

(g) MANAGEMENT. At all times ensure that Edward J. Havlik remains
employed as President of United Homes, involved in the day to day
operations of the Borrower.

Section 5.3. NEGATIVE COVENANTS. So long as any amount payable
hereunder or any other Loan Document still remains unpaid or Lender shall have
any commitment to disburse the Loan hereunder, Borrower shall not, unless Lender
shall otherwise consent in writing:

(a) LIENS. Subject to the rights of the Borrower pursuant to the
Loan Agreement Supplements, create, assume or suffer to exist any lien,
security interest or other charge or encumbrance, or any other type of
preferential arrangement, upon the collateral for the Loan assigned to
Lender by Borrower pursuant to the Project Security Instruments or the
Model Homes Security Instruments.

(b) SALES, ETC. OF ASSETS; OWNERSHIP OF COLLATERAL. Sell, lease,
transfer or otherwise dispose of (i) all or substantially all of its assets
(in a single transaction or a series of related transactions), or (ii) any
of the collateral for the Loan assigned to Lender pursuant to the Project
Security Instruments or the Model Homes Security Instruments, except as
permitted by the Loan Agreement Supplements.

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(d) CHANGE IN NATURE OF BUSINESS. Make any change in the nature of
its business as carried on at the date hereof.

(e) LAND BANKING OR LAND SPECULATION. Permit the use of Loan
proceeds for Land Banking or Land Speculation.

(f) USE OF PROCEEDS. Use any part of the proceeds of the Loan to (i)
purchase or carry any margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System), (ii) repay
or otherwise refinance indebtedness of Borrower or others incurred to
purchase or carry any margin stock, (iii) extend credit for the purpose of
purchasing or carrying any margin stock, or (iv) acquire any security in
any transaction that is subject to Section 13 or 14 of the Securities
Exchange Act of 1934, as amended, and regulations promulgated thereunder.

Section 5.4. FINANCIAL COVENANTS. Borrower shall comply with, or
ensure compliance with, each of the following financial covenants:

(a) NET WORTH. United Homes shall, on a consolidated basis, at all
times maintain a Net Worth equal to or in excess of (i) prior to September
30, 1996, Eight Million Dollars ($8,000,000) and (ii) on and after
September 30, 1996, Ten Million Dollars ($10,000,000).

(c) RATIO OF LIABILITIES TO ADJUSTED NET WORTH. At all times, the
ratio of United Homes' total liabilities (reported on a consolidated basis)
to its Adjusted Net Worth shall not exceed 4.0 to 1.0.

Section 5.5. INSURANCE. Borrower shall maintain or cause its
contractors to maintain the insurance required by the terms of this Loan
Agreement and shall deposit with Lender original, duplicate original or
certified copies of insurance certificates issued by insurance companies with
current Best's Key Ratings of not less than A/IX and written in form and content
acceptable to Lender, providing the following minimum insurance coverages:

(a) For each Project, all-risk course of construction insurance
(non-reporting form) in the minimum amount of the proposed construction
cost for such Project on a replacement cost basis against loss or damage by
hazards customarily included within "extended coverage" policies, and any
other risks or hazards which in Lender's reasonable judgment should be
insured against, with a Lender's Loss Payable Endorsement naming Lender as
an additional insured together with a full replacement cost endorsement
(without provisions for co-insurance).

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(b) "Comprehensive General Liability" insurance in the minimum
"general aggregate" amount of Two Million Dollars ($2,000,000), in the
minimum "occurrence" limit of One Million Dollars ($1,000,000) and in the
minimum "umbrella" amount of Ten Million Dollars ($10,000,000), all against
claims for "personal injury" liability, including bodily injury, death or
damage to the project liability, including completed operations and
contractual liability and also including owners' and contractors'
protective coverage naming Lender as an additional insured.

(c) Workers' compensation insurance as prescribed by the laws of each
state in which the Borrower is required to maintain such insurance, and
employers' liability with limits as prescribed by law.

(d) For each Project, flood insurance in the maximum amount of the
Project Amount or the maximum coverage available, whichever is less,
designating Lender as payee, or evidence satisfactory to Lender that the
Project is not located within an area designated as within the 100 year
flood plain under the National Flood Insurance Program.

(e) Insurance with respect to its properties, assets and business
against loss or damage of the kinds customarily insured against by Persons
of established reputation engaged in the same or similar business and
similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, all in
accordance with reasonably prudent industry standards.

Each policy of insurance required under this SECTION 5.5 shall contain the
"standard non-contributory mortgagee clause" and the "standard lenders' loss
payable clause," or their equivalents, in favor of Lender, and shall provide
that it shall not be modified or canceled without thirty (30) days' prior
written notice to Lender. Borrower shall also furnish Lender with receipts for
the payment of premiums on such policies or other evidence of such payment
reasonably satisfactory to Lender. In the event Borrower does not deposit with
Lender a new policy of insurance with evidence of payment of premiums thereon at
least thirty (30) days prior to the expiration of any expiring policy, then
Lender may, but shall not be obligated to, procure such insurance, and Borrower
shall pay the premiums thereon to Lender promptly upon demand. Lender shall
not, by the fact of approving, disapproving, accepting, preventing, obtaining or
failing to obtain any such insurance, incur any liability for the form or legal
sufficiency of insurance contracts, solvency of insurers or payment of losses,
and Borrower hereby expressly assumes full responsibility therefor and all
liability related thereto, if any.

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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES

Section 6.1. EVENTS OF DEFAULT. The occurrence and continuance of any
of the following events shall constitute an "Event of Default" hereunder:

(a) Borrower shall fail to pay any installment of principal on the
Loan when due, whether at stated maturity, as a result of a mandatory
prepayment requirement, upon acceleration or otherwise, or pay when due any
interest, fees or other amounts payable hereunder or under the other Loan
Documents; or

(b) any representation or warranty made by Borrower herein or in any
other Loan Document shall at any time be incorrect in any material respect;
or

(c) Borrower shall fail to perform or observe any term, covenant or
agreement contained in this Loan Agreement or any other Loan Document
(other than failure described elsewhere in this SECTION 6.1), and such
failure shall remain unremedied for thirty (30) days after notice thereof
from Lender to Borrower; provided that in the event Borrower commences and
is diligently pursuing to completion action to cure the failure, such
thirty (30) day period may be extended for such period of time as is
necessary to cure the failure, but in no event longer than one hundred
twenty (120) days from the date of the Lender's notice; provided further
however, that in the event (i) Lender determines that the failure to
immediately declare an Event of Default could materially and adversely harm
the rights of the Lender hereunder or under any other Loan Document, or the
rights of the Lender with respect to the collateral pledged to secure the
Loan, or (ii) Lender reasonably determines that the failure to perform or
observe the terms of this Loan Agreement or any other Loan Document cannot
be remedied with the passage of one hundred twenty (120) days, then Lender
may declare an immediate Event of Default in its notice given pursuant to
this SECTION 6.1(c); or

(d) Borrower shall assert the invalidity or unenforceability of any
Loan Document or any Loan Document shall be adjudicated to be invalid or
unenforceable in any material respect; or

(e) Borrower shall fail to pay any Debt, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt and such failure could result in a Material Adverse
Change; or any other default under any agreement or instrument relating to
any such Debt, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such failure to pay, default or event and such failure
could result in a Material Adverse Change and results in the acceleration,
or permits the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or is required to be prepaid
(other than by a regularly

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scheduled required prepayment) prior to the stated maturity thereof, and
the effect of such required payment could result in a Material Adverse
Change; or

(f) Borrower shall generally not pay its Debts as such Debts become
due, or shall admit in writing its inability to pay its Debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Borrower seeking to adjudicate
such party as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition
of such party's Debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official
for such party or for any substantial part of such party's property and, in
the case of any such proceeding instituted against it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed for a
period of thirty (30) days (whether or not consecutive), or any of the
actions sought in such proceeding (including, without, limitation, the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for any substantial
part of its property) shall occur; or Borrower shall take any action to
authorize any of the actions set forth above; or

(g) any event of default (however described) under any other Loan
Document shall occur and not be cured within the applicable grace period;
or

(h) any Project Security Instrument or any Model Home Security
Instrument, for any reason, ceases to create a valid and perfected first
priority lien on or in the Land or other collateral relating thereto as
described in the Loan Documents, or Borrower shall so state in writing; or

(i) the dissolution or winding up of Borrower; or

(j) any judgment or order for the payment of money in excess of One
Hundred Thousand Dollars ($100,000), singularly or in the aggregate, shall
be rendered against Borrower, and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment, or (ii) there shall
be a period of fifteen (15) days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or

(k) a Material Adverse Change shall occur; or

(l) the Borrower shall fail to comply with any of the financial
covenants set forth in SECTION 5.4.

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Section 6.2. REMEDIES. Upon the occurrence of any Event of Default,
the following provisions shall apply:

(a) if such event is an Event of Default specified in SECTION 6.1(f),
Lender's commitment to fund the Loan shall terminate and the indebtedness
evidenced by the Note shall and any other amounts payable under this Loan
Agreement and the other Loan Documents shall immediately and automatically
become due and payable; and

(b) if such event is any event other than an Event of Default
described in SUBPARAGRAPH (a) above, Lender may, at its option:

(1) by notice to Borrower, terminate its commitment to fund
the Loan and declare the Loan, all interest thereon, and all other
amounts payable under this Loan Agreement and the other Loan Documents
to be due and payable, whereupon the Loan, all such interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by Borrower; and/or

(2) exercise any and all rights and remedies available to
Lender under the Loan Documents or at law or in equity, including,
without limitation, the right to foreclose or otherwise realize upon
all or any part of the collateral securing Borrower's obligations and
to proceed against Borrower and/or any other Person liable with
respect to the obligations under the Loan Documents.

Section 6.3. AUTHORIZATION TO APPLY ASSETS TO PAYMENT OF LOAN. The
Borrower hereby authorizes the Lender, following the occurrence of an Event of
Default, without notice or demand, to apply any property, balances, credits,
accounts or moneys of the Borrower or any Affiliate of the Borrower then in the
possession of Lender, or standing to the credit of the Borrower or any Affiliate
of the Borrower, to the payment of the Loan.

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ARTICLE VII
MISCELLANEOUS

Section 7.1. SUCCESSORS AND ASSIGNS; NO ASSIGNMENT BY BORROWER. The
provisions of this Loan Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, provided that
Borrower may not assign or transfer any of its rights or obligations under this
Loan Agreement or any of the other Loan Documents without the prior written
consent of Lender.

Section 7.2. NOTICES. All notices, requests and demands to be made
hereunder to the parties hereto shall be in writing (at the addresses set forth
below) and shall be given by any of the following means:

(a) personal delivery;

(b) reputable overnight courier service;

(c) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by registered or certified, first
class mail, return receipt requested); or

(d) registered or certified, first class mail, return receipt
requested. Any notice, demand or request sent pursuant to SUBSECTION (a)
OR (c) hereof shall be deemed received upon such personal delivery or upon
dispatch by electronic means, and if sent pursuant to SUBSECTION (d) shall
be deemed received three (3) days following deposit in the mail, and if
sent pursuant to SUBSECTION (b) shall be deemed received on the next
Business Day following delivery to the courier service.

The addresses for notices are as follows:

To Lender: Residential Funding Corporation
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437
Attention: Managing Director
Construction Finance
Telephone No.: (612) 832-7435
Telecopier No.: (612) 832-7254

With a copy to: Residential Funding Corporation
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437
Attention: General Counsel
Telephone No.: (612) 832-7415
Telecopier No.: (612) 832-7190

38
<PAGE>

To Borrower: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: Edward F. Havlik, President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

With copies to: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: William J. Crock, Jr., Vice - President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

Shefsky, Froelich & Divine, LTD
444 North Michigan Ave
Suite 2300
Chicago, Illinois 60611
David Feltman
Telephone No.: (312) 836-4064
Telecopier No.: (312) 527-9285

Such addresses may be changed by notice to the other parties given in the same
manner as provided above.

Notwithstanding the foregoing, all requests for disbursements of the Loan
pursuant to ARTICLE II above shall be deemed received only upon actual receipt,
and such requests for disbursement shall be given only to the Lender's primary
addressee.

Section 7.3. CHANGES, WAIVERS, DISCHARGE AND MODIFICATIONS IN WRITING.
No provision of this Loan Agreement or any of the other Loan Documents may be
changed, waived, discharged or modified except by an instrument in writing
signed by the Lender and the party against whom enforcement of the change,
waiver, discharge or modification is sought.

Section 7.4. NO WAIVER; REMEDIES CUMULATIVE. No disbursement of
proceeds of the Loan shall constitute a waiver of any conditions to Lender's
obligation to make further disbursements nor, in the event Borrower is unable to
satisfy any such conditions, shall any such waiver have the effect of precluding
Lender from thereafter declaring such inability to constitute an Event of
Default (however described) under this Loan Agreement or any other Loan
Document. No failure or delay on the part of Lender in the exercise of any
power, right or privilege hereunder or under this Loan Agreement or any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any Event of Default (however described) or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise

39
<PAGE>

thereof, or of any other right, power or privilege. Except as specifically
provided herein, all rights and remedies existing under this Loan Agreement or
any other Loan Document are cumulative to and not exclusive of any rights or
remedies otherwise available.

Section 7.5. COSTS, EXPENSES AND TAXES. Borrower agrees to pay the
costs, and all expenses incurred by Lender in connection with the preparation,
execution, delivery, administration, modification and amendment of this Loan
Agreement, the other Loan Documents and any other documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for Lender with respect thereto and with respect to advising
Lender as to its rights and responsibilities under this Loan Agreement and the
other Loan Documents; provided however, that the Borrower shall not be obligated
to pay in excess of Twenty Thousand Dollars ($20,000) with respect to the
preparation, execution and delivery of this Loan Agreement.

Borrower further agrees to pay all costs and expenses of Lender (including,
without limitation, reasonable counsel fees and expenses, court costs and all
other litigation expenses, including, but not limited to, reasonable expert
witness fees, document copying expenses, exhibit preparation, courier expenses,
postage expenses and communication expenses) in connection with the enforcement
of this Loan Agreement, the other Loan Documents and any other documents
delivered hereunder, including, without limitation, costs and expenses incurred
in connection with any bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar proceeding, or any refinancing or restructuring in
the nature of a "workout" of the Loan Documents and any other documents
delivered by Borrower related thereto. In addition, Borrower shall pay any and
all stamp and other taxes payable or determined to be payable in connection with
the execution and delivery of this Loan Agreement, the other Loan Documents and
the other documents to be delivered hereunder, and agrees to hold Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes.

Whenever Borrower is obligated to pay or reimburse Lender for any
attorneys' fees, those fees shall include the allocated costs for services of
Lender's in-house counsel.

Payment from the Borrower of amounts due pursuant to this SECTION 7.5 shall
be due ten (10) days after it has received from the Lender written notice of the
nature of the item for which payment is required and the amount due, other than
amounts due pursuant to the last sentence of the previous paragraph which
amounts shall be due on demand.

Section 7.6. DISCLAIMER BY LENDER; NO JOINT VENTURE. Borrower
acknowledges, understands and agrees as follows:

(a) the relationship between Borrower and Lender is, and shall at all
times remain, solely that of borrower and lender, and Lender neither
undertakes nor assumes any responsibility for or duty to Borrower to
select, review, inspect, supervise, pass judgment upon or inform Borrower
of the quality, adequacy or suitability of any matter or thing submitted to
Lender for its approval;

40
<PAGE>

(b) Lender owes no duty of care to protect Borrower or any other
Person against negligent, faulty, inadequate or defective building or
construction; and

(c) Borrower is not and shall not be an agent of Lender for any
purpose and Lender is not a joint venture partner with Borrower in any
manner whatsoever.

Any approvals granted by Lender for any matters covered under this Loan
Agreement shall be narrowly construed to cover only the parties and facts
identified in any such approval.

Section 7.7. INDEMNIFICATION. Borrower agrees to protect, indemnify,
defend and hold harmless each Indemnified Party from and against any and all
claims (including, without limitation, Hazardous Materials Claims), damages,
losses, liabilities, obligations, penalties, actions, judgments, suits, costs,
disbursements and expenses (including, without limitation, reasonable fees and
expenses of counsel and consultants and allocated costs of internal counsel)
that may be incurred by or asserted against any Indemnified Party, in each case
arising out of or in connection with or related to any of the following:

(a) the Loan, this Loan Agreement or any other Loan Document,

(b) the use of funds advanced under the Loan Documents,

(c) the failure of Borrower or any other party (other than Lender) to
comply fully with any and all laws applicable to it (including, without
limitation, Hazardous Materials Laws), or

(d) any use, handling, production, transportation, disposal or
storage of any Hazardous Materials in, under or on any Project or Model
Home or any part thereof by any Person, including, without limitation,

(i) all consequential damages directly or indirectly arising
out of (A) the use, generation, storage, discharge or disposal of
Hazardous Materials by any owner or operator of said property or any
Person on or about said property, or (B) any residual contamination
affecting any natural resource or the environment, and

(ii) the costs of any required or necessary repair, cleanup, or
detoxification of said property and the preparation of any closure or
other required plans,

whether or not an Indemnified Party is a party thereto and whether or not the
transactions contemplated hereby are consummated, except to the extent such
claims, damages, losses, liabilities, obligations, penalties, actions,
judgments, suits, costs, obligations, penalties, disbursements and expenses are
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from the negligence or willful misconduct of the Indemnified
Party.

41
<PAGE>

Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this SECTION
7.7 shall (i) survive the termination of this Loan Agreement and the other Loan
Documents and the payment in full of the Loan and (ii) be in addition to the
indemnification obligations contained in the Environmental Indemnities.

Section 7.8. CONSULTANTS. Borrower shall pay any and all valid claims
of any consultants, advisors, brokers or agents whom it has retained or with
whom it has initiated contact with respect to the Loan who claims a right to any
fees in connection with the Loan, and shall indemnify, defend and hold Lender
harmless from such claims, whether or not they are valid.

Section 7.9. GOVERNING LAW. This Loan Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois.

Section 7.10. TITLES AND HEADINGS. The titles and headings of sections
of this Loan Agreement are intended for convenience only and shall not in any
way affect the meaning or construction of any provision of this Loan Agreement.

Section 7.11. COUNTERPARTS. This Loan Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same agreement with the same effect as if all
parties had signed the same signature page.

Section 7.12. PARTICIPATIONS. Lender may at any time sell, assign, grant
or transfer to a Participant participations in all or part of the obligations of
Borrower under the Loan Documents. Without limitation of the exclusive right of
Lender to enforce such obligations, Borrower agrees that each disposition will
give rise to a debtor-creditor relationship of Borrower to the Participant, and
Borrower authorizes each Participant, upon the occurrence of an Event of
Default, to proceed directly by right of setoff, bankers' lien, or otherwise,
against any assets of Borrower which may be in the hands of such Participant;
provided however that the preceding clauses of this sentence shall not be
construed to give to any Participant any rights which are in addition to the
rights such Participant would derive from the participation arrangement between
Lender and Participant. Borrower authorizes Lender to disclose to any
prospective Participant any and all information in Lender's possession
concerning Borrower, this Loan Agreement and the other Loan Documents, the
Projects and Model Homes and the collateral for Borrower's obligations under the
Loan Documents. The Lender shall obtain from every Participant its covenant to
comply with the terms of SECTION 7.13 hereof.

Section 7.13. CONFIDENTIALITY. Borrower and Lender shall mutually agree
on the contents of any press release, public announcement or other public
disclosure regarding this Loan Agreement and the transactions contemplated
hereunder to be made following the mutual execution and delivery of this Loan
Agreement; provided that Lender may disclose the terms hereof and give copies of
the Loan Documents to assignees and Participants and to prospective assignees
and Participants. If either party fails to respond to the other party in
writing with either an approval or a disapproval within five (5) Business Days
of a party's receipt of the other party's request for consent or approval

42
<PAGE>

as expressly contemplated pursuant to this SECTION 7.13, which request shall
have been sent to the other party's notice addressees in the manner set forth in
SECTION 7.2, then such consent or approval shall be deemed to have been given,
provided that such five (5) Business Day period shall not commence to run unless
and until the other party shall have received all information, materials,
documents and other matters required to be submitted to it hereunder with
respect to such consent or approval and all other information, materials,
documents and other matters reasonably essential to its decision process.

Section 7.14. TIME IS OF THE ESSENCE. Time is of the essence of this
Loan Agreement.

Section 7.15. NO THIRD PARTIES BENEFITTED. This Loan Agreement is made
and entered into for the sole protection and legal benefit of Borrower, Lender
and the Participants and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Loan Agreement or any
of the other Loan Documents. Lender shall not have any obligation to any Person
not a party to this Loan Agreement or the other Loan Documents.

Section 7.16. SEVERABILITY. The illegality or unenforceability of any
provision of this Loan Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Loan Agreement or any instrument or
agreement required hereunder.

Section 7.17. JURISDICTION. Any legal action or proceeding with respect
to this Loan Agreement or any of the other Loan Documents may be brought in the
courts of the State of Illinois or of the United States for the Northern
District of Illinois , and by execution and delivery of this Loan Agreement,
each of Borrower and Lender consents, for itself and in respect of its property,
to the jurisdiction of those courts. Each of Borrower and Lender irrevocably
waives any objection, including any objection to the laying of venue or based on
the grounds of forum non conveniensm which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of this
Loan Agreement or any document related hereto. Borrower and Lender each waive
any personal service of any summons, complaint or other process, which may be
made by any other means permitted by Illinois law. Nothing in this SECTION 7.17
shall affect the right of Lender to serve legal process in any other manner
permitted by law or limit the right of Lender to bring any action or proceeding
against Borrower or its property in the courts of any other jurisdiction.

Section 7.18. WAIVER OF JURY TRIAL. BORROWER AND LENDER WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OR ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER
AND LENDER AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES

43
<PAGE>

FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

Section 7.19. INTERPRETATION. This Loan Agreement and the other Loan
Documents shall not be construed against Lender merely because of Lender's
involvement in the preparation of such documents and agreements.

Section 7.20. ENTIRE AGREEMENT. This Loan Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding among
Borrower and Lender and supersedes all prior or contemporaneous agreements and
understandings of such persons, verbal or written, relating to the subject
matter hereof and thereof except for any prior arrangements made with respect to
the payment by Borrower of (or any indemnification for) any fees, costs or
expenses payable to or incurred (or to be incurred) by or on behalf of Lender.

Section 7.21. JOINT AND SEVERAL LIABILITY. Borrower consists of United
Homes, United Arizona, United Illinois and United Michigan, each of which shall
be jointly and severally liable to Lender for the faithful performance of this
Loan Agreement and the other Loan Documents.

Section 7.22. RELEASES OF MODEL HOMES. Borrower may from time to time
request that Lender release one or more Model Homes from the lien of the Deed of
Trust and the other Model Home Security Instruments encumbering such Model
Homes. Lender agrees that it will execute a partial release that releases
Lender's lien on such Model Home pursuant to the Deed of Trust and the documents
executed pursuant thereto, provided that in all instances the following
conditions precedent shall have been satisfied:

(a) Lender shall have received a written notice requesting the
partial release no fewer than five (5) Business Days prior to the date on
which the partial release is to be effective, which notice shall specify
(i) the specific Model Homes to be released, (ii) if such release is being
requested in connection with a sale of the Model Homes, the Persons to whom
such Model Homes are being sold, which Person shall not be an Affiliate of
the Borrower, and (iii) the Lender's Release Prices therefor;

(b) Lender shall have received evidence satisfactory to Lender that
(i) the closing of the sale and/or release of such Model Home shall be
conducted through an escrow with a title company satisfactory to Lender,
and (ii) such title company shall have been instructed, which instructions
shall have been acknowledged and agreed to by such title company and which
cannot be changed or supplemented without Lender's written concurrence, not
to record Lender's partial release until such title company receives in
respect of such release an

44
<PAGE>

amount equal to Lender's Release Price for such Model Home and is
irrevocably committed to disburse such amount to Lender;

(c) Lender shall have received executed originals of all instruments,
agreements and other documents, if any, in form and substance satisfactory
to Lender, which Lender determines are necessary or appropriate, to
evidence and/or effectuate the partial release and to modify the Project
Documents as a result thereof; and

(d) Lender shall have received evidence satisfactory to Lender that
Borrower has satisfied all conditions precedent in the Project Documents
relating to the release of the Model Homes.

In connection with each release of a Model Home, provided all conditions to
such release have been met, Lender agrees to provide to the title insurance
company an estoppel letter, in form and substance satisfactory to Lender,
specifying the Lender's Release Price.

Section 7.23. LENDER'S CONSENT TO CERTAIN MATTERS. The Lender agrees
that it shall not unreasonably withhold or delay its consent to matters relating
to this Loan Agreement, the Projects or the Project Documents; provided however,
that the foregoing shall not apply to (i) the provisions of SECTION 2.11 and
notwithstanding the foregoing, the Lender may, in its sole and absolute
discretion, approve or disapprove any requested extension of the Approval
Period, (ii) the provisions of SECTION 3.1 and notwithstanding the foregoing,
the Lender may, in its sole and absolute discretion, approve or disapprove any
proposed project for inclusion as a Project or (iii) any other matter with
respect to which Lender determines that its consent could materially and
adversely harm the rights of the Lender hereunder or under any other Loan
Document, or the rights of the Lender with respect to the collateral pledged to
secure the Loan.

45
<PAGE>

IN WITNESS WHEREOF, Lender and Borrower have caused this Loan Agreement to
be duly executed and delivered as of the date first above written.

LENDER:

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

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

Printed Name:
--------------------------

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

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
--------------------------

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

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

46
<PAGE>

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

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

Printed Name:
--------------------------

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

47
<PAGE>

EXHIBIT A TO LOAN AGREEMENT

CONDITIONS TO OBLIGATION OF LENDER TO MAKE LOAN

The obligation of the Lender to make the Loan is conditioned upon the
Lender having received, in form and substance satisfactory to Lender, each of
the following:

1. Executed originals of this Loan Agreement and the Note.

2. A favorable opinion from counsel for Borrower with respect to the
following:

(a) United Homes and United Illinois are each duly organized, validly
existing and in good standing as corporations under the laws of the State
of Illinois. United Arizona is duly organized, validly existing and in
good standing as a corporation under the laws of the State of Arizona.
United Michigan is duly organized, validly existing and in good standing as
a corporation under the laws of the State of Michigan. Each of United
Homes, United Arizona, United Illinois and United Michigan are each duly
qualified to do business and in good standing in every jurisdiction where
its business or properties require such qualification and has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted.

(b) Borrower has the power and authority to execute and deliver, and
perform its obligations under, the Loan Documents.

(c) The execution, delivery and performance by Borrower of the Loan
Agreement and the Note have been duly authorized by all necessary action
and do not and will not (i) contravene the charter documents of United
Homes, United Arizona, United Illinois or United Michigan; (ii) contravene
any law, rule or regulation or, to such counsel's knowledge, any order,
writ, judgment, injunction or decree or any contractual restriction binding
on or affecting the Borrower; (iii) require any approval or consent of any
partner or any other Person other than approvals or consents which have
been previously obtained and disclosed in writing to Lender; (iv) to such
counsel's actual knowledge, result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which the
Borrower or its properties may be bound or affected; or (v) to such
counsel's actual knowledge, result in, or require the creation or
imposition of, any lien of any nature (other than the liens contemplated
hereby) upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower; and, to such counsel's knowledge, the
Borrower is not in default under any such law, rule, regulation, order,
writ, judgment, injunction, decree or contractual restriction or any such
indenture, agreement, lease or instrument.

A-1

<PAGE>

(d) The Loan Agreement and the Note have been duly executed and
delivered and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.

(e) To such counsel's knowledge, no authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery
and performance by Borrower of the Loan Agreement or the Note or any other
document executed pursuant thereto or in connection therewith.

(f) To such counsel's actual knowledge, there is no pending or
threatened action, suit, proceeding or arbitration against or affecting
Borrower or any of its Affiliates before any court, governmental agency or
arbitrator which, if adversely determined, would result in a Material
Adverse Change.

(g) Such other opinions as Lender shall request.

4. Copies of the Articles of Incorporation, By-Laws and a Certificate of
Good Standing for each of United Homes, United Arizona, United Illinois and
United Michigan.

5. Copies of the resolutions adopted by each of United Homes, United
Arizona, United Illinois and United Michigan authorizing the Borrower to
obligate itself with respect to the Loan and authorizing certain officers to
execute and deliver this Loan Agreement and the other Loan Documents.

6. Subject to the terms of SECTION 7.5 payment of all costs and expenses
incurred by Lender, including, without limitation, the fees and costs of its
legal counsel, in connection with the preparation, execution and delivery of
this Loan Agreement, the Note and the forms of the other Loan Documents.

7. Evidence satisfactory to the Lender that Borrower has approved the
forms of the Project Documents and Model Home Documents approved by Lender.

A-2

<PAGE>

EXHIBIT B TO LOAN AGREEMENT

PROJECT REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C>
ENTITLEMENT RISK Land must be through all discretionary zoning and approvals.

BY GEOGRAPHICAL The Projects must be located in the Chicago land area, the Phoenix
REGION suburbs or western Michigan.

FINAL PRICE POINT Entry-Level 50% - 100%
First move-up 0% - 50%
Second move-up 0% - 30%
Other 0% - 10%

Maximum value per Unit of $300,000

DEVELOPMENT LIFE The maximum proforma lifetime of a Project shall not exceed thirty
CYCLE (30) months from the date of the first disbursement of proceeds of
the Loan for the Project to full repayment, with all outstanding
borrowings due and payable on the Project Maturity Date. The
Development Work and/or the Construction Improvements must
commence within four (4) months of the date of the first
disbursement of proceeds of the Loan for the Project. Development
of raw, but entitled land, is anticipated only for the
construction of residential "for sale" Units by the Borrower. The
sale of lots to third party builders or developers must be
approved by the Lender.

MAXIMUM PER No more than Five Million Dollars ($5,000,000) of the Loan may be
PROJECT committed to any Project.

PROJECT SIZE Based on the absorption rate projected in the Appraisal Report,
LIMITATIONS the size of the Project shall not exceed the number of Units which
can be absorbed prior to the Project Maturity Date, with an
absolute cap of 125 Lots per Project.
</TABLE>

B-1

<PAGE>

<S> <C>
START LIMITATIONS Construction of the Units will be limited to (i) an agreed upon
number of Project Model Homes as set forth in the Project
Commitment, plus (ii) 100% of Units for which there exists a Sales
Agreement, plus (iii) an amount of Spec Units equaling up to three
(3) months of Unit absorption, based on the absorption rate
projected in the Appraisal Report. (Exceptions to the above start
limitations will be considered for attached dwelling Projects
containing numerous Units in one building and for winter
construction which requires pouring of slabs to enable spring
production). Phasing of the Development Work will be determined
based upon the economics of the Project and its physical
requirements.

STALE UNITS Any Unit, exclusive of Project Model Homes, which has not been
repaid within twelve (12) months of the commencement of
construction on said Unit, must be repaid.

LOAN TO VALUE The Project Amount shall be an amount which results in the Loan to
RATIO: Value Ratio being equal to or less than eighty percent (80%).
</TABLE>

B-2

<PAGE>

EXHIBIT C TO LOAN AGREEMENT

PROJECT UNDERWRITING DOCUMENTS

A. GENERAL PROJECT INFORMATION:

1. Summary description of proposed project.
2. Purchase contract for Land or Lots.
3. Project profitability summary
4. Source and use of funds statement.
5. Cash flow analysis, which shall include the proposed Budget
(including a line item cost breakdown and breakdown between costs of
acquisition of the Land or Lots, costs related to Development Work
and costs related to Construction Improvements) and the proposed
Construction Progress Schedule.
6. Market report supporting absorption rates and information on the
various model types of the Homes.
7. Appraisal Report(s) setting forth (i) a Value for the proposed
project equal to or greater than that required by the Project
Requirements and (ii) a value for each model type of Home included
within the proposed project.
8. The plat relating to such project.
9. Commitment for the Title Policy, including copies of all documents
relating to exceptions, which Title Policy will provide mechanics'
lien coverage, will have all standard exceptions deleted therefrom
and will have appended thereto such endorsements as are generally
required by lenders in the area in which the Project is located.
10. Certificates of insurance.

B. CONSTRUCTION INFORMATION AND DOCUMENTS:

C-1

<PAGE>

C. PROJECT LEGAL DOCUMENTS

1. Proposed or recorded covenants, conditions and restrictions.
2. If a condominium, a copy of the homeowner's association articles of
incorporation, by-laws and budget.

D. BORROWER LEGAL DOCUMENTS

1. A resolution of the Borrower authorizing the Borrower to obligate
itself with respect to the Project Documents and authorizing certain
officers to execute and deliver the Project Documents.

C-2

<PAGE>

EXHIBIT D TO LOAN AGREEMENT

FORM OF PROJECT COMMITMENT

[LETTERHEAD OF LENDER]

[DATE]

United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220

RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender") is
pleased to confirm that the Lender agrees to advance, in accordance with and
pursuant to the Loan Agreement referenced below, proceeds of the loan which the
Lender made, on a collective basis, to UNITED HOMES, INC., an Illinois
corporation, UNITED HOMES, INC., an Arizona corporation, UNITED HOMES OF
ILLINOIS, INC., an Illinois corporation and UNITED HOMES OF MICHIGAN, INC., a
Michigan corporation (collectively, the "Borrower") with respect to the Project
specified below, substantially upon the terms outlined below. Capitalized terms
used herein shall have the meanings assigned those terms in the Loan Agreement
dated as of May 28, 1996 between the Borrower and the Lender.

- --------------------------------------------------------------------------------
PROJECT
- --------------------------------------------------------------------------------
PROJECT OWNER
- --------------------------------------------------------------------------------
PROJECT AMOUNT $_______, of which amount $_______ is
the Acquisition and Development Amount
and $_________ is the Construction
Amount
- --------------------------------------------------------------------------------
TYPE OF PROJECT High Advance Rate Project /
Conventionally Financed Project
- --------------------------------------------------------------------------------

D-1

<PAGE>

- --------------------------------------------------------------------------------
DESCRIPTION OF PROJECT ACQUISITION OF LAND: Acquisition of
land for a _____ lot residential
subdivision located
_______________________.

DEVELOPMENT WORK: the work of
development to be performed on or with
respect to the Land (including,
without limitation, the installation
of utilities, roads and all related
on-site and off-site improvements) in
connection with the development of the
Land for the subsequent construction
thereon of Homes, all of which work
and construction shall be completed by
or on behalf of the Borrower in
accordance with the Plans and
Specifications.

CONSTRUCTION IMPROVEMENTS: the Homes
which are to be constructed on or with
respect to the Land by or on behalf of
the Borrower in accordance with the
Plans and Specifications, which
improvements shall include ________
[number]__________ [type] homes in a
subdivision commonly known as
_____________ located in ____________
County, State of __________, but shall
not include the Development Work.
- --------------------------------------------------------------------------------
BUDGET SCHEDULE 1 attached hereto sets forth
the Budget, which includes budgets for
the Acquisition and Development Amount
and for the Construction Amount, as
well as a schedule of the Stages of
the Construction Improvements.
- --------------------------------------------------------------------------------
COMMENCEMENT OF CONSTRUCTION Construction of the Project will
commence no later than ninety (90)
days from the date of this Project
Commitment.
- --------------------------------------------------------------------------------
PERMITTED PROJECT MODEL HOMES AND SPEC
HOMES
- --------------------------------------------------------------------------------
PLANS AND SPECIFICATIONS
- --------------------------------------------------------------------------------
INSPECTOR
- --------------------------------------------------------------------------------

D-2

<PAGE>

- --------------------------------------------------------------------------------
ADDITIONAL LIMITATIONS ON
DISBURSEMENTS
- --------------------------------------------------------------------------------
PROJECT DOCUMENTS Project Commitment
Loan Agreement Supplement
Deed of Trust
Environmental Indemnity
UCC-1 Financing Statement
Assignment
Title Policy
Plans and Specifications
- --------------------------------------------------------------------------------
OTHER REQUIRED DOCUMENTS 1. A copy of the corporate
resolutions adopted by each of United
Homes, United Arizona, United Illinois
and United Michigan authorizing the
Borrower to incur the debt related to
the Project and authorizing certain
officers of the Borrower to execute
and deliver the Project Documents.
2. Opinion of Counsel
- --------------------------------------------------------------------------------
BUILDER'S RISK INSURANCE
- --------------------------------------------------------------------------------

This Project Commitment is conditioned upon the absence of (i) any material
adverse change in the financial condition, operations or prospects of the
Borrower since ________________ ___, 199___, and (ii) any material action, suit
or proceeding (including, without limitation, any inquiry or investigation)
pending or threatened with respect to Borrower that could have a material
adverse affect on Borrower.

The Project Documents shall be prepared by counsel to the Lender and shall
be satisfactory to the Lender. Borrower shall be obligated to pay all costs and
expenses incurred to satisfy all conditions precedent, whether or not any funds
of the Loan are advanced with respect to the Project. The Lender shall not be
responsible or liable for consequential damages which may be alleged as a result
of the issuance of this Project Commitment. The provisions of this paragraph
shall survive any termination of this commitment.

Borrower agrees to indemnify and hold harmless Lender from liabilities
(including costs of settlement) arising out of or resulting from the
transactions contemplated by this Project Commitment, other than liabilities
resulting from the negligence or willful misconduct of the Lender, and to
reimburse the Lender for reasonable legal or other expenses incurred in
connection with the defense or preparation of the defense of any such liability.

D-3

<PAGE>

The provisions of the immediately preceding two paragraphs shall survive
any termination of this Project Commitment.

This Project Commitment shall terminate unless (a) this Project Commitment
is accepted by you on or before _______________, 199__, and (b) definitive
Project Documents, satisfactory in form and substance to the Lender, have been
entered into on or before _________ __, 199__ or such later date as is mutually
agreeable to the Lender and the Borrower.

Sincerely,

RESIDENTIAL FUNDING CORPORATION

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

Printed Name:
--------------------------

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

TERMS ACCEPTED:

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
--------------------------

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

D-4

<PAGE>

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

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

Printed Name:
--------------------------

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

D-5

<PAGE>

SCHEDULE 1 TO PROJECT COMMITMENT

BUDGET

D-6

<PAGE>

EXHIBIT E TO LOAN AGREEMENT

FORM OF EXTENSION REQUEST

Residential Funding Corporation
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437

Attention: Managing Director, Construction Finance

Gentlemen/Ladies:

In accordance with SECTION 2.11 of that certain Loan Agreement dated as of
May 28, 1996 (the "Loan Agreement"), between the undersigned and you, the
undersigned hereby notifies you of its election to request a twelve-month
extension of the Approval Period (as that term is defined in the Loan Agreement)
to ______________, 199__.

Please indicate Lender's consent to such six-month extension by signing the
attached copy of this letter in the space provided below and returning the same
to the undersigned.

Very truly yours,

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
--------------------------

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

E-1

<PAGE>

UNITED ILLINOIS, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

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

Printed Name:
--------------------------

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

E-2

<PAGE>

CONSENT TO EXTENSION

RESIDENTIAL FUNDING CORPORATION (the "Lender"), as lender under the Loan
Agreement dated as of May 28, 1996 between the Lender and UNITED HOMES, INC.,
consents to the extension of the Approval Period to May 28, 199__.

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

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

Printed Name:
--------------------------

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

E-3

<PAGE>

EXHIBIT F TO LOAN AGREEMENT

FORM OF MODEL HOME DRAW REQUEST CERTIFICATION

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

MODEL HOME DRAW REQUEST NUMBER _____

[DATE]

LENDER: RESIDENTIAL FUNDING CORPORATION

BORROWER: UNITED HOMES, INC.
UNITED HOMES, INC.
UNITED HOMES OF ILLINOIS, INC.
and
UNITED HOMES OF MICHIGAN, INC.

MODEL HOME(S): [name(s) and location(s)]

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Reference is made to that certain Loan Agreement dated as of May 28, 1996
between Lender and Borrower (as amended or otherwise modified from time to time,
the "Loan Agreement"). Capitalized terms used herein without definition shall
have the meanings set forth in the Loan Agreement, unless the context shall
require otherwise.

Borrower requests Lender to disburse to the Borrower the proceeds of the
Loan to refinance the Model Home(s) listed above, as detailed in the attached
SCHEDULE 1.

In connection with such requested disbursement, Borrower hereby represents,
warrants and certifies to Lender as follows:

(a) No Event of Default or Potential Default presently exists
under the Loan Agreement or any other Loan Document.

(b) All of the representations and warranties of Borrower under
the Loan Agreement and the other Loan Documents are hereby remade and
restated.

F-1

<PAGE>

(i) the Borrower has satisfied all conditions precedent to
the refinancing of the Model Home(s) as set forth in the Loan
Documents;

(ii) the Loan Documents are in full force and effect; and

(iii) the Loan is secured by a first priority lien on the Model
Homes(s) and the other collateral described in the Loan Documents.

(d) All insurance required to be maintained by Borrower remains
in full force in effect, of the types, in the amounts and issued by
insurers as previously approved by Lender.

(e) The Model Home Amount for each Model Home covered by this
Draw Request does not exceed seventy five percent (75%) of the Value of the
Model Home.

(f) The proceeds of the Loan disbursed pursuant to this Model
Home Draw Request Certification will be used soley to refinance the
specified Model Homes.

BORROWER:

UNITED HOMES, INC. ,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
--------------------------

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

F-2

<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

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

Printed Name:
--------------------------

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

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

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

Printed Name:
--------------------------

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

F-3

<PAGE>

[NAME(S) AND LOCATION(S) OF MODEL HOME(S)]

SCHEDULE 1 TO
MODEL HOME DRAW REQUEST CERTIFICATION NUMBER ____

[Borrower to attach its schedule setting forth the amounts
requested to be disbursed.]

F-4

<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SUPPLEMENT TO LOAN AGREEMENT

Dated as of October 3, 1996

Between

UNITED HOMES, INC.,
an Illinois corporation
UNITED HOMES, INC.
an Arizona corporation
UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation
and
UNITED HOMES OF MICHIGAN, INC.,
an Michigan corporation

collectively, "Borrower"

and

RESIDENTIAL FUNDING CORPORATION
a Delaware corporation

"Lender"

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

ARTICLE I DEFINITIONS ............................................... 4
Section 1.1 CERTAIN DEFINED TERMS ..................................... 4
Section 1.2 Other Definitional Provisions ............................ 14

ARTICLE II ADDITIONAL REPRESENTATIONS AND WARRANTIES ................ 16
Section 2.1 Consideration ............................................ 16
Section 2.2 Authorization ............................................ 16
Section 2.3 Governmental Consents .................................... 16
Section 2.4 Validity ................................................. 16
Section 2.5 Financial Position ....................................... 16
Section 2.6 No Material Adverse Change ............................... 16
Section 2.7 Litigation ............................................... 17
Section 2.8 Environmental Matters .................................... 17
Section 2.9 Full Disclosure .......................................... 17
Section 2.10 FIRPTA Certification ..................................... 17

ARTICLE III CONDITIONS PRECEDENT TO CLOSING .......................... 18
Section 3.1 Conditions Precedent ..................................... 18
Section 3.2 Project Underwriting Documents and Other Documents ....... 18
Section 3.3 Mortgage Recordation ..................................... 18
Section 3.4 Perfection Of Security Interest in Personal Property ..... 18
Section 3.5 Taxes .................................................... 18
Section 3.6 Insurance With Respect to Project ........................ 18

ARTICLE IV DISBURSEMENTS ............................................ 19
Section 4.1 Processes Relating to Disbursements ...................... 19
Section 4.2 Conditions Precedent to Disbursements For Qualified
Project Expenditures ..................................... 20
Section 4.3 Conditions Precedent to Final Disbursement ............... 21
Section 4.4 Application of Disbursements ............................. 23
Section 4.5 Lender May Make Disbursement Notwithstanding
Noncompliance ............................................ 23

ARTICLE V THE PROJECT .............................................. 24
Section 5.1 Consideration ............................................ 24
Section 5.2 Title to Project ......................................... 24
Section 5.3 No Prior Liens or Claims ................................. 24
Section 5.4 Access to the Project .................................... 24
Section 5.5 Compliance with Project Requirements and Laws and
Regulations .............................................. 24
Section 5.6 Covenants, Zoning, Codes, Permits and Consents ........... 25
Section 5.7 Utilities ................................................ 25

i
<PAGE>

Section 5.8 Maps, Permits, Licenses and Approvals .................... 25
Section 5.9 Approval of Plans and Specifications and Approval of
Budget ................................................... 25
Section 5.10 Adequacy of Project Amount ............................... 26
Section 5.11 Construction Start and Completion ........................ 26
Section 5.12 Personal Property Incorporation .......................... 26
Section 5.13 Contractors and Contracts ................................ 26
Section 5.14 Evidence of Ownership of Materials ....................... 27
Section 5.15 Changes to Plans and Specifications and Budget ........... 27
Section 5.16 Lender Inspections, Appraisals and Information ........... 28
Section 5.17 Correction of Defects .................................... 29
Section 5.18 Protection Against Lien Claims ........................... 29
Section 5.19 Conveyance, Lease or Encumbrance ......................... 30
Section 5.20 Security Instruments ..................................... 30
Section 5.21 Further Assurances; Cooperation .......................... 30
Section 5.22 Negative Covenants ....................................... 30
Section 5.23 Signs .................................................... 31

ARTICLE VI SALES OF UNITS AND RELEASES FROM MORTGAGE ................ 32
Section 6.1 Sales Agreement .......................................... 32
Section 6.2 Sales and Closings ....................................... 32
Section 6.3 Sales Operations and Seller's Obligations ................ 32
Section 6.4 Releases from Lien of Mortgage ........................... 32
Section 6.5 Project Model Homes ...................................... 33

ARTICLE V DEFAULT AND REMEDIES ..................................... 35
Section 7.1 Events of Default ........................................ 35
Section 7.2 Remedies ................................................. 37
Section 7.3 Authorization to Apply Assets to Payment of Loan ......... 41

ARTICLE VI MISCELLANEOUS ............................................ 42
Section 8.1 Successors and Assigns; No Assignment by Borrower ........ 42
Section 8.2 Notices .................................................. 42
Section 8.3 Changes, Waivers, Discharge and Modifications in Writing . 43
Section 8.4 No Waiver; Remedies Cumulative ........................... 44
Section 8.5 Costs, Expenses and Taxes ................................ 44
Section 8.6 Disclaimer by Lender; No Joint Venture ................... 44
Section 8.7 Indemnification .......................................... 45
Section 8.8 Consultants .............................................. 46
Section 8.9 Governing Law ............................................ 46
Section 8.10 Titles and Headings ...................................... 46
Section 8.11 Counterparts ............................................. 46
Section 8.12 Time is of the Essence ................................... 46
Section 8.13 No Third Parties Benefitted .............................. 46

ii
<PAGE>

Section 8.14 Severability ............................................. 46
Section 8.15 Jurisdiction ............................................. 47
Section 8.16 Waiver of Jury Trial ..................................... 47
Section 8.17 Interpretation ........................................... 47
Section 8.18 Entire Agreement ......................................... 47
Section 8.19 Joint and Several Liability .............................. 48
Section 8.20 Relationships With Other Customers ....................... 48
Section 8.21 Survival of Warranties ................................... 48
Section 8.22 Authority to File Notices ................................ 48
Section 8.23 Purpose and Effect of Lender Approval .................... 48

iii
<PAGE>

EXHIBIT A
TO SUPPLEMENT TO LOAN AGREEMENT
LEGAL DESCRIPTION OF THE LAND ....................................... A-1

EXHIBIT B
TO SUPPLEMENT TO LOAN AGREEMENT
PROJECT REQUIREMENTS ................................................ B-1

EXHIBIT C
TO SUPPLEMENT TO LOAN AGREEMENT
PROJECT UNDERWRITING DOCUMENTS ...................................... C-1

EXHIBIT D
TO SUPPLEMENT TO LOAN AGREEMENT
PROJECT COMMITMENT .................................................. D-1

EXHIBIT E
TO SUPPLEMENT TO LOAN AGREEMENT
CONDITIONS TO OBLIGATION
OF LENDER TO ENTER INTO LOAN AGREEMENT SUPPLEMENT ................... E-1

EXHIBIT F
TO SUPPLEMENT TO LOAN AGREEMENT
FORM OF DRAW REQUEST CERTIFICATION .................................. F-1

EXHIBIT G
TO SUPPLEMENT TO LOAN AGREEMENT
ADDITIONAL PERMITTED EXCEPTIONS ..................................... G-1

<PAGE>

SUPPLEMENT TO LOAN AGREEMENT

THIS SUPPLEMENT TO LOAN AGREEMENT (the "Loan Agreement Supplement")
dated as of October 3,1996, is entered into by and between UNITED HOMES,
INC., an Illinois corporation, ("United Homes"), UNITED HOMES, INC., an
Arizona corporation ("United Arizona"), UNITED HOMES OF ILLINOIS, INC., an
Illinois corporation ("United Illinois") and UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation ("United Michigan") (United Homes, United Arizona,
United Illinois and United Michigan are collectively referred to herein as
the "Borrower") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
(the "Lender") and supplements the terms and provisions of the Loan Agreement
dated as of May 28, 1996 by and between Borrower and Lender. Capitalized
terms used herein are defined in ARTICLE I.

RECITALS

This Loan Agreement Supplement is entered into upon the basis of the
following facts and circumstances:

A. Lender has previously made the Loan to Borrower, the proceeds of
which Loan are available with respect to acquisition, development and
construction projects to be acquired, developed and constructed by the
Borrower.

B. Borrower owns, or is about to become the owner of the Land, upon
which Land the Borrower will perform the Development Work and construct the
Construction Improvements in accordance with the Plans and Specifications.

C. Lender has agreed to designate certain of the proceeds of the Loan
in a sum not to exceed the Project Amount, for payment of the costs which
have been itemized in the Budget. This Loan Agreement Supplement sets forth
certain terms and conditions with respect to the Project Amount and the
Project.

D. The Loan shall be secured by the Mortgage and such other security
instruments and additional documents as Lender may require as hereinafter
described.

E. Lender is willing to make certain of the proceeds of the Loan
available to Borrower for the purposes set forth above, all upon the terms
and conditions as set forth in this Loan Agreement Supplement.

2
<PAGE>

AGREEMENT

NOW THEREFORE, in consideration of the foregoing Recitals and the
covenants and conditions, representations and warranties contained herein,
the parties hereto agree as follows:

3
<PAGE>

ARTICLE I
DEFINITIONS

Section 1.1 CERTAIN DEFINED TERMS. As used herein (including any
Exhibits attached hereto), the following terms shall have the meanings set
forth below (unless expressly stated to the contrary):

"ADDITIONAL LOAN FEE" shall mean the additional fee the Borrower will be
required to pay to Lender as a condition precedent to the Lender's release of
its lien on any Lot or Unit located in the Project, which amount shall equal
two percent (2%) of the gross base selling price of such Lot or Unit.

"ADVANCE RATE" shall mean, with respect to disbursements of the Loan for
the Project, (i) ninety percent (90%) of the Qualified Project Expenditures
which relate to the acquisition of Land and (ii) one hundred percent (100%)
of the Qualified Project Expenditures of a Project which relate to
Development Work or Construction Improvements.

"AFFILIATE" shall mean a Person that, directly or indirectly, controls,
is controlled by, or is under common control with, a referenced Person.

"APPRAISAL REPORT" shall mean a real estate appraisal report which (i)
has been prepared by an Appraiser, (ii) at the time it is submitted to the
Lender is not more than three (3) months old, or was updated by letter not
more than three (3) months prior to the date of submission to the Lender,
(iii) states that it is prepared in accordance with the applicable standards
of the American Institute of Real Estate Appraisers for such reports, (iv)
provides an appraisal of the Value of the Project or portion thereof required
to be appraised thereunder, and (v) employs a customary methodology and
provides limiting conditions satisfactory to the Lender.

"APPRAISER" shall mean a Person who is qualified to appraise property
similar in size and scope to the Project which such Person is acceptable
to the Lender in its sole and absolute discretion.

"BORROWER" shall mean, collectively, United Homes, United Arizona,
United Illinois and United Michigan.

"BUDGET" shall mean the itemized budget for such Project submitted to
and approved by the Lender and included as a schedule to the Project
Commitment, as such budget may be amended in accordance with the provisions
of SECTION 5.15.

4
<PAGE>

"BUSINESS DAY" shall mean a day other than Saturday, Sunday or a day on
which national banks are legally closed for business in the States of
Arizona, Illinois, Michigan or Minnesota.

"CONSTRUCTION AGREEMENTS" shall mean all agreements (including, without
limitation, construction contracts) entered into between the Borrower and any
contractor, architect, engineer, supplier or other Person with respect to the
development or construction of the Project, as such agreements may be
amended or otherwise modified from time to time in accordance with this Loan
Agreement Supplement.

"CONSTRUCTION IMPROVEMENTS" shall mean the Homes which are to be
constructed on or with respect to the Land by or on behalf of the Borrower in
accordance with the Plans and Specifications, which improvements shall
include one hundred one (101) single-family detached homes in a subdivision
commonly known as Sienna Pointe located in McHenry County, State of Illinois,
but shall not included the Development Work.

"CONSTRUCTION PROGRESS SCHEDULE" shall mean the schedule for the
Development Work and the Construction Improvements prepared by the Borrower,
as such schedule may be amended in accordance with the provisions of SECTION
5.11.

"DEVELOPMENT WORK" shall mean the work of development to be performed on
or with respect to the Land (including, without limitation, the installation
of utilities, roads and all related on-site and off-site improvements) in
connection with the development of the Land for the subsequent construction
thereon of Homes, all of which work and construction shall be completed by or
on behalf

5
<PAGE>

of the Borrower in accordance with the Plans and Specifications, but shall
not include the Construction Improvements.

"DRAW REQUEST CERTIFICATION" shall mean, with respect to a requested
disbursement of the Loan to fund Qualified Project Expenditures, a
certification of the Borrower in the form of EXHIBIT F.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and rulings issued
thereunder.

"EVENT OF DEFAULT" shall mean the occurrence of any of the events listed
in SECTION 7.1 or an event of default (however described) under the Loan
Agreement or any other of the Project Documents.

"FORCE MAJEURE EVENT" shall mean fire, flood, labor dispute, weather,
governmental action or other cause beyond the reasonable control of Borrower
that shall delay the Development Work or the completion of the Construction
Improvements.

"HAZARDOUS MATERIALS" shall mean the following:

(a) any oil, flammable substances, explosives, radioactive
materials, hazardous wastes or substances, toxic wastes or substances or
any other materials or pollutants, exposure to which is prohibited,
limited or regulated by any governmental authority pursuant to any
Hazardous Materials Law;

(b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated biphenyls
in excess of fifty (50) parts per million, exposure to which is
prohibited, limited or regulated by any governmental authority pursuant
to any Hazardous Materials Law;

(c) any chemical, material or substance defined as or included
in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous

<PAGE>

waste", "restricted hazardous waste", or "toxic substances" or words
of similar import under any Hazardous Material Laws; and

(d) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental
authority pursuant to any Hazardous Materials Law.

"HAZARDOUS MATERIALS CLAIMS" shall mean any and enforcement, clean-up,
removal or other governmental or regulatory actions or orders threatened,
instituted or completed pursuant to any Hazardous Materials Laws, together
with claims made or threatened by any third party relating to damage,
contribution, cost recovery compensation, loss or injury resulting from any
Hazardous Materials.

"HAZARDOUS MATERIALS LAWS" shall mean any federal, state or local laws,
ordinances and the regulations, policies or publications promulgated pursuant
thereto relating to (i) the environment, (ii) health and safety, (iii) any
Hazardous Materials (including, without limitation, the use, handling,
transportation, production, disposal, discharge or storage thereof), (iv)
industrial hygiene or (v) environmental conditions on, under or about
property, including, without limitation, soil and groundwater conditions;
including, but not limited to, the following, as now or hereafter amended:
the Clean Air Act, 42 U.S.C. Sec. 9401, ET SEQ.; the Clean Water Act, 33
U.S.C. Sec. 7401, ET. SEQ.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601, ET. SEQ., as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sec. 11001, ET. SEQ.; the Federal Water Pollution Control Act, 33
U.S.C. Sec. 1251, ET. SEQ.; the Hazardous Materials Transportation Act, 49
U.S.C. Sec. 1801, ET. SEQ.; the Resource Conservation and Recovery Act, 42
U.S.C. Sec. 6901, ET. SEQ.; the Safe Drinking Water Act, 42 U.S.C. Secs. 300f
to 300j; the Solid Waste Disposal Act, 42 U.S.C. Sec. 3251; ET. SEQ.; and the
Toxic Substances Control Act, 15 U.S.C. Sec. 2601, ET SEQ.

"HOMES" shall mean the single family residences, condominium homes and/or
attached townhouses that will be constructed by the Borrower with the
proceeds of the Loan, which Homes the Borrower shall construct on the Land
and offer for sale to individuals and families.

"INDEMNIFIED PARTY" shall mean the Lender and any Participants and each
of their officers, directors, employees, agents, attorneys, consultants,
advisors and Affiliates.

"INSPECTOR" shall mean the inspector for the Project to be selected by
the Lender, as set forth in the Project Commitment.

"INTEREST RESERVE" shall mean the amount within the Budget which has been
designated as available to pay interest on the Project Amount for a period of
time not to exceed the lesser of (i) six (6) months from the date of the
first disbursement of proceeds of the Loan for the Project or (ii) the time
period between the date of the first disbursement of proceeds of the Loan for
the Project and the date on which the first Unit in the Project is sold and
closed.

7
<PAGE>

"LAND" shall mean that certain real property which is suitable for and
substantially entitled for the development of Homes thereon and related on
and off-site improvements and upon which the Borrower will perform the
Development Work and construct the Construction Improvements, which such real
property is located in McHenry County, in the State of Illinois and described
in EXHIBIT A.

"LAWS AND REGULATIONS" shall mean (i) all laws, regulations, orders,
codes, ordinances, rules, statutes and policies of all local, regional,
county, state and federal governmental authorities having jurisdiction over
the Project and (ii) all restrictive covenants and other title encumbrances,
permits and approvals, leases and other rental agreements which in any case
relate to the development, occupancy, ownership, management, use, and/or
operation of the Project.

"LENDER" shall mean Residential Funding Corporation, a Delaware
corporation.

"LENDER'S RELEASE PRICE" shall mean, with respect to any parcel of the
Land which the Borrower requests the Lender to release from the lien of the
Mortgage, the amount required to be paid to the Lender prior to such release,
which amount shall equal, for each Lot and/or Unit located in the Project,
(i) the amount specified in SECTION 2.6(a), (b) OR (c), as applicable, of the
Loan Agreement, plus (ii) the Additional Loan Fee for such Lot and/or Unit.

"LOAN" shall mean the revolving loan described in the Loan Agreement in a
principal amount not to exceed the Loan Amount.

"LOAN AGREEMENT" shall mean the Loan Agreement dated as of May 28, 1996
between the Lender and the Borrower, as such Loan Agreement may be amended or
otherwise modified from time to time in accordance with the terms thereof.

"LOAN AGREEMENT SUPPLEMENT" shall mean this Loan Agreement Supplement
dated as of October 3, 1996 between the Borrower and the Lender, as the same
may be amended or otherwise modified from time to time.

"LOAN AMOUNT" shall mean Twenty-Five Million Dollars ($25,000,000).

"LOAN DOCUMENTS" shall mean, as to the Loan, all documents, instruments,
agreements, assignments and certificates relating thereto, including, without
limitation, any and all loan or credit agreements, promissory notes, deeds of
trust, mortgages, security agreements, assignments of rents, assignments of
leases, assignments of contracts, environmental indemnities, guaranties,
contractor's consent agreements, lender's title insurance policies, opinions
of counsel, evidences of authorization or incumbency, escrow instructions,
architect's consent agreements, and UCC-1 financing statements to be executed
(and acknowledged where applicable) by Borrower, Project Owner and/or Lender
(where applicable) in connection with Lender making the Loan to Borrower, as
the same may be amended or otherwise modified from time to time in accordance
with the Loan Agreement. The Loan Documents shall include, but not be limited
to, the following:

8
<PAGE>

(a) the Loan Agreement;

(b) the Note;

(d) any Related Loan Documents.

"LOAN TO VALUE RATIO" shall mean, with respect to the Project or any
part thereof as to which a Loan to Value Ratio is being determined, the ratio
of the Project Amount to the Value.

"LOTS" shall mean the tracts of real property within the Land that have
been or will be developed for the subsequent construction thereon of Homes.

"MAP" shall mean a final subdivision or parcel map consistent with the
Plans and Specifications and with the Laws and Regulations.

"MATERIAL ADVERSE CHANGE" shall mean any material and adverse change in,
or a material adverse effect upon, any of:

(a) the business, properties, operations or condition (financial or
otherwise) of Borrower since either or both of (i) October 1, 1996, or
(ii) the date of the most recent financial statements delivered to Lender
in connection with the Loan;

(b) the legal or financial ability of Borrower to perform its
obligations under the Borrower Documents and to avoid any Potential
Default or Event of Default; or

"MATURITY DATE" shall mean the first to occur of (i) the date which is
forty two (42) months from the date of the Loan Agreement (as such date may
be extended in writing by Lender and Borrower from time to time), or (ii) the
date on which the Loan is required to be repaid pursuant to SECTION 6.2 of
the Loan Agreement.

"MORTGAGE" shall mean the Construction Mortgage, Security Agreement and
Fixture Filing With Assignment of Rents, Proceeds and Agreements dated of
even date herewith executed by Project Owner, as mortgagor, for the benefit
of the Lender, as the same may be amended or otherwise modified from time to
time.

"NOTE" shall mean the Promissory Note dated May 28, 1996 executed by
Borrower, as maker and made payable, to the order of Lender, as holder, in
the amount of Twenty-Five Million Dollars

9
<PAGE>

($25,000,000) and maturing on the Maturity Date, to evidence the Loan, as
such Promissory Note may be amended or otherwise modified from time to time.

"PARTICIPANT" shall mean any financial institution to whom the Lender,
in accordance with and subject to SECTION 7.12 of the Loan Agreement, at any
time sells, assigns, grants or otherwise transfers a participation interest
in all or part of the obligations of the Borrower under the Loan Documents.

"PERMITTED EXCEPTIONS" shall mean (i) real estate taxes and assessments
not yet due and payable and possible supplemental assessments for
improvements constructed on the Land, (ii) unfiled mechanics' and
materialmen's liens (to the extent applicable), but only if affirmative
mechanics' lien coverage is provided by the Title Policy, (iii) exceptions to
title which are approved by the Lender and which do not adversely affect the
value of the Land, the marketability of title to the Land or the use to which
the Land is intended to be put, (iv) easements for the installation and
maintenance of utilities servicing the Project which do not adversely affect
the value of the Land, the marketability of title to the Land or the use to
which the Land is intended to be part and (v) the additional permitted
exceptions in EXHIBIT G.

"PERSON" shall mean an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.

"PLANNING COSTS" shall mean the fees and planning costs, such as
engineering and architectural fees, incurred in connection with the planning
for the Development Work and Construction Improvements, to the extent
reflected in the Budget.

"PLANS AND SPECIFICATIONS" shall mean the final set of architectural,
structural, mechanical, electrical, grading, sewer, water, street and utility
plans and specifications for the Development Work and the Construction
Improvements to be included within the Project, including all supplements,
amendments and modifications thereto signed and affixed with the architect's
registration stamp or seal, all in form and substance reasonably satisfactory
to the Lender and the Inspector.

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

"PROJECT" shall mean (i) the Land and (ii) the Development Work and
Construction Improvements to be completed on the Land, for which the Lender
has issued the Project Commitment.

"PROJECT AMOUNT" shall mean Three Million Five Hundred Thousand Dollars
($3,500,000).

"PROJECT COMMITMENT" shall mean the Project Commitment dated October 1,
1996 and attached as EXHIBIT D.

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<PAGE>

"PROJECT DOCUMENTS" shall mean, with respect to the Project, all
documents, instruments, agreements, assignments and certificates relating
thereto, including, without limitation, any and all loan or credit
agreements, promissory notes, deeds of trust, mortgages, security agreements,
assignments of rents, assignments of leases, assignments of contracts,
environmental indemnities, guaranties, contractor's consent agreements,
lender's title insurance policies, opinions of counsel, evidences of
authorization or incumbency, escrow instructions, architect's consent
agreements, and UCC-1 financing statements to be executed (and acknowledged
where applicable) by Borrower, Project Owner and/or Lender (where applicable)
in connection with Lender making proceeds of the Loan available to the
Borrower for the Project, as the same may be amended or otherwise modified
from time to time in accordance with the Loan Agreement and this Loan
Agreement Supplement. The Project Documents shall include, but not be limited
to, the following:

(a) the Project Commitment;

(b) this Loan Agreement Supplement;

(d) the Environmental Indemnity;

(e) the UCC-1 Financing Statement;

(f) the Assignment;

(g) the Title Policy; and

(h) the Plans and Specifications.

"PROJECT MATURITY DATE" shall mean the first to occur of (i) the date
which is thirty (30) months from the date of this Loan Agreement Supplement
(as such date may be extended in writing by the Lender and the Borrower from
time to time), or (ii) the date on which the Loan is required to be repaid
pursuant to SECTION 7.2 of the Loan Agreement.

"PROJECT MODEL HOME" shall mean any Home which is not subject to a Sales
Agreement and which the Borrower has designated as a model home to be used in
marketing the Project, the number of which such model homes shall be limited
as set forth in the Project Commitment.

"PROJECT OWNER" shall mean, United Homes, Inc., an Illinois corporation.

"PROJECT REQUIREMENTS" shall mean the requirements listed in EXHIBIT B.

"PROJECT SECURITY INSTRUMENTS" shall mean, with respect to the Project,
all pledge agreements, guaranties, deeds of trust, mortgages, security
agreements, assignments and other agreements or

<PAGE>

instruments executed by Borrower and/or Project Owner granting in favor of
Lender a lien or encumbrance on or a security interest in any property or
right or interest of Borrower and or Project Owner as security for the Loan,
as the same may be amended or otherwise modified from time to time in
accordance with the Loan Agreement and this Loan Agreement Supplement,
including but not limited to the following:

(a) the Mortgage;

(b) the UCC-1 Financing Statement; and

"PROJECT UNDERWRITING DOCUMENTS" shall mean the documents listed in
EXHIBIT C and any other documents relating to the Project which Lender
reasonably requests, all in form and substance reasonably satisfactory to the
Lender and, as to items A5, A8, B1, B3, and B6, in form and substance
reasonably satisfactory to the Inspector.

"QUALIFIED PROJECT EXPENDITURES" shall mean the costs for which proceeds
of the Loan may be disbursed, which such costs shall be limited to the
following:

(a) the cost of acquiring the Land or the Lots;

(b) Planning Costs;

(d) the Interest Reserve; and

(e) Soft Costs.

The particular amounts which may be disbursed for each of the categories set
forth in PARAGRAPHS (a) through (e) above are set forth in the Budget for the
Project. Amounts in the Budget which are not listed in any of the categories
set forth in PARAGRAPHS (a) through (e) above shall not be Qualified Project
Expenditures and proceeds of the Loan may not be disbursed for any such costs.

"RELATED LOAN DOCUMENTS" shall mean and includes any and all loan
documents which have been or may be executed by Borrower in connection with
the Lender making proceeds of the Loan available for another project,
together with any and all modifications, extensions and renewals thereof.

"SALES AGREEMENT" shall mean a written agreement for the sale of a Lot
or a Unit between the Borrower and a Person who is not an Affiliate of the
Borrower, which agreement (i) shall be binding

<PAGE>

upon such Person, (ii) shall require such Person to deposit with the Borrower
an "at risk" deposit, (iii) shall conform to all applicable laws,
regulations, codes and ordinances, including those requiring disclosures to
prospective and actual buyers and (iv) shall not contain any contingencies,
except that such agreement may be contingent on such Person's ability to
obtain financing for the purchase, but only if such
Person has been pre-approved for financing prior to entering into such
agreement.

"SOFT COSTS" shall mean the Borrower's overhead, general and
administrative expenses and other "soft costs" incurred in the development,
construction, marketing and sale of the Project, to the extent reflected in
the Budget.

"SPEC HOMES" shall mean Homes which are not subject to a Sales Agreement.

"STAGE" shall mean the various stages of the Construction Improvements
which such stages, and the components of the Construction Improvements which
fit within each stage, are specified in the Project Commitment.

"TITLE POLICY" shall mean the ALTA loan form (1970 form, unrevised or
the equivalent thereof) of title insurance policy in the amount of the
Project Amount and issued by Chicago Title Insurance Company, insuring the
Lender that the Mortgage is an enforceable first lien against marketable fee
simple title to the Project, subject only to Permitted Exceptions, which such
title insurance policy will provide mechanics' lien coverage, will have all
standard exceptions deleted therefrom and will have appended thereto a usury
endorsement and such other endorsements as are generally required by lenders
in the area in which the Project is located.

"TOTAL PROJECT COSTS" shall mean, with respect to a Project, the sum of
(i) the Qualified Project Expenditures plus (ii) all other costs necessary to
acquire the Land, construct the Development Work and the Construction
Improvements in accordance with the Plans and Specifications and complete the
Project.

"UCC-1 FINANCING STATEMENT" shall mean a UCC-1 financing statement dated
of even date herewith executed by Project Owner, as debtor, in favor of
Lender, as secured party, in connection with Lender making proceeds of the
Loan available to the Borrower for the Project, as such UCC-1 financing
statement may be amended or otherwise modified from time to time.

"UNIT" shall mean a Lot and the Home constructed on such Lot.

"UNITED ARIZONA" shall mean United Homes, Inc., an Arizona corporation.

"UNITED HOMES" shall mean United Homes, Inc., an Illinois corporation.

"UNITED ILLINOIS" shall mean United Homes of Illinois, Inc., an Illinois
corporation.

"UNITED MICHIGAN" shall mean United Homes of Michigan, Inc., a Michigan
corporation.

<PAGE>

"Value" shall mean, for purposes of determining whether or not the Loan
to Value Ratio complies with the Project Requirements, the lower of (i) the
value which an Appraiser assigns to the Project, as set forth in an Appraisal
Report, which Appraisal Report shall determine the values of each Unit,
whether or not the construction Improvements have been completed, based on the
"as completed" appraised value of such Unit and (ii) the sales prices for the
Units as set forth in Sales Agreements.

Section 1.2 OTHER DEFINITIONAL PROVISIONS.

(b) The words "hereof", "herein" and hereunder" and words of similar
import when used in this Loan Agreement Supplement shall refer to this
Agreement Supplement as a whole and not to any particular provision of this
Loan Agreement Supplement.

(c) In this Loan Agreement Supplement in the computation of periods of
time from a specified date to a later specified date, the word "from" shall
mean "from and including" and the words "to" and "until" each shall mean "to
but excluding".

<PAGE>

ARTICLE II
ADDITIONAL REPRESENTATIONS AND WARRANTIES

Section 2.1 CONSIDERATION. As an inducement to Lender to execute this
Loan Agreement Supplement and to disburse the proceeds of the Loan for the
Project, and in addition to the representations and warranties in the Loan
Agreement, Borrower represents and warrants the truth and accuracy of the
matters set forth in this ARTICLE II.

Section 2.2 AUTHORIZATION. The execution, delivery and performance by
Borrower of the Project Documents have been duly authorized by all necessary
action and do not and will not (i) contravene the charter documents of any of
United Homes, United Arizona, United Illinois or United Michigan, (ii)
contravene any law, rule or regulation or any order, writ, judgement,
injunction or decree or any contractual restriction binding on or affecting
Borrower, (iii) require any approval or consent of any partner, shareholder
or any other Person other than approvals or consents which have been
previously obtained and disclosed in writing to Lender, (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Borrower is a
party or by which Borrower or its properties may be bound or affected, or (v)
result in, or require the creation or imposition of, any lien of any nature
(other than the liens contemplated hereby) upon or with respect to any of the
properties now owned or hereafter acquired by Borrower; and Borrower is not
in default under any such law, rule, regulation, order, writ, judgement,
injunction, decree or contractual restriction or any such indenture,
agreement, lease or instrument.

Section 2.3 GOVERNMENTAL CONSENTS. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery and
performance by Borrower of the Project Documents or any other document
executed pursuant thereto or in connection therewith.

Section 2.4 VALIDITY. The Project Documents have been duly executed and
delivered and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.

Section 2.5 FINANCIAL POSITION. As of the dates prepared, the financial
statements and all financial data heretofore delivered to Lender in
connection with the Project and/or relating to Borrower are true, correct and
complete in all material respects and were prepared in accordance with GAAP
consistently applied. Such financial statements fairly present the financial
position of the Persons who are the subject thereof as of the dates thereof.

Section 2.6 NO MATERIAL ADVERSE CHANGE. No Material Adverse Change has
occurred since October 1, 1996.

<PAGE>

Section 2.7 LITIGATION. There is no pending or, to Borrower's knowledge,
threatened action, suit, proceeding or arbitration against or affecting
Borrower before any court, governmental agency or arbitrator, which may
result in a Material Adverse Change.

Section 2.8 ENVIRONMENTAL MATTERS. The operations of Borrower comply
in all respects with all Hazardous Materials Laws except such noncompliance
which would not (if enforced in accordance with applicable law) reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Change. As of the date of this Loan Agreement Supplement, (i) neither
Borrower nor its present properties or operations is subject to any
outstanding written order from or settlement or consent agreement with any
government authority or other Person, nor is any of the foregoing subject to
any judicial or docketed administrative proceeding respecting any Hazardous
Materials Law, Hazardous Materials Claim or Hazardous Material, and (ii)
there are no other conditions or circumstances known to Borrower which may
give rise to any Hazardous Materials Claim arising from the operations of
Borrower.

Section 2.9 FULL DISCLOSURE. None of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of
Borrower in connection with the Project contains any untrue statement of a
material fact, or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading; provided, however, that it is
recognized by Lender that projections and forecasts provided by Borrower,
while reflecting Borrower's good faith projections or forecasts based upon
methods and data Borrower believes to be reasonable and accurate, are not to
be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or
forecasted results.

Section 2.10 FIRPTA CERTIFICATION. Borrower declares and certifies, under
penalty of perjury, that: (i) the U.S. Taxpayer I.D. Number of United Homes
is 36-3978181, of United Arizona is 86-0680628, of United Illinois is
36-3421835 and of United Michigan is 38-3180076; (ii) the business address of
Borrower is United Homes, Inc., 2100 Golf Road, Suite 110, Rolling Meadows,
Illinois 60008-4220; (iii) Borrower is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as
amended; and (iv) Borrower understands that the information and certification
contained in this SECTION 2.10 may be disclosed to the Internal Revenue
Service and that any false statement contained herein could be punished by
fine, imprisonment or both. Borrower agrees to provide Lender and Lender with
a new certification containing the provisions of this SECTION 2.10 immediately
upon any change in such information.

<PAGE>

ARTICLE III
CONDITIONS PRECEDENT TO CLOSING

Section 3.1 CONDITIONS PRECEDENT. Lender's obligation to enter into
and perform its duties under this Loan Agreement Supplement shall be subject
to the full and complete satisfaction of the conditions precedent set forth
in this ARTICLE III and in EXHIBIT E.

Section 3.2 PROJECT UNDERWRITING DOCUMENTS AND OTHER DOCUMENTS. The
Borrower shall have delivered to the Lender the Project Underwriting
Documents and all the documents described in the Project Commitment.

Section 3.3 MORTGAGE RECORDATION. The Mortgage must be duly recorded
and in a first-priority lien position, which first-priority lien positions
shall be evidenced and insured by the Title Policy.

Section 3.4 PERFECTION OF SECURITY INTEREST IN PERSONAL PROPERTY.
Lender's security interests in all personal property and any fixtures covered
by the Mortgage must be duly perfected and in a first-priority lien position.

Section 3.5 TAXES. All taxes, fees and other charges in connection
with the execution, delivery and recording of the Project Documents shall
have been paid, and all delinquent taxes, assessments or other governmental
charges or liens affecting the Project, if any, shall have been paid.

Section 3.6 INSURANCE WITH RESPECT TO PROJECT. In addition to the
insurance required by SECTION 5.5 of the Loan Agreement, Borrower shall
maintain with respect to the Project the insurance required by the terms of
this SECTION 3.6 and shall deposit with Lender, original, duplicate original
or certified copies of insurance policies of such insurance issued by
insurance companies with current Best's Key Ratings of not less than A/IX and
written in form and content acceptable to Lender. Such insurance with respect
to the Project shall consist of all-risk course of construction insurance
(non-reporting form) in the minimum amount specified in the Project
Commitment, on a replacement cost basis, insuring against loss or damage by
hazards customarily included within "extended coverage" policies, and any
other risks or hazards which in Lender's reasonable judgment should be
insured against, with a Lender's Loss Payable Endorsement naming Lender as an
additional insured together with a full replacement cost endorsement (without
provisions for co-insurance). The insurance policies required by this
SECTION 3.6 shall be subject to the requirements and restrictions set forth
in SECTION 5.5 of the Loan Agreement.

<PAGE>

ARTICLE IV
DISBURSEMENTS

Section 4.1 PROCESSES RELATING TO DISBURSEMENTS.

(a) Borrower may request disbursements of the Loan for Qualified
Project Expenditures related to the Project, subject to the limitation of the
number of allowable disbursements per month set forth in Section 2.2(c) of
the Loan Agreement. All requests for disbursements of proceeds of the Loan
shall comply with the terms of this ARTICLE IV and any additional limitations
set forth in the Project Commitment.

(b) Each disbursement request shall be evidenced by a Draw Request
Certification and shall be accompanied by, or the Lender shall have received
from another source, the following:

(1) an "Application and Certificate for Payment" on AIA forms G702
and G703 or such other form as the Lender approves;

(2) with respect to requested disbursements for costs of
Development Work, supporting billings of each subcontractor or vendor
with respect to the Development Work of such subcontractor or vendor as
to which a disbursement is being requested;

(3) with respect to requested disbursements for costs of
Construction Improvements, the Draw Request Certification, or another
document satisfactory to the Lender, shall specify the Stage of the
Construction Improvements for which the disbursement is being requested
and the Lender shall not be obligated to disburse funds with respect to
a Stage unless and until all the components of the Construction
Improvements which comprise such Stage have been completed, as evidenced
by the written certificate of the Inspector required to be delivered
pursuant to the terms of SUBPARAGRAPH (4) below;

(4) a written certification from the Inspector to Lender, in a
form satisfactory to Lender, that (i) the Development Work for which
payment is being sought has been completed, or the Construction
Improvements for which payment is being sought are being constructed, in
accordance with the Plans and Specifications and (ii) all work done for
which payment is being sought shall have been completed with sound new
materials and fixtures, or refurbished materials and fixtures that meet
the requirements of the Plans and Specifications, and in a good and
workmanlike manner;

(5) at Borrower's expense, evidence satisfactory to Lender that
the issuer of the Title Policy is prepared to issue to Lender an
endorsement to the Title Policy insuring that the lien granted to Lender
by the Mortgage remains a first lien upon the Project, subject only to
Permitted Exceptions, and insuring the full amount of the disbursement,
provided that any such endorsement may show mechanics' liens resulting
from the Development Work or the Construction Improvements if and only
if the issuer of the Title Policy shall issue an

<PAGE>

endorsement which insures Lender against any loss by reason of such
mechanics' liens and Borrower shall have complied in all respects with
the requirements of SECTION 5.18; and

(6) such other documents specified in the Project Commitment.

The foregoing submissions shall reflect the cost of all Development Work
and Construction Improvements for which payment is to be made, and the Draw
Request Certification shall specify the portion of such costs which shall be
paid by Borrower and the portion thereof which will be paid out of the
requested disbursement of Loan proceeds.

(c) Provided that no Event of Default or Potential Default exists, and
subject to the terms and conditions set forth herein, the Lender will use its
reasonable best efforts to disburse to the Borrower the amount requested,
within five (5) Business Days after receipt of a Draw Request Certification
meeting the requirements of this Loan Agreement Supplement, provided that in
the event the Lender is unable to make the disbursement within such time
period, the Lender will disburse the proceeds of the Loan as soon thereafter
as possible. All disbursements shall be delivered to Borrower by federal
funds wire transfer as instructed by Borrower.

Section 4.2 CONDITIONS PRECEDENT TO DISBURSEMENTS FOR QUALIFIED PROJECT
EXPENDITURES. The obligation of Lender to make disbursements of the Loan to
fund Qualified Project Expenditures (including the initial disbursements for
the Project) is subject to fulfillment of the following conditions precedent:

(a) If all or a portion of the requested disbursement is to be
used to fund the initial disbursement related to the Project, then as a
condition precedent to Lender's obligation to fund such initial
disbursement, Borrower must deliver to the Lender evidence that the
Borrower has contributed to the Project equity equal to
[ten percent (10%)/thirty-five percent (35%)] of the total cost to
acquire the Land.

(b) Lender shall not be obligated to make any disbursements of the
Loan to the extent that the requested disbursement relates to costs
which are not Qualified Project Expenditures. Qualified Project
Expenditures not paid with Loan proceeds disbursed hereunder and other
costs which are not Qualified Project Expenditures shall be paid from
additional funds provided by Borrower.

(1) the outstanding balance of the Loan exceeds, or would
following the contemplated disbursement exceed, the face amount of
the Note;

(2) the outstanding balance of the Loan attributable to the
Project exceeds, or would following the contemplated disbursement
exceed, the Project Amount; or

<PAGE>

(3) the proceeds of the Loan which, pursuant to the Project
Commitment, are available for disbursement will not be sufficient
to complete the acquisition of the Land, the Development Work and
Construction Improvements related to the Project, including the
construction of any Homes within the Project to be constructed on
the Land as scheduled, provided however, that the Lender shall be
obligated to make disbursements notwithstanding such a deficiency
in the event that (i) the Budget and the amount of the Loan
allocated to the Project have been increased by an amount at least
equal to such deficiency in accordance with the terms of SECTION
5.15(d), or (ii) the Borrower provides to the Lender evidence that
it has paid from its own funds, in addition to any Borrower funds
which the Budget requires, an amount at least equal to the amount
of the deficiency.

(d) Lender shall not be obligated to disburse any Loan proceeds
for the Project to the extent that the Project does not then
satisfy the requirements set forth in the Project Commitment.

(e) Lender shall not be obligated to disburse any Loan proceeds
unless all statements made in the applicable Draw Request Certification
are true and correct on and as of the date of the requested
disbursement, before and after giving effect thereto and to the
application of the proceeds therefrom.

(f) The representations and warranties of Borrower contained in
the Loan Documents are true and correct in all material respects on and
as of the date of the requested disbursement, before and after giving
effect thereto and to the application of the proceeds therefrom, as
though made on and as of such date.

(g) No Event of Default or Potential Default has occurred and is
continuing, or would result from such disbursement or from the
application of the proceeds therefrom.

Section 4.3 CONDITIONS PRECEDENT TO FINAL DISBURSEMENT. Lender's
obligation to make the final disbursement of Loan funds for construction
purposes shall be subject to the satisfaction of the following conditions
precedent, each of which Borrower shall furnish as promptly as is reasonably
possible:

(a) Completion of construction of the Development Work and the
Construction Improvements in accordance with the Plans and
Specifications, and if required by Lender, its receipt of a certificate
of completion from the project architect that the Development Work and
the Construction Improvements have been completed substantially in
accordance with the Plans and Specifications.

(b) If applicable, receipt by Lender of a copy of a valid,
recorded notice of completion sufficient to effect the purpose of such
notices as contemplated by the laws of the State of Illinois relative to
mechanics' liens.

<PAGE>

(c) Receipt by Lender of the final certificate(s) of occupancy for
the Construction Improvements issued by the appropriate government
authorities having jurisdiction.

(d) Receipt by Lender of such endorsements to the Title Policy as
it may require insuring that a notice of completion was properly filed,
that the Development Work and the Construction Improvements have been
completed free of mechanics' and materialmen's liens and that all
applicable filing periods have expired, or, at Lender's election, an
ALTA rewrite of the Title Policy together with such endorsements thereto
as Lender may require, and insuring the first-lien priority of the final
disbursement.

(e) If required by Lender, its receipt of an "as-built" survey
prepared by a licensed engineer or surveyor locating all Project lines,
building setback lines, easements, the Development Work and the
Construction Improvements.

(f) There shall be no statutory liens on record for labor or
material arising out of the construction of the Development Work and the
Construction Improvements; provided, however, that if there are any such
liens Borrower shall have complied with the terms of SECTION 5.18.

(g) Upon completion of the Development Work and the Construction
Improvements, Borrower shall deliver to Lender a completion certificate
containing the following: (i) Borrower's statement of the aggregate
amount of costs incurred in connection with the Project but not paid by
the Borrower before the completion date and (ii) Borrower's
certification that all of the proceeds of the Loan disbursed with
respect to the Project have been applied to pay or reimburse costs
incurred in connection with the construction of the Development Work and
the Construction Improvements and the acquisition of the Land, and that
none of the proceeds of the Loan disbursed with respect to the Project
have been applied to pay or reimburse any costs or expenses other than
such costs of construction and acquisition, together with interest and
servicing and fees incurred in connection with the Loan.

Lender's right to require satisfaction of each of the foregoing
conditions and to receive and review the materials listed above shall not
impose upon Lender any obligation whatsoever to the Borrower, the general
contractor, architect, any purchasers of the Lots and/or Units or any other
party whatsoever, with respect to any of the subject matter constituting such
conditions, nor shall it operate to release Borrower from liability for any
misrepresentations or breaches hereunder (notwithstanding any opportunity of
Lender to discover such misrepresentation or breach from materials provided
to Lender as a condition of closing). Borrower understands and agrees that
such conditions are for the sole purpose of protecting Lender's Loan advances
and providing security for the Loan, and are made solely for the Lender's
benefit. No waiver of a condition in one or more instances shall establish a
course of dealing or other agreement that will bind Lender or prohibit Lender
from enforcing such condition or any other term or condition of this Loan
Agreement Supplement in the same or any other instance.

<PAGE>

Section 4.4 APPLICATION OF DISBURSEMENTS. All Loan proceeds disbursed
to Borrower pursuant to this Loan Agreement Supplement will be used only for
payment of those items specified in the Draw Request Certification for which
the particular disbursement was made. Borrower will not use all or any
portion of such disbursement to pay or reimburse itself, directly or
indirectly, for any amounts paid by Borrower or any other Person but not
included in the Budget.

Section 4.5 LENDER MAY MAKE DISBURSEMENT NOTWITHSTANDING NONCOMPLIANCE.
Notwithstanding the failure of any condition precedent to Lender's
obligation to make any disbursement hereunder, Lender may make such
disbursement if Lender, in its sole discretion, determines the making of the
same to be advisable. The making of any disbursement, either before or after
the satisfaction of all conditions precedent with respect to Lender's
obligation to make the same, shall not be deemed to constitute an approval or
acceptance by Lender of the Development Work or the Construction Improvements
theretofore completed or a waiver of such condition with respect to a
subsequent disbursement.

<PAGE>

ARTICLE V
THE PROJECT

Section 5.1 CONSIDERATION. As an inducement to Lender to execute this
Loan Agreement Supplement and to make each disbursement of the Loan for the
Project, Borrower represents and warrants to the truth and accuracy of the
matters regarding the Project set forth in this ARTICLE V and hereby
covenants regarding the Project as set forth in this ARTICLE V.

Section 5.2 TITLE TO PROJECT. Project Owner is, or will be upon
acquisition of the Land and Construction Improvements as contemplated by this
Loan Agreement Supplement, the sole legal and beneficial owner of the Land
and Construction Improvements, free and clear of all claims, liens and
encumbrances other than Permitted Exceptions. All of the personal property
which forms a part of the Construction Improvements is or will be vested
solely in Project Owner, free and clear of all claims, liens and
encumbrances, other than Permitted Exceptions, and the security interest of
Lender in such personal property is a first lien thereon, subject only to
Permitted Exceptions.

SECTION 5.3 NO PRIOR LIENS OR CLAIMS. Except as otherwise may have been
approved in writing by Lender and as to which Lender shall have received such
endorsement (including mechanics lien coverage) to the Title Policy as Lender
may require to assure the priority of the Mortgage as a valid first lien on
the Project, subject only to Permitted Exceptions, Borrower represents that,
prior to recordation of the Mortgage, neither it, nor anyone acting on
Borrower's behalf has (i) commenced construction of the Development Work or
the Construction Improvements, or any grading or site clearance related
thereto, (ii) purchased, contracted for or otherwise brought upon the Land
any materials, specially fabricated or otherwise, to be incorporated into the
Development Work or the Construction Improvements, or (iii) entered into any
contract or arrangement, the performance of which by any other party thereto
could give rise to a lien or claim on the Project or any portion thereof.

Section 5.4 ACCESS TO THE PROJECT. All roads, streets, traffic turn
lanes, and access ways necessary for the full utilization of the Project for
its intended purpose have either been completed or the necessary rights of
way have either been acquired by the appropriate governmental authority or
have been dedicated to public use and accepted by the appropriate
governmental authority, and all necessary steps have been taken by Borrower
and the appropriate governmental authority to assure the complete
construction and installation thereof by the time needed for construction
and/or occupancy and operation of the Project.

Section 5.5 COMPLIANCE WITH PROJECT REQUIREMENTS AND LAWS AND
REGULATIONS. The Project, the proposed and actual use thereof, the
Development Work and the Construction Improvements when completed will comply
with the Project Requirements and with the Laws and Regulations, and there is
no action or proceeding pending or, to the knowledge of Borrower (after due
inquiry), threatened before any court, quasi-judicial body or administrative
agency at the time of any disbursement by Lender relating to the validity of
the Loan or the proposed or actual use of the Project.

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Section 5.6 COVENANTS, ZONING, CODES AND CONSENTS. Borrower is familiar
and has complied, or will comply on a timely basis, with all of the Laws and
Regulations to be complied with in connection with the construction of the
Development Work and the Construction Improvements. Except as set forth in
the Project Commitment, all permits, licenses, consents, approvals or
authorizations by, or registrations, declarations, withholding of objections
or filings with any governmental body necessary in connection with the valid
execution, delivery and performance of this Loan Agreement Supplement, the
Project Documents, and any and all other documents executed in connection with
any of the foregoing, necessary for the subdivision of the Land, necessary
for the construction of the Development Work and the Construction
Improvements, and necessary for the marketing and sale of the Construction
Improvements, have been obtained or will be obtained on a timely basis and
are and will be valid, adequate and in full force and effect. Construction
of the Development Work and the Construction Improvements and the intended
use thereof will in all respects conform to and comply with all Laws and
Regulations, including without limitation all applicable zoning, subdivision,
environmental protection, use and building codes, laws, regulations and
ordinances.

Section 5.7 UTILITIES. All utility services and facilities necessary for
the construction, sale and occupancy of the Project and the operation thereof
for its intended purpose are either available at the boundaries of the Land,
or, if not, all necessary steps have been, or will be, taken by Borrower and
the local authority or public utility company which provides such services to
assure the complete installation and availability thereof when needed for
construction, sale, occupancy and operation of the Project.

Section 5.8 MAP, PERMITS, LICENSES AND APPROVALS. Borrower has obtained
or will, in a timely manner, obtain the Map. Borrower shall properly comply
with and keep in effect the Map and all permits, licenses and approvals which
are required to be obtained from governmental bodies in order to construct,
occupy, operate, market and sell the Project. Borrower shall promptly deliver
copies of the Map and all such permits, licenses and approvals to Lender.

Section 5.9 APPROVAL OF PLANS AND SPECIFICATIONS AND APPROVAL OF BUDGET.

(a) The Plans and Specifications are a true, complete and accurate
reflection of the Development Work and the Construction Improvements that
Borrower will construct. The Plans and Specifications are satisfactory to
Borrower and have been reviewed and approved by Borrower and the general
contractor for the Project (if different from the Borrower), and have also been
approved as required by all governmental bodies or agencies having jurisdiction
(including, without limitation, any local design review boards) and by the
beneficiary of any restrictive covenant affecting the Project. There are no
structural defects in the Development Work or the Construction Improvements as
shown in the Plans and Specifications, and no violation of any of the Laws
and Regulations exists with respect to the Plans and Specifications.

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(b) After diligent investigation of all relevant conditions and due
consultation with such parties as Borrower deems appropriate, Borrower
represents that the Budget identifies, on a line item basis, the Total
Project Costs and all costs for which proceeds of the Loan are to be
disbursed. The Budget reflects Borrower's best, true, accurate and complete
estimate of the costs shown therein and of the Total Project Costs.

Section 5.10 ADEQUACY OF PROJECT AMOUNT. The Project Amount, together
with the equity funds of the Borrower in the amount set forth in the Budget,
is sufficient to pay all costs of the acquisition of the Land, all costs of
the Development Work and the construction of the Construction Improvements in
accordance with the Plans and Specifications and all remaining costs related
thereto, except as has been specifically disclosed to and approved in writing
by Lender.

Section 5.11 CONSTRUCTION START AND COMPLETION. Borrower shall commence
construction of the Development Work and the Construction Improvements no
later than the date set forth in the Project Commitment and shall thereafter
diligently proceed with construction and completion of the Development Work
and Construction Improvements in a good and workmanlike manner in accordance
with the Plans and Specifications and the Construction Progress Schedule;
provided however that in the event construction of the Project is subject to
delays caused by any Force Majeure Event, the Borrower shall provide to the
Lender written notice of such delay, and if such delay will not exceed one
hundred twenty (120) days in the aggregate or is otherwise reasonable in
length, the Borrower shall not be deemed in default of its obligations
assumed pursuant to this Loan Agreement Supplement solely by reason of such
delay. The Borrower shall cause the Development Work and the Construction
Improvements at all times to materially conform to the Laws and Regulations
and shall accomplish completion of the Development Work and the Construction
Improvements in accordance with the Construction Progress Schedule. Borrower
shall cooperate at all times with Lender in bringing about the timely
completion of each element of the Development Work and the Construction
Improvements, and Borrower shall resolve all disputes arising during the work
of construction in a manner which shall allow work to proceed expeditiously.

Section 5.12 PERSONAL PROPERTY INCORPORATION. All personal property for
which Lender advances Loan proceeds for the Project is to be stored on the
Land and in Lender's judgement must be reasonably secure from damage and
theft and fully insured at all times.

Section 5.13 CONTRACTORS AND CONTRACTS. Upon demand by Lender, the
Borrower shall furnish to Lender, from time to time, correct lists of all
contractors and subcontractors employed in connection with the Development
Work and the Construction Improvements. Each such list shall show the name,
address and telephone number of each such contractor or subcontractor, a
general statement of the nature of the work to be done, the labor and
materials to be supplied, the names of materialmen, if known, and the
approximate dollar value of such labor, work and materials with respect to
each. Upon an Event of Default, Lender shall have the right, and at any time
the Inspector shall have the right (in both cases without either the obligation
or the duty), to contact directly each contractor, subcontractor and materialman
to verify the facts disclosed by said list or for any other purpose.

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Section 5.14 EVIDENCE OF OWNERSHIP OF MATERIALS. If requested by Lender,
Borrower shall promptly deliver to Lender any bills of sale, statements,
receipts, contracts or agreements under which Borrower claims title to any
materials, fixtures or articles incorporated into the Development Work and
the Construction Improvements.

Section 5.15 CHANGES TO PLANS AND SPECIFICATIONS AND BUDGET

(a) There shall be no Change of any of the Plans and Specifications or
working drawings relating to the Development Work which, together with all
prior changes, exceeds, in aggregate amount, five percent (5%) of the portion
of the Budget allocable to the Development Work, whether by change order or
otherwise, without the prior written approval of Lender, and, to the extent
that such approvals may be required, the appropriate governmental authorities.
There shall be no Change to the Plan and Specifications relating to the
Construction Improvements which increases the portion of the Budget allocable
to each Home by five percent (5%) or more, without the prior written approval
of Lender; provided that the foregoing shall not apply to upgrades. As a
condition to its approval of any Change described in either of the preceding
sentences, Lender may require verification that such Change:

(1) is a Change as to which the Borrower has complied with the
terms of SUBPARAGRAPH (d) of this SECTION 5.15;

(2) will not adversely affect the value of Lender's security;

(3) is not a material change in structure, design, exterior
appearance, square footage, or function;

(4) would not cause an increase in any line item or category of the
Budget in excess of the contingencies (if any) specifically contained
in the Budget for that line item or category; and

(5) would be consistent with the Laws and Regulations.

Lender is under no duty to review or inform Borrower of the quality or
suitability of the Plans and Specifications, any contract or subcontract or
any changes thereto. Without limitation of the foregoing, Borrower shall
obtain Lender's prior written approval of any alteration in the Plans and
Specifications which might adversely affect the value of Lender's security
or which, regardless of cost, is a material change in structure, design,
function or exterior appearance.

(b) Borrower shall obtain from the appropriate persons or entities
approvals of any alterations in the Map, the Plans and Specifications or
any work, materials or contracts that are required by any of the Laws and
Regulations or under the terms of the Project Commitment or other Borrower
Project Document.

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(c) Borrower agrees to provide Lender with copies of all change orders,
together with all additional documents that Lender may require in order to
evaluate a request for approval of a Change of a type described in CLAUSE (a)
above. These documents may include the following: (i) a written description
of the Change and related working drawings and (ii) a written estimate of the
cost of the Change and the time necessary to complete it. Lender may take a
reasonable time to evaluate any requests for approval of a Change, 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, and agrees that so long as any delays caused by
Lender are not unreasonable in duration, they shall not affect Borrower's
obligation to complete each element of the Development Work and the
Construction Improvements in accordance with the Construction Progress
Schedule.

(d) In the event that either:

(1) the proceeds of the Loan which are available for disbursement
will not be sufficient to complete the Development Work or the Construction
Improvements, including the construction of any Homes within the Project to
be constructed on the Land as scheduled; or

(2) the costs of the Project have increased over the amount set
forth in the Budget by an amount in excess of (i) with respect to the
Development Work, and including all prior changes, in aggregate amount,
five percent (5%) of the portion of the Budget allocable to the
Development Work, or (ii) with respect to the Construction Improvements,
five percent (5%) or more of the portion of the Budget allocable to each
Home,

then the Borrower shall submit to the Lender a revised budget for the
Project, together with (i) a request that the Lender approve an increase in
the Project Amount, which request the Lender may approve or disapprove in its
absolute and sole discretion, or (ii) evidence that the Borrower has
sufficient funds to pay the increased costs, in which event the Lender shall
not be obligated to disburse additional amounts of the Loan pursuant to the
provisions of SECTION 4.1 until such time as the Borrower provides to the
Lender evidence that it has paid from its own funds, in addition to any
Borrower funds which the Budget requires, an amount at least equal to the
increase. Any such revised Budget for the Project submitted to the Lender
shall be accompanied by a written report from the Inspector stating that the
Inspector has reviewed and approved the revised Budget.

Section 5.16 LENDER INSPECTIONS, APPRAISAL AND INFORMATION. During normal
business hours, the Borrower shall arrange for the Lender, the Inspector or
any other authorized representative of Lender, at the expense of Borrower, to
visit, inspect or appraise the Project, the materials to be used thereon or
therein, contracts, records, plans, specifications and shop drawings relating
thereto, whether kept at Borrower's offices or at the Project construction
site or elsewhere, and the books, records, accounts and other financial and
accounting records of Borrower wherever kept, and to make copies and take
extracts thereof and therefrom as often as may be requested at Borrower's
cost and expense. Borrower will cooperate with Lender to enable Lender and
Inspector to conduct such

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visits, inspection and appraisals. The cost of the Inspector and of such
inspections shall be borne by Borrower and shall be paid within thirty (30)
days of Borrower's receipt of any invoice with respect thereto.

Section 5.17 CORRECTION OF DEFECTS. If Lender in its reasonable judgment
determines that any Development Work, Construction Improvements or materials
fail to conform to the Map, any Laws and Regulations, the Plans and
Specifications or sound building practices, or that they otherwise depart from
any of the requirements of this Loan Agreement Supplement, Lender may require
the work to be stopped and withhold disbursements until the matter is
corrected. If this occurs, Borrower shall promptly correct the work to
Lender's satisfaction, and pending completion of such corrective work shall
not allow any other work which is dependent upon or directly related to the
work requiring correction to proceed. No such action by Lender shall affect
Borrower's obligation to complete each element of the Development Work and
the Construction Improvements within the times required by this Loan
Agreement Supplement. The advance of any Loan proceeds shall not constitute a
waiver of Lender's right to require compliance with this covenant.

Section 5.18 PROTECTION AGAINST LIEN CLAIMS.

(a) Borrower shall pay and discharge, or cause to be paid and
discharged, promptly and fully all claims for labor done and materials
and services furnished in connection with the Development Work and the
Construction Improvements, and take or cause to be taken all reasonable
steps to forestall the assertion of claims of lien against the Project or
any part thereof. Borrower shall obtain a lien waiver with respect to
each payment by or to the Borrower and each of the various subcontractors
and materialmen (and the major subcontractors and submaterialmen under
them), and Lender, at any time, at its option, may require that Borrower
make any payments for which disbursements are made hereunder by joint
check made payable to the Borrower and the subcontractor or sub-
subcontractor for whose account such payment is to be made, as joint payees.

(b) Nothing herein contained shall require Borrower to pay any
claims for labor, materials, or services which Borrower in good faith
disputes and which Borrower, at its own expense, currently and diligently
contest, provided that Borrower shall, for each such case where a claim of
lien in excess of Twenty-Five Thousand Dollars ($25,000), has been filed,
within thirty (30) days after the Borrower's actual receipt of notice of
filing of any such claim of lien, (i) record or cause to be recorded in
the office of the recorder of McHenry County a surety bond sufficient to
release said claim of lien, or (ii) make or cause to be made a deposit of
cash in the amount of 150% of the claim of lien with Lender, or (iii)
deliver or cause to be delivered to Lender a specific endorsement to the
Title Policy which insures Lender against any loss by reason of such
claim of lien, or (iv) deliver or cause to be delivered to Lender such
other assurance as may be acceptable to Lender; provided, however, that
in the event the aggregate amount of claims filed with respect to the
Project exceeds Fifty Thousand Dollars ($50,000), Borrower shall be
required to take one of the actions specified in (i) through (iv) above
with respect to subsequent claims.

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Section 5.19 CONVEYANCE, LEASE OR ENCUMBRANCE. Borrower shall not sell,
agree to sell, convey, transfer, dispose of or further encumber the Project
or any portion thereof or interest therein (other than the sale of Units),
or enter into a lease covering all or any portion thereof or interest
therein, either voluntarily, involuntarily or otherwise, or enter into
an agreement to do so, without the prior written consent of Lender being
first had and obtained. All easements, declarations, covenants, conditions,
restrictions and dedications affecting the Project shall be submitted to
Lender for its approval, accompanied by a drawing or survey showing the
precise location thereof, and such approval shall be obtained prior to
the execution or granting of any thereof by Borrower. Borrower shall not
execute any lease of any portion of the Project without the prior written
consent of Lender. Borrower shall promptly notify Lender of any event of
default or cancellation under any lease now or hereafter in effect.

Section 5.20 SECURITY INSTRUMENTS. From time to time, upon the request
or Lender, Borrower shall execute and deliver to Lender a security
instrument of instruments naming Lender as secured party covering all
contracts of any kind entered into in connection with the Development
Work or the Construction Improvements and all other property of any kind
whatsoever owned by the Borrower and used, or to be used, in the use and
enjoyment of the Project and concerning which Lender may have any doubt
as to its being subject to the lien of the Project Security Instruments.

Section 5.21 FURTHER ASSURANCES; COOPERATION. Borrower will at any time
and from time to time upon request of Lender take or cause to be taken any
action, execute, acknowledge, deliver or record any further documents,
opinions, mortgages, security agreements, financing statements or other
instruments or obtain such additional insurance as Lender in its discretion
deems necessary or appropriate to carry out the purposes of this Loan
Agreement Supplement and to preserve, protect and perfect the security
interest intended to be created and preserved in the Project, the Development
Work and Construction Improvements.

Section 5.22 NEGATIVE COVENANTS. So long as any amount payable under any
Loan Document still remains unpaid or Lender shall have any commitment to
disburse the Loan hereunder, Borrower shall not, unless Lender shall
otherwise consent in writing (i) create, assume or suffer to exist any lien,
security interest or other charge or encumbrance, or any other type of
preferential arrangement, upon the collateral for the Loan assigned to Lender
by Borrower pursuant to Project Security Instruments, or (ii) sell, lease,
transfer or otherwise dispose of (A) all or substantially all of its assets
(in a single transaction or a series of related transactions), or (B) any of
the collateral for the Loan assigned to Lender by Borrower.

Section 5.23 SIGNS. Upon the request of Lender, Borrower shall erect and
place on or in the vicinity of the Project a sign or signs indicating that
Lender has provided construction financing for the Project. Said sign(s)
shall remain the property of Lender and shall be required to be removed only
after the Development Work and the Construction Improvements have been
completed.

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ARTICLE VI
SALES OF LOTS AND UNITS
AND RELEASES FROM MORTGAGE

Section 6.1 SALES AGREEMENTS. Each Lot and Unit shall be sold under a
Sales Agreement. Each Sales Agreement must require full payment in cash to
Borrower at closing. No Lot or Home may be leased, sold or conveyed under any
lease, conditional sales contract or other arrangement where Borrower retains
a deferred portion of the purchase price or any residual or contingent
interest in the Lot or Unit, including any purchase money security interest,
without the express prior written consent of Lender in each instance.

Section 6.2 SALES AND CLOSINGS. Borrower may enter into sales in the
ordinary course of business with bona fide third party buyers without Lender's
prior written consent if:

(a) a Sales Agreement is executed with the buyer which conforms to
the requirements of this Loan Agreement Supplement and

(b) Borrower, acting in good faith following exercise of due
diligence, has determined that the buyer is financially capable of
performing all of its obligations under the Sales Agreement.

The Borrower shall furnish to the Lender copies of all Sales Agreements
immediately after execution of such Sales Agreements by all Persons who are
parties thereto. Lender in the exercise of its sole discretion may consider
any sale to be unsatisfactory if the sale fails to meet any of the
requirements of this Loan Agreement Supplement. If this happens, or if any
Event of Default had occurred and is continuing, Lender may make written
demand on Borrower to submit future Sales Agreements for Lender's approval
prior to execution, together in each instance with accompanying financial
statements and other information that Borrower may have pertaining to the
prospective buyer. Until such time as the earlier of (i) the Lender's
notification to Borrower that the Sales Agreements need no longer be
submitted to execution or (ii) the Event of Default is cured or Lender has
waived such Event of Default, Borrower shall comply with any such demand by
Lender;

Section 6.3 SALES OPERATIONS AND SELLER'S OBLIGATIONS. Borrower shall at
all times maintain adequate marketing capability for the sale of the Units,
and shall perform all obligations required to be performed by it under each
Sales Agreement.

Section 6.4 RELEASES FROM LIEN OF MORTGAGE. Borrower may from time to
time request that Lender release one or more Lots and/or Units from the lien
of the Mortgage and the other Project Security Instruments encumbering such
Lots and/or Units. Lender agrees that it will execute a partial release that
releases Lender's lien on such Lot and/or Unit pursuant to the Mortgage and
the documents executed pursuant thereto, provided that in all instances the
following conditions precedent shall have been satisfied.

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(a) Lender shall have received a written notice requesting the
partial release no fewer than five (5) Business Days prior to the date
on which the partial release is to be effective, which notice shall
specify (i) the Project, (ii) the specific Lots and/or Units to be
released, (iii) if such release is being requested in connection with a
sale or the Lots and/or Units, the Persons to whom such Lots and/or Units
are being sold, which Person shall not be an Affiliate of the Borrower,
and (iv) the Lender's Release Prices therefor;

(b) Lender shall have received evidence satisfactory to Lender that
(i) the closing of the sale and/or release of such Lot and/or Unit shall
be conducted through an escrow with a title company satisfactory to Lender,
and (ii) such title company shall have been instructed, which instructions
shall have been acknowledged and agreed to by such title company and which
cannot be changed or supplemented without Lender's written concurrence, not
to record Lender's partial release until such title company receives in
respect of such release an amount equal to Lender's Release Price for such
Lot and/or Unit and is irrevocably committed to disburse such amount to
Lender.

(c) Lender shall have received executed originals of all instruments,
agreements and other documents, if any, in form and substance satisfactory
to Lender, which Lender determines are necessary or appropriate, to evidence
and/or effectuate the partial release and to modify the Project Documents
as a result thereof; and

(d) Lender shall have received evidence satisfactory to Lender that
Borrower has satisfied all conditions precedent in the Project Documents
relating to the release of the Lots and/or Units.

If the title insurance company that is selected by Borrower to insure
title to the Lots and/or Units sold by Borrower elects to have Lender and/or
Borrower enter into a master release agreement that provides for the release
of the Lots and Units once all of the Lots and Units in the Project are sold
instead of being released one at a time, then Lender agrees to enter into
such a master release agreement in form and substance satisfactory to Lender.

In connection with each release of a Lot and/or Unit, provided all
conditions to such release have been met, Lender agrees to provide to the
title insurance company an estoppel letter, in form and substance
satisfactory to Lender, specifying the Lender's Release Price.

Section 6.5 PROJECT MODEL HOMES.

(a) So long as any proceeds of the Loan remain outstanding with respect
to the Project, the Borrower shall construct and if necessary, modify, Homes
in such a manner as to accommodate their use as Project Model Homes, and at
least one of such Project Model Homes shall include therein a sales office.
The Borrower shall insure that sufficient adjacent parking for customers
exists within the vicinity of the Project Model Homes. Each Project Model
Home shall be used solely as a model display (including landscaping and
walkways), as a sales office and for parking, all in connection with

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the marketing and sale of Units. Borrower shall maintain the interiors and
exteriors of the Project Model Homes in good condition, repair and order,
except for ordinary wear and tear. Regardless of any other provision of this
Loan Agreement Supplement, Lender shall not be required to release the
Project Model Homes or any of them from the lien of the Mortgage unless the
Project Amount has been paid in full or Borrower has provided, and Lender has
accepted, a substituted Project Model Home which Lender in its reasonable
judgment considers to be comparable to the Project Model Home to be released
and suitable for the purposes and uses described above. Borrower shall
maintain insurance coverage regarding the Project Model Homes as Lender shall
reasonably require.

(b) Borrower may sell a Project Model Home to a Person approved by
Lender in its reasonable discretion, subject to the requirements that (i) the
Borrower leases the Project Model Home back from such Person pursuant to a
lease agreement, the form and terms of which are approved by the Lender in
its reasonable discretion and (ii) upon the request of the Lender, Borrower
executes such documents as Lender requires to assign to Lender the Borrower's
interest in such lease.

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ARTICLE VII
DEFAULT AND REMEDIES

Section 7.1 EVENTS OF DEFAULT. In addition to the Events of Default set
forth in the Loan Agreement, the occurrence of any one or more of the
following events shall constitute an Event of Default:

(a) any representation or warranty made by Borrower herein or in
any other Project Document shall at any time be incorrect in any material
respect; or

(b) Borrower shall fail to perform or observe any term, covenant or
agreement contained in this Loan Agreement Supplement or any other
Project Document, and such failure shall remain unremedied for thirty (30)
days after notice thereof from Lender to Borrower; provided that in the
event Borrower commences and is diligently pursuing to completion action
to cure the failure, such thirty (30) day period may be extended for such
period of time as is necessary to cure the failure, but in no event longer
than one hundred twenty (120) days from the date of the Lender's notice;
provided further however that in the event (i) Lender determines that the
failure to immediately declare an Event of Default could result in
irreparable harm to the rights of the Lender hereunder, under any other
Project Document, or the rights of the Lender with respect to the
collateral pledged to secure the Loan, or (ii) Lender determines that the
failure to perform or observe the terms of this Loan Agreement Supplement
or any other Project Document cannot be remedied with the passage of one
hundred twenty (120) days, then Lender may declare an immediate Event of
Default in its notice given pursuant to this SECTION 7.1(b); or

(c) Borrower fails to meet or comply with any of the projections or
other provisions of the Construction Progress Schedule (which failure
Lender reasonably believes may result in impairment of the value of its
security for the Loan or in the ability of the Borrower to repay the Loan
in full by the Project Maturity Date), and does not cure that failure
within thirty (30) days after written notice from Lender; provided that
such cure period shall not be applicable (i.e., there shall be no cure
period) if Lender has reasonably determined that such failure is not
susceptible to cure within thirty (30) days; or

(d) Borrower shall assert the invalidity or unenforceability of any
Project Document or any Project Document shall be adjudicated to be invalid
or unenforceable in any material respect; or

(e) any event of default (however described) under any other
Project Document shall occur and not be cured within the applicable grace
period; or

(f) any Project Security Instrument, for any reason, cease to
create a valid and perfected first priority lien on or in the Land and the
other collateral relating thereto described in the Project Security
Instrument, or Borrower shall so state in writing; or

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(g) an event of default (however described) shall occur and not be
cured within any applicable grace period under any Related Loan Document;
or

(h) the assignment by the Borrower of the rents or the income of
the Project, or any part thereof or of any other revenues or sales proceeds
relating to the Project (other than to Lender); or

(i) there shall occur substantial deviations in the Development
Work or the Construction Improvements from the Plans and Specifications
without the prior approval of Lender, or the existence of materially
adverse defective workmanship or materials incorporated into the
Development Work or the Construction Improvements which deviations or
defects are not corrected within thirty (30) days after written notice
thereof to Borrower, such deviations and defects to be conclusively
determined by Lender after consultation with the Inspector; or

(j) cessation of the Development Work prior to completion of the
Construction Improvements for a continuous period of (i) one hundred twenty
(120) days or more if such cessation is by a Force Majeure Event, or (ii)
thirty (30) days or more if such cessation is not caused by a Force Majeure
Event; or

(k) the Development Work or the Construction Improvements are not,
in Lender's judgment, being carried out in accordance with the Construction
Progress Schedule (subject to delays not to exceed thirty (30) days or to
delays not to exceed one hundred twenty (120) days in the aggregate which
are caused by Force Majeure Events of which Lender has been properly
notified in accordance with the provisions of SECTION 5.11);

(l) Borrower fails to commence construction of the Development Work
or the Construction Improvements or fails to satisfy all of the conditions
of this Loan Agreement Supplement with respect to disbursement of Loan
proceeds for costs of such construction on or before the expiration of
three (3) months after date of this Loan Agreement Supplement; or

(m) a court of competent jurisdiction enters an order enjoining
construction of the Development Work or the Construction Improvements, or
such a court or an authorized governmental agency orders that sales of the
Lots and/or Units be suspended or halted, or any required approval, license
or permit is withdrawn or suspended, and the order, withdrawal or
suspension remains in effect for a period of fifteen (15) days; or

(n) there occurs any attachment, levy, execution or other judicial
seizure of any portion of the Project, any other collateral provided by
Borrower under any of the Project Documents, or any substantial portion of
the other assets of Borrower, which is not released, expunged, discharged
or dismissed prior to the earlier of (i) twenty (20) days after such
attachment, levy execution or seizure, or (ii) the sale of the assets
affected thereby; or

<PAGE>

(o) any surety obligated for any Development Work or Construction
Improvements is called upon to perform its obligations and/or any person
demands funds pursuant to any "set-aside" letter or "cash in lieu of bond
agreement" issued by Lender with respect to the Project; or

(p) there occurs, in Lenders' reasonable judgment, a materially
detrimental change in the operations or value of the Project, including
without limitation, a reduction in the sales prices from the projected
offering prices for the Homes to such an extent that existing sales to
date or continued sales at such price reductions, together with actual and
anticipated disbursements of Loan funds, cause or will cause an Budget
shortfall.

The Event of Default specified in subsection (g) above is for purpose of
cross default (and cross-collateralization pursuant to the Mortgage) only;
nothing contained herein shall be construed as imposing an obligation upon
Lender, or as evidencing Lender's intention, to make proceeds of the Loan
available to Borrower for any other project. In addition, Borrower
acknowledges and agrees that any Related Loan Documents shall provide or be
amended to provide that a default under each such Related Loan Document shall
be a default hereunder, and that a default under the Project Documents shall
be a default under Related Loan Documents.

Borrower acknowledges and agrees that all material non-monetary defaults
are conclusively deemed to be and are defaults which impair the security of
the Mortgage, and that Lender shall be entitled to exercise any appropriate
remedy, including without limitation, foreclosure of the Mortgage upon the
occurrence of any such material non-monetary default.

Section 7.1 REMEDIES. Upon the occurrence of an Event of Default, Lender
may, in addition to any other remedies which Lender may have hereunder or
under the Project Documents or the Loan Agreement or by law or in equity, at
its option and without prior demand or notice take any or all of the
following actions:

(a) Immediately terminate any further advance of Loan funds
hereunder, and from time to time apply all or any portion of the
undisbursed Loan funds to payment of accrued interest under the Note
and/or upon any other obligations of Borrower hereunder or under the
Project Documents. Lender may also withhold any one or more disbursements
after an event or condition occurs that with notice or the passage of time
could become an Event of Default, unless Borrower cures or corrects the
event or condition to the reasonable satisfaction of Lender prior to the
occurrence of an Event of Default.

(b) Declare the Note to be immediately due and payable and record a
notice of default under the Mortgage and under the mortgages or deeds of
trust, as applicable, which form a part of the Related Loan Documents.

(c) Make any disbursements after the happening of any one or more
Events of Default, without thereby waiving its right to demand payment of
the Note and all other sums

<PAGE>

owing to Lender with respect to the Project Documents or any other rights
or remedies described herein, and without liability to make any other or
further disbursements, notwithstanding Lender's previous exercise of any
such rights and remedies.

(d) Enter upon the Project and with or without legal process take
possession of the Project, remove Borrower and all employees, contractors
and agents of Borrower therefrom, and complete or attempt to complete
construction of the Development Work and/or the Construction Improvements
in accordance with the Plans and Specifications with such changes,
additions or corrections therein as Lender may from time to time and in
its judgment deem appropriate, and market, sell or lease the Project, at
the risk and expense of Borrower. Lender shall have the right at any time
to discontinue any work commenced by it in respect to the Development Work
and/or the Construction Improvements or to change any course of action
undertaken by it and not be bound by any limitations or requirements of
time whether set forth herein or otherwise. Lender shall have the right
and power (but shall not be obligated) to assume any construction contract
made by or on behalf of Borrower in any way relating to the Construction
Improvements and to take over and use all or any part of the labor,
materials, supplies, and equipment contracted for, by or on behalf of
Borrower whether or not previously incorporated into the Development Work
and/or the Construction Improvements, in the discretion of Lender. Lender
may also modify or terminate any contractual arrangements, subject to its
right at any time to discontinue any work without liability. If Lender
chooses to complete the Development Work and/or the Construction
Improvements, Lender shall not assume any liability to Borrower or any
other person for completing them, or for the manner or quality of their
construction, and Borrower expressly waives any such liability. In
connection with any work of construction undertaken by Lender pursuant
to the provisions of this SUBSECTION (d), Lender may do any of the
following:

(1) engage builders, contractors, subcontractors, architects,
engineers, suppliers, inspectors, consultants and others for the
purpose of furnishing labor, materials, equipment and other services
in connection with the work of construction, for the protection or
clearance of title to the Project, or for the protection of Lender's
interests with respect thereto;

(2) pay, settle or compromise all bills or claims which may
become liens against the Project or which have been or may be
incurred in any manner in connection with completing construction of
the Development Work and/or the Construction Improvements or for the
protection or clearance of title to the Project, or for the protection
of Lender's interests with respect thereto;

(3) prosecute and defend all actions and proceedings in
connection with the Project;

<PAGE>

(5) take such other action, including the employment of security
personnel to protect the Development Work and the Construction
Improvements, or refrain from taking action under this Loan Agreement
Supplement as Lender may in its discretion determine from time to time.

Borrower shall be liable to Lender for sums paid or incurred for completing
construction of the Development Work and the Construction Improvements
whether the same shall be paid or incurred pursuant to the provision of
this Section or otherwise, and all payments made or liabilities incurred
by Lender hereunder of any kind whatsoever shall be paid by Borrower to
Lender upon demand with interest at the rate set forth in the Note, and
all of the foregoing shall be deemed and shall constitute disbursements
under this Loan Agreement Supplement and be secured by the Project
Documents. For the purpose of carrying out the provisions and exercising
the rights, powers and privileges granted by this SUBSECTION (d), Borrower
hereby unconditionally and irrevocably constitutes and appoints Lender its
true and lawful attorney-in-fact to enter into such contracts, perform
such acts and incur such liabilities as are referred to in said Section in
the name and on behalf of Borrower. This power of attorney is coupled with
an interest.

(e) Where substantial deviations from the Plans and Specifications
appear which have not been approved as set forth herein, or where
defective or unworkmanlike labor or materials are being used in the
construction of the Development Work and/or the Construction Improvements,
or upon receipt of knowledge of encroachments to which there has been no
consent, or if Lender determines that the Development Work and/or the
Construction Improvements are not being constructed in accordance with any
governmental requirements or any covenants, conditions, restrictions,
agreements or other matters, whether or not of record, affecting the
condition of title to the Project, Lender shall have the right to
immediately order stoppage of the construction and demand that such
conditions be corrected. After issuance of such an order in writing, no
further work shall be done on that portion of the Development Work and/or
the Construction Improvements where there is a substantial deviation from
the Plans and Specifications which has not been approved as set forth
herein, where there is defective or unworkmanlike labor or materials, or
which does not comply with governmental requirements or matters affecting
title to the Project, without the prior written consent of Lender, which
consent shall not be unreasonably withheld, unless and until said
condition has been fully corrected.

<PAGE>

discretion so determine, and pursue any such other remedy or remedies as
Lender may so determine to be in its best interest.

(g) If Lender spends their fund in exercising or enforcing any of its
rights or remedies under the Project Documents, the amount of funds spent
shall be payable to Lender upon demand, together with interest at the rate
applicable to the principal balance of the Note, from the date such funds
were spent until repaid. Such amounts shall be deemed secured by the
Mortgage and other applicable Project Documents.

Whether or not Lender elects to employ any or all of the remedies
available to it in connection with an Event of Default, Lender shall not be
liable for (i) the construction of or failure to construct, complete or
protect the Development Work and/or the Construction Improvements, (ii) the
payment of any expense incurred in connection with the exercise of any remedy
available to Lender or the construction or completion of the Development Work
and/or the Construction Improvements, or (iii) the performance or
non-performance or any other obligation of Borrower.

All remedies of Lender provided for herein, in the Loan Agreement, and in
any other Project Document and in any of the Related Loan Documents are
cumulative and shall be in addition to all other rights and remedies provided
by law or in equity. The exercise of any right or remedy by Lender hereunder
shall not in any way constitute a cure or waiver of default hereunder, under
any Project Document, under the Loan Agreement or under any of the Related
Loan Documents or invalidate any act done pursuant to any notice of default,
or prejudice Lender in the exercise of any of its rights hereunder, under any
other Project Document, under the Loan Agreement or under any of the Related
Loan Documents unless, in the exercise of its rights, Lender realized amounts
owed to it under such Project Documents, Loan Agreements and the Related Loan
Documents. If Lender exercises any of the rights or remedies provided in
this ARTICLE VII, that exercise shall not make Lender, or cause Lender to be
deemed to be, a partner or joint venturer of Borrower. No disbursement of
Loan funds by Lender shall cure any default of Borrower, unless Lender agrees
otherwise in writing in each instance.

Upon the occurrence of any Event of Default, all of Borrower's
obligations under the Project Documents may become immediately due and
payable without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or other notices or demands of any kind
or character, at Lender's option, exercisable in its sole discretion. If such
acceleration occurs, Lender may apply the undisbursed Loan funds to the
obligations of Borrower under the Project Documents, in any order and
proportions that Lender in its sole discretion may choose.

Section 7.3 AUTHORIZATION TO APPLY ASSETS TO PAYMENT OF LOAN. The
Borrower hereby authorizes the Lender, following the occurrence of an Event of
Default, without notice or demand, to apply any property, balances, credits,
accounts or moneys of the Borrower then in the possession of Lender, or
standing to the credit of the Borrower, to the payment of the Loan.

<PAGE>

ARTICLE VIII
MISCELLANEOUS

Section 8.1 SUCCESSORS AND ASSIGNS; NO ASSIGNMENT BY BORROWER. The
provisions of this Loan Agreement Supplement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided that Borrower may not assign or transfer any of its rights
or obligations under this Loan Agreement Supplement or any of the other
Project Documents without the prior written consent of Lender.

Section 8.2 NOTICES. All notices, requests and demands to be made
hereunder to the parties hereto shall be in writing (at the addresses set
forth below) and shall be given by any of the following means:

(a) personal delivery;

(b) reputable overnight courier service;

(c) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by registered or certified,
first class mail, return receipt requested); or

(d) registered or certified, first class mail, return receipt
requested. Any notice, demand or request sent pursuant to SUBSECTION (a)
OR (c) hereof shall be deemed received upon such personal delivery or
upon dispatch by electronic means, and if sent pursuant to SUBSECTION (d)
shall be deemed received three (3) days following deposit in the mail,
and if sent pursuant to SUBSECTION (b) shall be deemed received on the
next Business Day following delivery to the courier service.

The addresses for notices are as follows:

<PAGE>

With a copy to: Residential Funding Corporation
8400 Normandale Boulevard
Minneapolis, Minnesota 55437
Attention: General Counsel
Telephone No.: (612) 832-7415
Telecopier No.: (612) 832-7190

To Borrower: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: Edward F. Havlik, President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2480

With copies to: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: William J. Crock, Vice-President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

Shefsky, Froelich & Divine, LTD
444 North Michigan Ave
Suite 2300
Chicago, Illinois 60611
Attention: David Feltman
Telephone No.: (312) 836-4064
Telecopier No.: (312) 527-9285

Such addresses may be changed by notice to the other parties given in the
same manner as provided above.

Notwithstanding the foregoing, requests for disbursements of the Loan
pursuant to ARTICLE IV above shall be deemed received only upon actual
receipt, and such requests for disbursement shall be given only to Lender's
primary addressee.

Section 8.3 CHANGES, WAIVERS, DISCHARGE AND MODIFICATIONS IN WRITING.
No provision of this Loan Agreement Supplement or any of the other Project
Documents may be changed, waived, discharged or modified except by an
instrument in writing signed by the Lender and the party against whom
enforcement of the change, waiver, discharge or modification is sought.

Section 8.4 NO WAIVER; REMEDIES CUMULATIVE. No disbursement of
proceeds of the Loan shall constitute a waiver of any conditions to Lender's
obligation to make further disbursements nor,

<PAGE>

in the event is unable to satisfy any such conditions, shall any such waiver
have the effect of precluding Lender from thereafter declaring such inability
to constitute an Event of Default (however described) under this Loan
Agreement Supplement, the Note or any other Project Document. No failure or
delay on the part of Lender in the exercise of any power, right or privilege
hereunder or under the Note or any other Project Document shall impair such
power, right or privilege or be construed to be a waiver of any Event of
Default (however described) or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof, or of any other right, power or privilege. Except
as specifically provided herein, rights and remedies existing under this Loan
Agreement Supplement, the Note or any other Project Document are cumulative
to and not exclusive of any rights or remedies otherwise available.

Section 8.5 COSTS, EXPENSES AND TAXES. Borrower agrees to pay on
demand all costs and expenses incurred by Lender in connection with the
preparation, execution, delivery, administration, modification and amendment
of this Loan Agreement Supplement, the other Project Documents, and any other
documents to be delivered hereunder or pursuant to the terms of any Project
Document, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for Lender with respect thereto and with
respect to advising Lender as to its rights and responsibilities under this
Loan Agreement Supplement and the other Project Documents.

Borrower further agrees to pay on demand all costs and expenses of
Lender (including without limitation, reasonable counsel fees and expenses,
court costs and all other litigation expenses, including, but not limited to,
expert witness fees, document copying expenses, exhibit preparation, courier
expenses, postage expenses and communication expenses) in connection with the
enforcement of this Loan Agreement Supplement, the other Project Documents and
any other documents delivered hereunder, including, without limitation, costs
and expenses incurred in connection with any bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceeding, or any
refinancing or restructuring in the nature of a "workout" of the Project
Documents and any other documents delivered by Borrower related thereto. In
addition, Borrower shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of
this Loan Agreement Supplement, the other Project Documents and the other
documents to be delivered hereunder, and agrees to hold Lender harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.

Whenever Borrower is obligated to pay or reimburse Lender for any
attorneys' fees, those fees shall include the allocated costs for services of
Lender's in-house counsel.

Section 8.6 DISCLAIMER BY LENDER; NO JOINT VENTURE. Borrower
acknowledges, understands and agrees as follows:

41
<PAGE>

upon or inform Borrower of the quality, adequacy or suitability of any
matter or thing submitted to Lender for its approval;

(b) Lender owes no duty of care to protect Borrower or any
other Person against negligent, faulty, inadequate or defective building
or construction; and

(c) Borrower is not and shall not be an agent of Lender for any
purpose. Lender is not a joint venture partner with Borrower in any
manner whatsoever.

Any approvals granted by Lender for any matters covered under this Loan
Agreement Supplement shall be narrowly construed to cover only the parties
and facts identified in any such approval.

Section 8.7 INDEMNIFICATION. Borrower agrees to protect, indemnify,
defend and hold harmless each Indemnified Party from and against any and
claims (including, without limitation, Hazardous Materials Claims), damages,
losses, liabilities, obligations, penalties, actions, judgments, suits,
costs, disbursements and expenses (including, without limitation, reasonable
fees and expenses of counsel and consultants and allocated costs of internal
counsel) that may be incurred by or asserted against any Indemnified Party,
in each case arising out of or in connection with or related to any of the
following:

(a) the Loan, this Loan Agreement Supplement or any other
Project Document,

(b) the use of funds advanced under the Project Documents,

(c) the failure of Borrower or any other party to comply fully
with any and laws applicable to it (including, without limitation,
Hazardous Materials Laws), or

(d) any use, handling, production, transportation, disposal or
storage of any Hazardous Materials in, under or on the Land by any
Person, including, without limitation,

(i) foreseeable and unforeseeable consequential damages
directly or indirectly arising out of (A) the use, generation,
storage, discharge or disposal of Hazardous Materials by any
owner or operator of said property or any Person on or about said
property, or (B) any residual contamination affecting any natural
resource or the environment, and

(ii) the costs of any required or necessary repair,
cleanup, or detoxification of said property and the preparation
of any closure or other required plans,

42
<PAGE>

expenses are found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the negligence or willful misconduct of
the Indemnified Party.

Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this
SECTION 8.7 shall survive the termination of this Loan Agreement Supplement
and the other Project Loan Documents and the payment in full of the Loan.

Section 8.8 CONSULTANTS. Borrower shall pay any and all valid claims
of any consultants, advisors, brokers or agents whom it has retained or with
whom it has initiated contact with respect to the Loan who claims a right to
any fees in connection with the Loan, and shall indemnify, defend and hold
Lender harmless from such claims, whether or not they are valid.

Section 8.9 GOVERNING LAW. This Loan Agreement Supplement shall be
governed by and construed in accordance with the laws of the State of
Illinois.

Section 8.10 TITLES AND HEADINGS. The title and headings of sections of
this Loan Agreement Supplement are intended for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Loan Agreement Supplement.

Section 8.11 COUNTERPARTS. This Loan Agreement Supplement, each other
Project Document and any attached consents or exhibits requiring signatures
may be executed in counterparts, and all counterparts shall constitute but
one and the same document.

Section 8.12 TIME IS OF THE ESSENCE. Time is of the essence of this
Loan Agreement Supplement.

Section 8.13 NO THIRD PARTIES BENEFITTED. This Loan Agreement Supplement
is made and entered into for the sole protection and legal benefit of
Borrower and Lender and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct
or indirect cause of action or claim in connection with, this Loan Agreement
Supplement or any of the other Project Documents. Lender shall not have any
obligation to any Person not a party to this Construction Agreement or the
other Project Documents.

Section 8.14 SEVERABILITY. The illegality or unenforceability of any
provision of this Loan Agreement Supplement or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Loan Agreement Supplement
or any instrument or agreement required hereunder.

43
<PAGE>

in respect of its property, to the jurisdiction of those Courts. Each of
Borrower and Lender irrevocably waives any objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens which
it may now or hereafter have to the bringing of any action or proceeding in
such jurisdiction in respect of this Loan Agreement Supplement or any
document related hereto. Borrower and Lender each waive any personal service
of any summons, complaint or other process, which may be made by any other
means permitted by the State of Illinois. Nothing in this SECTION 8.15 shall
affect the right of Lender to serve legal process in any other manner
permitted by law or limit the right of Lender to bring any action or
proceeding against Borrower or its property in the Courts of any other
jurisdiction.

Section 8.16 WAIVER OF JURY TRIAL. BORROWER AND LENDER WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OR ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS LOAN AGREEMENT SUPPLEMENT, THE
OTHER PROJECT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. BORROWER AND LENDER AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A
TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS LOAN AGREEMENT SUPPLEMENT OR
THE OTHER PROJECT DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS LOAN AGREEMENT SUPPLEMENT AND THE OTHER PROJECT
DOCUMENTS.

Section 8.17 INTERPRETATION. This Loan Agreement Supplement and the
other Project Documents shall not be construed against Lender merely because
of the involvement of the Lender in the preparation of such documents and
agreements.

Section 8.18 ENTIRE AGREEMENT. This Loan Agreement Supplement, together
with the other Project Documents and the Loan Agreement, embodies the entire
agreement and understanding among Borrower and Lender with respect to the
Project and supersedes all prior or contemporaneous agreements and
understandings of such persons, verbal or written, relating to the subject
matter hereof and thereof except for any prior arrangements made with respect
to the payment by Lender or Borrower of (or any indemnification for) any fees,
costs or expenses payable to or incurred (or to be incurred) by or on behalf
of Lender.

Section 8.19 JOINT AND SEVERAL LIABILITY. Borrower consists of United
Homes, United Arizona, United Illinois and United Michigan, each of which
shall be jointly and severally liable to Lender for the faithful performance
of this Loan Agreement and the other Loan Documents.

44
<PAGE>

Section 8.20 RELATIONSHIPS WITH OTHER CUSTOMERS. From time to time,
Lender and Lender's Affiliates may have business relationships with
Borrower's customers, suppliers, contractors, tenants, partners,
shareholders, officers, or directors, or with businesses offering products or
services similar to those of Borrower, or with persons seeking to invest in,
borrow from or lend to Borrower. Borrower agrees that Lender and Lender's
Affiliates may extend credit to such parties and may take any action it may
deem necessary to collect the credit, regardless of the effect that such
extension or collection of credit may have on Borrower's financial condition
or operations. Borrower further agrees that in no event shall Lender or its
Affiliates be obligated to disclose to Borrower any information concerning
any other customer of Lender or its Affiliates.

Section 8.21 SURVIVAL OF WARRANTIES. All agreements, representations
and warranties made herein shall survive the execution and delivery of this
Loan Agreement Supplement and of the other Project Documents and the
disbursement of the Loan hereunder and continue in full force and effect
until the obligations of Borrower hereunder and the indebtedness evidenced by
the Note have been fully paid and satisfied.

Section 8.22 AUTHORITY TO FILE NOTICES. Borrower irrevocably appoints,
designates and authorizes Lender as its agent (said agency being coupled with
an interest) and attorney-in-fact, with full power of substitution, to file
for record any Notices of Completion, Cessation of Labor, or file or send to
any third party and other notice or documents or take any other action that
Lender deems necessary or desirable to protect its interest hereunder, or
under the Project Documents, and will upon request by Lender, execute such
additional documents as Lender may require to further evidence the grant of
the aforesaid right to Lender.

Section 8.23 PURPOSE AND EFFECT OF LENDER APPROVAL. Lender's approval
of any matter in connection with the Loan shall be for the sole purpose of
protecting Lender's security and rights. No such approval shall result in a
waiver of any default of Borrower. In no event shall Lender's approval be a
representation of any kind with regard to the matter being approved.

From time to time, Lender may approve changes to the Plans and
Specifications at Borrower's request, and may also require Borrower to make
corrections to the work of construction, on and subject to the terms and
conditions of this Loan Agreement Supplement. Borrower acknowledges that no
such action, approval or other action by Lender or Borrower shall in any
manner commit or obligate Lender to increase the Project Amount.

45
<PAGE>

IN WITNESS WHEREOF, Lender and Borrower have executed this Loan
Agreement Supplement as of the date first written above by and through their
duly authorized representatives.

LENDER:

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

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

Printed Name:
-----------------------------

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

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

By: /s/ William J. Crock
---------------------------------------

Printed Name: William J. Crock, Jr.
-----------------------------

Title: Secretary
------------------------------------

UNITED HOMES, INC.,
an Arizona corporation

By: /s/ William J. Crock
---------------------------------------

Printed Name: William J. Crock, Jr.
-----------------------------

Title: Assistant Secretary
------------------------------------

46
<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By: /s/ William J. Crock
---------------------------------------

Printed Name: William J. Crock, Jr.
-----------------------------

Title: Secretary
------------------------------------

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

By: /s/ William J. Crock
---------------------------------------

Printed Name: William J. Crock, Jr.
-----------------------------

Title: Vice President
------------------------------------

<PAGE>

EXHIBIT A
TO HAZARDOUS SUBSTANCES REMEDIATION
AND INDEMNIFICATION AGREEMENT

LEGAL DESCRIPTION OF THE LAND

PARCEL 1:
LOT 1 IN CARY OAKS SUBDIVISION PHASE 5, ACCORDING TO THE PLAT THEREOF
RECORDED AUGUST 25, 1993 AS DOCUMENT 93R50199, BEING A RESUBDIVISION OF LOT
3 IN CARY OAKS SUBDIVISION PHASE 2, ACCORDING TO THE PLAT THEREOF RECORDED
JANUARY 6, 1993 AS DOCUMENT 93R788, IN THE EAST 1/2 OF SECTION 14, TOWNSHIP
43 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, BEING A SUBDIVISION
OF LOT 60 IN CARY OAKS SUBDIVISION ACCORDING TO THE PLAT THEREOF RECORDED
JULY 21, 1989 AS DOCUMENT 89R23347, AND CERTIFICATE OF CORRECTION RECORDED
APRIL 3, 1990 AS DOCUMENT 90R11683, IN MCHENRY COUNTY, ILLINOIS.

PARCEL 4:
THAT PART OF LOT 1 IN CARY OAKS SUBDIVISION PHASE 4, ACCORDING TO THE PLAT
THEREOF RECORDED JULY 30, 1993 AS DOCUMENT 93R044450, BEING A RESUBDIVISION
OF LOT 2 IN CARY OAKS SUBDIVISION PHASE 2, ACCORDING TO THE PLAT THEREOF
RECORDED JANUARY 6, 1993 AS DOCUMENT 93R000788, IN THE EAST 1/2 OF SECTION
14, TOWNSHIP 43 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, BEING A
SUBDIVISION OF LOT 60 IN CARY OAKS SUBDIVISION ACCORDING TO THE PLAT THEREOF
RECORDED JULY 21, 1989 AS DOCUMENT 89R23347, AND CERTIFICATES OF CORRECTION
RECORDED APRIL 3, 1990 AS DOCUMENT 90R11683, LYING NORTHERLY OF THE
FOLLOWING DESCRIBED LINE: BEGINNING AT A POINT 181.40 FEET NORTHERLY OF THE
MOST SOUTHERLY CORNER OF SAID LOT 1 (AS MEASURED ALONG THE EASTERLY LINE OF
SAID LOT 1); THENCE NORTH 67 DEGREES 46 MINUTES 36 SECONDS WEST, ALONG A LINE
AT RIGHT ANGLES TO THE WESTERLY LINE OF SAID LOT 1, 147.12 FEET; THENCE NORTH
22 DEGREES 13 MINUTES 25 SECONDS EAST, ALONG A LINE AT RIGHT ANGLES TO THE
LAST DESCRIBED COURSE, 160.00 FEET; THENCE NORTH 67 DEGREES 46 MINUTES 35
SECONDS WEST, ALONG A LINE AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE,
225.00 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 1 AND ALSO BEING THE
POINT OF TERMINATION OF SAID LINE, IN MCHENRY COUNTY, ILLINOIS.

<PAGE>

EXHIBIT B
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT REQUIREMENTS

ENTITLEMENT RISK Land must be through all discretionary zoning and
approvals.

BY GEOGRAPHICAL REGION The Projects must be located in the Chicago land
area, the Phoenix suburbs or western Michigan.

FINAL PRICE POINT Entry-Level 50% - 100%
First move-up 0% - 50%
Second move-up 0% - 30%
Other 0% - 10%

Maximum value per Unit of $300,000

DEVELOPMENT LIFE CYCLE The maximum proforma lifetime of a Project shall
not exceed thirty (30) months from the date of
the first disbursement of proceeds of the Loan
for the Project to full repayment, with all
outstanding borrowings due and payable on the
Project Maturity Date. The Development Work
and/or the Construction Improvements must
commence within four (4) months of the date of
the first disbursement of proceeds of the Loan
for the Project. Development of raw, but
entitled land, is anticipated only for the
construction of residential "for sale" Units by
the Borrower. The sale of lots to third party
builders or developers must be approved by the
Lender.

MAXIMUM PER PROJECT No more than Five Million Dollars ($5,000,000) of
the Loan may be committed to any Project.

PROJECT SIZE LIMITATIONS Based on the absorption rate projected in the
Appraisal Report, the size of the Project shall
not exceed the number of Units which can be
absorbed prior to the Project Maturity Date,
with an absolute cap of 125 Lots per Project.

START LIMITATIONS Construction of the Units will be limited to (i) an
agreed upon number of Project Model Homes as
set forth in the Project Commitment, plus (ii)
100% of Units for which there exists a Sales
Agreement, plus (iii) an amount of Spec Homes
equaling up to three (3) months of Unit
absorption, based on the absorption rate
projected in the Appraisal Report. (Exceptions
to the above

B-1

<PAGE>

start limitations will be considered for
attached dwelling Projects containing numerous
Units in one building and for winter
construction which requires pouring of slabs to
enable spring production). Phasing of the
Development Work will be determined based upon
the economics of the Project and its physical
requirements.

STALE UNITS Any Unit, exclusive of Project Model Homes, which
has not been repaid within twelve (12) months
of the commencement of construction on said
Unit, must be repaid.

LOAN TO VALUE RATIO: The Project Amount shall be an amount which results
in the Loan to Value Ratio being equal to or less
than eighty percent (80%).

B-2

<PAGE>

EXHIBIT C
TO SUPPLEMENT LOAN AGREEMENT

PROJECT UNDERWRITING DOCUMENTS

A. GENERAL PROJECT INFORMATION:

1. Summary description of proposed project.
2. Purchase contract for Land or Lots.
3. Project profitability summary.
4. Source and use of funds statement.
5. Cash flow analysis, which shall include the proposed Budget (including
a line item cost breakdown and breakdown between costs of acquisition
of the Land or Lots, costs related to Development Work and costs
related to Construction Improvements) and the proposed Construction
Progress Schedule.
6. Market report supporting absorption rates and information on the
various model types of the Homes.
7. Appraisal Report(s) setting forth (i) a Value for the proposed
project equal to or greater than that required by the Project
Requirements and (ii) a value for each model type of Home included
within the proposed project.
8. The plat relating to such project.
9. Commitment for the Title Policy, including copies of all documents
relating to exceptions, which Title Policy will provide mechanics'
lien coverage, will have all standard exceptions deleted therefrom
and will have appended thereto such endorsements as are generally
required by lenders in the area in which the Project is located.
10. Certificates of insurance.

B. CONSTRUCTION INFORMATION AND DOCUMENTS:

C-1

<PAGE>

C. PROJECT LEGAL DOCUMENTS

1. Proposed or recorded covenants, conditions and restrictions.
2. If a condominium, a copy of the homeowner's association articles of
incorporation, by-laws and budget.

D. BORROWER LEGAL DOCUMENTS

1. A resolution of the Borrower authorizing the Borrower to obligate
itself with respect to the Project Documents and authorizing certain
officers to execute and deliver the Project Documents.

C-2

<PAGE>

EXHIBIT D
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT COMMITMENT

D-1
<PAGE>
EXHIBIT E
TO SUPPLEMENT TO LOAN AGREEMENT

CONDITIONS TO OBLIGATION
OF LENDER TO ENTER INTO LOAN AGREEMENT SUPPLEMENT

The obligation of the Lender to enter into Loan Agreement is conditioned upon
the Lender having received, in form and substance satisfactory to Lender,
each of the following:

1. Executed originals of the Loan Agreement Supplement, the other
Project Documents and such other agreements, instruments, certificates and
other documents as Lender shall require.

2. Such financial statements, budgets, reports, studies, data and
information concerning Project as Lender shall require.

3. A favorable opinion from counsel for Borrower with respect to the
following:

(a) Borrower has the power and authority to execute and deliver,
and perform its obligations under, the Project Documents.

(b) The execution, delivery and performance by Borrower of the
Project Documents have been duly authorized by necessary action and do
not and will not (i) contravene the charter documents of United Homes,
United Arizona, United Illinois or United Michigan; (ii) contravene any
law, rule or regulation or, to such counsel's knowledge, any order, writ,
judgment, injunction or decree or any contractual restriction binding on
or affecting Borrower; (iii) require any approval or consent of any
partner or any other Person other than approvals or consents which have
been previously obtained and disclosed in writing to Lender; (iv) to such
counsel's actual knowledge, result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower is a party or by which Borrower or
its properties may be bound or affected; or (v) to such counsel's actual
knowledge, result in, or require the creation or imposition of, any lien
of any nature (other than the liens contemplated hereby) upon or with
respect to any of the properties now owned or hereafter acquired by
Borrower; and, to such counsel's knowledge, Borrower is not in default
under any such law, rule, regulation, order, writ, judgment, injunction,
decree or contractual restriction or any such indenture, agreement, lease
or instrument.

(c) The Project Documents have been duly executed and delivered
and constitute the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms.

E-1
<PAGE>

(d) To such counsel's knowledge, no authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery
and performance by Borrower of the Project Documents or any other document
executed pursuant thereto or in connection therewith.

(e) To such counsel's actual knowledge, there is no pending or
threatened action, suit, proceeding or arbitration against or affecting
Borrower or any of its Affiliates before any court, governmental agency or
arbitrator which, if adversely determined, would result in a Material
Adverse Change.

(f) The steps necessary to perfect the security interests
granted pursuant to the Project Security Instruments under applicable law.

(g) Such other opinions as Lender shall request.

4. A copy of the resolutions adopted by United Homes, United Arizona,
United Illinois and United Michigan authorizing the Borrower to incur the
debt related to the Project and authorizing certain officers of the Borrower
to execute and deliver the Project Documents.

5. Payment of costs and expenses incurred by Lender, including,
without limitation, the fees and costs of its legal counsel, in connection
with the preparation, execution, delivery and recordation/filing of the
Project Documents.

E-2

<PAGE>

EXHIBIT F
TO SUPPLEMENT TO LOAN AGREEMENT

FORM OF DRAW REQUEST CERTIFICATION

- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
DRAW REQUEST NUMBER ____

[DATE]

LENDER: RESIDENTIAL FUNDING CORPORATION

BORROWER: UNITED HOMES, INC.
UNITED HOMES, INC.
UNITED HOMES OF ILLINOIS, INC.
and
UNITED HOMES OF MICHIGAN, INC.

PROJECT: Sienna Pointe
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

Reference is made to that certain Loan Agreement dated as of May 28,
1996 between Lender and Borrower as amended by the Supplement to Loan
Agreement dated as of October 3, 1996 relating to the above referenced
Project (as amended or otherwise modified from time to time, the "Loan
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Loan Agreement Supplement, unless the context shall
require otherwise.

Borrower requests Lender to disburse to the Borrower the proceeds of the
Loan in the amounts and for the purposes stated in the attached SCHEDULE 1.

In connection with such requested disbursement, Borrower hereby
represents, warrants and certifies to Lender as follows:

(a) No Event of Default or Potential Default presently exists
under the Loan Agreement or any other Loan Document.

(b) All of the representations and warranties of Borrower under
the Loan Agreement and the other Loan Documents are hereby remade and
restated.

F-1

<PAGE>

(i) the Borrower has satisfied all conditions precedent to
the funding of the Project as set forth in the Loan Documents;

(ii) the Loan Documents are in full force and effect;

(iii) the Loan is secured by a first priority lien on the
Project and the other collateral described in the Loan Documents;

(iv) the sum of all amounts expended in respect of the
development and construction of the Project does not exceed the
Budget, or if such amounts do exceed the Budget, attached hereto
is a listing of the amounts over budget and an explanation of such
budget overrun(s); and

(v) all contractors, subcontractors, vendors, materialmen
and other Persons entitled to payment with respect to the Project
have been paid or will be paid, subject to retainage, with the
proceeds of the requested disbursement.

(d) All insurance required to be maintained by Borrower remains
in full force in effect, of the types, in the amounts and issued by insurers
as previously approved by Lender.

(e) All Development Work and Construction Improvements covered
by this Draw Request have been completed in accordance with the applicable
contracts and should now be paid, and all costs incurred in connection with
the Development Work and the Construction Improvements either have been paid
or will be paid out of the proceeds of this disbursement.

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name: -----------------------

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

F-2

<PAGE>

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name: -----------------------

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

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

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

Printed Name: -----------------------

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

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

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

Printed Name: -----------------------

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

F-3

<PAGE>

SIENNA POINTE

SCHEDULE 1 TO DRAW REQUEST NUMBER ___

[Borrower to attach its schedule setting forth the amounts requested to be
disbursed.]

F-4

<PAGE>

EXHIBIT G
TO SUPPLEMENT TO LOAN AGREEMENT

ADDITIONAL PERMITTED EXCEPTIONS

G-1

<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SUPPLEMENT TO LOAN AGREEMENT

Dated as of August 21, 1996

Between

UNITED HOMES, INC.,
an Illinois corporation,
UNITED HOMES, INC.
an Arizona corporation,
UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation
and
UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

collectively, "Borrower"

and

RESIDENTIAL FUNDING CORPORATION
a Delaware corporation

"Lender"

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

ARTICLE I DEFINITIONS................................................3
Section 1.1 Certain Defined Terms......................................3
Section 1.2 Other Definitional Provisions.............................13

ARTICLE II ADDITIONAL REPRESENTATIONS AND WARRANTIES.................14
Section 2.1 Consideration.............................................14
Section 2.2 Authorization.............................................14
Section 2.3 Governmental Consents.....................................14
Section 2.4 Validity..................................................14
Section 2.5 Financial Position........................................14
Section 2.6 No Material Adverse Change................................14
Section 2.7 Litigation................................................15
Section 2.8 Environmental Matters.....................................15
Section 2.9 Full Disclosure...........................................15
Section 2.10 FIRPTA Certification......................................15

ARTICLE III CONDITIONS PRECEDENT TO CLOSING...........................16
Section 3.1 Conditions Precedent......................................16
Section 3.2 Project Underwriting Documents and Other Documents........16
Section 3.3 Mortgage Recordation......................................16
Section 3.4 Perfection of Security Interest in Personal Property......16
Section 3.5 Taxes.....................................................16
Section 3.6 Insurance With Respect to Project.........................16

ARTICLE IV DISBURSEMENTS.............................................17
Section 4.1 Processes Relating to Disbursements.......................17
Section 4.2 Conditions Precedent to Disbursements
For Qualified Project Expenditures........................18
Section 4.3 Conditions Precedent to Final Disbursement................19
Section 4.4 Application of Disbursements..............................21
Section 4.5 Lender May Make Disbursement
Notwithstanding Noncompliance.............................21

ARTICLE V THE PROJECT...............................................22
Section 5.1 Consideration.............................................22
Section 5.2 Title to Project..........................................22
Section 5.3 No Prior Liens or Claims..................................22
Section 5.4 Access to the Project.....................................22
Section 5.5 Compliance with Project Requirements and
Laws and Regulations......................................22
Section 5.6 Covenants, Zoning, Codes, Permits and Consents............23

<PAGE>

Section 5.7 Utilities.................................................23
Section 5.8 Map, Permits, Licenses and Approvals......................23
Section 5.9 Approval of Plans and Specifications and
Approval of Budget........................................23
Section 5.10 Adequacy of Project Amount................................24
Section 5.11 Construction Start and Completion.........................24
Section 5.12 Personal Property Incorporation...........................24
Section 5.13 Contractors and Contracts.................................24
Section 5.14 Evidence of Ownership of Materials........................25
Section 5.15 Changes to Plans and Specifications and Budget............25
Section 5.16 Lender Inspections, Appraisal and Information.............26
Section 5.17 Correction of Defects.....................................27
Section 5.18 Protection Against Lien Claims............................27
Section 5.19 Conveyance, Lease or Encumbrance..........................28
Section 5.20 Security Instruments......................................28
Section 5.21 Further Assurances; Cooperation...........................28
Section 5.22 Negative Convenants.......................................28
Section 5.23 Signs.....................................................29

ARTICLE VI SALES OF LOTS AND UNITS
AND RELEASES FROM MORTGAGE................................30
Section 6.1 Sales Agreements..........................................30
Section 6.2 Sales and Closings........................................30
Section 6.3 Sales Operations and Seller's Obligations.................30
Section 6.4 Releases from Lien of Mortgage............................30
Section 6.5 Project Model Homes.......................................31

ARTICLE VII DEFAULT AND REMEDIES......................................33
Section 7.1 Events of Default.........................................33
Section 7.2 Remedies..................................................35
Section 7.3 Authorization to Apply Assets to Payment of Loan..........39

ARTICLE VIII MISCELLANEOUS.............................................40
Section 8.1 Successors and Assigns; No Assignment by Borrower.........40
Section 8.2 Notices...................................................40
Section 8.3 Changes, Waivers, Discharge and Modifications in Writing..41
Section 8.4 No Waiver; Remedies Cumulative............................42
Section 8.5 Costs, Expenses and Taxes.................................42
Section 8.6 Disclaimer by Lender; No Joint Venture....................42
Section 8.7 Indemnification...........................................43
Section 8.8 Consultants...............................................44
Section 8.9 Governing Law.............................................44
Section 8.10 Titles and Headings.......................................44

<PAGE>

Section 8.11 Counterparts..............................................44
Section 8.12 Time is of the Essence....................................44
Section 8.13 No Third Parties Benefitted...............................44
Section 8.14 Severability..............................................44
Section 8.15 Jurisdiction..............................................45
Section 8.16 Waiver of Jury Trial......................................45
Section 8.17 Interpretation............................................45
Section 8.18 Entire Agreement..........................................45
Section 8.19 Joint and Several Liability...............................46
Section 8.20 Relationships With Other Customers........................46
Section 8.21 Survival of Warranties....................................46
Section 8.22 Authority to File Notices.................................46
Section 8.23 Purpose and Effect of Lender Approval.....................46

iii
<PAGE>

EXHIBIT A
LEGAL DESCRIPTION OF THE LAND..........................................A-1

EXHIBIT B
PROJECT REQUIREMENTS...................................................B-1

EXHIBIT C
PROJECT UNDERWRITING DOCUMENTS.........................................C-1

EXHIBIT D
PROJECT COMMITMENT.....................................................D-1

EXHIBIT E
CONDITIONS TO OBLIGATION
OF LENDER TO ENTER INTO LOAN AGREEMENT SUPPLEMENT......................E-1

EXHIBIT F
FORM OF DRAW REQUEST CERTIFICATION.....................................F-1

EXHIBIT G
ADDITIONAL PERMITTED EXCEPTIONS........................................G-1

4
<PAGE>

SUPPLEMENT TO LOAN AGREEMENT

THIS SUPPLEMENT TO LOAN AGREEMENT (the "Loan Agreement Supplement")
dated as of August 21, 1996, is entered into by and between UNITED HOMES,
INC., an Illinois corporation, ("United Homes"), UNITED HOMES, INC., an
Arizona corporation ("United Arizona"), UNITED HOMES OF ILLINOIS, INC., an
Illinois corporation ("United Illinois") and UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation ("United Michigan") (United Homes, United Arizona,
United Illinois and United Michigan are collectively referred to herein as
the "Borrower") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
(the "Lender") and supplements the terms and provisions of the Loan Agreement
dated as of May 28, 1996 by and between Borrower and Lender. Capitalized
terms used herein are defined in ARTICLE I..

RECITALS

This Loan Agreement Supplement is entered into upon the basis of the
following facts and circumstances:

D. The Loan shall be secured by the Mortgage and such other security
instruments and additional documents as Lender may require as hereinafter
described.

1
<PAGE>

AGREEMENT

NOW THEREFORE, in consideration of the foregoing Recitals and the
covenants and conditions, representations and warranties contained herein,
the parties hereto agree as follows:

2
<PAGE>

ARTICLE I
DEFINITIONS

Section 1.1 CERTAIN DEFINED TERMS. As used herein (including any
Exhibits attached hereto), the following terms shall have the meanings set
forth below (unless expressly stated to the contrary):

"AFFILIATE" shall mean a Person that, directly or indirectly, controls,
is controlled by, or is under common control with, a referenced Person.

"APPRAISAL REPORT" shall mean a real estate appraisal report which (i)
has been prepared by an Appraiser, (ii) at the time it is submitted to the
Lender is not more than three (3) months old, or was updated by letter not
more than three (3) months prior to the date of submission to the Lender,
(iii) states that it is prepared in accordance with the applicable standards
of the American Institute of Real Estate Appraisers for such reports, (iv)
provides an appraisal of the Value of the Project or portion thereof required
to be appraised thereunder, and (v) employs a customary methodology and
provides limiting conditions satisfactory to the Lender.

"APPRAISER" shall mean a Person who is qualified to appraise property
similar in size and scope to the Project which such Person is acceptable to
the Lender in its sole and absolute discretion.

"BORROWER" shall mean, collectively, United Homes, United Arizona,
United Illinois and United Michigan.

3
<PAGE>

"BUSINESS DAY" shall mean a day other than Saturday, Sunday or a day
on which national banks are legally closed for business in the States of
Arizona, Illinois, Michigan or Minnesota.

"CONSTRUCTION AGREEMENTS" shall mean all agreements (including,
without limitation, construction contracts) entered into between the Borrower
and any contractor, architect, engineer, supplier or other Person with
respect to the development or construction of the Project, as such agreements
may be amended or otherwise modified from time to time in accordance with
this Loan Agreement Supplement.

"CONSTRUCTION IMPROVEMENTS" shall mean the Homes which are to be
constructed on or with respect to the Land by or on behalf of the Borrower in
accordance with the Plans and Specifications, which improvements shall
include two hundred ninety one (291) single-family detached homes in a
subdivision commonly known as Bayberry located in Lake County, State of
Illinois, but shall not include the Development Work.

"DEBT" shall mean, for any Person, without duplication, the sum of all
(i) indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the
sale of the same or substantially similar securities or property, (vi)
obligations of such Person to reimburse any bank or other Person in respect
of amounts actually paid under a letter of credit or similar instrument,
(vii) indebtedness or obligations of other secured by a lien on any asset of
such Person, whether or not such indebtedness or obligations are assumed by
such Person (to the extent of the value of the asset), (viii) obligations
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in CLAUSES (i) through (vii) above, and (ix)
liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.

"DEVELOPMENT WORK" shall mean the work of development to be performed
on or with respect to the Land (including, without limitation, the
installation of utilities, roads and all related on-site and off-site
improvements) in connection with the development of the Land for the
subsequent construction thereon of Homes, all of which work and construction
thereon of Homes, all of which work and construction shall be completed

4
<PAGE>

by or on behalf of the Borrower in accordance with the Plans and
Specifications, but shall not include the Construction Improvements.

"DRAW REQUEST CERTIFICATION" shall mean, with respect to a requested
disbursement of the Loan to fund Qualified Project Expenditures, a
certification of the Borrower in the form of EXHIBIT F.

"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and rulings issued
thereunder.

"EVENT OF DEFAULT" shall mean the occurrence of any of the events
listed in SECTION 7.1 or an event of default (however described) under the
Loan Agreement or any other of the Project Documents.

"HAZARDOUS MATERIALS" shall mean the following:

(a) any oil, flammable substances, explosives, radioactive
materials, hazardous wastes or substances, toxic wastes or substances or
any other materials or pollutants, exposure to which is prohibited,
limited or regulated by any governmental authority pursuant to any
Hazardous Materials Law;

(b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty (50) parts per million, exposure to which is prohibited,
limited or regulated by any governmental authority pursuant to any
Hazardous Materials Law;

<PAGE>

(c) any chemical, material or substance defined as or included
in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", extremely hazardous waste", "restricted hazardous
waste", or "toxic substances" or words of similar import under any
Hazardous Material Laws; and

(d) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority
pursuant to any Hazardous Materials Law.

"HAZARDOUS MATERIALS LAWS" shall mean any federal, state or local laws,
ordinances and the regulations, policies or publications promulgated pursuant
thereto relating to (i) the environment, (ii) health and safety, (iii) any
Hazardous Materials (including, without limitation, the use, handling,
transportation, production, disposal, discharge or storage thereof), (iv)
industrial hygiene or (v) environmental conditions on, under or about
property, including, without limitation, soil and groundwater conditions;
including, but not limited to, the following, as now or hereafter amended:
the Clean Air Act, 42 U.S.C. Sec. 9401, ET SEQ.; the Clean Water Act, 33
U.S.C. Sec. 7401, ET SEQ.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601, ET SEQ., as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sec. 11001, ET SEQ.; the Federal Water Pollution Control Act, 33
U.S.C. Sec. 1251, ET SEQ.; the Hazardous Materials Transportation Act, 49
U.S.C. Sec. 1801, ET SEQ.; the Resource Conservation and Recovery Act, 42
U.S.C. Sec. 6901, ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Secs. 300f
to 300j; the Solid Waste Disposal Act, 42 U.S.C. Sec. 3251, ET SEQ.; and the
Toxic Substances Control Act, 15 U.S.C. Sec. 2601, ET SEQ.

"HOMES" shall mean the single family residences, condominium homes
and/or attached townhouses that will be constructed by the Borrower with the
proceeds of the Loan, which Homes the Borrower shall construct on the Land
and offer for sale to individuals and families.

"INDEMNIFIED PARTY" shall mean the Lender and any Participants and each
of their officers, directors, employees, agents, attorneys, consultants,
advisors and Affiliates.

"INSPECTOR" shall mean the inspector for the Project to be selected by
the Lender, as set forth in the Project Commitment.

"INTEREST RESERVE" shall mean the amount within the Budget which has
been designated as available to pay interest on the Project Amount for a
period of time not to exceed the lesser of (i) six

<PAGE>

(6) months from the date of the first disbursement of proceeds of the Loan
for the Project or (ii) the time period between the date of the first
disbursement of proceeds of the Loan for the Project and the date on which
the first Unit in the Project is sold and closed.

"LAND" shall mean that certain real property which is suitable for and
substantially entitled for the development of Homes thereon and related on
and off-site improvements and upon which the Borrower will perform the
Development Work and construct the Construction Improvements, which such real
property is located in Lake County, in the State of Illinois and described in
EXHIBIT A.

"LENDER" shall mean Residential Funding Corporation, a Delaware
corporation.

"LOAN" shall mean the revolving loan described in the Loan Agreement in
a principal amount not to exceed the Loan Amount.

"LOAN AGREEMENT SUPPLEMENT" shall mean this Loan Agreement Supplement
dated as of August 21, 1996 between the Borrower and the Lender, as the same
may be amended or otherwise modified from time to time.

"LOAN AMOUNT" shall mean Twenty-Five Million Dollars ($25,000,000).

<PAGE>

or incumbency, escrow instructions, architect's consent agreements, and UCC-1
financing statements to be executed (and acknowledged where applicable) by
Borrower, Project Owner and/or Lender (where applicable) in connection with
Lender making the Loan to Borrower, as the same may be amended or otherwise
modified from time to time in accordance with the Loan Agreement. The Loan
Documents shall include, but not be limited to, the following:

(a) the Loan Agreement;

(b) the Note;

(d) any Related Loan Documents.

"LOAN TO VALUE RATIO" shall mean, with respect to the Project or any
part thereof as to which a Loan to Value Ratio is being determined, the ratio
of the Project Amount to the Value.

"LOTS" shall mean the tracts of real property within the Land that
have been or will be developed for the subsequent construction thereon of
Homes.

"MAP" shall mean a final subdivision or parcel map consistent with the
Plans and Specifications and with the Laws and Regulations.

"MATERIAL ADVERSE CHANGE" shall mean any material and adverse change in,
or a material adverse effect upon, any of:

(a) the business, properties, operations or condition (financial
or otherwise) of Borrower since either or both of (i) August 14, 1996,
or (ii) the date of the most recent financial statements delivered to
Lender in connection with the Loan;

(b) the legal or financial ability of Borrower to perform its
obligations under the Borrower Documents and to avoid any Potential
Default or Event of Default; or

<PAGE>

"NOTE" shall mean the Promissory Note dated May 28, 1996 executed by
Borrower, as maker and made payable, to the order of Lender, as holder, in
the amount of Twenty-Five Million Dollars ($25,000,000) and maturing on the
Maturity Date, to evidence the Loan, as such Promissory Note may be amended
or otherwise modified from time to time.

"PERSON" shall mean an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.

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

<PAGE>

"PROJECT" shall mean (i) the Land and (ii) the Development Work and
Construction Improvements to be completed on the Land, for which the Lender
has issued the Project Commitment.

"PROJECT AMOUNT" shall mean Four Million Seven Hundred Fifty Thousand
Dollars ($4,750,000).

"PROJECT COMMITMENT" shall mean the Project Commitment dated August 14,
1996 and attached as EXHIBIT D.

"PROJECT DOCUMENTS" shall mean, with respect to the Project, all
documents, instruments, agreements, assignments and certificates relating
thereto, including, without limitation, any and all loan or credit
agreements, promissory notes, deeds of trust, mortgages, security agreements,
assignments of rents, assignments of leases, assignments of contracts,
environmental indemnities, guaranties, contractor's consent agreements,
lender's title insurance policies, opinions of counsel, evidences of
authorization or incumbency, escrow instructions, instructions, architect's
consent agreements, and UCC-I financing statements to be executed (and
acknowledged where applicable) by Borrower, Project Owner and/or Lender
(where applicable) in connection with Lender making proceeds of the Loan
available to the Borrower for the Project, as the same may be amended or
otherwise modified from time to time in accordance with the Loan Agreement
and this Loan Agreement Supplement. The Project Documents shall include, but
not be limited to, the following:

(a) the Project Commitment;

(b) this Loan Agreement Supplement;

(d) the Environmental Indemnity;

(e) the UCC-1 Financing Statement;

(f) the Assignment;

(g) the Title Policy; and

(h) the Plans and Specifications.

-10-

<PAGE>

"PROJECT OWNER" shall mean, United Homes, Inc., a an Illinois
corporation.

"PROJECT REQUIREMENTS" shall mean the requirements listed in EXHIBIT B.

"PROJECT SECURITY INSTRUMENTS" shall mean, with respect to the Project,
all pledge agreements, guaranties, deeds of trust, mortgages, security
agreements, assignments and other agreements or instruments executed by
Borrower and/or Project Owner granting in favor of Lender a lien or
encumbrance on or a security interest in any property or right or interest of
Borrower and or Project Owner as security for the Loan, as the same may be
amended or otherwise modified from time to time in accordance with the Loan
Agreement and this Loan Agreement Supplement, including but not limited to
the following:

(a) the Mortgage;

(b) the UCC-1 Financing Statement; and

"PROJECT UNDERWRITING DOCUMENTS" shall mean the documents listed in
EXHIBIT C and any other documents relating to the Project which Lender
reasonably requests, all in form and substance reasonably satisfactory to the
Lender and, as to items A5, A8, B1, B3 and B6 in form and substance
reasonably satisfactory to the Inspector.

"QUALIFIED PROJECT EXPENDITURES" shall mean the costs for which proceeds
of the Loan may be disbursed, which such costs shall be limited to the
following:

(a) the cost of acquiring the Land or the Lots;

(b) Planning Costs;

(c) the cost of materials and labor for Development Work and
Construction Improvements in place for the Project, but excluding any
costs for materials delivered to the Land which have not yet been put
in place;

(d) the Interest Reserve; and

(e) Soft Costs.

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<PAGE>

"SALES AGREEMENT" shall mean a written agreement for the sale of a Lot
or a Unit between the Borrower and a Person who is not an Affiliate of the
Borrower, which agreement (i) shall be binding upon such Person, (ii) shall
require such Person to deposit with the Borrower an "at risk" deposit, (iii)
shall conform to all applicable laws, regulations, codes and ordinances,
including those requiring disclosures to prospective and actual buyers and
(iv) shall not contain any contingencies, except that such agreement may be
contingent on such Person's ability to obtain financing for the purchase, but
only if such Person has been pre-approved for financing prior to entering
into such agreement.

"SPEC HOMES" shall mean Homes which are not subject to a Sales Agreement.

"TOTAL PROJECT COSTS" shall mean, with respect to a Project, the sum of
(i) the Qualified Project Expenditures plus (ii) all other costs necessary to
acquire the Land, construct the Development Work and the Construction
Improvements in accordance with the Plans and Specifications and complete the
Project.

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<PAGE>

"UNIT" shall mean a Lot and the Home constructed on such Lot.

"UNITED ARIZONA" shall mean United Homes, Inc., an Arizona corporation.

"UNITED HOMES" shall mean United Homes, Inc., an Illinois corporation.

"UNITED ILLINOIS" shall mean United Homes of Illinois, Inc., an Illinois
corporation.

"UNITED MICHIGAN" shall mean United Homes of Michigan, Inc., a Michigan
corporation.

"VALUE" shall mean, for purposes of determining whether or not the Loan
to Value Ratio complies with the Project Requirements, the lower of (i) the
value which an Appraiser assigns to the Project, as set forth in an Appraisal
Report, which Appraisal Report shall determine the values of each Unit,
whether or not the Construction Improvements have been completed, based on
the "as completed" appraised value of such Unit and (ii) the sales prices for
the Units as set forth in Sales Agreements.

Section 1.2 OTHER DEFINITIONAL PROVISIONS.

(b) The words "hereof", "herein" and "hereunder" are words of similar
import when used in this Loan Agreement Supplement shall refer to this Loan
Agreement Supplement as a whole and not to any particular provision of this
Loan Agreement Supplement.

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<PAGE>

ARTICLE II
ADDITIONAL REPRESENTATIONS AND WARRANTIES

Section 2.2 AUTHORIZATION. The execution, delivery and performance by
Borrower of the Project Documents have been duly authorized by all necessary
action and do not and will not (i) contravene the charter documents of any of
United Homes, United Arizona, United Illinois or United Michigan, (ii)
contravene any law, rule or regulation or any order, writ, judgment,
injunction or decree of any contractual restriction binding on or affecting
Borrower, (iii) require any approval or consent of any partner, shareholder
or any other Person other than approvals or consents which have been
previously obtained and disclosed in writing to Lender, (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Borrower is a
party or by which Borrower or its properties may be bound or affected, or (v)
result in, or require the creation or imposition of, any lien of any nature
(other than the liens contemplated hereby) upon or with respect to any of the
properties now owned or hereafter acquired by Borrower; and Borrower is not in
default under any such law, rule, regulation, order, writ, judgment,
injunction, decree or contractual restriction or any such indenture,
agreement, lease or instrument.

Section 2.4 VALIDITY. The Project Documents have been duly executed
and delivered and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.

Section 2.6 NO MATERIAL ADVERSE CHANGE. No Material Adverse Change has
occurred since August 14, 1996.

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<PAGE>

Section 2.7 LITIGATION. There is no pending or, to Borrower's
knowledge, threatened action, suit, proceeding or arbitration against or
affecting Borrower before any court, governmental agency or arbitrator,
which may result in a Material Adverse Change.

Section 2.8 ENVIRONMENTAL MATTERS. The operations of Borrower comply
in all respects with all Hazardous Materials Laws except such noncompliance
which would not (if enforced in accordance with applicable law) reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Change. As of the date of this Loan Agreement Supplement, (i) neither
Borrower nor its present properties or operations is subject to any
outstanding written order from or settlement or consent agreement with any
governmental authority or other Person, nor is any of the foregoing subject
to any judicial or docketed administrative proceeding respecting any Hazardous
Materials Law, Hazardous Materials Claim or Hazardous Material, and (ii)
there are no other conditions or circumstances known to Borrower which may
give rise to any Hazardous Materials Claim arising from the operations of
Borrower.

Section 2.10 FIRPTA CERTIFICATION. Borrower declares and certifies,
under penalty of perjury, that: (i) the U.S. Taxpayer I.D. Number of United
Homes is 36-3978181, of United Arizona is 86-0680628, of United Illinois is
36-3421835 and of United Michigan is 38-3180076; (ii) the business address of
Borrower is United Homes, Inc., 2100 Golf Road, Suite 110, Rolling Meadows,
Illinois 60008-4220; (iii) Borrower is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as
amended; and (iv) Borrower understands that the information and certification
contained in this SECTION 2.10 may be disclosed to the Internal Revenue
Service and that any false statement contained herein could be punished by
fine, imprisonment or both. Borrower agrees to provide Lender and Lender
with a new certification containing the provisions of this SECTION 2.10
immediately upon any change in such information.

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<PAGE>

ARTICLE III

CONDITIONS PRECEDENT TO CLOSING

Section 3.1 CONDITIONS PRECEDENT. Lender's obligation to enter into and
perform its duties under this Loan Agreement Supplement shall be subject to
the full and complete satisfaction of the conditions precedent set forth in
this ARTICLE III and in EXHIBIT E.

Section 3.3 MORTGAGE RECORDATION. The Mortgage must be duly recorded
and in a first-priority lien position, which first-priority lien positions
shall be evidenced and insured by the Title Policy.

Section 3.5 TAXES. All taxes, fees and other charges in connection with
the execution, delivery and recording of the Project Documents shall have
been paid, and all delinquent taxes, assessments or other governmental
charges or liens affecting the Project, if any, shall have been paid.

Section 3.6 INSURANCE WITH RESPECT TO PROJECT. In addition to the
insurance required by SECTION 5.5 of the Loan Agreement, Borrower shall
maintain with respect to the Project the insurance required by the terms of
this SECTION 3.6 and shall deposit with Lender, original, duplicate original
or certified copies of insurance policies for such insurance issued by
insurance companies with current Best's Key Ratings of not less than A/IX and
written in form and content acceptable to Lender. Such insurance with respect
to the Project shall consist of all-risk course of construction insurance
(non-reporting form) in the minimum amount specified in the Project
Commitment, on a replacement cost basis, insuring against loss or damage by
hazards customarily included within "extended coverage" policies, and any
other risks or hazards which in Lender's reasonable judgment should be
insured against, with a Lender's Loss Payable Endorsement naming Lender as an
additional insured together with a full replacement cost endorsement (without
provisions for co-insurance). The insurance policies required by this SECTION
3.6 shall be subject to the requirements and restrictions set forth in
SECTION 5.5 of the Loan Agreement.

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<PAGE>

ARTICLE IV

DISBURSEMENTS

Section 4.1 PROCESSES RELATING TO DISBURSEMENTS.

(a) Borrower may request disbursements of the Loan for Qualified
Project Expenditures related to the Project, subject to the limitation on the
number of allowable disbursements per month set forth in SECTION 2.2(c) of
the Loan Agreement. All requests for disbursements of proceeds of the Loan
shall comply with the terms of this ARTICLE IV and any additional limitations
set forth in the Project Commitment.

(b) Each disbursement request shall be evidenced by a Draw Request
Certification and shall be accompanied by, or the Lender shall have received
from another source, the following:

(1) an "Application and Certificate for Payment" on AIA forms G702
and G703 or such other form as the Lender approves;

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<PAGE>

Construction Improvements if and only if the issuer of the Title Policy
shall issue an endorsement which insures Lender against any loss by
reason of such mechanics' liens and Borrower shall have complied in all
respects with the requirements of SECTION 5.18; and

(6) such other documents specified in the Project Commitment.

(c) Provided that no Event of Default of Potential Default exists, and
subject to the terms and conditions set forth herein, the Lender will use its
reasonable best efforts to disburse to the Borrower the amount requested,
within five (5) Business Days after receipt of a Draw Request Certification
meeting the requirements of this Loan Agreement Supplement, provided that in
the event the Lender is unable to make the disbursement within such time
period, the Lender will disburse the proceeds of the Loan as soon thereafter
as possible. All disbursements shall be delivered to Borrower by federal
funds wire transfer as instructed by Borrower.

(a) If all or a portion of the requested disbursement is to be
used to fund the initial disbursement related to the Project, then as a
condition precedent to Lender's obligation to fund such initial
disbursement, Borrower must deliver to the Lender evidence that the
Borrower has contributed to the Project equity equal to
[ten percent (10%) thirty-five percent (35%)] of the total cost to
acquire the Land.

(1) the outstanding balance of the Loan exceeds, or would
following the contemplated disbursement exceed, the face amount of
the Note:

<PAGE>

(2) the outstanding balance of the Loan attributable to the
Project exceeds, or would following the contemplated disbursement
exceed, the Project Amount; or

(3) the proceeds of the Loan which, pursuant to the Project
Commitment, are available for disbursement will not be sufficient
to complete the acquisition of the Land, the Development Work and
Construction Improvements related to the Project, including the
construction of any Homes within the Project to be constructed on
the Land as scheduled; provided however, that the Lender shall be
obligated to make disbursements notwithstanding such a deficiency
in the event that (i) the Budget and the amount of the Loan
allocated to the Project have been increased by an amount at least
equal to such deficiency in accordance with the terms of
SECTION 5.15(d), or (ii) the Borrower provides to the Lender
evidence that it has paid from its own funds, in addition to any
Borrower funds which the Budget requires, an amount at least equal
to the amount of the deficiency.

(d) Lender shall not be obligated to disburse any Loan proceeds
for the Project to the extent that the Project does not then satisfy the
requirements set forth in the Project Commitment.

(f) The representations and warranties of Borrower contained in
the Loan Documents are true and correct in all material respects on and
as of the date of the requested disbursements, before and after giving
effect thereto and to the application of the proceeds therefrom, as
though made on and as of such date.

(g) No Event of Default or Potential Default has occurred and is
continuing, or would result from such disbursement or from the
application of the proceeds therefrom.

<PAGE>

Work and the Construction Improvements have been completed substantially
in accordance with the Plans and Specifications.

(c) Receipt by Lender of the final certificate(s) of occupancy for
the Construction Improvements issued by the appropriate governmental
authorities having jurisdiction.

(g) Upon completion of the Development Work and the Construction
Improvements, Borrower shall deliver to Lender a completion certificate
containing the following: (i) Borrower's statement of the aggregate
amount of costs incurred in connection with the Project but not paid by
the Borrower before the completion date and (ii) Borrower's
certification that all of the proceeds of the Loan disbursed with
respect to the Project have been applied to pay or reimburse costs
incurred in connection with the construction of the Development Work
and the Construction Improvements and the acquisition of the Land, and
that none of the proceeds of the Loan disbursed with respect to the
Project have been applied to pay or reimburse any costs or expenses
other than such costs of construction and acquisition, together with
interest and servicing and fees incurred in connection with the Loan.

<PAGE>

it operate to release Borrower from liability for any misrepresentations or
breaches hereunder (notwithstanding any opportunity of Lender to discover
such misrepresentation or breach from materials provided to Lender as a
condition of closing). Borrower understands and agrees that such conditions
are for the sole purpose of protecting Lender's Loan advances and providing
security for the Loan, and are made solely for the Lender's benefit. No
waiver of a condition in one or more instances shall establish a course of
dealing or other agreement that will bind Lender or prohibit Lender from
enforcing such condition or any other term or condition of this Loan
Agreement Supplement in the same or any other instance.

Section 4.4 APPLICATION OF DISBURSEMENTS. All Loan proceeds disbursed
to Borrower pursuant to this Loan Agreement Supplement will be used only for
payment of those items specified in the Draw Request Certification for which
the particular disbursement was made. Borrower will not use all or any portion
of such disbursement to pay or reimburse itself, directly or indirectly, for
any amounts paid by Borrower or any other Person but not included in the
Budget.

Section 4.5 LENDER MAY MAKE DISBURSEMENT NOTWITHSTANDING NONCOMPLIANCE.
Notwithstanding the failure of any condition precedent to Lender's obligation
to make any disbursement hereunder, Lender may make such disbursement if
Lender, in its sole discretion, determines the making of the same to be
advisable. The making of any disbursement, either before or after the
satisfaction of all conditions precedent with respect to Lender's obligation
to make the same, shall not be deemed to constitute an approval or acceptance
by Lender of the Development Work or the Construction Improvements
theretofore completed or a waiver of such condition with respect to a
subsequent disbursement.

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<PAGE>

ARTICLE V
THE PROJECT

Section 5.3 NO PRIOR LIENS OR CLAIMS. Except as otherwise may have
been approved in writing by Lender and as to which Lender shall have received
such endorsements (including mechanics lien coverage) to the Title Policy as
Lender may require to assure the priority of the Mortgage as a valid first
lien on the Project, subject only to Permitted Exceptions, Borrower
represents that, prior to recordation of the Mortgage, neither it, nor anyone
acting on Borrower's behalf has (i) commenced construction of the Development
Work or the Construction Improvements, or any grading or site clearance
related thereto, (ii) purchased, contracted for or otherwise brought upon the
Land any materials, specially fabricated or otherwise, to be incorporated
into the Development Work or the Construction Improvements, or (iii) entered
into any contract or arrangement, the performance of which by any other party
thereto could give rise to a lien or claim on the Project or any portion
thereof.

<PAGE>

of any disbursement by Lender relating to the validity of the Loan or the
proposed or actual use of the Project.

Section 5.6 COVENANTS, ZONING, CODES, PERMITS AND CONSENTS. Borrower
is familiar and has complied, or will comply on a timely basis, with all of
the Laws and Regulations to be complied with in connection with the
construction of the Development Work and the Construction Improvements.
Except as set forth in the Project Commitment, all permits, licenses,
consents, approvals or authorizations by, or registrations, declarations,
withholding of objections or filings with any governmental body necessary in
connection with the valid execution, delivery and performance of this Loan
Agreement Supplement, the Project Documents, and any and all other documents
executed in connection with any of the foregoing, necessary for the
subdivision of the Land, necessary for the construction of the Development
Work and the Construction Improvements, and necessary for the marketing and
sale of the Construction Improvements, have been obtained or will be obtained
on a timely basis and are and will be valid, adequate and in full force and
effect. Construction of the Development Work and the Construction
Improvements and the intended use thereof will in all respects conform to and
comply with all Laws and Regulations, including without limitation all
applicable zoning, subdivision, environmental protection, use and building
codes, laws, regulations and ordinances.

Section 5.7 UTILITIES. All utility services and facilities necessary
for the construction, sale and occupancy of the Project and the operation
thereof for its intended purpose are either available at the boundaries of
the Land or, if not, all necessary steps have been, or will be, taken by
Borrower and the local authority or public utility company which provides
such services to assure the complete installation and availability thereof
when needed for construction, sale, occupancy and operation of the Project.

Section 5.8 MAP, PERMITS, LICENSES AND APPROVALS. Borrower has
obtained or will, in a timely manner, obtain the Map. Borrower shall properly
comply with and keep in effect the Map and all permits, licenses and
approvals which are required to be obtained from governmental bodies in order
to construct, occupy, operate, market and sell the Project. Borrower shall
promptly deliver copies of the Map and all such permits, licenses and
approvals to Lender.

Section 5.9 APPROVAL OF PLANS AND SPECIFICATIONS AND APPROVAL OF BUDGET.

(a) The Plans and Specifications are a true, complete and accurate
reflection of the Development Work and the Construction Improvements that
Borrower will construct. The Plans and Specifications are satisfactory to
Borrower and have been reviewed and approved by Borrower and the general
contractor for the Project (if different from the Borrower), and have also
been approved as required by all governmental bodies or agencies having
jurisdiction (including, without limitation, any local design review boards)
and by the beneficiary of any restrictive covenant affecting the Project.
There are no structural defects in the Development Work or the Construction
Improvements

<PAGE>

as shown in the Plans and Specifications, and no violation of any of the Laws
and Regulations exists with respect to the Plans and Specifications.

Section 5.11 CONSTRUCTION START AND COMPLETION. Borrower shall
commence construction of the Development Work and the Construction
Improvements no later than the date set forth in the Project Commitment and
shall thereafter diligently proceed with construction and completion of the
Development Work and the Construction Improvements in a good and workmanlike
manner in accordance with the Plans and Specifications and the Construction
Progress Schedule; provided however that in the event construction of the
Project is subject to delays caused by any Force Majeure Event, the Borrower
shall provide to the Lender written notice of such delay, and if such delay
will not exceed one hundred twenty (120) days in the aggregate or is
otherwise reasonable in length, the Borrower shall not be deemed in default
of its obligations assumed pursuant to this Loan Agreement Supplement solely
by reason of such delay. The Borrower shall cause the Development Work and
the Construction Improvements at all times to materially conform to the Laws
and Regulations and shall accomplish completion of the Development Work and
the Construction Improvements in accordance with the Construction Progress
Schedule. Borrower shall cooperate at all times with Lender in bringing about
the timely completion of each element of the Development Work and the
Construction Improvements, and Borrower shall resolve all disputes arising
during the work of construction in a manner which shall allow work to proceed
expeditiously.

Section 5.12 PERSONAL PROPERTY INCORPORATION. All personal property
for which Lender advances Loan proceeds for the Project is to be stored on
the Land and in Lender's judgment must be reasonably secure from damage and
theft and fully insured at all times.

24
<PAGE>

respect to each. Upon an Event of Default, Lender shall have the right, and
at any time the Inspector shall have the right (in both cases without either
the obligation or the duty), to contact directly each contractor,
subcontractor and materialman to verify the facts disclosed by said list or
for any other purpose.

Section 5.15 CHANGES TO PLANS AND SPECIFICATIONS AND BUDGET.

(a) There shall be no Change of any of the Plans and Specifications or
working drawings relating to the Development Work which, together with all
prior changes, exceeds, in aggregate amount, five percent (5%) of the portion
of the Budget allocable to the Development Work, whether by change order or
otherwise, without the prior written approval of Lender, and, to the extent
that such approvals may be required, the appropriate governmental
authorities. There shall be no Change to the Plan and Specifications relating
to the Construction Improvements which increases the portion of the Budget
allocable to each Home by five percent (5%) or more, without the prior
written approval of Lender; provided that the foregoing shall not apply to
upgrades. As a condition to its approval of any Change described in either of
the preceding sentences, Lender may require verification that such Change:

(1) is a Change as to which the Borrower has complied with the
terms of SUBPARAGRAPH (d) of this SECTION 5.15;

(2) will not adversely affect the value of Lender's security;

(3) is not a material change in structure, design, exterior
appearance, square footage, or function;

(4) would not cause an increase in any line item or category of the
Budget in excess of the contingencies (if any) specifically
contained in the Budget for that line item or category; and

(5) would be consistent with the Laws and Regulations.

Lender is under no duty to review or inform Borrower of the quality or
suitability of the Plans and Specifications, any contract or subcontract or
any changes thereto. Without limitation of the foregoing, Borrower shall
obtain Lender's prior written approval of any alteration in the Plans and
Specifications which might adversely affect the value of Lender's security or
which, regardless of cost, is a material change in structure, design,
function or exterior appearance.

25
<PAGE>

(b) Borrower shall obtain from the appropriate persons or entities
approvals of any alterations in the Map, the Plans and Specifications or any
work, materials or contracts that are required by any of the Laws and
Regulations or under the terms of the Project Commitment or other Borrower
Project Document.

(d) In the event that neither:

(1) the proceeds of the Loan which are available for disbursement
will not be sufficient to complete the Development Work or the
Construction Improvements, including the construction of any Homes
within the Project to be constructed on the Land as scheduled; or

Section 5.16 LENDER INSPECTIONS, APPRAISAL AND INFORMATION. During
normal business hours, the Borrower shall arrange for the Lender, the
Inspector or any other authorized representative

26
<PAGE>

of Lender, at the expense of Borrower, to visit, inspect or appraise the
Project, the materials to be used thereon or therein, contracts, records,
plans, specifications and shop drawings relating thereto, whether kept at
Borrower's offices or at the Project construction site or elsewhere, and the
books, records, accounts and other financial and accounting records of
Borrower wherever kept, and to make copies and take extracts thereof and
therefrom as often as may be requested at Borrower's cost and expense.
Borrower will cooperate with Lender to enable Lender and Inspector to conduct
such visits, inspections and appraisals. The cost of the Inspector and of
such inspections shall be borne by Borrower and shall be paid within thirty
(30) days of Borrower's receipt of any invoice with respect thereto.

Section 5.17 CORRECTION OF DEFECTS. If Lender in its reasonable judgment
determines that any Development Work, Construction Improvements or materials
fail to conform to the Map, any Laws and Regulations, the Plans and
Specifications or sound building practices, or that they otherwise depart
from any of the requirements of this Loan Agreement Supplement, Lender may
require the work to be stopped and withhold disbursements until the matter is
corrected. If this occurs, Borrower shall promptly correct the work to
Lender's satisfaction, and pending completion of such corrective work shall
not allow any other work which is dependent upon or directly related to the
work requiring correction to proceed. No such action by Lender shall affect
Borrower's obligation to complete each element of the Development Work and
the Construction Improvements within the times required by this Loan
Agreement Supplement. The advance of any Loan proceeds shall not constitute a
waiver of Lender's right to require compliance with this covenant.

Section 5.18 PROTECTION AGAINST LIEN CLAIMS.

(a) Borrower shall pay and discharge, or cause to be paid and
discharged, promptly and fully all claims for labor done and materials
and services furnished in connection with the Development Work and
Construction Improvements, and take or cause to be taken all reasonable
steps to forestall the assertion of claims of lien against the Project
or any part thereof. Borrower shall obtain a lien waiver with respect to
each payment by or to the Borrower and each of the various
subcontractors and materialmen (and the major subcontractors and
submaterialmen under them), and Lender, at any time, at its option, may
require that Borrower make any payments for which disbursements are
made hereunder by joint check made payable to the Borrower and the
subcontractor or sub-subcontractor for whose account such payment is to
be made, as joint payees.

27
<PAGE>

deposit of cash in the amount of 150% of the claim of lien with Lender,
or (iii) deliver or cause to be delivered to Lender a specific
endorsement to the Title Policy which insures Lender against any loss by
reason of such claim of lien, or (iv) deliver or cause to be delivered
to Lender such other assurance as may be acceptable to Lender; provided
however, that in the event the aggregate amount of claims filed with
respect to the Project exceeds Fifty Thousand Dollars ($50,000),
Borrower shall be required to take one of the actions specified in (i)
through (iv) above with respect to subsequent claims.

Section 5.19 CONVEYANCE, LEASE OR ENCUMBRANCE. Borrower shall not sell,
agree to sell, convey, transfer, dispose of or further encumber the Project
or any portion thereof or interest therein (other than the sale of Units), or
enter into a lease covering all or any portion thereof or interest therein,
either voluntarily, involuntarily or otherwise, or enter into an agreement to
do so, without the prior written consent of Lender being first had and
obtained. All easements, declarations, covenants, conditions, restrictions
and dedications affecting the Project shall be submitted to Lender for its
approval, accompanied by a drawing or survey showing the precise location
thereof, and such approval shall be obtained prior to the execution or
granting of any thereof by Borrower. Borrower shall not execute any lease of
any portion of the Project without the prior written consent of Lender.
Borrower shall promptly notify Lender of any event of default or cancellation
under any lease now or hereafter in effect.

Section 5.20 SECURITY INSTRUMENTS. From time to time, upon the request of
Lender, Borrower shall execute and deliver to Lender a security instrument or
instruments naming Lender as secured party covering all contracts of any kind
entered into in connection with the Development Work or the Construction
Improvements and all other property of any kind whatsoever owned by the
Borrower and used, or to be used, in the use and enjoyment of the Project and
concerning which Lender may have any doubt as to its being subject to the
lien of the Project Security Instruments.

Section 5.21 FURTHER ASSURANCES: COOPERATION. Borrower will at any time
and from time to time upon request of Lender take or cause to be taken any
action, execute, acknowledge, deliver or record any further documents,
opinions, mortgages, security agreements, financing statements or other
instruments or obtain such additional insurance as Lender in its discretion
deems necessary or appropriate to carry out the purposes of this Loan
Agreement Supplement and to preserve, protect and perfect the security
interest intended to be created and preserved in the Project, the Development
Work and the Construction Improvements.

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<PAGE>

substantially all of its assets (in a single transaction or a series of
related transactions), or (B) any of the collateral for the Loan assigned to
Lender by Borrower.

29
<PAGE>

ARTICLE VI
SALES OF LOTS AND UNITS
AND RELEASES FROM MORTGAGE

Section 6.2 SALES AND CLOSINGS. Borrower may enter into sales in the
ordinary course of business with bona fide third party buyers without
Lender's prior written consent if:

(a) a Sales Agreement is executed with the buyer which conforms to
the requirements of this Loan Agreement Supplement; and

(b) Borrower, acting in good faith following exercise of due
diligence, has determined that the buyer is financially capable of
performing all of its obligations under the Sales Agreement.

The Borrower shall furnish to the Lender copies of all Sales Agreements
immediately after execution of such Sales Agreements by all Persons who are
parties thereto. Lender in the exercise of its sole discretion may consider
any sale to be unsatisfactory if the sale fails to meet any of the
requirements of this Loan Agreement Supplement. If this happens, or if any
Event of Default has occurred and is continuing, Lender may make written
demand on Borrower to submit future Sales Agreements for Lender's approval
prior to execution, together in each instance with accompanying financial
statements and other information that Borrower may have pertaining to the
prospective buyer. Until such time as the earlier of (i) the Lender's
notification to Borrower that the Sales Agreements need no longer be
submitted prior to execution or (ii) the Event of Default is cured or Lender
has waived such Event of Default, Borrower shall comply with any such demand
by Lender.

30
<PAGE>

(a) Lender shall have received a written notice requesting the
partial release no fewer than five (5) Business Days prior to the date
on which the partial release is to be effective, which notice shall
specify (i) the Project, (ii) the specific Lots and/or Units to be
released, (iii) if such release is being requested in connection with a
sale of the Lots and/or Units, the Persons to whom such Lots and/or
Units are being sold, which Person shall not be an Affiliate of the
Borrower, and (iv) the Lender's Release Prices therefor;

(b) Lender shall have received evidence satisfactory to Lender
that (i) the closing of the sale and/or release of such Lot and/or Unit
shall be conducted through an escrow with a title company satisfactory
to Lender, and (ii) such title company shall have been instructed, which
instructions shall have been acknowledged and agreed to by such title
company and which cannot be changed or supplemented without Lender's
written concurrence, not to record Lender's partial release until such
title company receives in respect of such release an amount equal to
Lender's Release Price for such Lot and/or Unit and is irrevocably
committed to disburse such amount to Lender;

(c) Lender shall have received executed originals of all
instruments, agreements and other documents, if any, in form and
substance satisfactory to Lender, which Lender determines are necessary
to appropriate, to evidence and/or effectuate the partial release and to
modify the Project Documents as a result thereof; and

(d) Lender shall have received evidence satisfactory to Lender
that Borrower has satisfied all conditions precedent in the Project
Documents relating to the release of the Lots and/or Units.

Section 6.5 PROJECT MODEL HOMES.

(a) So long as any proceeds of the Loan remain outstanding with
respect to the Project, the Borrower shall construct and if necessary,
modify, Homes in such a manner as to accommodate their use as Project Model
Homes, and at least one of such Project Model Homes shall include therein a
sales office. The Borrower shall insure that sufficient adjacent parking for
customers exists within the vicinity of the Project Model Homes. Each Project
Model Home shall be used solely as

31
<PAGE>

a model display (including landscaping and walkways), as a sales office and
for parking, all in connection with the marketing and sale of Units. Borrower
shall maintain the interiors and exteriors of the Project Model Homes in good
condition, repair and order, except for ordinary wear and tear. Regardless of
any other provision of this Loan Agreement Supplement, Lender shall not be
required to release the Project Model Homes or any of them from the lien of
the Mortgage unless the Project Amount has been paid in full or Borrower has
provided, and Lender has accepted, a substituted Project Model Home which
lender in its reasonable judgment considers to be comparable to the Project
Model Home to be released and suitable for the purposes and uses described
above. Borrower shall maintain insurance coverage regarding the Project Model
Homes as Lender shall reasonably require.

32
<PAGE>

ARTICLE VII
DEFAULT AND REMEDIES

Section 7.1 EVENTS OF DEFAULT. In addition to the Events of Default
set forth in the Loan Agreement, the occurrence of any one or more of the
following events shall constitute an Event of Default:

(a) any representation or warranty made by Borrower herein or
in any other Project Document shall at any time be incorrect in any
material respect; or

(b) Borrower shall fail to perform or observe any term,
covenant or agreement contained in this Loan Agreement Supplement or any
other Project Document, and such failure shall remain unremedied for
thirty (30) days after notice thereof from Lender to Borrower; provided
that in the event Borrower commences and is diligently pursuing to
completion action to cure the failure, such thirty (30) day period may
be extended for such period of time as is necessary to cure the failure,
but in no event longer than one hundred twenty (120) days from the date
of the Lender's notice; provided further however that in the event (i)
Lender determines that the failure to immediately declare an Event of
Default could result in irreparable harm to the rights of the Lender
hereunder, under any other Project Document, or the rights of the Lender
with respect to the collateral pledged to secure the Loan, or (ii)
Lender determines that the failure to perform or observe the terms of
this Loan Agreement Supplement or any other Project Document cannot be
remedied with the passage of one hundred twenty (120) days, then Lender
may declare an immediate Event of Default in its notice given pursuant
to this SECTION 7.1(b); or

(c) Borrower fails to meet or comply with any of the projections
or other provisions of the Construction Progress Schedule (which failure
Lender reasonably believes may result in impairment of the value of its
security for the Loan or in the ability of the Borrower to repay the
Loan in full by the Project Maturity Date), and does not cure that
failure within thirty (30) days after written notice from Lender;
provided that such cure period shall not be applicable (i.e., there
shall be no cure period) if Lender has reasonably determined that such
failure is not susceptible to cure within thirty (30) days; or

(d) Borrower shall assert the invalidity or unenforceability of
any Project Document or any Project Document shall be adjudicated to be
invalid or unenforceable in any material respect; or

(e) any event of default (however described) under any other
Project Document shall occur and not be cured within the applicable
grace period; or

33
<PAGE>

(f) any Project Security Instrument, for any reason, cease to
create a valid and perfected first priority lien on or in the Land and
the other collateral relating thereto described in the Project Security
Instrument, or Borrower shall so state in writing; or

(g) an event of default (however described) shall occur and not be
cured within any applicable grace period under any Related Loan
Document; or

(h) the assignment by the Borrower of the rents or the income of
the Project, or any part thereof or of any other revenues or sales
proceeds relating to the Project (other than to Lender); or

(j) cessation of the Development Work prior to completion of the
Construction Improvements for a continuous period of (i) one hundred
twenty (120) days or more if such cessation is by a Force Majeure Event,
or (ii) thirty (30) days or more if such cessation is not caused by a
Force Majeure Event; or

(k) the Development Work or the Construction Improvements are not,
in Lender's judgment, being carried out in accordance with the
Construction Progress Schedule (subject to delays not to exceed thirty
(30) days or to delays not to exceed one hundred twenty (120) days in
the aggregate which are caused by Force Majeure Events of which Lender
has been properly notified in accordance with the provisions of SECTION
5.11);

(l) Borrower fails to commence construction of the Development Work
or the Construction Improvements or fails to satisfy all of the
conditions of this Loan Agreement Supplement with respect to
disbursement of Loan proceeds for costs of such construction on or
before the expiration of three (3) months after date of this Loan
Agreement Supplement; or

(m) a court of competent jurisdiction enters an order enjoining
construction of the Development Work or the Construction Improvements,
or such a court or an authorized governmental agency orders that sales
of the Lots and/or Units be suspended or halted, or any required
approval, license or permit is withdrawn or suspended, and the order,
withdrawal or suspension remains in effect for a period of fifteen (15)
days; or

34
<PAGE>

(n) there occurs any attachment, levy, execution or other judicial
seizure of any portion of the Project, any other collateral provided by
Borrower under any of the Project Documents, or any substantial portion
of the other assets of Borrower, which is not released, expunged,
discharged or dismissed prior to the earlier of (i) twenty (20) days
after such attachment, levy execution or seizure, or (ii) the sale of
the assets affected thereby; or

(o) any surety obligated for any Development Work or Construction
Improvements is called upon to perform its obligations and/or any person
demands funds pursuant to any "set-aside" letter or "cash in lieu of
bond agreement" issued by Lender with respect to the Project; or

(p) there occurs, in Lender's reasonable judgment, a materially
detrimental change in the operations or value of the Project, including
without limitation, a reduction in the sales prices from the projected
offering prices for the Homes to such an extent that existing sales to
date or continued sales at such price reductions, together with actual
and anticipated disbursements of Loan funds, cause or will cause an
Budget shortfall.

Borrower acknowledges and agrees that all material non-monetary defaults
are conclusively deemed to be and are defaults which impair the security of
the Mortgage, and that Lender shall be entitled to exercise any appropriate
remedy, including without limitation, foreclosure of the Mortgage upon the
occurrence of any such material non-monetary default.

Section 7.2 REMEDIES. Upon the occurrence of an Event of Default, Lender
may, in addition to any other remedies which Lender may have hereunder or
under the Project Documents or the Loan Agreement or by law or in equity, at
its option and without prior demand or notice take any or all of the
following actions:

(a) Immediately terminate any further advance of Loan funds
hereunder, and from time to time apply all or any portion of the
undisbursed Loan funds to payment of accrued interest under the Note
and/or upon any other obligations of Borrower hereunder or under the
Project Documents. Lender may also withhold any one or more
disbursements after an event or condition occurs that with notice or the
passage of time could become an Event of Default, unless Borrower cures
or corrects the event or condition to the reasonable satisfaction of
Lender prior to the occurrence of an Event of Default.

35
<PAGE>

(c) Make any disbursements after the happening of any one or more
Events of Default, without thereby waiving its right to demand payment
of the Note and all other sums owing to Lender with respect to the
Project Documents or any other rights or remedies described herein, and
without liability to make any other or further disbursements,
notwithstanding Lender's previous exercise of any such rights and
remedies.

(d) Enter upon the Project and with or without legal process take
possession of the Project, remove Borrower and all employees,
contractors and agents of Borrower therefrom, and complete or attempt to
complete construction of the Development Work and/or the Construction
Improvements in accordance with the Plans and Specifications with such
changes, additions or corrections therein as Lender may from time to
time and in its judgment deem appropriate, and market, sell or lease the
Project, at the risk and expense of Borrower. Lender shall have the
right at any time to discontinue any work commenced by it in respect to
the Development Work and/or the Construction Improvements or to change
any course of action undertaken by it and not be bound by any
limitations or requirements of time whether set forth herein or
otherwise. Lender shall have the right and power (but shall not be
obligated) to assume any construction contract made by or on behalf of
Borrower in any way relating to the Construction Improvements and to
take over and use all or any part of the labor, materials, supplies and
equipment contracted for, by or on behalf of Borrower whether or not
previously incorporated into the Development Work and/or the
Construction Improvements, in the discretion of Lender. Lender may also
modify or terminate any contractual arrangements, subject to its right
at any time to discontinue any work without liability. If Lender chooses
to complete the Development Work and/or the Construction Improvements,
Lender shall not assume any liability to Borrower or any other person
for completing them, or for the manner or quality of their construction,
and Borrower expressly waives any such liability. In connection with any
work of construction undertaken by Lender pursuant to the provisions of
this SUBSECTION (d), Lender may do any of the following:

(1) engage builders, contractors, subcontractors, architects,
engineers, suppliers, inspectors, consultants and others for the
purpose of furnishing labor, materials, equipment and other
services in connection with the work of construction, for the
protection or clearance of title to the Project, or for the
protection of Lender's interests with respect thereto;

36
<PAGE>

Construction Improvements or for the protection or clearance of
title to the Project, or for the protection of Lender's interests with
respect thereto;

(3) prosecute and defend all actions and proceedings in connection
with the Project;

Borrower shall be liable to Lender for sums paid or incurred for
completing construction of the Development Work and the Construction
Improvements whether the same shall be paid or incurred pursuant to the
provisions of this Section or otherwise, and all payments made or
liabilities incurred by Lender hereunder of any kind whatsoever shall be paid
by Borrower to Lender upon demand with interest at the rate set forth in
the Note, and all the foregoing shall be deemed and shall constitute
disbursements under this Loan Agreement Supplement and be secured by the
Project Documents. For the purpose of carrying out the provisions and
exercising the rights, powers and privileges granted by this SUBSECTION
(d), Borrower hereby unconditionally and irrevocably constitutes and
appoints Lender its true and lawful attorney-in-fact to enter into such
contracts, perform such acts and incur such liabilities as are referred
to in said Section in the name and on behalf of Borrower. This power of
attorney is coupled with an interest.

37
<PAGE>

prior written consent of Lender, which consent shall not be unreasonably
withheld, unless and until said condition has been fully corrected.

(f) Foreclose on any security for the Loan without waiving its rights
to proceed against any other security or other entities or individuals
directly or indirectly responsible for repayment of the Loan, or waive any
and all security for the Loan as Lender may in its discretion so
determine, and pursue any such other remedy or remedies as Lender may so
determine to be in its best interest.

(g) If Lender spends their funds in exercising or enforcing any of its
rights or remedies under the Project Documents, the amount of funds spent
shall be payable to Lender upon demand, together with interest at the
rate applicable to the principal balance of the Note, from the date such
funds were spent until repaid. Such amounts shall be deemed secured by
the Mortgage and other applicable Project Documents.

All remedies of Lender provided for herein, in the Loan Agreement and in
any other Project Document and in any of the Related Loan Documents are
cumulative and shall be in addition to all other rights and remedies provided
by law or in equity. The exercise of any right or remedy by Lender hereunder
shall not in any way constitute a cure or waiver of default hereunder, under
any Project Document, under the Loan Agreement or under any of the Related
Loan Documents or invalidate any act done pursuant to any notice of default,
or prejudice Lender in the exercise of any of its rights hereunder, under any
other Project Document, under the Loan Agreement or under any of the Related
Loan Documents unless, in the exercise of its rights, Lender realizes amounts
owed to it under such Project Documents, Loan Agreements and the Related Loan
Documents. If Lender exercises any of the rights or remedies provided in this
ARTICLE VII, that exercise shall not make Lender, or cause Lender to be
deemed to be, a partner or joint venturer of Borrower. No disbursement of
Loan funds by Lender shall cure any default of Borrower, unless Lender agrees
otherwise in writing in each instance.

38
<PAGE>

Section 7.3 AUTHORIZATION TO APPLY ASSETS TO PAYMENT OF LOAN. The
Borrower hereby authorizes the Lender, following the occurrence of an Event
of Default, without notice or demand, to apply any property, balances,
credits, accounts or moneys of the Borrower then in the possession of Lender,
or standing to the credit of the Borrower, to the payment of the Loan.

39
<PAGE>

ARTICLE VIII
MISCELLANEOUS

Section 8.1 SUCCESSORS AND ASSIGNS: NO ASSIGNMENT BY BORROWER. The
provisions of this Loan Agreement Supplement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided that Borrower may not assign or transfer any of its rights
or obligations under this Loan Agreement Supplement or any of the other
Project Documents without the prior written consent of Lender.

(a) personal delivery;

(b) reputable overnight courier service;

(c) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by registered or certified,
first class mail, return receipt requested); or

(d) registered or certified, first class mail, return receipt
requested. Any notice, demand or request sent pursuant to SUBSECTION (a)
OR (c) hereof shall be deemed received upon such personal delivery or
upon dispatch by electronic means, and if sent pursuant to SUBSECTION (d)
shall be deemed received three (3) days following deposit in the mail,
and if sent pursuant to SUBSECTION (b) shall be deemed received on the
next Business Day following delivery to the courier service.

The addresses for notices are as follows:

40
<PAGE>

With a copy to: Residential Funding Corporation
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437
Attention: General Counsel
Telephone No.: (612) 832-7415
Telecopier No.: (612) 832-7190

To Borrower: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: Edward F. Havlik, President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2480

With copies to: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: William J. Crock, Jr., Vice-President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

Shefsky, Froelich & Divine, LTD
444 North Michigan Ave
Suite 2300
Chicago, Illinois 60611
Attention: David Feltman
Telephone No.: (312) 836-4064
Telecopier No.: (312) 527-9285

Such addresses may be changed by notice to the other parties given in the
same manner as provided above.

41
<PAGE>

Section 8.4 NO WAIVER; REMEDIES CUMULATIVE. No disbursement of
proceeds of the Loan shall constitute a waiver of any conditions to Lender's
obligation to make further disbursements nor, in the event is unable to
satisfy any such conditions, shall any such waiver have the effect of
precluding Lender from thereafter declaring such inability to constitute an
Event of Default (however described) under this Loan Agreement Supplement,
the Note or any other Project Document. No failure or delay on the part of
Lender in the exercise of any power, right or privilege hereunder or under
the Note or any other Project Document shall impair such power, right or
privilege or be construed to be a waiver of any Event of Default (however
described) or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude any other or further exercise
thereof, or of any other right, power or privilege. Except as specifically
provided herein, rights and remedies existing under this Loan Agreement
Supplement, the Note or any other Project Document are cumulative to and not
exclusive of any rights or remedies otherwise available.

Borrower further agrees to pay on demand all costs and expenses of
Lender (including, without limitation, reasonable counsel fees and expenses,
court costs and all other litigation expenses, including, but not limited to,
expert witness fees, document copying expenses, exhibit preparation, courier
expenses, postage expenses and communication expenses) in connection with the
enforcement of this Loan Agreement Supplement, the other Project Documents
and any other documents delivered hereunder, including, without limitation,
costs and expenses incurred in connection with any bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceeding, or any
refinancing or restructuring in the nature of a "workout" of the Project
Documents and any other documents delivered by Borrower related thereto. In
addition, Borrower shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of
this Loan Agreement Supplement, the other Project Documents and the other
documents to be delivered hereunder, and agrees to hold Lender harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.

Whenever Borrower is obligated to pay or reimburse Lender for any
attorneys' fees, those fees shall include the allocated costs for services of
Lender's in-house counsel.

Section 8.6 DISCLAIMER BY LENDER: NO JOINT VENTURE. Borrower
acknowledges, understands and agrees as follows:

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<PAGE>

(a) the relationship between Borrower and Lender is, and shall at
all times remain, solely that of borrower and lender, and Lender neither
undertakes nor assumes any responsibility for or duty to Borrower to
select, review, inspect, supervise, pass judgment upon or inform
Borrower of the quality, adequacy or suitability of any matter or thing
submitted to Lender for its approval;

(b) Lender owes no duty of care to protect Borrower or any other
Person against negligent, faulty, inadequate or defective building or
construction; and

(c) Borrower is not and shall not be an agent of Lender for any
purpose. Lender is not a joint venture partner with Borrower in any
manner whatsoever.

Any approvals granted by Lender for any matters covered under this Loan
Agreement Supplement shall be narrowly construed to cover only the parties
and facts identified in any such approval.

(a) the Loan, this Loan Agreement Supplement or any other Project
Document,

(b) the use of funds advanced under the Project Documents,

(c) the failure of Borrower or any other party to comply fully with
any and laws applicable to it (including, without limitation, Hazardous
Materials Laws), or

(d) any use, handling, production, transportation, disposal or
storage of any Hazardous Materials in, under or on the Land by any
Person, including, without limitation,

(i) foreseeable and unforeseeable consequential damages
directly or indirectly arising out of (A) the use, generation,
storage, discharge or disposal of Hazardous Materials by any owner
or operator of said property or any Person on or about said
property, or (B) any residual contamination affecting any natural
resource or the environment, and

(ii) the costs of any required or necessary repair, cleanup,
or detoxification of said property and the preparation of any
closure or other required plans,

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<PAGE>

Section 8.8 CONSULTANTS. Borrower shall pay any and all valid claims of
any consultants, advisors, brokers or agents whom it has retained or with
whom it has initiated contact with respect to the Loan who claims a right to
any fees in connection with the Loan, and shall indemnify, defend and hold
Lender harmless from such claims, whether or not they are valid.

Section 8.9 GOVERNING LAW. This Loan Agreement Supplement shall be
governed by and construed in accordance with the laws of the State of
Illinois.

Section 8.10 TITLES AND HEADINGS. The titles and headings of sections of
this Loan Agreement Supplement are intended for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Loan Agreement Supplement.

Section 8.12 TIME IS OF THE ESSENCE. Time is of the essence of this Loan
Agreement Supplement.

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<PAGE>

Section 8.15 JURISDICTION. Any legal action or proceeding with respect
to this Loan Agreement Supplement or any of the other Project Documents may be
brought in the Courts of the State of Illinois or of the United States for
the Northern District of Illinois and by execution and delivery of this Loan
Agreement Supplement, each of Borrower and Lender consents, for itself and in
respect of its property, to the jurisdiction of those Courts. Each of
Borrower and Lender irrevocably waives any objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens which
it may now or hereafter have to the bringing of any action or proceeding in
such jurisdiction in respect of this Loan Agreement Supplement or any
document related hereto. Borrower and Lender each waive any personal service
of any summons, complaint or other process, which may be made by any other
means permitted by the State of Illinois. Nothing in this SECTION 8.15 shall
affect the right of Lender to serve legal process in any other manner
permitted by law or limit the right of Lender to bring any action or
proceeding against Borrower or its property in the Courts of any other
jurisdiction.

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<PAGE>

or Borrower of (or any indemnification for) any fees, costs or expenses
payable to or incurred (or to be incurred) by or on behalf of Lender.

Section 8.20 RELATIONSHIPS WITH OTHER CUST0MERS. From time to time,
Lender and Lender's Affiliates may have business relationships with
Borrower's customers, suppliers, contractors, tenants, partners,
shareholders, officers or directors, or with businesses offering products or
services similar to those of Borrower, or with persons seeking to invest in,
borrow from or lend to Borrower. Borrower agrees that Lender and Lender's
Affiliates may extend credit to such parties and may take any action it may
deem necessary to collect the credit, regardless of the effect that such
extension or collection of credit may have on Borrower's financial condition
or operations. Borrower further agrees that in no event shall Lender or its
Affiliates be obligated to disclose to Borrower any information concerning any
other customer of Lender or its Affiliates.

Section 8.21 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this Loan
Agreement Supplement and of the other Project Documents and the disbursement
of the Loan hereunder and continue in full force and effect until the
obligations of Borrower hereunder and the indebtedness evidenced by the Note
have been fully paid and satisfied.

Section 8.22 AUTHORITY TO FILE NOTICES. Borrower irrevocably appoints,
designates and authorizes Lender as its agent (said agency being coupled with
an interest) and attorney-in-fact, with full power of substitution, to file
for record any Notices of Completion, Cessation of Labor, or file or send to
any third party any other notice or documents or take any other action that
Lender deems necessary or desirable to protect its interest hereunder, or
under the Project Documents, and will upon request by Lender, execute such
additional documents as Lender may require to further evidence the grant of
the aforesaid right to Lender.

Section 8.23 PURPOSE AND EFFECT OF LENDER APPROVAL. Lender's approval of
any matter in connection with the Loan shall be for the sole purpose of
protecting Lender's security and rights. No such approval shall result in a
waiver of any default of Borrower. In no event shall Lender's approval be a
representation of any kind with regard to the matter being approved.

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<PAGE>

IN WITNESS WHEREOF, Lender and Borrower have executed this Loan Agreement
Supplement as of the date first written above by and through their duly
authorized representatives.

LENDER:

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

By: /s/ [Illegible]
-----------------------------------

Printed Name: /s/ [Illegible]
-------------------------

Title: Secretary
--------------------------------

UNITED HOMES, INC.,
an Arizona corporation

By: /s/ [Illegible]
-----------------------------------

Printed Name: /s/ [Illegible]
-------------------------
Title:
--------------------------------

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<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By: /s/ [Illegible]
-----------------------------------

Printed Name: /s/ [Illegible]
-------------------------

Title: Secretary
--------------------------------

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

By: /s/ [Illegible]
-----------------------------------

Printed Name: /s/ [Illegible]
-------------------------

Title: Vice President
--------------------------------

48
<PAGE>

EXHIBIT A
TO SUPPLEMENT TO LOAN AGREEMENT

LEGAL DESCRIPTION OF THE LAND

THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF THE SOUTH EAST 1/4 OF SECTION 26,
TOWNSHIP 45 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN LAKE
COUNTY, ILLINOIS.

A-1
<PAGE>

EXHIBIT B
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT REQUIREMENTS

ENTITLEMENT RISK Land must be through all discretionary zoning and
approvals.

BY GEOGRAPHICAL REGION The Projects must be located in the Chicago land
area, the Phoenix suburbs or western Michigan.

FINAL PRICE POINT Entry-Level 50% - 100%
First move-up 0% - 50%
Second move-up 0% - 30%
Other 0% - 10%

Maximum value per Unit of $300,000

DEVELOPMENT LIFE CYCLE The maximum proforma lifetime of a Project shall
not exceed thirty (30) months from the date of the
first disbursement of proceeds of the Loan for the
Project to full repayment, with all outstanding
borrowings due and payable on the Project Maturity
Date. The Development Work and/or the Construction
Improvements must commence within four (4) months
of the date of the first disbursement of proceeds
of the Loan for the Project. Development of raw,
but entitled land, is anticipated only for the
construction of residential "for sale" Units by the
Borrower. The sale of lots to third party builders
or developers must be approved by the Lender.

MAXIMUM PER PROJECT No more than Five Million Dollars ($5,000,000) of
the Loan may be committed to any Project.

PROJECT SIZE LIMITATIONS Based on the absorption rate projected in the
Appraisal Report, the size of the Project shall not
exceed the number of Units which can be absorbed
prior to the Project Maturity Date, with an
absolute cap of 125 Lots per Project.

START LIMITATIONS Construction of the Units will be limited to (i) an
agreed upon number of Project Model Homes as set
forth in the Project Commitment, plus (ii) 100% of
Units for which there exists a Sales Agreement,
plus (iii) an amount of Spec Homes equaling up to
three (3) months of Unit absorption, based on the

B-1

<PAGE>

absorption rate projected in the Appraisal Report.
(Exceptions to the above start limitations will be
considered for attached dwelling Projects
containing numerous Units in one building and for
winter construction which requires pouring of slabs
to enable spring production). Phasing of the
Development Work will be determined based upon the
economics of the Project and its physical
requirements.

STALE UNITS Any Unit, exclusive of Project Model Homes, which
has not been repaid within twelve (12) months of
the commencement of construction on said Unit, must
be repaid.

LOAN TO VALUE RATIO: The Project Amount shall be an amount which results
in the Loan to Value Ratio being equal to or less
than eighty percent (80%).

B-2

<PAGE>

EXHIBIT C
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT UNDERWRITING DOCUMENTS

A. GENERAL PROJECT INFORMATION:

1. Summary description of proposed project.
2. Purchase contract for Land or Lots.
3. Project profitability summary.
4. Source and use of funds statement.
5. Cash flow analysis, which shall include the proposed Budget
(including a line item cost breakdown and breakdown between costs of
acquisition of the Land or Lots, costs related to Development Work
and costs related to Construction Improvements) and the proposed
Construction Progress Schedule.
6. Market report supporting absorption rates and information on the
various model types of the Homes.
7. Appraisal Report(s) setting forth (i) a Value for the proposed
project equal to or greater than that required by the Project
Requirements and (ii) a value for each model type of Home included
within the proposed project.
8. The plat relating to such project.
9. Commitment for the Title Policy, including copies of all documents
relating to exceptions, which Title Policy will provide mechanics'
lien coverage, will have all standard exceptions deleted therefrom
and will have appended thereto such endorsements as are generally
required by lenders in the area in which the Project is located.
10. Certificates of insurance.

B. CONSTRUCTION INFORMATION AND DOCUMENTS:

C-1

<PAGE>

C. PROJECT LEGAL DOCUMENTS

1. Proposed or recorded covenants, conditions and restrictions.
2. If a condominium, a copy of the homeowner's association articles of
incorporation, by-laws and budget.

D. BORROWER LEGAL DOCUMENTS

1. A resolution of the Borrower authorizing the Borrower to obligate
itself with respect to the Project Documents and authorizing
certain officers to execute and deliver the Project Documents.

C-2

<PAGE>

EXHIBIT D
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT COMMITMENT

D-1

<PAGE>

EXHIBIT E
TO SUPPLEMENT TO LOAN AGREEMENT

CONDITIONS TO OBLIGATION
OF LENDER TO ENTER INTO LOAN AGREEMENT SUPPLEMENT

The obligation of the Lender to enter into Loan Agreement Supplement is
conditioned upon the Lender having received, in form and substance
satisfactory to Lender, each of the following:

1. Executed originals of the Loan Agreement Supplement, the other
Project Documents and such other agreements, instruments, certificates and
other documents as Lender shall require.

2. Such financial statements, budgets, reports, studies, data and
information concerning Project as Lender shall require.

3. A favorable opinion from counsel for Borrower with respect to
the following:

(a) Borrower has the power and authority to execute and deliver,
and perform its obligations under, the Project Documents.

(b) The execution, delivery and performance by Borrower of the
Project Documents have been duly authorized by necessary action and
do not and will not (i) contravene the charter documents of United
Homes, United Arizona, United Illinois or United Michigan; (ii)
contravene any law, rule or regulation or, to such counsel's
knowledge, any order, writ, judgment, injunction or decree or any
contractual restriction binding on or affecting Borrower; (iii)
require any approval or consent of any partner or any other Person
other than approvals or consents which have been previously obtained
and disclosed in writing to Lender; (iv) to such counsel's actual
knowledge, result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease
or instrument to which Borrower is a party or by which Borrower or
its properties may be bound or affected; or (v) to such counsel's
actual knowledge, result in, or require the creation or imposition
of, any lien of any nature (other than the liens contemplated
hereby) upon or with respect to any of the properties now owned or
hereafter acquired by Borrower; and, to such counsel's knowledge,
Borrower is not in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree or contractual
restriction or any such indenture, agreement, lease or instrument.

(c) The Project Documents have been duly executed and delivered
and constitute the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms.

E-1

<PAGE>

(d) To such counsel's knowledge, no authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by Borrower of the Project Documents or any
other document executed pursuant thereto or in connection therewith.

(e) To such counsel's actual knowledge, there is no pending or
threatened action, suit, proceeding or arbitration against or
affecting Borrower or any of its Affiliates before any court,
governmental agency or arbitrator which, if adversely determined,
would result in a Material Adverse Change.

(f) The steps necessary to perfect the security interests
granted pursuant to the Project Security Instruments under
applicable law.

(g) Such other opinions as Lender shall request.

5. Payment of costs and expenses incurred by Lender, including, without
limitation, the fees and costs of its legal counsel, in connection with the
preparation, execution, delivery and recordation/filing of the Project
Documents.

E-2
<PAGE>

EXHIBIT F
TO SUPPLEMENT TO LOAN AGREEMENT

FORM OF DRAW REQUEST CERTIFICATION

- -------------------------------------------------------------------------------

DRAW REQUEST NUMBER ____

[DATE]

LENDER: RESIDENTIAL FUNDING CORPORATION

BORROWER: UNITED HOMES, INC.
UNITED HOMES, INC.
UNITED HOMES OF ILLINOIS, INC.
and
UNITED HOMES OF MICHIGAN, INC.

PROJECT: Bayberry

- -------------------------------------------------------------------------------

Reference is made to that certain Loan Agreement dated as of May 28,
1996 between Lender and Borrower as amended by the Supplement to Loan
Agreement dated as of August 21, 1996 relating to the above referenced
Project (as amended or otherwise modified from time to time, the "Loan
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Loan Agreement Supplement, unless the context shall
require otherwise.

Borrower requests Lender to disburse to the Borrower the proceeds of the
Loan in the amounts and for the purposes stated in the attached SCHEDULE 1.

In connection with such requested disbursement, Borrower hereby
represents, warrants and certifies to Lender as follows:

(a) No Event of Default or Potential Default presently exists
under the Loan Agreement or any other Loan Document.

(b) All of the representations and warranties of Borrower under
the Loan Agreement and the other Loan Documents are hereby remade and
restated.

F-1

<PAGE>

(i) the Borrower has satisfied all conditions precedent
to the funding of the Project as set forth in the Loan Documents;

(ii) the Loan Documents are in full force and effect;

(iii) the Loan is secured by a first priority lien on the
Project and the other collateral described in the Loan Documents;

(iv) the sum of all amounts expended in respect of the
development and construction of the Project does not exceed the
Budget, or if such amounts do exceed the Budget, attached hereto is
a listing of the amounts over budget and an explanation of such
budget overrun(s); and

(v) all contractors, subcontractors, vendors,
materialmen and other Persons entitled to payment with respect to
the Project have been paid or will be paid, subject to retainage,
with the proceeds of the requested disbursement.

(d) All insurance required to be maintained by Borrower remains
in full force in effect, of the types, in the amounts and issued by
insurers as previously approved by Lender.

(e) All Development Work and Construction Improvements covered
by this Draw Request have been completed in accordance with the
applicable contracts and should now be paid, and all costs incurred in
connection with the Development Work and the Construction Improvements
either have been paid or will be paid out of the proceeds of this
disbursement.

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------

F-2

<PAGE>

UNITED HOMES, INC.,
an Arizona corporation

By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------

F-3

<PAGE>

BAYBERRY

SCHEDULE 1 TO DRAW REQUEST NUMBER ___

[Borrower to attach its schedule setting forth the amounts
requested to be disbursed.]

F-4

<PAGE>

EXHIBIT G
TO SUPPLEMENT TO LOAN AGREEMENT

ADDITIONAL PERMITTED EXCEPTIONS

1. RIGHTS OF THE ILLINOIS BELL TELEPHONE COMPANY, A CORPORATION OF
ILLINOIS, ITS SUCCESSORS AND ASSIGNS, TO CONSTRUCT, LAY, MAINTAIN, ETC.,
CONDUITS, CABLES, ETC., WITH RIGHT OF ACCESS THERETO FOR THE MAINTENANCE
THEREOF, IN, UPON, UNDER AND ALONG THE EAST 1/2 OF COUNTY HIGHWAY NO. 38
(O'PLAINE ROAD) AS GRANTED BY INSTRUMENT DATED OCTOBER 17, 1969 AND
RECORDED NOVEMBER 10, 1969 AS DOCUMENT 1442162.
(AFFECTS THE WEST 40 FEET)

2. RIGHTS OF THE PUBLIC AND OF THE STATE OF ILLINOIS IN AND TO SO MUCH OF
THE LAND HEREIN AS DEDICATED FOR ROAD PURPOSES BY INSTRUMENT DATED MAY
26, 1952 AND RECORDED JUNE 4, 1952 AS DOCUMENT 759451 AND SHOWN ON PLAT
OF SURVEY RECORDED OCTOBER 10, 1956 AS DOCUMENT 926375.
(AFFECTS THE WEST 40 FEET OF THE LAND HEREIN)

3. CITY OF WAUKEGAN ORDINANCE 91-0-87 DATED AUGUST 19, 1991 AND RECORDED
SEPTEMBER 12, 1991 AS DOCUMENT 3061466, WHICH REQUIRES PAYMENT OF LIFT
STATION RECAPTURE FEES, INTEREST AND CITY FEES FOR ADMINISTERING SUCH
COLLECTIONS, TO BE PAID TO THE CITY OF WAUKEGAN.

4. PRE-ANNEXATION AGREEMENT DATED MARCH 12, 1995 AND RECORDED APRIL 19,
1995 AS DOCUMENT 3665647, BETWEEN THE NORTH SHORE SANITARY DISTRICT AND
BANK OF WAUKEGAN, AS TRUSTEE UNDER TRUST NUMBER 3410, AND THE TERMS AND
PROVISIONS CONTAINED THEREIN.

5. ANNEXATION ORDINANCE BY THE NORTH SHORE SANITARY DISTRICT DATED APRIL
27, 1995 AND RECORDED MAY 3, 1995 AS DOCUMENT 3670310.

G-1

<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SUPPLEMENT TO LOAN AGREEMENT

DATED AS OF FEBRUARY 3, 1997

BETWEEN

UNITED HOMES, INC.,
AN ILLINOIS CORPORATION,
UNITED HOMES, INC.
AN ARIZONA CORPORATION,
UNITED HOMES OF ILLINOIS, INC.,
AN ILLINOIS CORPORATION
AND
UNITED HOMES OF MICHIGAN, INC.,
A MICHIGAN CORPORATION

COLLECTIVELY, "BORROWER"

AND

RESIDENTIAL FUNDING CORPORATION
A DELAWARE CORPORATION

"LENDER"

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

ARTICLE I DEFINITIONS ............................................... 6
Section 1.1 Certain Defined Terms ..................................... 6
Section 1.2 Other Definitional Provisions ............................. 16

ARTICLE II ADDITIONAL REPRESENTATIONS AND WARRANTIES ................. 17
Section 2.1 Consideration ............................................. 17
Section 2.2 Authorization ............................................. 17
Section 2.3 Governmental Consents ..................................... 17
Section 2.4 Validity .................................................. 17
Section 2.5 Financial Position ........................................ 17
Section 2.6 No Material Adverse Change ................................ 17
Section 2.7 Litigation ................................................ 18
Section 2.8 Environmental Matters ..................................... 18
Section 2.9 Full Disclosure ........................................... 18
Section 2.10 FIRPTA Certification ...................................... 18

ARTICLE III CONDITIONS PRECEDENT TO CLOSING ........................... 19
Section 3.1 Conditions Precedent ...................................... 19
Section 3.2 Project Underwriting Documents and Other Documents ........ 19
Section 3.3 Mortgage Recordation ...................................... 19
Section 3.4 Perfection of Security Interest in Personal Property ...... 19
Section 3.5 Taxes ..................................................... 19
Section 3.6 Insurance With Respect to Project ......................... 19

ARTICLE IV DISBURSEMENTS ............................................. 20
Section 4.1 Processes Relating to Disbursements ....................... 20
Section 4.2 Conditions Precedent to Disbursements
For Qualified Project Expenditures ........................ 21
Section 4.3 Conditions Precedent to Final Disbursement ................ 22
Section 4.4 Application of Disbursements .............................. 23
Section 4.5 Lender May Make Disbursement Notwithstanding
Noncompliance ............................................. 23

ARTICLE V THE PROJECT ............................................... 24
Section 5.1 Consideration ............................................. 24
Section 5.2 Title to Project .......................................... 24
Section 5.3 No Prior Liens or Claims .................................. 24
Section 5.4 Access to the Project ..................................... 24
Section 5.5 Compliance with Project Requirements and Laws and
Regulations ............................................... 24
Section 5.6 Covenants, Zoning, Codes, Permits and Consents ............ 25
Section 5.7 Utilities ................................................. 25

i
<PAGE>

Section 5.8 Map, Permits, Licenses and Approvals ...................... 25
Section 5.9 Approval of Plans and Specifications and Approval of
Budget .................................................... 25
Section 5.10 Adequacy of Project Amount ................................ 26
Section 5.11 Construction Start and Completion ......................... 26
Section 5.12 Personal Property Incorporation ........................... 26
Section 5.13 Contractors and Contracts ................................. 26
Section 5.14 Evidence of Ownership of Materials ........................ 26
Section 5.15 Changes to Plans and Specifications and Budget ............ 26
Section 5.16 Lender Inspections, Appraisal and Information ............. 28
Section 5.17 Correction of Defects ..................................... 28
Section 5.18 Protection Against Lien Claims ............................ 29
Section 5.19 Conveyance, Lease or Encumbrance .......................... 29
Section 5.20 Security Instruments ...................................... 29
Section 5.21 Further Assurances; Cooperation ........................... 30
Section 5.22 Negative Covenants ........................................ 30
Section 5.23 Signs ..................................................... 30

ARTICLE VI SALES OF LOTS
AND RELEASES FROM MORTGAGES ............................... 31
Section 6.1 Sales Agreements .......................................... 31
Section 6.2 Sales and Closings ........................................ 31
Section 6.3 Sales Operations and Seller's Obligations ................. 31
Section 6.4 Releases from Lien of Mortgage ............................ 31

ARTICLE VII DEFAULT AND REMEDIES ...................................... 33
Section 7.1 Events of Default ......................................... 33
Section 7.2 Remedies .................................................. 35
Section 7.3 Authorization to Apply Assets to Payment of Loan .......... 38

ARTICLE VIII MISCELLANEOUS ............................................. 39
Section 8.1 Successors and Assigns; No Assignment by Borrower ......... 39
Section 8.2 Notices ................................................... 39
Section 8.3 Changes, Waivers, Discharge and Modifications in Writing .. 40
Section 8.4 No Waiver; Remedies Cumulative ............................ 40
Section 8.5 Costs, Expenses and Taxes ................................. 41
Section 8.6 Disclaimer by Lender; No Joint Venture .................... 41
Section 8.7 Indemnification ........................................... 42
Section 8.8 Consultants ............................................... 43
Section 8.9 Governing Law ............................................. 43
Section 8.10 Titles and Headings ....................................... 43
Section 8.11 Counterparts .............................................. 43
Section 8.12 Time is of the Essence .................................... 43
Section 8.13 No Third Parties Benefitted ............................... 43

ii
<PAGE>

Section 8.14 Severability .............................................. 43
Section 8.15 Jurisdiction .............................................. 43
Section 8.16 Waiver of Jury Trial ...................................... 44
Section 8.17 Interpretation ............................................ 44
Section 8.18 Entire Agreement .......................................... 44
Section 8.19 Joint and Several Liability ............................... 44
Section 8.20 Relationship With Other Customers ......................... 44
Section 8.21 Survival of Warranties .................................... 45
Section 8.22 Authority to File Notices ................................. 45
Section 8.23 Purpose and Effect of Lender Approval ..................... 45
Section 8.24 ABF Loan Documents ........................................ 45

iii

<PAGE>

EXHIBIT A
LEGAL DESCRIPTION OF THE LAND ........................................... A-1

EXHIBIT B
PROJECT REQUIREMENTS .................................................... B-1

EXHIBIT C
PROJECT UNDERWRITING DOCUMENTS .......................................... C-1

EXHIBIT D
PROJECT COMMITMENT ...................................................... D-1

EXHIBIT E
CONDITIONS TO OBLIGATION
OF LENDER TO ENTER INTO LOAN AGREEMENT SUPPLEMENT ....................... E-1

EXHIBIT F
FORM OF DRAW REQUEST CERTIFICATION ...................................... F-1

EXHIBIT G
ADDITIONAL PERMITTED EXCEPTIONS ......................................... G-1

<PAGE>

SUPPLEMENT TO LOAN AGREEMENT

THIS SUPPLEMENT TO LOAN AGREEMENT (the "Loan Agreement Supplement") dated
as of February 3, 1997, is entered into by and between UNITED HOMES, INC., an
Illinois corporation, ("United Homes"), UNITED HOMES, INC., an Arizona
corporation ("United Arizona"). UNITED HOMES OF ILLINOIS, INC., an Illinois
corporation ("United Illinois") and UNITED HOMES OF MICHIGAN, INC., a
Michigan corporation ("United Michigan") (United Homes, United Arizona,
United Illinois and United Michigan are collectively referred to herein as
the "Borrower") and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
(the "Lender") and supplements the terms and provisions of the Loan Agreement
dated as of May 28, 1996 by and between Borrower and Lender. Capitalized
terms used herein are defined in ARTICLE I.

RECITALS

This Loan Agreement Supplement is entered into upon the basis of the
following facts and circumstances:

B. Borrower owns, or is about to become the owner of the Land, upon
which Land the Borrower will perform the Development Work in accordance with
the Plans and Specifications.

D. The Loan shall be secured by the Mortgage and such other security
instruments and additional documents as Lender may require as hereinafter
described.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing Recitals and the
covenants and conditions, representations and warranties contained herein,
the parties hereto agree as follows:

5
<PAGE>

ARTICLE I
DEFINITIONS

Section 1.1 CERTAIN DEFINED TERMS. As used herein (including any
Exhibits attached hereto), the following terms shall have the meanings set
forth below (unless expressly stated to the contrary):

"ABF LOAN" shall mean the loan which the Lender may make to the Borrower
pursuant to the terms of the ABF Loan Agreement, subject to the terms of
SECTION 8.24.

"ABF LOAN AGREEMENT" shall mean the Loan Agreement which the Borrower and
the Lender may enter into, subject to the terms of SECTION 8.24, as the same
may be amended or modified from time to time.

"ABF LOAN DOCUMENTS" shall have the meaning given the term "Loan
Documents" in the ABF Loan Agreement.

"ADDITIONAL LOAN FEE" shall mean the additional fee the Borrower will be
required to pay to Lender as a condition precedent to the Lender's release of
its lien on any Lot located in the Project, which amount shall equal to five
percent (5%) of the amount required to be paid to the Lender pursuant to the
terms of SECTION 2.6(a) of the Loan Agreement.

"ADVANCE RATE" shall mean, with respect to disbursements of the Loan for
the Project, (i) the amount of the Qualified Project Expenditures which
relate to the acquisition of Land, as set forth in the Budget, and (ii) one
hundred percent (100%) of the Qualified Project Expenditures of Phase B of
the Project which relate to Development Work.

"AFFILIATE" shall mean a Person that, directly or indirectly, controls,
is controlled by, or is under common control with, a referenced Person.

"APPRAISAL REPORT" shall mean a real estate appraisal report which (i)
has been prepared by an Appraiser, (ii) at the tie it is submitted to the
Lender is not more than three (3) months old, or was updated by letter not
more than three (3) months prior to the date of submission to the Lender,
(iii) states that it is prepared in accordance with the applicable standards
of the American Institute of Real Estate Appraisers for such reports, (iv)
provides an appraisal of the Value of the Project or portion thereof required
to be appraised thereunder, and (v) employs a customary methodology and
provides limiting conditions satisfactory to the Lender.

"APPRAISER" shall mean a Person who is qualified to appraise property
similar in size and scope to the Project which such Person is acceptable to
the Lender in its sole and absolute discretion.

6
<PAGE>

"BORROWER" shall mean, collectively, United Homes, United Arizona,
United Illinois and United Michigan.

"BUSINESS DAY" shall mean a day other than Saturday, Sunday or a day on
which national banks are legally closed for business in the States of
Arizona, Illinois, Michigan or Minnesota.

"CONSTRUCTION AGREEMENTS" shall mean all agreements (including, without
limitation, construction contracts) entered into between the Borrower and any
contractor, architect, engineer, supplier or other Person with respect to the
development or construction of the Project, as such agreements may be amended
or otherwise modified from time to time in accordance with this Loan
Agreement Supplement.

"CONSTRUCTION PROGRESS SCHEDULE" shall mean the schedule for the
Development Work prepared by the Borrower, as such schedule may be amended in
accordance with the provisions of SECTION 5.11.

7
<PAGE>

"DEVELOPMENT WORK" shall mean the work of development to be performed on
or with respect to Phase B of the Land (including, without limitation, the
installation of utilities, roads and all related on-site and off-site
improvements) in connection with the development of Phase B of the Land for
the subsequent construction thereon of Homes, all of which work and
construction shall be completed by or on behalf of the Borrower in accordance
with the Plans and Specifications.

"DRAW REQUEST CERTIFICATION" shall mean, with respect to a requested
disbursement of the Loan to fund Qualified Project Expenditures, a
certification of the Borrower in the form of EXHIBIT F.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and rulings issued
thereunder.

"EVENT OF DEFAULT" shall mean the occurrence of any of the events listed
in SECTION 7.1 or an event of default (however described) under the Loan
Agreement or any other of the Project Documents.

"FORCE MAJEURE EVENT" shall mean fire, flood, labor dispute, weather,
governmental action or other cause beyond the reasonable control of Borrower
that shall delay the Development Work.

"HAZARDOUS MATERIALS" shall mean the following:

(a) any oil, flammable substances, explosives, radioactive
materials, hazardous wastes or substances, toxic wastes or substances or
any other materials or pollutants, exposure to which is prohibited,
limited or regulated by any governmental authority pursuant to any
Hazardous Materials Law;

(b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated biphenyls
in excess of fifty (50) parts per million, exposure to which is
prohibited, limited or regulated by any governmental authority pursuant
to any Hazardous Materials Law;

8
<PAGE>

(c) any chemical, material or substance defined as or included in
the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste",
or "toxic substances" or words of similar import under any Hazardous
Material Laws; and

(d) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority
pursuant to any Hazardous Materials Law.

"HAZARDOUS MATERIALS LAWS" shall mean any federal, state or local laws,
ordinances and the regulations, policies or publications promulgated pursuant
thereto relating to (i) the environment, (ii) health and safety, (iii) any
Hazardous Materials (including, without limitation, the use, handling,
transportation, production, disposal, discharge or storage thereof),
(iv) industrial hygiene or (v) environmental conditions on, under or about
property, including, without limitation, soil and groundwater conditions;
including, but not limited to, the following, as now or hereafter amended;
the Clean Air Act, 42 U.S.C. Sec. 9401, ET. SEQ.; the Clean Water Act, 33
U.S.C. Sec. 7401, ET. SEQ.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601, ET. SEQ., as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sec. 11001, ET. SEQ.; the Federal Water Pollution Control Act, 33
U.S.C. Sec. 1251, ET. SEQ.; the Hazardous Materials Transportation Act, 49
U.S.C. Sec. 1801, ET. SEQ.; the Resource Conservation and Recovery Act, 42
U.S.C. Sec. 6901, ET. SEQ.; the Safe Drinking Water Act, 42 U.S.C. Secs. 300f
to 300j; the Solid Waste Disposal Act, 42 U.S.C. Sec. 3251, ET.
SEQ.; and the Toxic Substances Control Act, 15 U.S.C. Sec. 2601, ET. SEQ.

"HOMES" shall mean the single family residences, condominium homes
and/or attached townhouses that will be constructed by the Borrower on the
Lots, using, in the event the Borrower and Lender enter into the ABF Loan
Agreement, the proceeds of the ABF Loan.

"INDEMNIFIED PARTY" shall mean the Lender and any Participants and each
of their officers, directors, employees, agents, attorneys, consultants,
advisors and Affiliates.

"INSPECTOR" shall mean the inspector for the Project to be selected by
the Lender, as set forth in the Project Commitment.

"INTEREST RESERVE" shall mean the amount within the Budget which has
been designated as available to pay interest on the Project Amount.

9
<PAGE>

"LAND" shall mean that certain real property which is suitable for and
substantially entitled for the development of Homes thereon and related on
and off-site improvements and upon which the Borrower will perform the
Development Work, which such real property is located in Ottawa County, in
the State of Michigan, is divided into Phase A and Phase B, and is described
in EXHIBIT A.

"LENDER" shall mean Residential Funding Corporation, a Delaware
corporation.

"LENDER'S RELEASE PRICE" shall mean, with respect to any parcel of the
Land which the Borrower requests the Lender to release from the lien of the
Mortgage, the amount required to be paid to the Lender prior to such release,
which amount shall equal, for each Lot located in the Project, (i) the amount
specified in SECTION 2.6(a) OR (c), as applicable, of the Loan Agreement,
plus (ii) the Additional Loan Fee for such Lot.

"LOAN" shall mean the revolving loan described in the Loan Agreement in
a principal amount not to exceed the Loan Amount.

"LOAN AGREEMENT SUPPLEMENT" shall mean this Loan Agreement Supplement
dated as of February 3, 1997 between the Borrower and the Lender, as the same
may be amended or otherwise modified from time to time.

"LOAN AMOUNT" shall mean Twenty-Five Million Dollars ($25,000,000).

"LOAN DOCUMENTS" shall mean, as to the Loan, all documents, instruments,
agreements, assignments and certificates relating thereto, including, without
limitation, any and all loan or credit agreements, promissory notes, deeds of
trust, mortgages, security agreements, assignments of rents, assignments of
leases, assignments of contracts, environmental indemnities, guaranties,
contractor's consent agreements, lender's title insurance policies, opinions
of counsel, evidences of authorization or incumbency, escrow instructions,
architect's consent agreements, and UCC-1 financing statements to be executed
(and acknowledged where applicable) by Borrower, Project Owner and/or Lender
(where applicable) in connection with Lender making the Loan to Borrower, as
the same may be amended or otherwise modified from time to time in accordance
with the Loan Agreement. The Loan Documents shall include, but not be limited
to, the following:

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(a) the Loan Agreement;

(b) the Note;

(d) any Related Loan Documents.

"LOAN TO VALUE RATIO" shall mean, with respect to the Project or any
part thereof as to which a Loan to Value Ratio is being determined, the ratio
of the Project Amount to the Value.

"LOTS" shall mean the tracts of real property within the Land that have
been or will be developed for the subsequent construction thereon of Homes.

"MAP" shall mean a final subdivision or parcel map consistent with the
Plans and Specifications and with the Laws and Regulations.

"MATERIAL ADVERSE CHANGE" shall mean any material and adverse change in,
or a material adverse effect upon, any of:

(a) the business, properties, operations or condition (financial
or otherwise) of Borrower since either or both of (i) January 30, 1997,
or (ii) the date of the most recent financial statements delivered to
Lender in connection with the Loan;

(b) the legal or financial ability of Borrower to perform its
obligations under the Borrower Documents and to avoid any Potential
Default or Event of Default; or

"NOTE" shall mean the Promissory Note dated May 28, 1996 executed by
Borrower, as maker and made payable, to the order of Lender, as holder, in
the amount of Twenty-Five Million Dollars

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($25,000,000) and maturing on the Maturity Date, to evidence the Loan, as
such Promissory Note may be amended or otherwise modified from time to time.

"PERSON" shall mean an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.

"PHASE A" shall mean the portion of the Land upon which the Borrower
intends to construct Homes which are single family homes, which portion
contains forty five (45) Lots.

"PHASE B" shall mean the portion of the Land upon which the Borrower
intends to construct Homes which are townhomes, which portion contains
seventy three (73) Lots.

"PLANNING COSTS" shall mean the fees and planning costs, such as
engineering and architectural fees, incurred in connection with the planning
for the Development Work, to the extent reflected in the Budget.

"PLANS AND SPECIFICATIONS" shall mean the final set of architectural,
structural, mechanical, electrical, grading, sewer, water, street and utility
plans and specifications for the Development Work to be included within the
Project, including all supplements, amendments and modifications thereto
signed and affixed with the architect's registration stamp or seal, all in
form and substance reasonably satisfactory to the Lender and the Inspector.

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

"PROJECT" shall mean (i) the Land and (ii) the Development Work to be
completed on Phase B of the Land, for which the Lender has issued the Project
Commitment.

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"PROJECT AMOUNT" shall mean Two Million Seventy Thousand Three Hundred
Fifty-Six Dollars ($2,070,356).

"PROJECT COMMITMENT" shall mean the Project Commitment dated January 30,
1997 and attached as EXHIBIT D.

(a) the Project Commitment;

(b) this Loan Agreement Supplement;

(d) the Environmental Indemnity;

(e) the UCC-1 Financing Statement;

(f) the Assignment;

(g) the Title Policy; and

(h) the Plans and Specifications.

"PROJECT OWNER" shall mean, United Homes of Michigan, Inc., a Michigan
corporation.

"PROJECT REQUIREMENTS" shall mean the requirements listed in EXHIBIT B.

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"PROJECT SECURITY INSTRUMENTS" shall mean, with respect to the Project,
all pledge agreements, guaranties, deeds of trust, mortgages, security
agreements, assignments and other agreements or instruments executed by
Borrower and/or Project Owner granting in favor of Lender a lien or
encumbrance on or a security interest in any property or right or interest of
Borrower and or Project Owner as security for the Loan, as the same may be
amended or otherwise modified from time to time in accordance with the Loan
Agreement and this Loan Agreement Supplement, including but not limited to
the following:

(a) the Mortgage;

(b) the UCC-1 Financing Statement; and

"PROJECT UNDERWRITING DOCUMENTS" shall mean the documents listed in
EXHIBIT C and any other documents relating to the Project which Lender
reasonably requests, all in form and substance reasonably satisfactory to the
Lender and, as to items A5, A8, B1, B3 and B6, in form and substance
reasonably satisfactory to the Inspector.

"QUALIFIED PROJECT EXPENDITURES" shall mean the costs for which proceeds
of the Loan may be disbursed, which such costs shall be limited to the
following:

(a) the cost of acquiring the Land or the Lots;

(b) Planning Costs;

(c) the cost of materials and labor for Development Work in place
for Phase B of the Project, but excluding any costs for materials
delivered to the Land which have not yet been put in place;

(d) the Interest Reserve; and

(e) Soft Costs.

"RELATED LOAN DOCUMENTS" shall mean and includes (i) any and all loan
documents which have been or may be executed by Borrower in connection with
the Lender making proceeds of the Loan available for another project,
together with any and all modifications, extensions and renewals thereof and
(ii) the ABF Loan Documents.

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"SALES AGREEMENT" shall mean a written agreement for the sale of a Lot
between the Borrower and a Person who is not an Affiliate of the Borrower,
which agreement (i) shall be binding upon such Person, (ii) shall require
such Person to deposit with the Borrower an "at risk" deposit, (iii) shall
conform to all applicable laws, regulations, codes and ordinances, including
those requiring disclosures to prospective and actual buyers and (iv) shall
not contain any contingencies, except that such agreement may be contingent
on such Person's ability to obtain financing for the purchase, but only if
such Person has been pre-approved for financing prior to entering into such
agreement.

"SOFT COSTS" shall mean the Borrower's overhead, general and
administrative expenses and other "soft costs" incurred in the development,
construction, marketing and sale of Phase B of the Project, to the extent
reflected in the Budget.

"TOTAL PROJECT COSTS" shall mean, with respect to a Project, the sum of
(i) the Qualified Project Expenditures plus (ii) all other costs necessary to
acquire the Land and construct the Development Work in accordance with the
Plans and Specifications and complete the Project.

"UCC-1 Financing Statement" shall mean a UCC-1 financing statement dated
of even date herewith executed by Project Owner, as debtor, in favor of
Lender, as secured party, in connection with Lender making proceeds of the
Loan available to the Borrower for the Project, as such UCC-1 financing
statement may be amended or otherwise modified from time to time.

"UNIT" shall mean a Lot and the Home constructed on such Lot.

"UNITED ARIZONA" shall mean United Homes, Inc., an Arizona corporation.

"UNITED HOMES" shall mean United Homes, Inc., an Illinois corporation.

"UNITED ILLINOIS" shall mean United Homes of Illinois, Inc., an Illinois
corporation.

"UNITED MICHIGAN" shall mean United Homes of Michigan, Inc., a Michigan
corporation.

"VALUE" shall mean, for purposes of determining whether or not the Loan
to Value Ratio complies with the Project Requirements, the lower of (i) the
value which an Appraiser signs to the Project, as set forth in an Appraisal
Report, which Appraisal Report shall determine the values of each

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Unit, whether or not the Homes have been completed, based on the
"as-completed" appraised value of such Unit and (ii) the sales prices for the
Units as set forth in Sales Agreements.

Section 1.2 OTHER DEFINITIONAL PROVISIONS.

(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Loan Agreement Supplement shall refer to this Loan
Agreement Supplement as a whole and not to any particular provision of this
Loan Agreement Supplement.

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ARTICLE II
ADDITIONAL REPRESENTATIONS AND WARRANTIES

Section 2.2 AUTHORIZATION. The execution, delivery and performance by
Borrower of the Project Documents have been duly authorized by all necessary
action and do not and will not (i) contravene the charter documents of any of
United Homes, United Arizona, United Illinois or United Michigan, (ii)
contravene any law, rule or regulation or any order, writ, judgment,
injunction or decree or any contractual restriction binding on or affecting
Borrower, (iii) require any approval or consent of any partner, shareholder
or any other Person other than approvals or consents which have been
previously obtained and disclosed in writing to Lender, (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Borrower is
a party or by which Borrower or its properties may be bound or affected, or
(v) result in, or require the creation or imposition of, any lien of any
nature (other than the liens contemplated hereby) upon or with respect to any
of the properties now owned or hereafter acquired by Borrower, and Borrower is
not in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree or contractual restriction or any such indenture,
agreement, lease or instrument.

Section 2.3 GOVERNMENTAL CONSENTS. No authorization or approval or other
action by, and no notice to filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by Borrower of the Project Documents or any other document executed pursuant
thereto or in connection therewith.

Section 2.4 VALIDITY. The Project Documents have been duly executed
and delivered and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms.

Section 2.5 FINANCIAL POSITION. As of the dates prepared, the
financial statements and all financial data heretofore delivered to Lender in
connection with the Project and/or relating to Borrower are true, correct
and complete in all material respects and were prepared in accordance with
GAAP consistently applied. Such financial statements fairly present the
financial position of the Persons who are the subject thereof as of the dates
thereof.

Section 2.6 NO MATERIAL ADVERSE CHANGE. No Material Adverse Change has
occurred since January 30, 1997.

<PAGE>

Section 2.7 LITIGATION. There is no pending or, to Borrower's
knowledge, threatened action, suit, proceeding or arbitration against or
affecting Borrower before any court, governmental agency or arbitrator, which
may result in a Material Adverse Change.

Section 2.8 ENVIRONMENTAL MATTERS. The operations of Borrower comply
in all respects with all Hazardous Materials Laws except such noncompliance
which would not (if enforced in accordance with applicable law) reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Change. As of the date of this Loan Agreement Supplement, (i) neither
Borrower nor its present properties or operations is subject to any
outstanding written order from or settlement or consent agreement with any
governmental authority or other Person, nor is any of the foregoing subject
to any judicial or docketed administrative proceeding respecting any
Hazardous Materials Law, Hazardous Materials Claim or Hazardous Material, and
(ii) there are no other conditions or circumstances known to Borrower which
may give rise to any Hazardous Materials Claim arising from the operations of
Borrower.

Section 2.10 FIRPTA CERTIFICATION. Borrower declares and certifies,
under penalty of perjury, that: (i) the U.S. Taxpayer I.D. Number of United
Homes is 36-3978181, of United Arizona is 86-0680628, of United Illinois is
36-3421835 and of United Michigan is 38-3180076; (ii) the business address of
Borrower is United Homes, Inc., 2100 Golf Road, Suite 110, Rolling Meadows,
Illinois 60008-4220; (iii) Borrower is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as
amended; and (iv) Borrower understands that the information and certification
contained in this SECTION 2.10 may be disclosed to the Internal Revenue
Service and that any false statement contained herein could be punished by
fine, imprisonment or both. Borrower agrees to provide Lender and Lender
with a new certification containing the provisions of this SECTION 2.10
immediately upon any change in such information.

<PAGE>

ARTICLE III
CONDITIONS PRECEDENT TO CLOSING

Section 3.3 MORTGAGE RECORDATION. The Mortgage must be duly recorded
and in a first-priority lien position, which first-priority lien positions
shall be evidenced and insured by the Title Policy.

Section 3.4 PERFECTION OF SECURITY INTEREST IN PERSONAL PROPERTY.
Lender's security interests in all personal property and any fixtures covered
by the Mortgage must duly perfected and in a first-priority lien position.

Section 3.6. INSURANCE WITH RESPECT TO PROJECT. In addition to the
insurance required by SECTION 5.5 of the Loan Agreement, Borrower shall
maintain with respect to the Project the insurance required by the terms of
this SECTION 3.6 and shall deposit with Lender, original, duplicate original
or certified copies of insurance policies for such insurance issued by
insurance companies with current Best's Key Ratings of not less than A/IX and
written form and content acceptable to Lender. Such insurance with respect
to the Project shall consist of all-risk course of construction insurance
(non-reporting form) in the minimum amount specified in the Project
Commitment, on a replacement cost basis, insuring against loss or damage by
hazards customarily included within "extended coverage" policies, and any
other risks or hazards which in Lender's reasonable judgment should be
insured against, with a Lender's Loss Payable Endorsement naming Lender as an
additional insured together with a full replacement cost endorsement (without
provisions for co-insurance). The insurance policies required by this
SECTION 3.6 shall be subject to the requirements and restrictions set forth
in SECTION 5.5 of the Loan Agreement.

<PAGE>

ARTICLE IV
DISBURSEMENTS

Section 4.1 PROCESSES RELATING TO DISBURSEMENTS.

(a) Borrower may request disbursements of the Loan for Qualified Project
Expenditures related to the Project, subject to the limitation on the number
of allowable disbursements per month set forth in Section 2.2(c) of the Loan
Agreement. All requests for disbursements of proceeds of the Loan shall
comply with the terms of this ARTICLE IV and any additional limitations set
forth in the Project Commitment.

(b) Each disbursement request shall be evidenced by a Draw Request
Certification and shall be accompanied by, or the Lender shall have received
from another source, the following:

(1) an "Application and Certificate for Payment" on AIA forms
G702 and G703 or such other form as the Lender approves;

(3) a written certification from the Inspector to Lender, in a
form satisfactory to Lender, that (i) the Development Work for which
payment is being sought has been completed in accordance with the Plans
and Specifications and (ii) all work done for which payment is being
sought shall have been completed with sound new materials and fixtures,
or refurbished materials and fixtures that meet the requirements of the
Plans and Specifications, and in a good and workmanlike manner;

(4) at Borrower's expense, evidence satisfactory to Lender that
the issuer of the Title Policy is prepared to issue to Lender an
endorsement to the Title Policy insuring that the lien granted to Lender
by the Mortgage remains a first lien upon the Project, subject only to
Permitted Exceptions, and insuring the full amount of the disbursement,
provided that any such endorsement may show mechanics' liens resulting
from the Development Work if and only if the issuer of the Title Policy
shall issue an endorsement which insures Lender against any loss by
reason of such mechanics' liens and Borrower shall have complied in all
respects with the requirements of SECTION 5.18; and

(5) such other documents specified in the Project Commitment.

The foregoing submissions shall reflect the cost of all Development Work
for which payment is to be made, and the Draw Request Certification shall
specify the portion of such costs which shall be paid by Borrower and the
portion thereof which will be paid out of the requested disbursement of Loan
proceeds.

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(a) Lender shall not be obligated to make any disbursements of the
Loan to the extent that the requested disbursement relates to costs
which are not Qualified Project Expenditures. Qualified Project
Expenditures not paid with Loan proceeds disbursed hereunder and other
costs which are not Qualified Project Expenditures shall be paid from
additional funds provided by Borrower.

(b) Lender shall not be obligated to make any disbursements if:

(1) the outstanding balance of the Loan exceeds, or would
following the contemplated disbursement exceed, the face amount of
the Note;

(2) the outstanding balance of the Loan attributable to the
Project exceeds, or would following the contemplated disbursement
exceed, the Project Amount; or

(3) the proceeds of the Loan which, pursuant to the Project
Commitment, are available for disbursement will not be sufficient
to complete the acquisition of the Land, the Development Work
related to the Project; provided however, that the Lender shall be
obligated to make disbursements notwithstanding such a deficiency
in the event that (i) the Budget and the amount of the Loan
allocated to the Project have been increased by an amount at
least equal to such deficiency in accordance with the terms of
SECTION 5.15(d), or (ii) the Borrower provides to the Lender
evidence that it has paid from its own funds, in addition to any
Borrower funds which the Budget requires, an amount at least equal
to the amount of the deficiency.

(c) Lender shall not be obligated to disburse any Loan proceeds
for the Project to the extent that the Project does not then satisfy the
requirements set forth in the Project Commitment.

(d) Lender shall not be obligated to disburse any Loan proceeds
unless all statements made in the applicable Draw Request Certification
are true and correct on and as

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<PAGE>

of the date of the requested disbursement, before and after giving
effect thereto and to the application of the proceeds therefrom.

(e) The representations and warranties of Borrower contained in
the Loan Documents are true and correct in all material respects on and
as of the date of the requested disbursement, before and after giving
effect thereto and to the application of the proceeds therefrom, as
though made on and as of such date.

(f) No Event of Default or Potential Default has occurred and is
continuing, or would result from such disbursement or from the
application of the proceeds therefrom.

(a) Completion of construction of the Development Work in
accordance with the Plans and Specifications, and if required by Lender,
its receipt of a certificate of completion from the project architect
that the Development Work has been completed substantially in accordance
with the Plans and Specifications.

(b) If applicable, receipt by Lender of a copy of a valid,
recorded notice of completion sufficient to effect the purpose of such
notices as contemplated by the laws of the State of Michigan relative to
mechanics' liens.

(c) Receipt by Lender of such endorsements to the Title Policy as
it may require insuring that a notice of completion was properly filed,
that the Development Work has been completed free of mechanics' and
materialmen's liens and that all applicable filing periods have expired,
or, at Lender's election, an ALTA rewrite of the Title Policy together
with such endorsements thereto as Lender may require, and insuring the
first-lien priority of the final disbursement.

(d) If required by Lender, its receipt of an "as-built" survey
prepared by a licensed engineer or surveyor locating all Project lines,
building setback lines, easements and the Development Work.

(e) There shall be no statutory liens on record for labor or
material arising out of the construction of the Development Work;
provided, however, that if there are any such liens Borrower shall have
complied with the terms of SECTION 5.18.

(f) Upon completion of the Development Work, Borrower shall
deliver to Lender a completion certificate containing the following:
(i) Borrower's statement of the aggregate amount of costs incurred in
connection with the Project but not paid by the Borrower before

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<PAGE>

the completion date and (ii) Borrower's certification that all of the
proceeds of the Loan disbursed with respect to the Project have been
applied to pay or reimburse costs incurred in connection with the
construction of the Development Work and the acquisition of the Land,
and that none of the proceeds of the Loan disbursed with respect to the
Project have been applied to pay or reimburse any costs or expenses
other than such costs of construction and acquisition, together with
interest and servicing and fees incurred in connection with the Loan.

Lender's right to require satisfaction of each of the foregoing
conditions and to receive and review the materials listed above shall not
impose upon Lender any obligation whatsoever to the Borrower, the general
contractor, architect, any purchasers of the Lots or any other party
whatsoever, with respect to any of the subject matter constituting such
conditions, nor shall it operate to release Borrower from liability for any
misrepresentations or breaches hereunder (notwithstanding any opportunity of
Lender to discover such misrepresentation or breach from materials provided
to Lender as a condition of closing). Borrower understands and agrees that
such conditions are for the sole purpose of protecting Lender's Loan advances
and providing security for the Loan, and are made solely for the Lender's
benefit. No waiver of a condition in one or more instances shall establish a
course of dealing or other agreement that will bind Lender or prohibit Lender
from enforcing such condition or any other term or condition of this Loan
Agreement Supplement in the same or any other instance.

Section 4.5 LENDER MAY MAKE DISBURSEMENT NOTWITHSTANDING NONCOMPLIANCE.
Notwithstanding the failure of any condition precedent to Lender's obligation
to make any disbursement hereunder, Lender may make such disbursement if
Lender, in its sole discretion, determines the making of the same to be
advisable. The making of any disbursement, either before or after the
satisfaction of all conditions precedent with respect to Lender's obligation
to make the same, shall not be deemed to constitute an approval or acceptance
by Lender of the Development Work theretofore completed or a waiver of such
condition with respect to a subsequent disbursement.

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ARTICLE V
THE PROJECT

Section 5.2 TITLE TO PROJECT. Project Owner is, or will be upon
acquisition of the Land and Development Work as contemplated by this Loan
Agreement Supplement, the sole legal and beneficial owner of the Land and
Development Work, free and clear of all claims, liens and encumbrances other
than Permitted Exceptions. All of the personal property which forms a part of
the Development Work is or will be vested solely in Project Owner, free and
clear of all claims, liens and encumbrances, other than Permitted Exceptions,
and the security interest of Lender in such personal property is a first lien
thereon, subject only to Permitted Exceptions.

Section 5.3 NO PRIOR LIENS OR CLAIMS. Except as otherwise may have
been approved in writing by Lender and as to which Lender shall have received
such endorsements (including mechanics lien coverage) to the Title Policy as
Lender may require to assure the priority of the Mortgage as a valid first
lien on the Project, subject only to Permitted Exceptions, Borrower
represents that, prior to recordation of the Mortgage, neither it,
nor anyone acting on Borrower's behalf has (i) commenced construction of
the Development Work, or any grading or site clearance related thereto,
(ii) purchased, contracted for or otherwise brought upon the Land any
materials, specially fabricated or otherwise, to be incorporated into the
Development Work, or (iii) entered into any contract or arrangement, the
performance of which by any other party thereto could give rise to a lien or
claim on the Project or any portion thereof.

Section 5.4 ACCESS TO THE PROJECT. All roads, streets, traffic turn
lanes, and access ways necessary for the full utilization of the Project for
its intended purpose have either been completed or the necessary rights of
way have either been acquired by the appropriate governmental authority or
have been dedicated to public use and accepted by the appropriate
governmental authority, and all necessary steps have been taken by Borrower
and the appropriate governmental authority to assure the
complete construction and installation thereof by the time needed for
construction and/or occupancy and operation of the Project.

Section 5.5 COMPLIANCE WITH PROJECT REQUIREMENTS AND LAWS AND
REGULATIONS. The Project, the proposed and actual use thereof, and the
Development Work when completed will comply with the Project Requirements and
with the Laws and Regulations, and there is no action or proceeding pending
or, to the knowledge of Borrower (after due inquiry), threatened before any
court, quasi-judicial body or administrative agency at the time of any
disbursement by Lender relating to the validity of the Loan or the proposed
or actual use of the Project.

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<PAGE>

Section 5.6 COVENANTS, ZONING, CODES, PERMITS AND CONSENTS. Borrower
is familiar and has complied, or will comply on a timely basis, with all of
the Laws and Regulations to be complied with in connection with the
construction of the Development Work. Except as set forth in the Project
Commitment, all permits, licenses, consents, approvals or authorizations by,
or registrations, declarations, withholding of objections or filings with any
governmental body necessary in connection with the valid execution, delivery
and performance of this Loan Agreement Supplement, the Project Documents, and
any and all other documents executed in connection with any of the foregoing,
necessary for the subdivision of the Land, necessary for the construction of
the Development Work, have been obtained or will be obtained on a timely
basis and are and will be valid, adequate and in full force and effect.
Construction of the Development Work and the intended use thereof will in all
respects conform to and comply with all Laws and Regulations, including
without limitation all application zoning, subdivision, environmental
protection, use and building codes, laws, regulations and ordinances.

Section 5.7 UTILITIES. All utility services and facilities necessary
for the construction, sale and occupancy of the Project and the operation
thereof for its intended purpose are either available at the boundaries of
the Land, or, if not, all necessary steps have been, or will be, taken by
Borrower and the local authority or public utility company which provides
such services to assure the complete installation and availability thereof
when needed for construction, sale, occupancy and operation of the Project.

Section 5.8 MAP, PERMITS, LICENSES AND APPROVALS. Borrower has
obtained or will, in a timely manner, obtain the Map. Borrower shall properly
comply with and keep in effect the Map and all permits, licenses and
approvals which are required to be obtained from governmental bodies in order
to construct, occupy, operate, market and sell the Project. Borrower shall
promptly deliver copies of the Map and all such permits, licenses and
approvals to Lender.

Section 5.9 APPROVAL OF PLANS AND SPECIFICATIONS AND APPROVAL OF BUDGET.

(a) The Plans and Specifications are a true, complete and accurate
reflection of the Development Work that Borrower will construct. The Plans
and Specifications are satisfactory to Borrower and have been reviewed and
approved by Borrower and the general contractor for the Project (if different
from the Borrower), and have also been approved as required by all
governmental bodies or agencies having jurisdiction (including, without
limitation, any local design review boards) and by the beneficiary of any
restrictive covenant affecting the Project. There are no structural defects
in the Development Work as shown in the Plans and Specifications, and no
violation of any of the Laws and Regulations exists with respect to the Plans
and Specifications.

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<PAGE>

Section 5.10 ADEQUACY OF PROJECT AMOUNT. The Project Amount, together
with the equity funds of the Borrower in the amount set forth in the Budget,
is sufficient to pay all costs of the acquisition of the Land and all costs
of the Development Work in accordance with the Plans and Specifications and
all remaining costs related thereto, except as has been specifically
disclosed to and approved in writing by Lender.

Section 5.11 CONSTRUCTION START AND COMPLETION. Borrower shall
commence construction of the Development Work no later than the date set
forth in the Project Commitment and shall thereafter diligently proceed with
construction and completion of the Development Work in a good and workmanlike
manner in accordance with the Plans and Specifications and the Construction
Progress Schedule; provided however that in the event construction of the
Project is subject to delays caused by any Force Majeure Event, the Borrower
shall provide to the Lender written notice of such delay, and if such delay
will not exceed one hundred twenty (120) days in the aggregate or is
otherwise reasonable in length, the Borrower shall not be deemed in default
of its obligations assumed pursuant to this Loan Agreement Supplement solely
by reason of such delay. The Borrower shall cause the Development Work at all
times to materially conform to the Laws and Regulations and shall accomplish
completion of the Development Work in accordance with the Construction
Progress Schedule. Borrower shall cooperate at all times with Lender in
bringing about the timely completion of each element of the Development Work,
and Borrower shall resolve all disputes arising during the work of
construction in a manner which shall allow work to proceed expeditiously.

Section 5.13 CONTRACTORS AND CONTRACTS. Upon demand by Lender, the
Borrower shall furnish to Lender, from time to time, correct lists of all
contractors and subcontractors employed in connection with the Development
Work. Each such list shall show the name, address and telephone number of
each such contractor or subcontractor, a general statement of the nature of
the work to be done, the labor and materials to be supplied, the names of
materialmen, if known, and the approximate dollar value of such labor, work
and materials with respect to each. Upon an Event of Default, Lender shall
have the right, and at any time the Inspector shall have the right (in both
cases without either the obligation or the duty), to contact directly each
contractor, subcontractor and materialman to verify the facts disclosed by
said list or for any other purpose.

Section 5.14 EVIDENCE OF OWNERSHIP OF MATERIALS. If requested by
Lender, Borrower shall promptly deliver to Lender any bills of sale,
statements, receipts, contracts or agreements under which Borrower claims
title to any materials, fixtures or articles incorporated into the
Development Work.

Section 5.15 CHANGES TO PLANS AND SPECIFICATIONS AND BUDGET.

(a) There shall be no Change of any of the Plans and Specifications or
working drawings relating to the Development Work which, together with all
prior changes, exceeds, in aggregate

<PAGE>

amount, five percent (5%) of the portion of the Budget allocable to the
Development Work, whether by change order or otherwise, without the prior
written approval of Lender, and, to the extent that such approvals may be
required, the appropriate governmental authorities. As a condition to its
approval of any Change described in either of the preceding sentences, Lender
may require verification that such Change:

(1) is a Change as to which the Borrower has complied with the
terms of SUBPARAGRAPH (d) of this SECTION 5.15;

(2) will not adversely affect the value of Lender's security;

(3) is not a material change in structure, design, exterior
appearance, square footage, or function;

(4) would not cause an increase in any line item or category of
the Budget in excess of the contingencies (if any) specifically contained
in the Budget for that line item or category; and

(5) would be consistent with the Laws and Regulations.

Lender is under no duty to review or inform Borrower of the quality or
suitability of the Plans and Specifications, any contract or subcontract or
any changes thereto. Without limitation of the foregoing, Borrower shall
obtain Lender's prior written approval of any alteration in the Plans and
Specifications which might adversely affect the value of Lender's security or
which, regardless of cost, is a material change in structure, design,
function or exterior appearance.

(b) Borrower shall obtain from the appropriate persons or entities
approvals of any alterations in the Map, the Plans and Specifications or any
work, materials or contracts that are required by any of the Laws and
Regulations or under the terms of the Project Commitment or other Borrower
Project Document.

(c) Borrower agrees to provide Lender with copies of all change orders,
together with all additional documents that Lender may require in order to
evaluate a request for approval of a Change of a type described in CLAUSE (a)
above. These documents may include the following: (i) a written description
of the Change and related work drawings and (ii) a written estimate of the
cost of the Change and the time necessary to complete it. Lender may take a
reasonable time to evaluate any requests for approval of a Change, and may
require that all other approvals required from other parties be obtained
before its reviews any requested Change. Lender may approval or disapprove
Changes in the exercise of its reasonable judgment. Borrower acknowledges
that delays may result, and agrees that so long as any delays caused by
Lender are not unreasonable in duration, they shall not affect Borrower's
obligation to complete each element of the Development Work in accordance
with the Construction Progress Schedule.

<PAGE>

(d) In the event that either:

(1) the proceeds of the Loan which are available for disbursement
will not be sufficient to complete the Development Work as scheduled; or

(2) the costs of the Project have increased over the amount set
forth in the Budget by an amount in excess of with respect to the
Development Work, and including all prior changes, in aggregate amount,
five percent (5%) of the portion of the Budget allocable to the
Development Work,

Section 5.16 LENDER INSPECTIONS, APPRAISAL AND INFORMATION. During
normal business hours, the Borrower shall arrange for the Lender, the
Inspector or any other authorized representative of Lender, at the expense of
Borrower, to visit, inspect or appraise the Project, the materials to be used
thereon or therein, contracts, records, plans, specifications and shop
drawings relating thereto, whether kept at Borrower's offices or at the
Project construction site or elsewhere, and the books, records, accounts and
other financial and accounting records of Borrower wherever kept, and to make
copies and take extracts thereof and therefrom as often as may be requested
at Borrower's cost and expense. Borrower will cooperate with Lender to enable
Lender and Inspector to conduct such visits, inspections and appraisals. The
cost of the Inspector and of such inspections shall be borne by Borrower and
shall be paid within thirty (30) days of Borrower's receipt of any invoice
with respect thereto.

Section 5.17 CORRECTION OF DEFECTS. If Lender in its reasonable
judgment determines that any Development Work or materials fail to conform to
the Map, any Laws and Regulations, the Plans and Specifications or sound
building practices, or that they otherwise depart from any of the
requirements of this Loan Agreement Supplement, Lender may require the work
to be stopped and withhold disbursements until the matter is corrected. If
this occurs, Borrower shall promptly correct the work to Lender's
satisfaction, and pending completion of such corrective work shall not allow
any other work which is dependent upon or directly related to the work
requiring correction to proceed. No such action by Lender shall affect
Borrower's obligation to complete each element of the Development Work within
the times required by this Loan Agreement Supplement. The advance of any Loan
proceeds shall not constitute a waiver of Lender's right to require
compliance with this covenant.

<PAGE>

Section 5.18 PROTECTION AGAINST LIEN CLAIMS.

(a) Borrower shall pay and discharge, or cause to be paid and
discharged, promptly and fully all claims for labor done and materials
and services furnished in connection with the Development Work, and take
or cause to be taken all reasonable steps to forestall the assertion of
claims of lien against the Project or any part thereof. Borrower shall
obtain a lien waiver with respect to each payment by or to the Borrower
and each of the various subcontractors and materialmen (and the major
subcontractors and submaterialmen under them), and Lender, at any time,
at its option, may require that Borrower make any payments for which
disbursements are made hereunder by joint check made payable to the
Borrower and the subcontractor or sub-subcontractor for whose account
such payment is to be made, as joint payees.

(b) Nothing herein contained shall require Borrower to pay any
claims for labor, materials, or services which Borrower in good faith
disputes and which Borrower, at its own expense, currently and
diligently contest, provided that Borrower shall, for each such case
where a claim of lien in excess of Twenty-Five Thousand Dollars
($25,000), has been filed, within thirty (30) days after the Borrower's
actual receipt of notice of filing of any such claim of lien, (i) record
or cause to be recorded in the office of the recorder of Ottawa County a
surety bond sufficient to release said claim of lien, or (ii) make or
cause to be made a deposit of cash in the amount of 150% of the claim of
lien with Lender, or (iii) deliver or cause to be delivered to Lender a
specific endorsement to the Title Policy which insures Lender against
any loss by reason of such claim of lien, or (iv) deliver or cause to be
delivered to Lender such other assurance as may be acceptable to Lender;
provided however, that in the event the aggregate amount of claims filed
with respect to the Project exceeds Fifty Thousand Dollars ($50,000),
Borrower shall be required to take one of the actions specified in (i)
through (iv) above with respect to subsequent claims.

Section 5.19 CONVEYANCE, LEASE OR ENCUMBRANCE. Borrower shall not
sell, agree to sell, convey, transfer, dispose of or further encumber the
Project or any portion thereof or interest therein (other than the sale of
Lots), or enter into a lease covering all or any portion thereof or interest
therein, either voluntarily, involuntarily or otherwise, or enter into an
agreement to do so, without the prior written consent of Lender being first
had and obtained. All easements, declarations, covenants, conditions,
restrictions and dedications affecting the Project shall be submitted to
Lender for its approval, accompanied by a drawing or survey showing the
precise location thereof, and such approval shall be obtained prior to the
execution or granting of any thereof by Borrower. Borrower shall not execute
any lease of any portion of the Project without the prior written consent of
Lender. Borrower shall promptly notify Lender of any event of default or
cancellation under any lease now or hereafter in effect.

29
<PAGE>

Work and all other property of any kind whatsoever owned by the Borrower and
used, or to be used, in the use and enjoyment of the Project and concerning
which Lender may have any doubt as to its being subject to the lien of the
Project Security Instruments.

Section 5.21 FURTHER ASSURANCES; COOPERATION. Borrower will at any
time and from time to time upon request of Lender take or cause to be taken
any action, execute, acknowledge, deliver or record any further documents,
opinions, mortgages, security agreements, financing statements or other
instruments or obtain such additional insurance as Lender in its discretion
deems necessary or appropriate to carry out the purposes of this Loan
Agreement Supplement and to preserve, protect and perfect the security
interest intended to be created and preserved in the Project and the
Development Work.

Section 5.22 NEGATIVE COVENANTS. So long as any amount payable under
any Loan Document still remains unpaid or Lender shall have any commitment
to disburse the Loan hereunder, Borrower shall not, unless Lender shall
otherwise consent in writing (i) create, assume or suffer to exist any lien,
security interest or other charge or encumbrance, or any other type of
preferential arrangement, upon the collateral for the Loan assigned to Lender
by Borrower pursuant to Project Security Instruments, or (ii) sell, lease,
transfer or otherwise dispose of (A) all or substantially all of its assets
(in a single transaction or a series of related transactions), or (B) any of
the collateral for the Loan assigned to Lender by Borrower.

Section 5.23 SIGNS. Upon the request of Lender, Borrower shall erect
and place on or in the vicinity of the Project a sign or signs indicating
that Lender has provided construction financing for the Project. Said sign(s)
shall remain the property of Lender and shall be required to be removed only
after the Development Work has been completed.

30
<PAGE>

ARTICLE VI
SALES OF LOTS
AND RELEASES FROM MORTGAGES

Section 6.1 SALES AGREEMENTS. Each Lot shall be sold under a Sales
Agreement. Each Sales Agreement must require full payment in cash to Borrower
at closing. No Lot may be leased, sold or conveyed under any lease,
conditional sales contract or other arrangement where Borrower retains a
deferred portion of the purchase price or any residual or contingent interest
in the Lot, including any purchase money security interest, without the
express prior written consent of Lender in each instance.

Section 6.2 SALES AND CLOSINGS. Borrower may enter into sales in the
ordinary course of business with bona fide third party buyers without
Lender's prior written consent if:

(a) a Sales Agreement is executed with the buyer which conforms to
the requirements of this Loan Agreement Supplement; and

(b) Borrower, acting in good faith following exercise of due
diligence, has determined that the buyer is financially capable of
performing all of its obligations under the Sales Agreement.

The Borrower shall furnish to the Lender copies of all Sales Agreements
immediately after execution of such Sales Agreements by all Persons who are
parties thereto. Lender in the exercise of its sole discretion may consider
any sale to be unsatisfactory if the sale fails to meet any of the
requirements of this Loan Agremeent Supplement. If this happens, or if any
Event of Default has occurred and is continuing, Lender may make written
demand on Borrower to submit future Sales Agreements for Lender's approval
prior to execution, together in each instance with accompanying financial
statements and other information that Borrower may have pertaining to the
prospective buyer. Until such time as the earlier of (i) the Lender's
notification of Borrower that the Sales Agreements need no longer be
submitted prior to execution or (ii) the Event of Default is cured or Lender
has waived such Event of Default, Borrower shall comply with any such demand
by Lender.

Section 6.3 SALES OPERATIONS AND SELLER'S OBLIGATIONS. Borrower shall
at all times maintain adequate marketing capability for the sale of the Lots,
and shall perform all obligations required to be performed by it under each
Sales Agreement.

Section 6.4 RELEASES FROM LIEN OF MORTGAGE. Borrower may from time to
time request that Lender release one or more Lots from the lien of the
Mortgage and the other Project Security Instruments encumbering such Lots.
Lender agrees that it will execute a partial release that releases Lender's
lien on such Lot pursuant to the Mortgage and the documents executed pursuant
thereto, provided that in all instances the following conditions precedent
shall have been satisfied:

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<PAGE>

(a) Lender shall have received a written notice requesting the
partial release no fewer than five (5) Business Days prior to the date
on which the partial release is to be effective, which notice shall
specify (i) the Project, (ii) the specific Lots to be released, (iii)
if such release is being requested in connection with a sale of the
Lots, the Persons to whom such Lots are being sold, which Person shall
not be an Affiliate of the Borrower, and (iv) the Lender's Release
Prices therefor;

(b) Lender shall have received evidence satisfactory to Lender
that (i) the closing of the sale and/or release of such Lot shall be
conducted through an escrow with a title company satisfactory to
Lender, and (ii) such title company shall have been instructed, which
instructions shall have been acknowledged and agreed to by such title
company and which cannot be changed or supplemented without Lender's
written concurrence, not to record Lender's partial release until such
title company receives in respect of such release an amount equal to
Lender's Release Price for such Lot and is irrevocably committed to
disburse such amount to Lender;

(c) Lender shall have received executed originals of all
instruments, agreements and other documents, if any, in form and
substance satisfactory to Lender, which Lender determines are necessary
or appropriate, to evidence and/or effectuate the partial release and
to modify the Project Documents as a result thereof, and

(d) Lender shall have received evidence satisfactory to Lender
that Borrower has satisfied all conditions precedent in the Project
Documents relating to the release of the Lots.

If the title insurance company that is selected by Borrower to insure
title to the Lots sold by Borrower elects to have Lender and/or Borrower
enter into a master release agreement that provides for the release of the
Lots once all of the Lots in the Project are sold instead of being released
one at a time, then Lender agrees to enter into such a master release
agreement in form and substance satisfactory to Lender.

In connection with each release of a Lot, provided all conditions to
such release have been met, Lender agrees to provide to the title insurance
company an estoppel letter, in form and substance satisfactory to Lender,
specifying the Lender's Release Price.

<PAGE>

ARTICLE VII
DEFAULT AND REMEDIES

Section 7.1 EVENTS OF DEFAULT. In addition to the Events of Default
set forth in the Loan Agreement, the occurrence of any one or more of the
following events shall constitute an Event of Default:

(a) any representation or warranty made by Borrower herein or in
any other Project Document shall at any time be incorrect in any
material respect; or

(b) Borrower shall fail to perform or observe any term, covenant
or agreement contained in this Loan Agreement Supplement or any other
Project Document, and such failure shall remain unremedied for thirty
(30) days after notice thereof from Lender to Borrower; provided that
in the event Borrower commences and is diligently pursuing to
completion action to cure the failure, such thirty (30) day period may
be extended for such period of time as is necessary to cure the
failure, but in no event longer then one hundred twenty (120) days from
the date of the Lender's notice; provided further however that in the
event (i) Lender determines that the failure to immediately declare an
Event of Default could result in irreparable harm to the rights of the
Lender hereunder, under any other Project Document, or the rights of
the Lender with respect to the collateral pledged to secure the Loan,
or (ii) Lender determines that the failure to perform or observe the
terms of this Loan Agreement Supplement or any other Project Document
cannot be remedied with the passage of one hundred twenty (120) days,
then Lender may declare an immediate Event of Default in its notice
given pursuant to this SECTION 7.1(b); or

(c) Borrower fails to meet or comply with any of the projections or
other provisions of the Construction Progress Schedule (which failure
Lender reasonably believes may result in impairment of the value of its
security for the Loan or in the ability of the Borrower to repay the
Loan in full by the Project Maturity Date), and does not cure that
failure within thirty (30) days after written notice from Lender;
provided that such cure period shall not be applicable (i.e., there
shall be no cure period) if Lender has reasonably determined that such
failure is not susceptible to cure within thirty (30) days; or

(d) Borrower shall assert the invalidity or unenforceability of
any Project Document or any Project Document shall be adjudicated to be
invalid or unenforceable in any material respect, or

(e) any event of default (however described) under any other
Project Document shall occur and not be cured within the applicable
grace period; or

(f) any Project Security Instrument, for any reason, cease to
create a valid and perfected first priority lien on or in the Land and
the other collateral relating thereto described in the Project Security
Instrument, or Borrower shall so state in writing; or

<PAGE>

(g) an event of default (however described) shall occur and not
be cured within any applicable grace period under any Related Loan
Document; or

(h) the assignment by the Borrower of the rents or the income
of the Project, or any part thereof or of any other revenues or sales
proceeds relating to the Project (other than to Lender); or

(i) there shall occur substantial deviations in the Development
Work from the Plans and Specifications without the prior approval of
Lender, or the existence of materially adverse defective workmanship or
materials incorporated into the Development Work which deviations or
defects are not corrected within thirty (30) days after written notice
thereof to Borrower, such deviations and defects to be conclusively
determined by Lender after consultation with the Inspector; or

(j) cessation of the Development Work for a continuous period
of (i) one hundred twenty (120) days or more if such cessation is by a
Force Majeure Event, or (ii) thirty (30) days or more if such cessation
is not caused by a Force Majeure Event; or

(k) the Development Work are not, in Lender's judgment, being
carried out in accordance with the Construction Progress Schedule
(subject to delays not to exceed thirty (30) days or to delays not to
exceed one hundred twenty (120) days in the aggregate which are caused
by Force Majeure Events of which Lender has been properly notified in
accordance with the provisions of SECTION 5.11);

(l) Borrower fails to commence construction of the Development
Work or fails to satisfy all of the conditions of this Loan Agreement
Supplement with respect to disbursement of Loan proceeds for costs of
such construction on or before the expiration of three (3) months after
date of this Loan Agreement Supplement; or

(m) a court of competent jurisdiction enters an order
enjoining construction of the Development Work, or such a court or an
authorized governmental agency orders that sales of the Lots be
suspended or halted, or any required approval, license or permit is
withdrawn or suspended, and the order, withdrawal or suspension remains
in effect for a period of fifteen (15) days; or

(n) there occurs any attachment, levy, execution or other
judicial seizure of any portion of the Project, any other collateral
provided by Borrower under any of the Project Documents, or any
substantial portion of the other assets of Borrower, which is not
released, expunged, discharged or dismissed prior to the earlier of (i)
twenty (20) days after such attachment, levy execution or seizure, or
(ii) the sale of the assets affected thereby; or

<PAGE>

(o) any surety obligated for any Development Work is called upon
to perform its obligations and/or any person demands funds pursuant to
any "set-aside" letter or "cash in lieu of bond agreement" issued by
Lender with respect to the Project; or

(p) there occurs, in Lender's reasonable judgment, a materially
detrimental change in the operations or value of the Project, including
without limitation, a reduction in the sales prices from the projected
offering prices for the Lots to such an extent that existing sales to
date or continued sales at such price reductions, together with actual
and anticipated disbursements of Loan funds, cause or will cause an
Budget shortfall.

Borrower acknowledges and agrees that all material non-monetary defaults
are conclusively deemed to be and are defaults which impair the security of
the Mortgage, and that Lender shall be entitled to exercise any appropriate
remedy, including without limitation, foreclosure of the Mortgage upon the
occurrence of any such material non-monetary default.

Section 7.2 REMEDIES. Upon the occurrence of an Event of Default,
Lender may, in addition to any other remedies which Lender may have hereunder
or under the Project Documents or the Loan Agreement or by law or in equity,
at its option and without prior demand or notice take any or all of the
following actions:

(a) Immediately terminate any further advance of Loan funds
hereunder, and from time to time apply all or any portion of the
undisbursed Loan funds to payment of accrued interest under the Note
and/or upon any other obligations of Borrower hereunder or under the
Project Documents. Lender may also withhold any one or more
disbursements after an event or condition occurs that with notice or the
passage of time could become an Event of Default, unless Borrower cures
or corrects the event or condition to the reasonable satisfaction of
Lender prior to the occurrence of an Event of Default.

(b) Declare the Note to be immediately due and payable and record
a notice of default under the Mortgage and under the mortgages or deeds
of trust, as applicable, which form a part of the Related Loan Documents.

<PAGE>

described herein, and without liability to make any other or further
disbursements, notwithstanding Lender's previous exercise of any such
rights and remedies.

(d) Enter upon the Project and with or without legal process take
possession of the Project, remove Borrower and all employees,
contractors and agents of Borrower therefrom, and complete or attempt to
complete construction of the Development Work in accordance with the
Plans and Specifications with such changes, additions or corrections
therein as Lender may from time to time and in its judgment deem
appropriate, and market, sell or lease the Project, at the risk and
expense of Borrower. Lender shall have the right at any time to
discontinue any work commenced by it in respect to the Development Work
or to change any course of action undertaken by it and not be bound by
any limitations or requirements of time whether set forth herein or
otherwise. Lender shall have the right and power (but shall not be
obligated) to assume any construction contract made by or on behalf of
Borrower in any way relating to the Development Work and to take over
and use all or any part of the labor, materials, supplies and equipment
contracted for, by or on behalf of Borrower whether or not previously
incorporated into the Development Work, in the discretion of Lender.
Lender may also modify or terminate any contractual arrangements,
subject to its right at any time to discontinue any work without
liability. If Lender chooses to complete the Development Work, Lender
shall not assume any liability to Borrower or any other person for
completing them, or for the manner or quality of their construction, and
Borrower expressly waives any such liability. In connection with any
work of construction undertaken by Lender pursuant to the provisions of
this SUBSECTION (d), Lender may do any of the following:

(1) engage builders, contractors, subcontractors, architects,
engineers, suppliers, inspectors, consultants and others for the
purpose of furnishing labor, materials, equipment and other
services in connection with the work of construction, for the
protection or clearance of title to the Project, or for the
protection of Lender's interest with respect thereto;

(2) pay, settle or compromise all bills or claims which may
become liens against the Project or which have been or may be
incurred in any manner in connection with completing construction
of the Development Work or for the protection or clearance of title
to the Project or for the protection of Lender's interest with
respect thereto;

(3) prosecute and defend all actions and proceedings in
connection with the Project;

(4) execute, acknowledge and deliver all other instruments
and documents in the name of Borrower that are necessary or
desirable, to exercise Borrower's rights under contracts concerning
the Project; and

<PAGE>

(5) take such other action, including the employment of
security personnel to protect the Development Work, or refrain from
taking action under this Loan Agreement Supplement as Lender may in
its discretion determine from time to time.

Borrower shall be liable to Lender for sums paid or incurred for
completing construction of the Development Work whether the same shall
be paid or incurred pursuant to the provisions of this Section or
otherwise, and all payments made or liabilities incurred by Lender
hereunder of any kind whatsoever shall be paid by Borrower to Lender
upon demand with interest at the rate set forth in the Note, and all of
the foregoing shall be deemed and shall constitute disbursements under
this Loan Agreement Supplement and be secured by the Project Documents.
For the purpose of carrying out the provisions and exercising the
rights, powers and privileges granted by this SUBSECTION (d), Borrower
hereby unconditionally and irrevocably constitutes and appoints Lender
its true and lawful attorney-in-fact to enter into such contracts,
perform such acts and incur such liabilities as are referred to in said
Section in the name and on behalf of Borrower. This power of attorney is
coupled with an interest.

(e) Where substantial deviations from the Plans and Specifications
appear which have not been approved as set forth herein, or where
defective or unworkmanlike labor or materials are being used in the
construction of the Development Work, or upon receipt of knowledge of
encroachments to which there has been no consent, or if Lender
determines that the Development Work are not being constructed in
accordance with any governmental requirements or any covenants,
conditions, restrictions, agreements or other matters, whether or not of
record, affecting the condition of title to the Project, Lender shall
have the right to immediately order stoppage of the construction and
demand that such conditions be corrected. After issuance of such an
order in writing, no further work shall be done on that portion of the
Development Work where there is a substantial deviation from the Plans
and Specifications which has not been approved as set forth herein,
where there is defective or unworkmanlike labor or materials, or which
does not comply with governmental requirements or matters affecting
title to the Project, without the prior written consent of Lender, which
consent shall not be unreasonably withheld, unless and until said
condition has been fully corrected.

(f) Foreclose on any security for the Loan without waiving its
rights to proceed against any other security or other entities or
individuals directly or indirectly responsible for repayment of the
Loan, or waive any and all security for the Loan as Lender may in its
discretion so determine, and pursue any such other remedy or remedies as
Lender may so determine to be in its best interest.

<PAGE>

from the date such funds were spent until repaid. Such amounts shall be
deemed secured by the Mortgage and other applicable Project Documents.

Whether or not Lender elects to employ any or all of the remedies
available to it in connection with an Event of Default, Lender shall not be
liable for (i) the construction of or failure to construct, complete or
protect the Development Work, (ii) the payment of any expense incurred in
connection with the exercise of any remedy available to Lender or the
construction or completion of the Development Work, or (iii) the performance
or non-performance of any other obligation of Borrower.

All remedies of Lender provided for herein, in the Loan Agreement and
in any other Project Document and in any of the Related Loan Documents are
cumulative and shall be in addition to all other rights and remedies provided
by law or in equity. The exercise of any right or remedy by Lender hereunder
shall not in any way constitute a cure or waiver of default hereunder, under
any Project Document, under the Loan Agreement or under any of the Related
Loan Documents or invalidate any act done pursuant to any notice of default,
or prejudice Lender in the exercise of any of its rights hereunder, under any
other Project Document, under the Loan Agreement or under any of the Related
Loan Documents unless, in the exercise of its rights, Lender realizes amounts
owed to it under such Project Documents, Loan Agreements and the Related Loan
Documents. If Lender exercises any of the rights or remedies provided in this
ARTICLE VII, that exercise shall not make Lender, or cause Lender to be
deemed to be, a partner or joint venturer of Borrower. No disbursement of
Loan funds by Lender shall cure any default of Borrower, unless Lender agrees
otherwise in writing in each instance.

<PAGE>

ARTICLE VIII
MISCELLANEOUS

(a) personal delivery;

(b) reputable overnight courier service;

(c) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by registered or certified,
first class mail, return receipt requested); or

(d) registered or certified, first class mail, return receipt
requested.

Any notice, demand or request sent pursuant to SUBSECTION (a) or (c) hereof
shall be deemed received upon such personal delivery or upon dispatch by
electronic means, and if sent pursuant to SUBSECTION (d) shall be deemed
received three (3) days following deposit in the mail, and if sent pursuant
to SUBSECTION (b) shall be deemed received on the next Business Day following
delivery to the courier service.

The addresses for notices are as follows:

<PAGE>

With a copy to: Residential Funding Corporation
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437
Attention: General Counsel
Telephone No.: (612) 832-7415
Telecopier No.: (612) 832-7190

To Borrower: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: Edward F. Havlik, President
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2480

With copies to: United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220
Attention: William J. Crock, Jr., Vice-President
David Feltman, Corporate Counsel
Telephone No.: (847) 427-2450
Telecopier No.: (847) 427-2450

Such addresses may be changed by notice to the other parties given in the
same manner as provided above.

Section 8.4 NO WAIVER, REMEDIES CUMULATIVE. No disbursement of proceeds
of the Loan shall constitute a waiver of any conditions to Lender's
obligation to make further disbursements nor, in the event is unable to
satisfy any such conditions, shall any such waiver have the effect of
precluding Lender from thereafter declaring such inability to constitute an
Event of Default (however described) under this Loan Agreement Supplement,
the Note or any other Project Document. No failure or delay on the part of
Lender in the exercise of any power, right or privilege hereunder or under
the Note or any other Project Document shall impair such power, right or
privilege or be construed to be a waiver of any Event of Default (however
described) or acquiescence therein, nor

<PAGE>

shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof, or of any other right, power
or privilege. Except as specifically provided herein, rights and remedies
existing under this Loan Agreement Supplement, the Note or any other Project
Document are cumulative to and not exclusive of any rights or remedies
otherwise available.

Section 8.5 COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand
all costs and expenses incurred by Lender in connection with the preparation,
execution, delivery, administration, modification and amendment of this Loan
Agreement Supplement, the other Project Documents, and any other documents to
be delivered hereunder or pursuant to the terms of any Project Document,
including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel for Lender with respect thereto and with respect to advising
Lender as to its rights and responsibilities under this Loan Agreement
Supplement and the other Project Documents.

Borrower further agrees to pay on demand all costs and expenses of Lender
(including, without limitation, reasonable counsel fees and expenses, court
costs and all other litigation expenses, including, but not limited to,
expert witness fees, document copying expenses, exhibit preparation, courier
expenses, postage expenses and communication expenses) in connection with the
enforcement of this Loan Agreement Supplement, the other Project Documents
and any other documents delivered hereunder, including, without limitation,
costs and expenses incurred in connection with any bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceeding, or any
refinancing or restructuring in the nature of a "workout" of the Project
Documents and any other documents delivered by Borrower related thereto. In
addition, Borrower shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of
this Loan Agreement Supplement, the other Project Documents and the other
documents to be delivered hereunder, and agrees to hold Lender harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.

Whenever Borrower is obligated to pay or reimburse Lender for any
attorney's fees, those fees shall include the allocated costs for services of
Lender's in-house counsel.

Section 8.6 DISCLAIMER BY LENDER; NO JOINT VENTURE. Borrower
acknowledges, understands and agrees as follows:

(a) the relationship between Borrower and Lender is, and shall
at all times remain, solely that of borrower and lender, and Lender neither
undertakes nor assumes any responsibility for or duty to Borrower to select,
review, inspect, supervise, pass judgment upon or inform Borrower of the
quality, adequacy or suitability of any matter or thing submitted to Lender
for its approval;

(b) Lender owes no duty of care to protect Borrower or any other
Person against negligent, faulty, inadequate or defective building or
construction; and

41
<PAGE>

(c) Borrower is not and shall not be an agent of Lender for any
purpose. Lender is not a joint venture partner with Borrower in any manner
whatsoever.

Any approvals granted by Lender for any matters covered under this Loan
Agreement Supplement shall be narrowly construed to cover only the parties
and facts identified in any such approval.

Section 8.7 INDEMNIFICATION. Borrower agrees to protect, indemnify,
defend and hold harmless each Indemnified Party from and against any and
claims (including, without limitation, Hazardous Materials Claims), damages,
losses, liabilities, obligations, penalties, actions, judgments, suits, costs,
disbursements and expenses (including, without limitation, reasonable fees and
expenses of counsel and consultants and allocated costs of internal counsel)
that may be incurred by or asserted against any Indemnified Party, in each case
arising out of or in connection with or related to any of the following:

(a) the Loan, this Loan Agreement Supplement or any other
Project Document,

(b) the use of funds advanced under the Project Documents,

(c) the failure of Borrower or any other party to comply fully
with any and laws applicable to it (including, without limitation,
Hazardous Materials Laws), or

(d) any use, handling, production, transportation, disposal or
storage of any Hazardous Materials in, under or on the Land by any Person,
including, without limitation,

(ii) the costs of any required or necessary repair,
cleanup, or detoxification of said property and the preparation of
any closure or other required plans,

Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this
SECTION 8.7 shall survive the termination

42
<PAGE>

of this Loan Agreement Supplement and the other Project Loan Documents and
the payment in full of the Loan.

Section 8.8 CONSULTANTS. Borrower shall pay any and all valid claims of
any consultants, advisors, brokers or agents whom it has retained or with
whom it has initiated contact with respect to the Loan who claims a right to
any fees in connection with the Loan, and shall indemnify, defend and hold
Lender harmless from such claims, whether or not they are valid.

Section 8.9 GOVERNING LAW. This Loan Agreement Supplement shall be
governed by and construed in accordance with the laws of the State of
Illinois.

Section 8.11 COUNTERPARTS. This Loan Agreement Supplement, each other
Project Document and any attached consents or exhibits requiring signatures may
be executed in counterparts, and all counterparts shall constitute but one
and the same document.

Section 8.12 TIME IS OF THE ESSENCE. Time is of the essence of this Loan
Agreement Supplement.

Section 8.13 NO THIRD PARTIES BENEFITTED. This Loan Agreement Supplement
is made and entered into for the sole protection and legal benefit of
Borrower and Lender and their permitted successors and assigns, and no other
Person shall be direct or indirect legal beneficiary of, or have any direct
or indirect cause of action or claim in connection with, this Loan Agreement
Supplement or any of the other Project Documents. Lender shall not have any
obligation to any Person not a party to this Construction Agreement or the
other Project Documents.

Section 8.15 JURISDICTION. Any legal action or proceeding with respect
to this Loan Agreement Supplement or any of the other Project Documents may
be brought in the Courts of the State of Illinois or of the United States for
the Northern District of Illinois and by execution and delivery of this Loan
Agreement Supplement, each of Borrower and Lender consents, for itself and in
respect of its property, to the jurisdiction of those Courts. Each of
borrower and Lender irrevocably waives and objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens which it
may now or hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of this Loan Agreement Supplement or any document
related hereto. Borrower and Lender each waive any personal service of any
summons, complaint

43
<PAGE>

or other process, which may be made by any other means permitted by the State
of Illinois. Nothing in this SECTION 8.15 shall affect the right of Lender
to serve legal process in any other manner permitted by law or limit the
right of Lender to bring any action or proceeding against Borrower or its
property in the Courts of any other jurisdiction.

Section 8.16 WAIVER OF JURY TRIAL. BORROWER AND LENDER WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OR ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS LOAN AGREEMENT SUPPLEMENT. THE
OTHER PROJECT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE, BORROWER AND LENDER AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A
TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS LOAN AGREEMENT SUPPLEMENT OR
THE OTHER PROJECT DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS LOAN AGREEMENT SUPPLEMENT AND THE OTHER PROJECT
DOCUMENTS.

Section 8.18 ENTIRE AGREEMENT. This Loan Agreement Supplement,
together with the other Project Documents and the Loan Agreement, embodies
the entire agreement and understanding among Borrower and Lender with respect
to the Project and supersedes all prior to contemporaneous agreements and
understandings of such persons, verbal or written, relating to the subject
matter hereof and thereof except for any prior arrangements made with respect
to the payment by Lender or Borrower of (or any indemnification for) any
fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of Lender.

44
<PAGE>

Borrower agrees that Lender and Lender's Affiliates may extend credit to such
parties and may take any action if may deem necessary to collect the credit,
regardless of the effect that such extension or collection of credit may have
on Borrower's financial condition or operations. Borrower further agrees
that in no event shall Lender or its Affiliates be obligated to disclose to
Borrower any information concerning any other customer of Lender or its
Affiliates.

Section 8.22 AUTHORITY TO FILE NOTICES. Borrower irrevocably appoints,
designates and authorizes Lender as its agent (said agency being coupled with
an interest) and attorney-in-fact, with full power of substitution, to file
for record any Notices of Completion, Cessation of Labor, or file or send to
any third party any other notice or documents or take any other action that
Lender deems necessary or desirable to protect its interest hereunder, or
under the Project Documents, and will upon request by Lender, execute such
additional documents as Lender may require to further evidence the grant of
the aforesaid right to Lender.

Section 8.24 ABF LOAN DOCUMENTS. The references in this Loan Agreement
Supplement and the other Project Documents to the ABF Loan, the ABF Loan
Agreement and the ABF Documents are included solely for the convenience of
the Borrower in the event the Borrower and the Lender enter into the ABF Loan
Agreement; nothing contained herein shall be construed as imposing any
obligation upon Lender to make the ABF Loan. In the event the Lender does
not make the ABF Loan and the ABF Loan Documents are not executed and
delivered, then all references herein and in the other Project Documents to
the ABF Loan, the ABF Loan Agreement and the ABF Loan Documents shall be of
no force and effect. In addition, Borrower acknowledges and agrees that the
ABF Loan Documents, if entered into, shall provide that a default under each
such ABF Loan Document shall be a default under the Loan Agreement and the
Project Documents, and that a default under the Loan Agreement and the
Project Documents shall be a default under the ABF Loan Documents.

<PAGE>

IN WITNESS WHEREOF, Lender and Borrower have executed this Loan
Agreement Supplement as of the date first written above by and through their
duly authorized representatives.

LENDER:

RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation

By: /s/ [illegible]
----------------------------------

Printed Name: [illegible]
------------------------

Title: Director
-------------------------------

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

By: /s/ [illegible]
----------------------------------

Printed Name: [illegible]
------------------------

Title: Secretary
-------------------------------

UNITED HOMES, INC.,
an Arizona corporation

By: /s/ [illegible]
----------------------------------

Printed Name: [illegible]
------------------------

Title: Ass't. Secretary
-------------------------------

46
<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By: /s/ [illegible]
----------------------------------

Printed Name: [illegible]
------------------------

Title: Secretary
-------------------------------

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

By: /s/ [illegible]
----------------------------------

Printed Name: [illegible]
------------------------

Title: Vice President
-------------------------------

47
<PAGE>

EXHIBIT A
TO SUPPLEMENT TO LOAN AGREEMENT

LEGAL DESCRIPTION OF THE LAND

A-1
<PAGE>

LEGAL DESCRIPTION

PARCEL A: [SINGLE FAMILY]

The land referred to in this legal description, situated in the County of
Ottawa, Township of Holland, State of Michigan, is described as follows:

Lots 1 through 17, 19 and 25 through 51, Woodside Green Subdivision,
according to the recorded plat thereof in Liber 25 of Plats on Page 44.

PARCEL B: [CONDOS]

Parcel 1:

Units 1 through 25, inclusive, The Condominium Homes of Woodside Green, a
Condominium according to the Master Deed recorded in Liber 2146, pages 842
through 891, inclusive, in the office of the Ottawa County Register of Deeds,
and designated as Ottawa County Condominium Subdivision Plan No. 199,
together with rights in general common elements and limited common elements
as set forth in the above Master Deed and as described in Act 59 of the Public
Acts of 1978, as amended.

Parcel 2:

Commencing at the South 1/4 corner of Section 11, Town 5 North, Range 15
West, Holland Township, Ottawa County, Michigan; thence South 89 degrees 59
minutes 40 seconds West 854.65 feet along the South line of said Section 11
for point of beginning; thence South 89 degrees 59 minutes 40 seconds West
70.66 feet along said South section line; thence North 01 degrees 30 minutes
58 seconds West 295.10 feet; thence South 89 degrees 59 minutes 40 seconds
West 393.14 feet; thence North 01 degree 30 minutes 58 seconds West 948.72
feet along the West line of the East 1/2 of the Southwest 1/4 of said Section
11; thence North 88 degrees 29 minutes 02 seconds East 71.00 feet; thence
South 87 degrees 23 minutes 56 seconds East 196.21 feet; thence South 76
degrees 42 minutes 58 seconds East 169.34 feet; thence North 22 degrees 12
minutes 38 seconds East 143.68 feet; thence Southeasterly 66.01 feet on a
1047.00 foot radius curve to the right, long chord bearing South 67 degrees
47 minutes 22 minutes East 66.00 feet; thence South 22 degrees 12 minutes 38
seconds West 145.17 feet; thence South 39 degrees 46 minutes 40 seconds East
362.01 feet; thence South 25 degrees 59 minutes 49 seconds East 47.70 feet;
thence South 17 degrees 49 minutes 32 seconds East 128.39 feet; thence South
07 degrees 02 minutes 15 seconds East 80.63; thence South 01 degree 40
minutes 40 seconds East 78.15 feet; thence South 00 degrees 32 minutes 50
seconds East 211.06 feet; thence South 89 degrees 59 minutes 40 seconds West
206.98 feet; thence Southwesterly 287.46 feet on a 183.00 foot radius curve
to the left, long chord bearing South 44 degrees 59 minutes 40 seconds West
258.80 feet; thence South 00 degrees 00 minutes 20 seconds East 275.93 feet
to the point of beginning.

Except that portion thereof now included within Parcel 1 described above.

1
<PAGE>
EXHIBIT B
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT REQUIREMENTS

ENTITLEMENT RISK Land must be through all discretionary zoning and
approvals.

BY GEOGRAPHICAL REGION The Projects must be located in the Chicago land
area, the Phoenix suburbs or western Michigan.

FINAL PRICE POINT Entry-Level 50% - 100%
First move-up 0% - 50%
Second move-up 0% - 30%
Other 0% - 10%

Maximum value per Unit of $300,000

DEVELOPMENT LIFE CYCLE The maximum proforma lifetime of a Project shall
not exceed thirty (30) months from the date of the
first disbursement of proceeds of the Loan for the
Project to full repayment, with all outstanding
borrowings due and payable on the Project Maturity
Date. The Development Work and/or the
Construction Improvements must commence within
four (4) months of the date of the first
disbursement of proceeds of the Loan for the
Project. Development of raw, but entitled land, is
anticipated only for the construction of
residential "for sale" Units by the Borrower. The
sale of lots to third party builders or developers
must be approved by the Lender.

MAXIMUM PER PROJECT No more than Five Million Dollars ($5,000,000) of
the Loan may be committed to any Project.

START LIMITATIONS Construction of the Units will be limited to (i)
an agreed upon number of Project Model Homes as
set forth in the Project Commitment, plus (ii)
100% of Units for which there exists a Sales
Agreement, plus (iii) an amount of Spec Homes
equaling up to three (3) months of Unit
absorption, based on the absorption rate projected
in the Appraisal Report. (Exceptions to the above

B-1

<PAGE>

start limitations will be considered for attached
dwelling Projects containing numerous Units in one
building and for winter construction which
requires pouring of slabs to enable spring
production). Phasing of the Development Work will
be determined based upon the economics of the
Project and its physical requirements.

STALE UNITS Any Unit, exclusive of Project Model Homes, which
has not been repaid within twelve (12) months of
the commencement of construction on said Unit,
must be repaid.

LOAN TO VALUE RATIO: The Project Amount shall be an amount which
results in the Loan to Value Ratio being equal to
or less than eighty percent (80%).

B-2

<PAGE>

EXHIBIT C

TO SUPPLEMENT TO LOAN AGREEMENT

A. GENERAL PROJECT INFORMATION:

B. CONSTRUCTION INFORMATION AND DOCUMENTS:

C-1
<PAGE>

C. PROJECT LEGAL DOCUMENTS

1. Proposed or recorded covenants, conditions and restrictions.
2. If a condominium, a copy of the homeowner's association articles of
incorporation, by-laws and budget.

D. BORROWER LEGAL DOCUMENTS

1. A resolution of the Borrower authorizing the Borrower to obligate
itself with respect to the Project Documents and authorizing certain
officers to execute and deliver the Project Documents.

C-2
<PAGE>

EXHIBIT D
TO SUPPLEMENT TO LOAN AGREEMENT

PROJECT COMMITMENT

D-1
<PAGE>

[LETTERHEAD]

PROJECT COMMITMENT

January 30, 1997

United Homes, Inc.
2100 Golf Road, Suite 110
Rolling Meadows, Illinois 60008-4220

RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the "Lender") is
pleased to confirm that the Lender agrees to advance, in accordance with and
pursuant to the Loan Agreement referenced below, proceeds of the loan which
the Lender made, on a collective basis, to UNITED HOMES, INC., an Illinois
corporation, UNITED HOMES, INC., an Arizona corporation, UNITED HOMES OF
ILLINOIS, INC., an Illinois corporation and UNITED HOMES OF MICHIGAN, INC., a
Michigan corporation (collectively, the "Borrower") with respect to the
Project specified below, substantially upon the terms outlined below.
Capitalized terms used herein shall have the meanings assigned those terms
in the Loan Agreement dated as of May 28, 1996 between the Borrower and the
Lender.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
GENERAL
- -------------------------------------------------------------------------------
<S> <C>
PROJECT Woodside Green
- -------------------------------------------------------------------------------
PROJECT OWNER United Homes of Michigan, Inc.
- -------------------------------------------------------------------------------
LOAN TERMS APPLICABLE TO THIS PROJECT
- -------------------------------------------------------------------------------
PROJECT AMOUNT $2,070,356, which amount is to be
used to acquire the Land and
construct the Development Work on
Phase B. Proceeds of the Loan are
not available for construction of
Homes in this Project.
- -------------------------------------------------------------------------------
TYPE OF PROJECT High Advance Rate Project
- -------------------------------------------------------------------------------
</TABLE>

1
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ADDITIONAL LOAN FEE The Borrower will be required to
pay to Lender an Additional Loan Fee
as a condition precedent to the
Lender's release of its lien on any
Lot located in the Project, which
amount shall equal five percent (5%)
of the amount of required to be paid
to the Lender upon the sale of each
Lot, as specified below under
SUBPARAGRAPH (a) of the caption
"REPAYMENT OF PRINCIPAL".
- -------------------------------------------------------------------------------
INTEREST RATE The Loan bears interest at the
per annum rate of the Prime Rate
plus one and one-quarter percent
(1.25%)
- -------------------------------------------------------------------------------
ADVANCE RATE The Advance Rate for disbursements
of proceeds of the Loan for the
Project is (i) one hundred percent
(100%) of the Qualified Project
Expenditures which relate to the
acquisition of the Land and (ii) one
hundred percent (100%) of the
Qualified Project Expenditures of
the Project which relate to
Development Work or Construction
Improvements.
- -------------------------------------------------------------------------------
ADDITIONAL LIMITATIONS ON FIRST: SEE the caption "PLANS AND
DISBURSEMENTS SPECIFICATIONS' below.

SECOND: SEE the caption
"INSPECTOR" below.
- -------------------------------------------------------------------------------
</TABLE>

2
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
REPAYMENT OF PRINCIPAL Principal of the Loan shall be due
and payable as follows:
(a) upon the sale of a Lot in
the Project, the Borrower shall
repay the principal amount of the
Loan (i) at the rate of one hundred
fifteen percent (115%) of (A) the
total amount of the Loan disbursed
for the acquisition of such Lot plus
(B) the total amount of the Loan
budgeted for the Development Work
related to such Lot, until such
time as the total amount of the
Loan disbursed for the Project has
been paid in full;
(b) if the amount of the Loan
disbursed for the Project has not
been repaid on or before the Project
Maturity Date, the Borrower shall on
such date repay the entire principal
amount of the Loan allocable to the
Project; and
(c) on the Maturity Date, the
Borrower shall repay the entire
remaining principal amount of the
Loan.
- -------------------------------------------------------------------------------
LOAN MATURITY DATE The Maturity Date of the Loan is
the first to occur of (i) the date
which is forty two (42) months from
May 28, 1996 (as such date may be
extended in writing by Lender and
Borrower from time to time), or
(ii) the date on which the Loan is
required to be repaid pursuant to
SECTION 6.2 of the Loan Agreement.
- -------------------------------------------------------------------------------
PROJECT MATURITY DATE The Project Maturity Date is the
first to occur of (i) the date which
is thirty (30) months from the date
of the Loan Agreement Supplement
(as such date may be extended in
writing by the Lender and the
Borrower from time to time), or
(ii) the date on which the Loan is
required to be repaid pursuant to
SECTION 6.2 of the Loan Agreement.
- -------------------------------------------------------------------------------
PROJECT INFORMATION
- -------------------------------------------------------------------------------
</TABLE>

3
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
DESCRIPTION OF PROJECT ACQUISITION OF LAND: Acquisition
of land for a 118 lot residential
subdivision located in Holland,
Michigan in Ottawa County in the
State of Michigan. The land is
divided into two (2) phases, as
follows: (i) Phase A which consists
of forty five (45) lots upon which
the Borrower will construct single
family homes and (ii) Phase B which
consists of seventy three (73) lots
upon which the Borrower will
construct townhomes.
------------------------------------
DEVELOPMENT OF WORK: the work of
development to be performed on or
with respect to Phase B of the Land
(including, without limitations, the
installation of utilities, roads and
all related on-site and off-site
improvements) in connection with the
development of Phase B of the Land
for the subsequent construction
thereon of Homes, all of which work
and construction shall be completed
by or on behalf of the Borrower in
accordance with the Plans and
Specifications.
- -------------------------------------------------------------------------------
BUDGET SCHEDULE 1 attached hereto sets
forth the Budget
- -------------------------------------------------------------------------------
ABSORPTION RATE Not Applicable
- -------------------------------------------------------------------------------
PERMITTED MODEL AND SPEC HOMES Not Applicable
- -------------------------------------------------------------------------------
PLANS AND SPECIFICATIONS The Lender has not received the
Plans and Specifications. The
delivery of such Plans and
Specifications for the Development
Work is required prior to the first
disbursement of proceeds of the Loan
for Development Work.
- -------------------------------------------------------------------------------
INSPECTOR The Lender has not yet identified
the Inspector. The identification of
the Inspector, and the execution of
an agreement between the Lender and
the Inspector is required prior to
the first disbursement of proceeds
of the Loan for Development Work.
- -------------------------------------------------------------------------------
COMMENCEMENT OF CONSTRUCTION Construction of the Project has
previously commenced.
- -------------------------------------------------------------------------------
</TABLE>

4
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
BUILDER'S RISK INSURANCE Not Applicable
- -------------------------------------------------------------------------------
DOCUMENTS
- -------------------------------------------------------------------------------
PROJECT DOCUMENTS Project Commitment
Loan Agreement Supplement
Mortgage [Michigan form]
Environmental Indemnity
UCC-1 Financing Statement
Assignment
Title Policy
Plans and Specifications
- -------------------------------------------------------------------------------
OTHER REQUIRED DOCUMENTS 1. A copy of the corporate
resolutions adopted by each of
United Homes, United Arizona,
United Illinois and United Michigan
authorizing the Borrower to incur
the debt related to the Project and
authorizing certain officers of the
Borrower to execute and delivery the
Project Documents.

2. Opinion of Counsel
- -------------------------------------------------------------------------------
</TABLE>

This Project Commitment is conditioned upon the absence of (i) any
material adverse change in the financial condition, operations or prospects
of the Borrower since the date of the most recent financial statements of the
borrower delivered to Lender, and (ii) any material action, suit or
proceeding (including, without limitation, any inquiry or investigation)
pending or threatened with respect to Borrower that could have a material
adverse affect on Borrower.

The Project Documents shall be prepared by counsel to the Lender and
shall be satisfactory to the Lender. Borrower shall be obligated to pay all
costs and expenses incurred to satisfy all conditions precedent, whether or
not any funds of the Loan are advanced with respect to the Project. The
Lender shall not be responsible or liable for consequential damages which may
be alleged as a result of the issuance of this Project Commitment. The
provisions of this paragraph shall survive any termination of this commitment.

The provisions of the immediately preceding two paragraphs shall survive
any termination of this Project Commitment.

5
<PAGE>

This Project Commitment shall terminate unless (a) this Project
Commitment is accepted by you on or before February 3, 1997, and (b)
definitive Project Documents, satisfactory in form and substance to the
Lender, have been entered into on or before February 3, 1997 or such later
date as is mutually agreeable to the Lender and the Borrower.

Sincerely,

RESIDENTIAL FUNDING CORPORATION

By: /s/ DONALD V. PIERCE
-------------------------------------
Printed Name: Donald V. Pierce
---------------------------
Title: Director
----------------------------------

TERMS ACCEPTED:

UNITED HOMES, INC.,
an Illinois corporation

By: /s/ WILLIAM J. CROCK, JR.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Secretary
----------------------------------

UNITED HOMES, INC.,
an Arizona corporation

By: /s/ WILLIAM J. CROCK, JR.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Asst. Secretary
----------------------------------

6
<PAGE>

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

By: /s/ WILLIAM J. CROCK, JR.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Secretary
----------------------------------

UNITED HOMES OF MICHIGAN, INC.,
an Michigan corporation

By: /s/ WILLIAM J. CROCK, JR.
-------------------------------------
Printed Name: William J. Crock, Jr.
---------------------------
Title: Vice President
----------------------------------

7
<PAGE>

SCHEDULE 1 TO PROJECT COMMITMENT

BUDGET
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TOTAL BUDGETED AMOUNTS
- -------------------------------------------------------------------------------
PHASE A PHASE B
- -------------------------------------------------------------------------------
<S> <C> <C>
Land Acquisition $725,250 $164,000
- -------------------------------------------------------------------------------
Development Work 0 1,046,112
- -------------------------------------------------------------------------------
Interest Reserve 31,106 103,888
- -------------------------------------------------------------------------------
TOTAL $756,356 $1,314,000
-------- ----------
-------- ----------
- -------------------------------------------------------------------------------
Loan per lot 16,808 18,000
- -------------------------------------------------------------------------------
Principal repayment per lot 19,330 20,700
- -------------------------------------------------------------------------------
Additional Loan Fee per lot 967 1,035
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
DEVELOPMENT WORK FOR PHASE B
- -------------------------------------------------------------------------------
$
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
TOTAL $1,046,112
----------
----------
- -------------------------------------------------------------------------------
</TABLE>

8
<PAGE>

WOODSIDE GREEN
CONDO - SITE BUDGET
HOLLAND, MICHIGAN
- -------------------------------------------------------------------------------
<TABLE>

<S> <C>
INITIAL DEVELOPMENT
- -------------------
HARD COST BOND CONSTRUCTION
SITE PREPARATION AND GRADING $285,000
SANITARY $64,752
WATERMAIN $39,160
STORM SEWER $41,945
SIX INCH DRAINAGE PIPE, SEEDING,
CONCRETE, CURB & GUTTER, PAVING $75,951
----------
$506,808

FUTURE DEVELOPMENT $474,875
- ------------------ ----------
$981,683
SOFT COST
- ---------
ENGINEERING (PRIEN & NEWHOF) $29,838
LAND PLANNING (M.C. SMITH) $12,927
LANDSCAPE ARCHITECT (M.C. SMITH) $12,977
CONDO DOCUMENTS (HOWARD & HOWARD) $6,000
APPRAISEL (GREAT LAKES) $1,850
MUNICIPAL FEES (HOLLAND TOWNSHIP) $837
----------
$64,429
----------
TOTAL $1,046,112
</TABLE>

<PAGE>

EXHIBIT E
TO SUPPLEMENT TO LOAN AGREEMENT

CONDITIONS TO OBLIGATION
OF LENDER TO ENTER INTO LOAN AGREEMENT SUPPLEMENT

The obligation of the Lender to enter into Loan Agreement Supplement is
conditioned upon the Lender having received, in form and substance
satisfactory to Lender, each of the following:

1. Executed originals of the Loan Agreement Supplement, the other
Project Documents and such other agreements, instruments, certificates and
other documents as Lender shall require.

2. Such financial statements, budgets, reports, studies, data and
information concerning Project as Lender shall require.

3. A favorable opinion from counsel for Borrower with respect to
the following:

(a) Borrower has the power and authority to execute and
deliver, and perform its obligations under, the Project Documents.

(b) The execution, delivery and performance by Borrower of
the Project Documents have been duly authorized by necessary action
and do not and will not (i) contravene the charter documents of
United Homes, United Arizona, United Illinois or United Michigan;
(ii) contravene any law, rule or regulation or, to such counsel's
knowledge, any order, writ, judgment, injunction or decree or any
contractual restriction binding on or affecting Borrower; (iii)
require any approval or consent of any partner or any other Person
other than approvals or consents which have been previously
obtained and disclosed in writing to Lender; (iv) to such counsel's
actual knowledge, result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which Borrower is a party or by
which Borrower or its properties may be bound or affected; or (v)
to such counsel's actual knowledge, result in, or require the
creation or imposition of, any lien of any nature (other than the
liens contemplated hereby) upon or with respect to any of the
properties now owned or hereafter acquired by Borrower; and, to
such counsel's knowledge, Borrower is not in default under any such
law, rule, regulation, order, writ, judgment, injunction, decree or
contractual restriction or any such indenture, agreement, lease or
instrument.

(c) The Project Documents have been duly executed and
delivered and constitute the legal, valid and binding obligations
of Borrower, enforceable in accordance with their respective terms.

E-1
<PAGE>

(d) To such counsel's knowledge, no authorization or approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by Borrower of the Project
Documents or any other document executed pursuant thereto or in
connection therewith.

(e) To such counsel's actual knowledge, there is no pending
or threatened action, suit, proceeding or arbitration against or
affecting Borrower or any of its Affiliates before any court,
governmental agency or arbitrator which, if adversely determined,
would result in a Material Adverse Change.

(f) The steps necessary to perfect the security interests
granted pursuant to the Project Security Instruments under
applicable law.

(g) Such other opinions as Lender shall request.

E-2
<PAGE>

EXHIBIT F
TO SUPPLEMENT TO LOAN AGREEMENT

FORM OF DRAW REQUEST CERTIFICATION

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

DRAW REQUEST NUMBER ______

[DATE]

LENDER: RESIDENTIAL FUNDING CORPORATION

BORROWER: UNITED HOMES, INC.
UNITED HOMES, INC.
UNITED HOMES OF ILLINOIS, INC.
and
UNITED HOMES OF MICHIGAN, INC.
-
PROJECT: WOODSIDE GREEN

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

Reference is made to that certain Loan Agreement dated as of May 28, 1996
Lender and Borrower as amended by the Supplement to Loan Agreement dated as
of February 3, 1997 relating to the above referenced Project (as amended or
otherwise modified from time to time, the "Loan Agreement"). Capitalized
terms used herein without definition shall have the meanings set forth in the
Loan Agreement Supplement, unless the context shall require otherwise.

Borrower requests Lender to disburse to the Borrower the proceeds of the
Loan in the amounts and for the purposes stated in the attached SCHEDULE 1.

In connection with such requested disbursement, Borrower hereby
represents, warrants and certifies to Lender as follows:

(a) No Event of Default or Potential Default presently exists under the
Loan Agreement or any other Loan Document.

(b) All of the representations and warranties of Borrower under the
Loan Agreement and the other Loan Documents are hereby remade and
restated.

F-1

<PAGE>

(i) the Borrower has satisfied all conditions precedent to the
funding of the Project as set forth in the Loan Documents;

(ii) the Loan Documents are in full force and effect;

(iii) the Loan is secured by a first priority lien on the Project
and the other collateral described in the Loan Documents;

(iv) the sum of all amounts expended in respect of the development
and construction of the Project does not exceed the Budget, or if such
amounts do exceed the Budget, attached hereto is a listing of the
amounts over budget and an explanation of such budget overrun(s); and

(v) all contractors, subcontractors, vendors, materialmen and
other Persons entitled to payment with respect to the Project have been
paid or will be paid, subject to retainage, with the proceeds of the
requested disbursement.

(d) All insurance required to be maintained by the Borrower remains in
full force in effect, of the types, in the amounts and issued by insurers
as previously approved by the Lender.

(e) All Development Work covered by this Draw Request have been
completed in accordance with the applicable contracts and should now be
paid, and all costs incurred in connection with the Development Work either
have been paid or will be paid out of the proceeds of this disbursement.

BORROWER:

UNITED HOMES, INC.,
an Illinois corporation

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

Printed Name:
-----------------------

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

F-2

<PAGE>

UNITED HOMES, INC.,
an Arizona corporation

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

Printed Name:
-----------------------

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

UNITED HOMES OF ILLINOIS, INC.,
an Illinois corporation

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

Printed Name:
-----------------------

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

UNITED HOMES OF MICHIGAN, INC.,
a Michigan corporation

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

Printed Name:
-----------------------

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

F-3

<PAGE>

WOODSIDE GREEN

SCHEDULE 1 TO DRAW REQUEST NUMBER ____

[Borrower to attach its schedule setting forth the amounts requested to be
disbursed.]

F-4

<PAGE>

EXHIBIT G
TO SUPPLEMENT TO LOAN AGREEMENT

ADDITIONAL PERMITTED EXCEPTIONS

Title Policy No.: 23 0085 107 00011777
Date of Policy: February 5, 1997

Exceptions 1 through 10

G-1

<PAGE>

LOAN AGREEMENT

DATED: AS OF MARCH 5, 1996

BY AND BETWEEN

UNITED-DARIEN LIMITED PARTNERSHIP,
UNITED DEVELOPMENT MANAGEMENT COMPANY,
UNITED HOMES, INC.,
UNITED HOMES OF ILLINOIS, INC.,
EDWARD HAVLIK AND VIRGIL OWINGS

AND

FIRST BANK NATIONAL ASSOCIATION
A National Banking Association

WOODMERE
DARIEN, ILLINOIS

Thomas P. Duffy, Esq.
WILDMAN, HARROLD, ALLEN & DIXON
225 West Wacker Drive
Suite 2600
Chicago, Illinois 60606

<PAGE>

TABLE OF CONTENTS

Page
----
ARTICLE I - INCORPORATION AND DEFINITIONS...............................1

1.1 Incorporation...............................................1
1.2 Definitions.................................................1

ARTICLE II - LOANS......................................................6

2.1 Agreement to Borrow and Lend................................6
2.2 Loans.......................................................6
2.3 Other Funds.................................................7
2.4 Conditions Precedent to Loan Advances.......................7
2.5 Loan Advances...............................................7
2.6 Fees........................................................8
2.7 Sale of Units...............................................8
2.8 No Speculative Homes........................................9
2.9 Equity Contribution.........................................9

ARTICLE III - REPRESENTATIONS AND WARRANTIES...........................10

3.1 Representations and Warranties.............................10

ARTICLE IV - CONDITIONS TO LOAN OPENING................................12

4.1 Loan Documents.............................................12
4.2 Other Conditions to Loan Opening...........................13

ARTICLE V - CONSTRUCTION DISBURSEMENTS.................................16

5.1 Loan in Balance............................................16
5.2 Documents Required for Loan Advances.......................17
5.3 Payments Directly to Subcontractors........................18
5.4 Escrow Payouts.............................................18
5.5 Frequency of Payouts.......................................18
5.6 Consultants................................................18
5.7 Retainages.................................................18
5.8 Stored Materials...........................................18
5.9 Expenses and Advances Secured By Mortgage..................19
5.10 Acquiescence Not a Waiver..................................19
5.11 Lender's Action for Lender's Protection....................19
5.12 Plat of Subdivision........................................19

-i-

<PAGE>

Page
----
ARTICLE VI - RESERVES..................................................19

6.1 Setting Up and Adjusting Reserves..........................19
6.2 Disbursement of Reserves...................................20

ARTICLE VII - FURTHER AGREEMENTS OF THE OBLIGORS.......................20

7.1 Loan Opening..............................................20
7.2 Construction of Homes.....................................20
7.3 Changes in Plans and Contracts, Extras....................20
7.4 Mechanics' Liens and Taxes................................21
7.5 Renewal of Insurance......................................21
7.6 Fixtures and Personal Property............................21
7.7 Proceedings to Prevent Construction.......................21
7.8 Defaults Under Contracts and Mortgages....................22
7.10 Excess Indebtedness.......................................22
7.11 Additional Recordings.....................................23
7.12 Project Accounts..........................................23
7.13 Further Assurances........................................23
7.14 Financial Covenants.......................................23

ARTICLE VIII - CASUALTY AND CONDEMNATION...............................23

8.1 Application of Insurance Proceeds and Condemnation Awards.23
8.2 Obligation to Rebuild.....................................24

ARTICLE IX - ASSIGNMENTS, SALE AND ENCUMBRANCES........................25

9.1 Lender's Right to Assign..................................25
9.2 Prohibition of Transfers..................................25
9.3 Permitted Transfer........................................25

ARTICLE X - DEFAULTS AND REMEDIES......................................26

10.1 Defaults..................................................26
10.2 Remedies Conferred Upon Lender............................28
10.3 Right of Lender to Make Advances..........................29
10.4 Attorneys, Fees...........................................29
10.5 No Waiver.................................................29
10.6 Default Rate..............................................29

-ii-

<PAGE>

Page
----
ARTICLE XI - MISCELLANEOUS.............................................29

11.1 Time Is of the Essence....................................29
11.2 Amendment.................................................29
11.3 Disclaimer by Lender......................................30
11.4 Indemnification...........................................30
11.5 Erection of Sign..........................................30
11.6 Captions..................................................30
11.7 Inconsistent Terms and Partial Invalid....................30
11.8 Gender and Number.........................................30
11.9 Notices...................................................31
11.10 Governing Law.............................................31
11.11 Joint and Several.........................................32
11.12 Counterpart...............................................32

-iii-

<PAGE>

LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Agreement") is made this 5th day of March,
1996 by and between UNITED-DARIEN LIMITED PARTNERSHIP, an Illinois limited
partnership ("Borrower"); UNITED DEVELOPMENT MANAGEMENT COMPANY, an Illinois
limited partnership ("UDMC"); UNITED HOMES, INC., an Illinois corporation
("UHI"); UNITED HOMES OF ILLINOIS, INC., an Illinois corporation ("UHII");
EDWARD HAVLIK and VIRGIL OWINGS (Edward Havlik and Virgil Owings together
with UDMC, UHII and UHI, are called the "Guarantors"); and FIRST BANK
NATIONAL ASSOCIATION ("Lender").

WITNESSETH:

WHEREAS, Borrower is the fee simple owner of the approximately 39 acre
tract of property described on EXHIBIT "A" attached hereto (the "Land") upon
which Borrower intends to construct a two hundred fifty-three (253) unit
townhouse/condominium unit development;

WHEREAS, Borrower wishes to (i) borrow from Lender the sum of
$2,500,000.00 on a revolving credit basis in order to fund the construction
of such two hundred fifty-three (253) unit townhouse/condominium unit
residential development upon the Land ("Revolving Credit Loan") and (ii)
borrow the sum of $7,500,000.00 in order to fund the costs of land
acquisition, site improvements, construction of two model buildings
containing a total of eight (8) model units and to pay loan fees ("Site
Improvement Loan"), and Lender is willing to make said loans upon the terms
and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, the sufficiency of
which is hereby acknowledged, the parties hereto represent and agree as
follows:

ARTICLE I

INCORPORATION AND DEFINITIONS

1.1 INCORPORATION. The foregoing recitals and all exhibits hereto are
hereby made a part of this Agreement.

1.2 DEFINITIONS. The following terms shall have the following meanings
in this Agreement:

ADVANCES: The aggregate of (i) all advances of proceeds of the Loan by
Lender ("Loan Advances"), and (ii) all sums advanced or disbursed by Lender
pursuant to this Agreement, or otherwise in respect to the Project.

<PAGE>

APPROVED BUDGET: A schedule prepared by Borrower and approved by Lender
reflecting the cost of each item of work or material required to complete the
Project, together with all related costs and expenses, and allocating said
cost by category and amount as shown on EXHIBIT "B" hereto, and any and all
amendments or supplements thereto approved in writing by Lender.

AVAILABLE FUNDS: As defined in Section 5.1 hereof.

AWARDS: As defined in Section 8.1 hereof.

BALANCE: As defined in Section 5.1 hereof.

BUILDING: An independent building containing four or five Courtyard Home
condominium units or four Raised Ranch Home townhouse Units.

CASUALTY: As defined in Section 8.1 hereof.

CITY: The City of Darien, Illinois.

CLOSING DATE: With respect to each Home, the closing date for the sale
of such Home by Borrower pursuant to the Sales Contract for such Home.

CONDEMNATION: As defined in Section 8.1 hereof.

CONSTRUCTION ESCROW: An agreement to be entered into by and among
Lender, Borrower, and the Construction Escrowee providing for disbursement of
Loan proceeds and the issuance of title insurance in connection therewith.

CONSTRUCTION ESCROWEE: Chicago Title and Trust Company.

CONTINGENCY RESERVE: As defined in Section 6.1(f) hereof.

DEFAULT: Any of the events described in Article X hereof.

DEFAULT RATE: Four percent (4%) per annum plus the Loan Interest Rate as
applicable.

GUARANTIES: The Guaranty of Payment and Performance and the Guaranty of
Completion to be executed by the Guarantors and pursuant to which the
Guarantors jointly and severally guarantee (i) repayment of the Loan Advances
and performance of all covenants and agreements of Borrower under the Loan
Documents and (ii) completion of the Project.

GOVERNMENTAL AUTHORITY: The United States of America, the State of
Illinois, any other state in which Borrower is organized or which for any
reason has jurisdiction over any of them, the Project, the City, and any
political subdivision of any of them, and any court, department, commission,
board or similar agency.

-2-

<PAGE>

HOME: A townhouse or condominium unit in the two hundred fifty-three
(253) unit residential development to be constructed by Borrower on the Land.
The Project shall consist of 129 attached "Courtyard Homes" and 124 "Raised
Ranch Homes." Each Courtyard Home shall be located in a condominium Building
containing four - five Courtyard Home condominium units with two Buildings of
Courtyard Homes located in a cluster forming a courtyard affect. Each Raised
Ranch Home shall be located in a townhouse building containing four Raised
Ranch Home townhouses.

INTERCREDITOR AGREEMENT. An Agreement between Subordinated Lender,
Borrower and Lender which subordinates the Subordinated Loan to the Loan,
which Intercreditor Agreement shall be in form and substance satisfactory to
Lender.

INTEREST RESERVE: As defined in Section 6.1(b) hereof.

LEGAL REQUIREMENTS: Any law, statute, ordinance, order, rule or
regulation of any Governmental Authority and any requirements, terms or
conditions contained in any restrictions or restrictive covenants affecting
the Land or the Project, including without limitation zoning, building,
environmental, land use, noise abatement, occupational health and safety or
other laws.

LENDER'S ARCHITECT: JRS Consultants, Inc., or any other inspecting
architect, engineer or disbursement advisor retained at Lender's direction
and at Borrower's expense with respect to construction of the Homes.

LENDER'S COUNSEL: Wildman, Harrold, Allen & Dixon, 225 West Wacker
Street, Suite 3000, Chicago, Illinois 60606, and any other legal counsel
engaged by Lender in connection with the preparation and negotiation of the
Loan Documents and the opening, administration and enforcement of the Loan.

LENDER'S ENVIRONMENTAL CONSULTANT. RUST Environment & Infrastructure,
Inc.

LOAN: The Revolving Credit Loan and Site Improvement Loan.

LOAN DOCUMENTS: This Agreement, the Note, the Mortgage, the Guaranties
and all other documents referred to in Section 4.1 hereof, together with any
and all amendments, extensions, modifications or replacements thereof and any
other documents at any time given to evidence or secure the Loan.

LOAN EXPENSES: As defined in Sections 2.6(c) and 5.6 hereof.

LOAN FEE: One Hundred Thousand and No/100 Dollars ($100,000.00).

LOAN INTEREST RATE: The Reference Rate plus one percent (1%).

LOAN OPENING: The first disbursement of any Loan proceeds.

-3-

<PAGE>

LOAN OPENING DATE: The date the initial Loan Advance is disbursed by
Lender as provided herein.

MATURITY DATE: January 31, 1999; notwithstanding anything to the
contrary in this Agreement or any of the Loan Documents, a default under the
Subordinate Loan Documents shall not constitute a Default or Event of Default
under this Agreement or Loan Documents; provided, however, upon Lender's
receipt from Subordinated Lender of a copy of any notice sent by Subordinated
Lender to Borrower regarding Borrower's default under the Subordinated Loan
Documents, Lender shall have the right, which Lender may exercise at its sole
option, to accelerate the Maturity Date to a date that is six (6) months
after the date of Subordinated Lender's default notice to Borrower; provided,
further, however, that during said six (6) month period, the Loan Documents
shall not be deemed to be in default by virtue of the default under the
Subordinated Loan Documents, and Borrower shall continue to have the right to
borrow monies under this Agreement and the Loan Documents in accordance with
the provisions thereof, and provided, further, that if the default under the
Subordinated Loan Documents is cured prior to expiration of said six (6)
month period, the original Maturity Date shall be reinstated (provided there
is no other Default or Event of Default under the Loan Documents). Borrower
hereby acknowledges that Lender's right to accelerate the Maturity Date as
provided above in the event Subordinate Lender transmits a default notice to
Borrower is of the very essence of this Agreement and Lender's agreement to
make the Loan to Borrower and, but for such right of Lender to accelerate the
Maturity Date, Lender would not make the Loan or agree to make the Loan with
the Subordinate Loan in existence. Borrower hereby irrevocably waives any
right to contest Lender's right to accelerate the Loan as provided above in
the event Subordinate Lender transmits a default notice to Borrower.

MORTGAGE: The Mortgage and Security Agreement duly executed by Borrower,
covering all of the Borrower's right, title and interest in the Project and
granting a first lien on the Project to secure the obligations, as modified
from time to time.

NOTE: The Mortgage Note of even date herewith from Borrower to Lender in
the original principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) evidencing the Loan, and all renewals and extensions thereof.

OBLIGATIONS: All obligations of Borrower, whether monetary or otherwise,
under the Loan Documents.

OBLIGORS: Borrower and the Guarantors, collectively.

OBLIGORS' COUNSEL: Shefsky & Froelich, Ltd., 444 North Michigan Avenue,
Chicago, Illinois 60611.

PERMITS: As defined in Section 4.2(n) hereof.

PERMITTED EXCEPTIONS: The title exceptions approved by Lender.

-4-

<PAGE>

PLANS: Detailed plans and specifications for the construction of the
Homes, together with any changes made therein that are permitted under the
terms of this Agreement. At present, the Plans or preliminary versions
thereof are identified in EXHIBIT "D" hereto.

PROCEEDS: As defined in Section 8.1 hereof.

PROHIBITED TRANSFER: As defined in Section 9.2 hereof.

PROJECT: Construction of a two hundred fifty-three (253) unit
townhouse/condominium unit residential development in Darien, DuPage County,
Illinois consisting of the Land and the Homes, and all site and other
improvements relating thereto. The Project shall be constructed in two
phases. Phase I will consist of approximately 58-60 Courtyard Home
condominium units and 67-70 Raised Ranch Home townhouse. Phase II will
constitute the remainder of the Project.

REFERENCE RATE: The rate of interest from time to time publicly
announced by Lender as its "reference rate". Lender may lend to its customers
at rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate which is based on the Reference Rate, such
interest rates shall change on the effective date of any change in the
Reference Rate.

REQUEST FOR ADVANCE: A completed statement in the form prescribed in the
Construction Escrow and this Agreement, executed by Borrower and delivered to
Lender and the Construction Escrowee prior to each funding as required in the
Construction Escrow.

RESERVES: As defined in Section 6.1 hereof.

REVOLVING CREDIT LOAN: As defined in the second "WHEREAS" clause.

SALES CONTRACT: Any agreement executed by or on behalf of Borrower for
the sale of a Home.

SITE IMPROVEMENT LOAN: As defined in the second "WHEREAS" clause.

SUBCONTRACT: Any contract or agreement between Borrower and a
Subcontractor or between a Subcontractor and any other subcontractor.

SUBCONTRACTOR: Any person or entity having a contract with Borrower for
the construction or supplying by such Subcontractor of any portion of the
Project.

SUBORDINATED COLLATERAL ASSIGNMENT: A Collateral Assignment of 100% of
the partnership interests in Borrower which secures the Subordinated Loan,
which shall be subordinated to the Loan pursuant to the Intercreditor
Agreement.

SUBORDINATED LENDER: Heller Financial, Inc., a Delaware corporation.

-5-

<PAGE>

SUBORDINATED LOAN DOCUMENTS: The loan documents which evidence or secure
the Subordinated Loan.

SUBORDINATED LOAN: A Three Million Three Hundred Thousand and No/100
Dollars ($3,300,000.00) loan made by Subordinated Lender to Borrower which
shall be secured only by the Subordinated Collateral Assignment.

TITLE INSURER: Chicago Title Insurance Company.

TITLE POLICY: As defined in Section 4.2(a) hereof.

TRANSFER: As defined in Section 9.2 hereof.

ARTICLE II

LOANS

2.1 AGREEMENT TO BORROW AND LEND. Borrower agrees to borrow from
Lender, and Lender agrees to lend to Borrower, the Loan, subject to the terms
and conditions of this Agreement.

2.2 LOANS. The Loan shall be disbursed to Borrower in accordance with
the provisions of this Agreement. The Loan shall be evidenced by the Note,
maturing on January 31, 1999 and the Loan shall bear interest and shall be
payable as follows:

(a) INTEREST RATE. Interest shall accrue from the date of first
disbursement hereunder on the unpaid principal balance on the Loan from
time to time at the Loan Interest Rate. Interest shall be computed on
Loan Advances from and including the date of each Loan Advance by Lender
to or for the account of Borrower (whether to an escrow or otherwise),
on the basis of the actual number of days elapsed during the period
for which interest is being charged hereunder, predicated on a year
consisting of three hundred and sixty (360) days.

(b) INTEREST PAYMENTS. Interest on the Loan shall be payable monthly
in arrears on the first (1st) day of each month beginning on the first day
of the first full calendar month after the Loan Opening, and continuing
on the first (1st) day of each and every succeeding month thereafter
until the Maturity Date.

(c) PRINCIPAL PAYMENT. The entire unpaid principal balance of the
Loan, as well as all accrued and unpaid interest thereon and any sums
due to Lender under any of the other Loan Documents, shall be due and
payable on the Maturity Date, unless the indebtedness evidenced hereby
is accelerated as provided herein.

-6-
<PAGE>

(d) LATE CHARGE. A late charge of five percent (5%) of each
Loan payment will be assessed for any payment that is more than
five (5) days late.

(e) REVOLVING CREDIT. So long as no Default exists hereunder or
under the Loan Documents, Loan Advances relating to the Revolving
Credit Loan, once repaid, may be reborrowed for permitted purposes
hereunder; provided, however, that notwithstanding the foregoing Loan
Advances relating to the Revolving Credit Loan, once repaid, may not be
reborrowed from and after the time the total remaining costs of the
Project are less than the remaining availability of funds under the
Revolving Credit Loan, in Lender's reasonable determination.

2.3 OTHER FUNDS. Any amount which may become due and payable to Lender
under this Agreement or pursuant to the terms of any collateral or security
agreement executed in connection with this Agreement may, in Lender's sole
discretion and if not otherwise paid, be charged by Lender to any available
funds then held by Lender for any account of the Borrower or any party
comprising Borrower.

2.4 CONDITIONS PRECEDENT TO LOAN ADVANCES. No Loan Advance relating to
the Loan shall be made by Lender to Borrower at any time unless:

(a) the Loan is in Balance as provided in Section 5.1 hereof;

(b) no Default has occurred under this Agreement, or under any of
the other Loan Documents, and no event, circumstance or condition has
occurred or exists that, with the passage of time or the giving of
notice, would constitute a Default under this Agreement or any other
Loan Document;

(c) all representations and warranties made by Borrower to Lender
herein or in any other Loan Document continue to be accurate in all
material respects; and

(d) all conditions precedent to such disbursement have been
satisfied.

2.5 LOAN ADVANCES. The proceeds of the Loan shall be disbursed as
follows:

(a) The Loan Opening shall be made at such time as all of the
conditions and requirements of this Agreement required to be
performed by Borrower or other parties prior to the Loan Opening
have been satisfied or performed.

(b) if any Loan proceeds are disbursed by Lender into an escrow,
including the Construction Escrow, such proceeds shall be considered
to be disbursed to Borrower from the date of deposit into escrow,
and interest shall accrue on such proceeds from such date.

(c) Borrower shall pay, and hereby requests and authorizes
Lender, in the event of a Default in the payment thereof by Borrower,
to make direct advances for

-7-

<PAGE>

payment and reimbursement of, all interest, charges, costs and expenses
incurred by Lender in connection with the Loan, including without
limitation: (i) all interest due on the Loan; (ii) all title examination,
survey, escrow, filing, search and recording fees and charges; (iii) all
fees and disbursements of architects, engineers and appraisers engaged
by Lender; (iv) all documentary stamp and other taxes and charges
imposed by law on the issuance or recording of any of the Loan
Documents; (v) all title, casualty; liability, performance or other
insurance or bond premiums; (vi) all reasonable fees and disbursements
of Lender's Counsel; and (vii) any amounts required to be paid by
Borrower under this Agreement or any of the other Loan Documents after
the occurrence of a Default (all of which indicated in this
Section 2.6(c) are herein collectively referred to as the "Loan
Expenses").

(d) Any Loan Advance shall be made for payment of a specified cost
of the Project in accordance with the Approved Budget. No amendment
of the Approved Budget shall be made without Lender's prior written
consent, which consent shall not be unreasonably withheld or delayed.
No reallocation of line items within the Approved Budget shall be made
without Lender's prior written consent, which consent shall not be
unreasonably withheld or delayed.

2.6 FEES. As consideration for its agreement to make the Loan and its
execution and delivery of this Agreement, Borrower shall pay to Lender, out
of the initial disbursement of the proceeds of the Loan, the Loan Fee. Such
sums shall constitute non-refundable fees to Lender, and shall be disbursed
to Lender at the Loan Opening.

2.7 SALE OF UNITS. Borrower may enter into Sales Contracts for the
construction and sale of a Home, provided that (a) Lender has approved the
standard form of the Sales Contract, and (b) the purchase price for the Home
is not less than the minimum sale price for said Home as set forth in the
price schedule attached hereto as EXHIBIT "E" and approved by Lender. Upon
the sale of each Home pursuant to a Sales Contract, Lender agrees to release
each Home from the lien of the Mortgage upon the payment of: (i) a release
fee of One Hundred and No/100 Dollars ($100.00) per Home; plus (ii) the "Net
Sales Proceeds" (as hereinafter defined), which in no event shall be less
than the applicable minimum release price for such Home as set forth in said
EXHIBIT "E" attached hereto. The Net Sales Proceeds shall be applied by
Lender as follows: Until the Site Improvement Loan is paid in full, the first
THIRTY-NINE THOUSAND FOUR HUNDRED AND NO/100 DOLLARS ($39,400.00) of Net
Sales Proceeds per Home will be used to reduce the Site Improvement Loan,
with the balance of Net Sales Proceeds (but in no event shall Lender receive
less than 100% of the amount of the Revolving Credit Loan allocated to
construct such Home) to be applied against the Revolving Credit Loan until
the Revolving Credit Loan is paid in full. After the Site Improvement Loan is
paid in full the Net Sales Proceeds (but in no event less than 100% of the
amount of the Revolving Credit Loan allocated to construct such Home) shall
be used to reduce the Revolving Credit Loan, until the Revolving Credit Loan
is paid in full, and any excess Net Sales Proceeds after the Site Improvement
Loan and Revolving Credit Loan have been paid in full, shall then be
deposited in Borrower's operating account maintained with Lender until Lender
has no further obligation to make Loan Advances under this Agreement or the
Loan Documents.

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As used herein, the phrase "Net Sales Proceeds" shall refer to the
amount equal to (v) the purchase price set forth in the Sales Contract
regarding such Home, as adjusted by customary real estate tax prorations
between Borrower and said purchaser, plus (w) the price of all "extras"
purchased by said purchaser or otherwise owed by said purchaser to Borrower
under said Sales Contract, minus (x) all customary transfer taxes, title and
escrow charges, recording fees, surveyor's fees, reasonable attorney's fees,
(y) customary brokerage commissions paid by Borrower in connection with the
sale of such Home (the total of all of the brokerage commissions not to
exceed 1% of the gross Sales Price of the Home), the earnest money deposit as
set forth in each approval Sales Contract for each Home, and an amount equal
to three and one-half (3 1/2%) percent of the purchase price to cover the
cost of Borrower's overhead, including costs of Borrower's employees and (z)
FIFTEEN THOUSAND DOLLARS ($15,000.00) per Home paid to Subordinated Lender to
be applied against the Subordinated Loan provided such FIFTEEN THOUSAND
DOLLAR ($15,000.00) per Home payment to Subordinated Lender shall not occur
unless the minimum release payments of Net Sales Proceeds required under the
first paragraph of this Section 2.8 have been paid to Lender. Notwithstanding
anything to the contrary contained herein, the FIFTEEN THOUSAND DOLLAR
($15,000.00) per Home payment to Subordinated Lender shall cease to be paid
to Subordinated Lender upon the exercise by Subordinated Lender of any of its
rights with regard to any of the limited partnership interests in Borrower
following the occurrence of a default or an event of default under the
Subordinated Loan Documents.

2.8 NO SPECULATIVE HOMES. No Building or Homes may be constructed using
Loan Proceeds unless there is an executed Sales Contract (with all
contingencies, including without limitation, any financing contingency,
satisfied or waived) covering at least fifty percent (50%) of the Homes in
the Building containing such Homes; provided, however, that notwithstanding
the foregoing, in no event at any time shall there be in excess of a total of
eight (8) speculative Courtyard Homes and eight (8) speculative Raised Ranch
Homes permitted to be constructed and maintained by Borrower, and further
provided that the costs thereof are within the Approved Budget.

2.9 EQUITY CONTRIBUTION. Borrower will contribute at least Two Million
Five Hundred Thousand and No/100 Dollars ($2,500,000.00) in cash equity for
the purpose of acquiring the Land as a condition to Lender's initial
disbursement of any of the Loan. Such equity may be in the form of a portion
of the proceeds of the Subordinated Loan.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 REPRESENTATIONS AND WARRANTIES. To induce Lender to execute and
perform this Agreement, the obligors hereby represent, warrant and covenant
to Lender as follows:

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(a) At the Loan Opening and at all times there after until the Loan
is paid in full, Borrower will have good and merchantable fee simple title
to the land, subject only to the Permitted Exceptions.

(b) The Obligors have full power and authority to enter into this
Agreement and to perform all of their duties and obligations under this
Agreement and under the other Loan Documents.

(c) This Agreement, the Note, the Mortgage, the Guaranties, the
other Loan Documents and any other documents and instruments required to
be executed and delivered by the Obligors in connection with this
Agreement, when executed and delivered, will constitute the duly
authorized, valid and legally binding obligations of the party required
to execute the same and will be enforceable strictly in accordance with
their respective terms. No basis presently exists for any claim against
Lender under this Agreement, under the other Loan Documents, or with
respect to the Loan. Enforcement of this Agreement and the other Loan
Documents is subject to no defenses of any kind.

(d) The execution, delivery and performance of this Agreement, the
Note, the Mortgage, the Guaranties, the other Loan Documents and any other
documents or instruments to be executed and delivered by the Obligors
pursuant to this Agreement or in connection with the Loan and the
construction, occupancy and use of the Project will not: (i) violate any
provisions of law or any applicable regulation, order, writ, injunction or
decree of any Governmental Authority or any other Legal Requirement; or
(ii) conflict with, be inconsistent with, or result in any breach or
default of any of the terms or provisions of any indenture, mortgage, deed
of trust, agreement or contract of any kind to which any Obligor is a
party or by which any of them may be bound.

(e) To the best of the Obligors' knowledge, no condition,
circumstance, event, agreement, document, litigation or proceeding (or
threatened litigation or proceeding or basis therefor) exists that could:
(i) adversely affect the validity or priority of the liens and security
interests granted to Lender under the Loan Documents, (ii) materially
adversely affect the ability of the Obligors to perform their obligations
under any of the Loan Documents, or (iii) constitute a default under any
of the Loan Documents, or would constitute such a default with the giving
of notice and lapse of time or both.

(f) The construction of the Homes pursuant to the Plans, and the
use and occupancy of the Homes when completed, will not violate or
conflict with any Legal Requirement or any grant, easement, covenant,
condition or restriction pertaining thereto.

(g) All financial statements submitted by the Obligors to Lender in
connection with this Loan are true and correct in all material respects,
and fairly present the respective financial conditions and results of
operations of the entities that are their subjects. No material adverse
change has occurred in the financial condition of the Obligors since the
date of such financial statements.

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(h) This Agreement and any and all financial statements, budgets,
schedules, contracts, certificates, contractor's statements, applications,
reports, affidavits, agreements and other materials submitted to Lender in
connection with or in of this Agreement by or on behalf of the Obligors
fully and fairly state the matters with which they purport to deal, and
neither misstate any material fact nor, separately or in the aggregate,
fail to state any material fact necessary to make the statements made
therein not misleading.

(i) Subject only to payment of fees that may be reflected in the
Approved Budget, all utility and municipal services required for the
construction, occupancy, and operation of the Project, including without
limitation, water supply, storm and sanitary sewage disposal systems, gas,
electric and telephone facilities are available for use and tap-on at the
boundaries of the Land.

(j) All governmental permits and licenses required by applicable
law to construct and to permit occupancy of the Project have been issued
and are in full force or, if the present stage of construction of the
Project does not allow such issuance, then such permits and licenses will
be issued upon substantial completion of construction of the Project
pursuant to the Plans.

(k) The Plans are or will be complete in all respects, containing
all detail requisite for the construction of the Homes, which, when built
and equipped in accordance therewith, will be ready for the intended use
thereof.

(l) The Loan is a business loan within the purview of 815 ILCS
205/4(1)(c). The Loan does not, and when disbursed will not, violate the
provisions of any applicable usury or consumer credit laws that may have
jurisdiction over this transaction, the Obligors, or any property securing
the Loan.

(m) To the best of Obligors' knowledge, no Hazardous Material (as
defined in Section 4.1(i) hereof) is currently stored, buried, placed,
held, located or disposed of on, under or at the Land or any part thereof.

3.2 CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The Obligors
hereby represent, warrant and covenant that the representations and
warranties made in Section 3.1 hereof shall be and shall remain true and
correct at the time of the Loan Opening and at all times thereafter, so long
as any part of the Loan remains outstanding. Each Request for Advance shall
constitute a reaffirmation that such representations and warranties are true
as of the date of such Request for Advance and will be true on the date of
the Advance.

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ARTICLE IV

CONDITIONS TO LOAN OPENING

4.1 LOAN DOCUMENTS. As a condition precedent to the Loan Opening, the
Obligors agree that they will furnish the following Loan Documents to Lender
at least two (2) business day before the Loan Opening, all of which must be
satisfactory to Lender and Lender's Counsel in form, substance and execution,
and dated of even date herewith:

(a) The Note.

(b) The Mortgage.

(c) A security agreement from Borrower to Lender creating a first
security interest in all personal property and fixtures in which Borrower
can grant a security interest in or related to the Project, together with
the proceeds thereof and all after-acquired property of Borrower
incorporated in or related to the Project, as security for the
Obligations, together with Uniform Commercial Code financing statements as
required to perfect all security interests granted by the security
agreement.

(d) The Guaranties.

(e) An assignment from Borrower to Lender of all Licenses, Permits,
Plans and Subcontracts and other construction contracts relating to the
Project as additional security for the Loan, together with the consent
thereto of the Architect who prepared the Plans.

(f) An indemnification agreement whereby Beneficiary and the
Guarantors agree to, jointly and severally, indemnify and hold Lender
harmless from any liability to Lender on account of Hazardous Material
affecting the Land, Homes or Project. For purposes of this Agreement,
"Hazardous Material" means and includes any hazardous, toxic or dangerous
waste, substance or material defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), any so-called "Superfund" or "Superlien" law, or any other
federal, state or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect, and any
other hazardous, toxic or dangerous waste, substance or material, and
otherwise as defined in any such Indemnity Agreement. The Indemnification
Agreement will also require the supervised removal and remediation of one
underground storage tank on the Land, asbestos in the existing structures
on the Land, which shall be demolished, and remediation of any soil
contamination near the underground storage tank and electric transformers
located on the Land, all of which shall be done in a manner reasonably
acceptable to Lender in accordance with all applicable Environmental Laws
and under

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procedures approved by and inspected from time to time by Lender's
Environmental Consultant.

(g) Assignments of all Borrower's right, title and interest in, to
and under any and all Sales Contracts, including all earnest money and
other deposits received by Borrower thereunder.

(h) Such other documents and instruments as Lender or Lender's
Counsel may require.

4.2 OTHER CONDITIONS TO LOAN OPENING. As conditions precedent to the
Loan Opening and in addition to the Loan Documents and the other requirements
set forth in this Agreement, the Obligors shall furnish the following to
Lender at least two (2) business days prior to the Loan Opening or at such
time as is set forth below, all of which must be satisfactory to Lender and
Lender's Counsel in form, content and execution:

(a) TITLE POLICY. At the Loan opening, a title insurance policy in
the form of an ALTA Loan Policy (the "Title Policy") issued on the date
of the Loan Opening by the Title Insurer to Lender in the aggregate of
the principal amount of the Note, insuring the Mortgage to be a valid
first lien on the Project subject only to the Permitted Exceptions and
to customary exceptions for pending disbursements of the Loan. The Title
Policy shall contain a Comprehensive Endorsement No. 1, Endorsements for
Interim Certification, an ALTA 3.0 Zoning Endorsement, a Revolving Credit
Endorsement and such additional endorsements as may be required by Lender.

(b) SURVEY. A plat of survey (the "Survey") of the Land made by a
registered Illinois land surveyor satisfactory to Lender, and
specifically showing the following issues: (i) the location of all
buildings, fences and other improvements on the Land, including the
Project; (ii) the location (and recording numbers, to the extent
recorded) of all visible or recorded easements, water courses, drains,
sewers, utility lines, public and private roads (including the names and
widths thereof and recording numbers for the dedications thereof),
rights of way, and showing that the same are, and after construction of
the Project and granting of easements will be, unobstructed and that all
portions of the Project will have direct access to dedicated public
roads; (iii) if the Land comprises more than one parcel, interior lines
and other data sufficient to insure contiguity; (iv) whether the Land is
located in a flood plain; and (v) such additional information which may
be required by the Lender or the Title Insurer. At Lender's election,
the Survey shall be made in accordance with the current survey standards
of the American Land Title Association, shall be dated not earlier than
three (3) months prior to the Loan Opening, shall bear a proper
certificate by the surveyor regarding compliance with the standards
enumerated above, shall include the legal description of the Land, and
shall run in favor of Borrower, Lender and the Title Insurer.

(c) INSURANCE POLICIES. Insurance policies with premiums prepaid
in companies, forms, amounts and coverage satisfactory to Lender,
containing waiver of

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subrogation and mortgagee clauses in favor of Lender and providing for
thirty (30) days' written notice to Lender in advance of cancellation
for non-payment of premiums or any other reason or of material
modification of such policies and ten (10) days' written notice to
Lender in advance of payment of any insurance claims under such policies
to any person. Without limiting the generality of the foregoing, such
policies shall include all insurance required to be carried by Borrower
under the Mortgage, and shall further include during construction of the
Project:

(i) Builder's risk insurance on an "all risks" basis insuring
the Project, including all construction work in place or in progress
from time to time, and materials in storage and while in transit,
against loss or damage by fire or other casualty, with extended
coverage, "X," "C" and "U" coverage, and vandalism and malicious
mischief coverage, bearing a replacement cost agreed amount
endorsement;

(ii) Comprehensive general liability insurance (including
contractual liability) in an amount not less than Two Million Dollars
($2,000,000.00) for injury to or death of one person and Three
Million Dollars ($3,000,000.00) for injury to or death of more than
one person, with umbrella coverage in an amount not less than Five
Million and No/100 Dollars ($5,000,000.00); and

(iii) Boiler and machinery insurance when such fixtures and
equipment, if any, are connected and ready for use.

When each Home has been completed, if not sold, Borrower shall provide
casualty insurance against loss and damage by all risks of physical loss
or damage, including without limitation fire, windstorm, flood (if
necessary) and other risks covered by the so-called extended coverage
endorsement in amounts not less than the full insurable replacement
value of all completed improvements, fixtures and equipment from time to
time on the Land and bearing a replacement cost agreed amount
endorsement.

(d) WORKMEN'S COMPENSATION INSURANCE. A certificate of workmen's
compensation insurance, covering all employees working on or about the
Land and death, injury and/or property damage occurring on or about the
Project or resulting from activity thereon, with liability insurance
limits for death of or injury to persons and/or damage to property of
not less than the amounts from time to time required by statute.

(e) DOCUMENTS OF RECORD. Copies of all covenants, conditions,
restrictions, easements and matters of record that affect the Project.

(f) SEARCHES. UCC searches of the state and county in which the
Land is located and the Guarantors reside, as applicable, indicating
that no judgments, tax or other liens, security interests, leases of
personalty or other encumbrances (other than Permitted Exceptions and
liens in favor of Lender), are of record or on file encumbering any
portion of the Project or any other assets in which Lender is granted a
security

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interest in connection with the Loan, and that there are no
bankruptcies, judgments or tax liens outstanding with respect to any
Obligor.

(g) OPINION OF OBLIGORS' COUNSEL. An opinion of Obligors' Counsel
satisfactory to Lender and Lender's Counsel in all respects.

(h) ORGANIZATIONAL DOCUMENTS. Certified copies of (i) the articles
of incorporation and by-laws regarding Borrower's general partner,
Borrower's limited partner, UHII, UDMC and UHI (ii) fully executed
partnership agreement creating Borrower, and (iii) Certificate of
Limited Partnership for Borrower.

(i) GOOD STANDING DOCUMENTS. Good standing certificates for
Borrower, Borrower's general partner, Borrower's limited partner, UHII,
UDMC and UHI issued by the Secretary of State of Illinois.

(j) AUTHORIZATION DOCUMENTS. Certified copies of corporate
resolutions for Borrower's general partner, Borrower's limited partner,
UHII, UDMC and UHI authorizing the execution and delivery of this
Agreement and the other Loan Documents, and incumbency certificates.

(k) APPRAISAL. An appraisal regarding the Project prepared by an
MAI appraiser and satisfactory to Lender in all respects, which
appraisal shall indicate an "as completed" retail sell-out loan to value
of not more than 80%.

(l) ENVIRONMENTAL REPORT. A "Phase I" and "Phase II" environmental
audit of the Land satisfactory to Lender, according to its sole
discretion, conducted by a qualified consultant acceptable to Lender.

(m) PLANS. One (1) complete set of final Plans for each type of
Home to be constructed in the Project, including all changes to the date
of submission thereof, which shall be substantially consistent
with any preliminary plans theretofore submitted to Lender.

(n) PERMITS, LICENSES, UTILITIES AND TESTS. Evidence satisfactory
to Lender that: (i) all governmental permits and licenses (collectively,
"Permits"), including without limitation a building permit issued by the
appropriate Governmental Authority authorizing construction of the Homes
in accordance with the Plans and including tap-on permits, required by
applicable laws to construct and occupy the Project have been issued and
are in full force and all fees therefor have been fully paid or, if the
stage of construction of the Project does not allow such issuance, such
permits and licenses will be issued upon substantial completion of the
Project in accordance with the Plans; (ii) all utility, parking, access,
construction, recreational and other easements and permits required or,
in Lender's judgment, necessary for the construction and use of the
Project have been granted or issued; and (iii) any soil tests reasonably
required by Lender evidencing the feasibility of the Project.

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(o) LENDER'S ARCHITECT'S CERTIFICATE. Certificate from Lender's
Architect or other evidence satisfactory to Lender that: (i) the Plans
for the applicable Home are, and that the Home will be, when completed in
accordance therewith, in full compliance with all applicable building,
zoning and other laws and ordinances, as well as pollution control and
environmental protection regulations; (ii) the Subcontracts contain all
detail necessary to provide for all labor, material and equipment
required by the Plans; and (iii) all Permits and governmental approvals
necessary for construction of the applicable Home have been issued.

(p) SWORN STATEMENT. A sworn statement from Borrower setting forth
a description of all Subcontracts (and any other parties as may be
required by the Title Insurer or applicable mechanics' lien laws) with
respect to the Project containing the names and addresses of the
Subcontractors under such contracts and any supplements or amendments
thereto, the nature of the work covered thereby, and the aggregate
amounts theretofore paid and thereafter to be paid to each contractor
thereunder with appropriate lien waivers as required by the Title
Insurer.

(q) CONSTRUCTION ESCROW. A construction loan escrow agreement
establishing the Construction Escrow.

(r) FINANCIAL STATEMENTS. Original current financial statements of
the Borrower and the Guarantors on Lender-approved forms.

(s) BONDS. Such payment and performance bonds as Lender may
reasonably require with respect to any Subcontractor.

(t) SUBCONTRACTS. Certified copies of all Subcontracts requested
by Lender.

(u) INTERCREDITOR AGREEMENT. The Intercreditor Agreement executed
by Subordinated Lender and Borrower, and shall be in form and substance
acceptable to Lender.

(v) ADDITIONAL DOCUMENTS. Such other documents and materials as
Lender may reasonably require.

ARTICLE V
CONSTRUCTION DISBURSEMENTS

5.1 LOAN IN BALANCE. Anything in this Agreement to the contrary
notwithstanding, it is expressly understood and agreed that Borrower shall at
all times cause the Loan to be in Balance. The Loan shall be deemed to be in
"Balance" only if total Available Funds for the construction of each Home
equal or exceed, in Lender's judgment, the aggregate of (a) the Interest
Reserve, if any; (b) the amount of the Contingency Reserve, if any, plus any
additional

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amounts required, in Lender's judgment, to fund contingencies not anticipated
in the Approved Budget for such Home; and (c) the amount necessary to pay for
all unpaid costs incurred or to be incurred in the completion of the
construction of said Home, including amounts to be paid as retainage to
persons who have supplied labor or materials to said Home. As used herein,
the term "Available Funds" shall mean the amount of undisbursed proceeds
under the Loan allocated for the construction of such Home, net of any
accrued and unpaid interest on the Loan, plus any amounts deposited by
Borrower pursuant to the next sentence of this Section 5.1. Borrower agrees
that if for any reason the Loan is not in Balance, Borrower shall, within ten
(10) days after request by Lender, deposit with Lender cash in an amount that
will place the Loan in Balance. Any such deposits shall first be exhausted
before any further disbursement of Loan proceeds is made. No interest shall
be payable on any such deposits.

5.2 DOCUMENTS REQUIRED FOR LOAN ADVANCES. Except as otherwise provided
herein, at least five (5) business days prior to, and as a condition of, each
Loan Advance, Borrower shall furnish to Lender the following documents:

(a) Borrower's Request for Advance specifying the amount of the
requested disbursement, directing Lender to disburse such funds in
accordance with this Agreement, and certifying to Lender, as of the date
of such Request for Advance, that: (i) the total amount of the Request
for Advance includes the actual amount payable to the Subcontractors who
have performed work on the Project and indicating what payment requests,
if any, have been received by Borrower but have not yet been approved by
Borrower for payment; (ii) no Default, or condition or event that, with
the giving of notice or passage of time or both, would constitute a
Default, exists under this Agreement; (iii) the representations and
warranties contained in Article III hereof are true and correct in all
material respects; (iv) Borrower has received no notice and has no
knowledge of any liens or claims of lien either filed or threatened
against the Project, except in favor of Lender; (v) all amounts shown as
previous payments on the Request for Advance have been paid to the
parties entitled to such payment; (vi) all work and materials
theretofore furnished for the Project conform with the Plans in all
material respects, and Borrower has approved all such work and
materials; and (vii) the Loan is in Balance;

(b) A certificate as to completion and payment authorization in
Lender's customary form, properly executed by the Subcontractors seeking
payment and Lender's Architect, if any;

(c) Borrower shall furnish to the Construction Escrowee the sworn
statements and waivers of lien covering all work for which disbursement
is to be made to the date specified therein (except that waivers of lien
from Subcontractors may be furnished to Construction Escrowee on or
before thirty (30) days after the date of such disbursement, provided
the Construction Escrow includes the appropriate endorsement therefor
reasonably acceptable to Lender), all in compliance with all applicable
mechanics' lien laws and with the requirements of Lender, the
Construction Escrowee and the Title

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Insurer, together with such other supporting data as Lender, the
Construction Escrowee or the Title Insurer may require;

(d) On the date of each Disbursement, endorsements to the Title
Policy to cover the amount and date of the Disbursement (whether into
escrow or otherwise), insuring that the Mortgage is a first priority
lien on the remainder of the Project, subject only to Permitted
Exceptions (and to exceptions and objections in the usual form relating
to the issuance of the Title Policy which by their nature cannot be
waived or removed until the final disbursement of Loan proceeds), and
containing a mechanics' lien interim certification to cover the amount
of the Loan then disbursed, which endorsement shall be delivered to
Lender upon such disbursement.

5.3 PAYMENTS DIRECTLY TO SUBCONTRACTORS. Lender may, in its discretion,
make or cause to be made (through the Construction Escrow or otherwise)
payments for the cost of construction and equipping of the Project directly
to those contractors, subcontractors, vendors, materialmen and suppliers owed
funds in connection therewith.

5.4 ESCROW PAYOUTS. Except as otherwise elected by Lender, all Loan
Advances shall be made through the Construction Escrow.

5.5 FREQUENCY OF PAYOUTS. Subsequent to the Loan Opening, Loan Advances
shall be made from time to time as construction progresses, but not more
frequently than once in each calendar month.

5.6 CONSULTANTS. Lender shall have the right (but not the duty) to
employ such consultants, including but not limited to Lender's Architect, to
review and approve the Plans, the Approved Budget and inspect the Project
from time to time to insure that the same is being duly constructed and
equipped as herein provided, approve any elements of a request for
disbursement and perform such other services as Lender may from time to time
require, all solely on behalf of Lender. The costs and disbursements of such
consultants shall be deemed a portion of the Loan Expenses.

5.7 RETAINAGES. No retention shall be required so long as no Event of
Default has occurred and is continuing.

5.8 STORED MATERIALS. No disbursement for materials purchased by
Borrower but not yet installed or incorporated into the Project shall be made
without Lender's prior approval of the conditions under which such materials
are purchased and stored. In no event shall any such disbursement be made
unless the materials involved have been delivered to the Land or stored with
a bonded warehouseman, with satisfactory evidence of security, insurance and
suitable storage. Upon Lender's request, Borrower shall provide to Lender a
copy of a bill of sale or other evidence of title in Borrower, together with
a copy of UCC searches against Borrower and the warehouseman, if applicable,
indicating no liens or claims affecting such materials.

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5.9 EXPENSES AND ADVANCES SECURED BY MORTGAGE. Any and all advances or
payments made by Lender hereunder from time to time, and any amounts expended
by Lender pursuant to this Agreement, the Note, the Mortgage or any of the
other Loan Documents, together with Lender's Architect's fees, reasonable
attorneys' fees of Lender's Counsel and all other Loan Expenses shall, as and
when advanced or incurred, be secured and guaranteed by the Loan Documents to
the same extent and effect as if the terms and provisions of this Agreement
were set forth therein, whether or not the aggregate of such indebtedness
exceeds the face amount of the Note.

5.10 ACQUIESCENCE NOT A WAIVER. To the extent that Lender may have
acquiesced in the Obligors' failure to comply with and satisfy any condition
precedent to the Loan Opening, to any Disbursement or to any disbursement of
proceeds of the Loan, such acquiescence shall not constitute a waiver by
Lender of any condition precedent set forth in this Agreement, and Lender may
at any time thereafter require the Obligors to comply with and satisfy all
conditions and requirements of this Agreement.

5.11 LENDER'S ACTION FOR LENDER'S PROTECTION. The authority herein
conferred upon Lender and any action taken by Lender or Lender's Architect or
their agents or employees in making inspections of the Project, procuring
sworn statements and waivers of lien and approving Plans shall be taken by
Lender and its agents or employees for Lender's protection only, and neither
Lender nor its agents or employees shall to deemed to have assumed any
responsibility to Borrower or any other person or entity with respect to any
such action herein authorized.

5.12 PLAT OF SUBDIVISION. Notwithstanding anything to the contrary
contained in this Agreement, other than Loan Advances which shall be used for
the purpose of acquiring the Land, no Loan Advances shall be made until
Borrower has delivered to Lender a final Plat of Subdivision of the Land for
Phase I of the Project, which shall be in form and substance satisfactory to
Lender and no portion of the Loan allocated for Phase II of the Project shall
be available to Borrower until Borrower has delivered to Lender a final Plat
of Subdivision of the Land for Phase I of the Project, which shall be in form
and substance satisfactory to Lender.

ARTICLE VI

RESERVES

6.1 SETTING UP AND ADJUSTING RESERVES. At the Loan Opening or form time
to time thereafter, Lender may designate reserves (the "Reserves") and
thereafter from time to time may in its reasonable discretion adjust the
amount of such Reserves as circumstances may require for any or all of the
following purposes to cover the actual or estimated amounts required for such
purposes until the Maturity Date: (a) all unpaid Loan Expenses; (b) interest
on the Loan prior to the Maturity Date (the "Interest Reserve"); (c) real
estate taxes that will accrue prior to the Maturity Date, and for tax
deposits, if any, required under the Mortgage; (d) premiums on insurance
policies required to be furnished by Borrower hereunder, payable prior to the
Maturity Date, and for insurance deposits, if any, required by the Mortgage;
(e) license or permit fees

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and other charges and fees; and (f) an amount to fund are serve for
contingencies (the "Contingency Reserve").

6.2 DISBURSEMENT OF RESERVES. Provided that the Obligors are not in
Default hereunder and the Loan is in Balance, Lender shall, at the request of
Borrower, disburse the Reserves for the respective purposes for which they
have been set aside, by payment through the Construction Escrow either of
items for which the Reserves have been set aside or in reimbursement to
Borrower for payments made directly by Borrower for such purposes. In the
event of Default or as may otherwise be specifically permitted under this
Agreement, Lender may use and apply Reserves or any monies deposited by
Borrower with Lender, regardless of the purpose for which deposited, to cure
such Default or to apply as a prepayment of the Loan, without request by
Borrower, either through the Construction Escrow or by direct payment to
others or to Lender. No interest shall accrue upon Reserves held by Lender
until disbursement thereof, whereupon such disbursement shall be deemed to be a
disbursement of Loan proceeds.

ARTICLE VII

FURTHER AGREEMENTS OF THE OBLIGORS

7.1 LOAN OPENING. In the event all of the conditions precedent to the
Loan Opening hereunder have not been performed on or before the Loan Opening
Date, Lender may, at its option at any time thereafter and prior to the Loan
Opening, terminate this Agreement and all of its obligations hereunder. In
the event of such termination, Borrower shall pay all accrued Loan Expenses.

7.2 CONSTRUCTION OF HOMES. Borrower agrees that each Home will be
constructed and fully equipped in a good and workmanlike manner with
materials of high quality, in accordance with the Plans and applicable
building, zoning and other laws and ordinances and all Legal Requirements.
Borrower further agrees that such renovation, construction and equipping of
each Home will be promptly commenced following the execution of each Sales
Contract and prosecuted with due diligence and will be fully completed not
later than the applicable Closing Date. If Lender disapproves any portion of
the renovation, construction or equipping of any Home due to any variation
from the Plans approved by Lender or any other violation of the terms of this
Agreement, Borrower shall, within fifteen (15) days after such disapproval,
commence to correct the condition so disapproved, and thereafter shall
diligently pursue such correction until completion.

7.3 CHANGES IN PLANS AND CONTACTS, EXTRAS. Borrower agrees that no
material changes will be made in the Plans, no change will be made in any
Subcontract, and no extras will be allowed to any Subcontractor, except upon
the written approval of the same by Lender and Lender's Architect; provided,
however, that Borrower may make changes in the Plans or allow such extras
without first obtaining the approval of Lender thereof; if (a) Borrower
obtains the approval of all parties to the contract proposed to be modified;
(b) the aggregate change in cost of all such changes and extras for any one
Home does not exceed Five Thousand Dollars

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($5,000.00); provided, however, that additional extras requested by the
purchaser of any Home shall be permitted so long as Borrower establishes to
Lender's satisfaction that the purchase price set forth in the Sales Contract
for such Unit shall cover the cost of such extras; and (c) the Loan remains
in Balance.

7.4 MECHANIC'S LIENS AND TAXES. The Obligors agree that they will not
suffer or permit any mechanic's lien claims to be filed or otherwise asserted
against the Land or will pay the same in case of the filing of any claims for
lien or proceedings for the enforcement thereof, and will pay all special
assessments that are placed for collection and all real estate taxes and
assessments of every kind (regardless of whether the same are payable in
installments) upon the Project, before the same become delinquent. The
Obligors shall have the right to contest in good faith and with reasonable
diligence the validity of any such lien, claim, tax or assessment, provided
that if Lender so requests. The Obligors shall furnish Lender with a bond or
other security satisfactory to Lender in a sufficient amount, in Lender's
reasonable judgment, to pay in full such contested lien, claim, tax or
assessment and all penalties and interest that might become due thereon. If
the Obligors fail promptly either to discharge or to contest claims, taxes,
or assessments asserted or give security or indemnity in the manner provided
herein or in the Mortgage, then Lender may (but shall not be required to)
procure the release and discharge of any such claim and any judgment or
decree thereon and in its sole discretion effect any settlement or
compromise of the same, without any inquiry into the validity thereof. Any
amounts so expended by Lender, including premiums paid or security furnished
in connection with the issuance of any surety bonds, shall be deemed to
constitute a Loan Advance. Alternatively, the Obligors may establish such
title indemnity accounts with the Title Insurer as may be required by said
company to insure Lender against any loss or damage resulting from any claims
for lien or unpaid taxes or assessments.

7.5 RENEWAL OF INSURANCE. The Obligors agree to pay all premiums on all
insurance policies required under this Agreement and, not later than fifteen
(15) days before any policies of insurance expire, furnish to Lender
replacement or renewal insurance policies in companies, coverage and amounts
satisfactory to Lender, premiums prepaid, in accordance with the terms hereof.

7.6 FIXTURES AND PERSONAL PROPERTY. Except for a security interest
granted to Lender and all applicable Purchase Money Mortgages, Borrower
agrees that Borrower is and shall remain the absolute owner of all personal
property, fixtures and equipment delivered in connection with the
construction, equipping or operation of the Project, free and clear of all
liens, claims, encumbrances and security interests whatsoever. Borrower
shall, upon request, furnish Lender with satisfactory evidence of such
ownership.

7.7 PROCEEDINGS TO PREVENT CONSTRUCTION. If any proceedings are filed
or are threatened to be filed seeking to (a) enjoin or otherwise prevent or
declare invalid or unlawful the construction, occupancy or operation of the
Project or any portion thereof; (b) adversely affect the validity or priority
of the liens and security interests granted to Lender under the Loan
Documents; or (c) adversely affect the financial condition of the Obligors or
the ability of the Obligors to complete the Project, then the Obligors shall
notify Lender of such proceeding and,

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within three (3) business days following the Obligors' notice of such
proceedings, resist the entry or seek the stay of any temporary or permanent
injunction that may be entered, and vigorously contest and use its best
efforts to bring about a favorable and speedy disposition of all such
proceedings.

7.8 DEFAULTS UNDER CONTRACTS AND MORTGAGES. The Obligors shall not
suffer or permit any breach or default to occur under any Subcontracts, and
shall promptly notify Lender of any default thereunder.

7.9 FURNISHING INFORMATION. The Obligors shall:

(a) Cooperate with Lender in arranging for inspections by
representatives of Lender or Lender's Architect of the progress of
construction from time to time during normal business hours;

(b) Furnish to Lender (i) as soon as available, but in no event
more than ninety (90) days after the end of each calendar year, audited
financial statements for Borrower, Borrower's general partner, Borrower's
limited partner, UHII, UDMC and UHI and financial statements of the
individual Guarantors for such calendar year, prepared in accordance
with generally accepted accounting principles consistently applied, on
Lender-approved forms; (ii) weekly sales and inventory reports during the
term of the Loan; (iii) updated budgets, price schedules, unit mix
breakdowns and other similar items as revised by Borrower from time to
time; (iv) copies of all Sales Contracts and closing statements; (v) a
quarterly covenant compliance certificate signed by Borrower's chief
financial officer; (vi) quarterly company prepared financial statements
of UHII, UDMC and UHI; and (vii) such other reports, documents and
information as Lender may from time to time request.

(c) Promptly notify Lender of any condition or event that
constitutes, or with the giving of notice or lapse of time or both would
constitute a Default, or of any material adverse change in the financial
condition of Borrower or any Guarantor;

(d) Permit Lender or any of its agents or representatives to have
access to and to examine all books and records regarding the Project at
any time or times hereafter during business hours; and

(e) Permit Lender to copy and make abstracts from any and all of
such books and records.

7.10 EXCESS INDEBTEDNESS. The obligors agree to pay to Lender on demand
the amount by which the indebtedness incurred hereunder or under any of the
other Loan Documents, at any time, exceeds the original principal amount of
the Loan.

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7.11 ADDITIONAL RECORDINGS. Borrower shall not record or permit to be
recorded any declaration of condominium, easements, restrictive covenants,
subdivision or other document or agreement against all or any part of the
Land without the prior written consent of Lender.

7.12 PROJECT ACCOUNTS. During the term of the Loan, Borrower agrees to
maintain all accounts relating to the Project with Lender.

7.13 FURTHER ASSURANCES. The obligors shall, upon request by Lender from
time to time, execute and deliver such documents as may be necessary to
perfect and maintain perfected as valid liens upon the Project the liens
granted to Lender pursuant to this Agreement, and to fully consummate the
transactions contemplated by this Agreement.

7.14 FINANCIAL COVENANTS. At all times during the term of the Loan, UHI
shall: (i) maintain a maximum debt to net worth ratio of 4.5:1, where debt of
UHI means the total of all of UHI's liabilities listed on its balance sheet,
and net worth of UHI means its tangible net worth consisting of capital stock
and retained earnings; (ii) maintain a maximum non-Project debt, including
guarantees, of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), where such
debt and guarantees are defined as debt or guaranties incurred by UHI in
respect to the costs of purchase, construction, improvement or sale of
property of UHI or any of its subsidiaries which is secured by a lien on the
property to be purchased, improved or constructed upon; and (iii) maintain a
minimum tangible net worth of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00), as reasonably determined by Lender. For the purpose of the
financial covenants set forth in this Section 7.14 all references to UHI
shall mean UHI together with all of its subsidiaries and affiliates reporting
and disclosing liabilities and assets on a consolidated basis.

ARTICLE VIII

CASUALTY AND CONDEMNATION

8.1 APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION AWARDS. The
proceeds (the "Proceeds") of any insurance policies resulting from any loss
or damage to any portion of the Project resulting from fire, vandalism,
malicious mischief, or any other casualty (a "Casualty"), and any awards,
judgments or claims (the "Awards") resulting from the exercise of the power
of condemnation or eminent domain (a "Condemnation") shall be applied,
subject to the terms of the Mortgage, to rebuild and restore the Project as
provided herein. Notwithstanding the foregoing, upon occurrence of any of the
following events:

(a) The occurrence of a Casualty as a result of which, in Lender's
sole and exclusive judgment:

(i) The Proceeds, together with such undisbursed portions of
the Loan as are budgeted for hard costs of completion of the
affected Homes and any

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additional funds placed by Borrower into an escrow account for such
purpose, will not be sufficient to complete the affected Homes; or

(ii) The affected Homes cannot be completed in accordance
with the Plans on or before the applicable Closing Date;

(b) The occurrence of any Condemnation after which Condemnation
the Project does not, in Lender's sole and exclusive judgment,
constitute a complete economic unit having equivalent value to the
Project as it existed prior to the Condemnation; or

(c) The occurrence of any Casualty or Condemnation after a Default
has occurred hereunder, Lender may declare the balance remaining unpaid
under the Loan to be due and payable forthwith and avail itself of any
of the remedies as in the case of Default, including without limitation
the right to collect, retain and apply as a prepayment of the Loan all
Proceeds collected or claimed as a result of such Casualty and all
Awards resulting from such Condemnation, after deduction of all expenses
of collection and settlement, including reasonable attorneys' and
adjusters' fees and charges. Upon occurrence of any other Casualty or
Condemnation, the Proceeds or Awards, as the case may be, shall be
applied to restore the Project as provided in Section 8.2 hereof. Any
Proceeds or Awards remaining after payment in full of the Loan, as well
as all other sums due Lender hereunder, shall next be paid by Lender to
Borrower, without any allowance for interest thereon.

8.2 OBLIGATION TO REBUILD. In the event Lender does not apply the
Proceeds or Awards to prepayment of the Loan as provided for in Section 8.1
hereof or in the event such Proceeds or Awards, if applied, do not fully
discharge the Loan, Borrower shall:

(a) Proceed with diligence to make settlement (which shall be
subject to the approval of Lender) with insurers or with condemning
authorities and cause the Proceeds or Awards to be deposited with
Lender, unless Lender elects to exercise its right under the Mortgage to
make such settlement without the consent of Borrower;

(b) In the event of any unreasonable delay in making settlement
with insurers or effecting collection of Proceeds or Awards, deposit
with Lender the full amount required to place the Loan in Balance,
disregarding such Proceeds or Awards;

(c) In the event the Proceeds or Awards deposited with Lender and
the undisbursed proceeds of the Loan are insufficient to place the Loan
in Balance, deposit with Lender upon demand any amount necessary, to
place the Loan in Balance; and

(d) Promptly proceed with resumption of construction and
restoration of the affected Homes, including the repair of all such loss
or damage, in accordance with the terms of the Mortgage.

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All Proceeds, Awards and funds deposited by Borrower hereunder shall first be
fully disbursed before the disbursement of any further proceeds of the Loan.
In the event of any deposit by Borrower of the full amount required to
complete construction of the Project, as aforesaid, and the subsequent
receipt of Proceeds or Awards, such Proceeds or Awards, as and when received,
may be collected and retained by Borrower.

ARTICLE IX

ASSIGNMENTS, SALE AND ENCUMBRANCES

9.1 LENDER'S RIGHT TO ASSIGN. Lender may assign, negotiate, pledge or
otherwise hypothecate this Agreement or any of its rights and security
hereunder or under the other Loan Documents to any bank, participant or
financial institution, and in case of such assignment, the Obligors hereby
agree that all rights and remedies shall be enforceable against the
Obligors by such bank, participant or financial institution with the same
force and effect and to the same extent as the same would have been
enforceable by Lender.

9.2 PROHIBITION OF TRANSFERS. Except as permitted under Section 9.3
hereof, Borrower shall not, without the prior written consent of Lender,
create, consent to, suffer or permit any Prohibited Transfer, as defined
hereinbelow, nor enter into any agreement for any Prohibited Transfer. Any
conveyance, sale, assignment, transfer, lease, lien, pledge, mortgage,
security interest or other encumbrance or alienation of any of the following
rights, properties or interests, or attempt to do any of the foregoing (a
"Transfer"), or the execution of any contract to perform any such Transfer,
without Lender's prior written consent shall constitute a Prohibited Transfer
hereunder:

(a) Any right, title or interest of Borrower in the Project or any
part thereof;

(b) All or any portion of the shares of stock in Borrower,
Borrower's general partner, Borrower's limited partner, UHII, UDMC or
UHI; or

(c) Any right, property or interest, the Transfer of which would
constitute an event of default under the Mortgage or any of the other
Loan Documents, in each case whether any such Transfer is effected
directly, indirectly, voluntarily or involuntarily, by operation of law
or otherwise; provided, however, that the foregoing provisions of this
Section 9.2 shall not apply to liens securing the Loan, or to the lien of
current taxes and assessments not in default.

9.3 PERMITTED TRANSFER. Notwithstanding anything to the contrary
contained herein, the sale of any Home pursuant to a Sales Contract in
accordance with the terms hereof shall not constitute a Prohibited Transfer.

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ARTICLE X

DEFAULTS AND REMEDIES

10.1 DEFAULTS. The occurrence of any one or more of the following shall
constitute a "Default" as such term is used herein:

(a) Any default occurs in (i) the due and punctual payment of
principal (or interest under the Note when and as the same becomes due,
and such default is not cured with in the applicable cure period, if
any, or (ii) the payment of any other amount owed to Lender under any of
the Loan Documents and such default is not cured within ten (10) days
after Lender's written demand therefor;

(b) Except as otherwise provided herein, any failure of the
Obligors to observe or perform any of the covenants of the Obligors
either: (i) under the terms of this Agreement, and such default is not
cured with thirty (30) days after Lender notifies the Obligors thereof,
or, with respect to defaults which cannot be cured within thirty (30)
days, the failure of the Obligors to promptly commence and diligently
pursue the cure of such default upon receipt of notice thereof, and to
complete said cure within ninety (90) days of said notice, except as
otherwise provided herein; or (ii) under the terms of any of the other
Loan Documents, and such default is not cured within the applicable cure
period, if any;

(c) The disapproval by Lender or Lender's Architect of any
construction work and failure of the Obligors to commence the correction
of said work to the satisfaction of Lender and Lender's Architect within
fifteen (15) days thereafter and diligently complete the same;

(d) The bankruptcy or insolvency of the Architect or Contractor
and failure of Borrower to procure a replacement Architect or Contractor
satisfactory to Lender within twenty (20) days from the occurrence of
such bankruptcy or insolvency;

(e) The occurrence of a Prohibited Transfer;

(f) Any representation, statement, report, or certificate
contained herein or in any other Loan Document is not true and correct
in any material respect, or if at any time any statement or
representation made in materials submitted to Lender for this Loan is
not true and correct in any material respect;

(g) All or a substantial part of the assets of any Obligor is
attached, seized, subjected to a writ or distress warrant or levied
upon, unless such attachment, seizure, writ, warrant or levy is vacated
within sixty (60) days;

(h) Any Obligor is enjoined, restrained or in any way prevented by
court order from performing any of its respective obligations hereunder
or under the other Loan

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Documents, or from conducting all or a substantial part of its business
affairs, or a proceeding seeking such relief is not dismissed within
forty-five (45) days of being filed or commenced, or proceedings are
commenced:

(i) A notice of lien, levy or assessment is filed of record with
respect to all or any part of the property of any Obligor by the United
States or any other Governmental Authority, unless diligently contested
in accordance herewith;

(j) Failure by Borrower to deposit with Lender funds required to
maintain the Loan in Balance within the time and in the manner herein
required;

(k) Occurrence of a material adverse change in the financial
condition of any Obligor;

(l) Any Obligor:

(i) Files a voluntary petition in bankruptcy or for
arrangement, reorganization or other relief under any chapter of
the Federal Bankruptcy Code or any similar law, state or federal,
now or hereafter in effect, or admits in writing its insolvency,
bankruptcy or inability to pay its debts as they mature, or makes
an assignment for the benefit of creditors, or consents to the
appointment of a receiver or trustee or liquidator of all or the
major part of its property or the Project; or

(ii) Fails, within sixty (60) days after the filing against
said entity of any involuntary proceedings under the Federal
Bankruptcy Code or any similar law, state or federal, now or
hereafter in effect, to cause such proceedings to be dismissed;

(iii) Fails, within sixty (60) days following the entry of
any order appointing a receiver, trustee, or liquidator for it or
for all or a major part of its property or the Project, to cause
such order be vacated;

(iv) Is adjudicated a bankrupt;

(v) If such party is an individual, dies or is judicially
declared to be incompetent, or if such party is a corporation or
partnership, is dissolved, terminated or merged, provided that the
death of an individual shall not be a Default if, within thirty
(30) days thereafter, the surviving Obligors enter into an
agreement acceptable to Lender with one or more persons or entities
acceptable to Lender, in its sole discretion, for the purpose of
carrying on the obligations hereunder previously undertaken by such
deceased individual, and assuming any financial obligations of such
deceased individual under the Loan Documents.

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(m) The occurrence of an event of default or a default by Borrower
under the Subordinated Loan.

(n) Any modification or amendment is made to Borrower's Partnership
Agreement without the prior written consent of Lender.

10.2 REMEDIES CONFERRED UPON LENDER. Upon the occurrence of any
Default, Lender, in addition to all remedies conferred upon Lender by law and
by the terms of the Loan Documents, may pursue any one or more of the
following remedies concurrently or successively, it being the intent hereof
that none of such remedies shall be to the exclusion of any others:

(a) Take possession of the Project and complete the construction
and equipping thereof and do anything required, necessary or advisable
in Lender's sole judgment to fulfill the obligations of the Obligors
hereunder, including the rights to avail itself of or procure
performance of any of the Subcontracts, to let any contracts with the
same contractors, subcontractors or others, and to employ watchmen to
protect the Project from injury. Without restricting the generality of
the foregoing and for the purposes aforesaid, the Obligors hereby
authorize Lender in Lender's own name and the Obligors hereby appoint
and constitute Lender as their lawful attorney-in-fact with full power
of substitution in the premises to perform any or all of the following
actions: to complete construction of the Project in the name of
Borrower; to use unadvanced Loan proceeds or to advance funds in excess
of the face amount of the Note to complete the Project; to make changes
in the Plans that are necessary or desirable to complete the Project; to
retain or employ new contractors, subcontractors, architects, engineers
and inspectors; without inquiring into and without respect to the
validity thereof, to pay, settle or compromise all existing bills and
claims that may be liens against the Project or any portion thereof, or
as may be necessary or desirable for the completion of the construction
and equipping of the Project or for the clearance of title to the Land;
to prosecute and defend actions or proceedings in connection with the
Project; to take action and require such performance as Lender deems
necessary or advisable under any of the bonds, if any, to be furnished
hereunder and to make settlements and compromises with the surety or
sureties thereunder, and, in connection therewith, to execute
instruments of release and satisfaction; and to do any and every act
that Borrower might do in its own behalf and with respect to the
Project, such appointment as attorney-in-fact being a power coupled with
an interest that can not be revoked.

(b) Withhold further disbursement of the Loan proceeds and
terminate any of Lender's obligations to the Obligors.

(c) Declare the Note to be due and payable forth with, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived.

(d) Exercise or pursue any other remedy or cause of action
permitted at law or in equity or under this Agreement or any of the other
Loan Documents, including without limitation foreclosure of the Mortgage.

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10.3 RIGHT OF LENDER TO MAKE ADVANCES. In the event the Obligors fail
to perform any of its covenants or agreements contained herein or in any of
the other Loan Documents, Lender may, in the event of a Default or sooner if
reasonably required to protect its security in the case of an event that
would mature into a Default with the passage of time, but shall not be
required to, perform any of such covenants and agreements, and any amounts
expended by Lender in so doing or pursuant to Section 10.2 hereof, as well as
any other amounts advanced by Lender pursuant to this Agreement, shall be
deemed advanced by Lender under an obligation to do so regardless of the
identity of the person or persons to whom such funds are disbursed. Any and
all amounts advanced by Lender to complete the Project or to protect its
security for the Loan are obligatory Advances hereunder and shall constitute
additional indebtedness payable on demand and evidenced and secured by the
Loan Documents.

10.4 ATTORNEYS, FEES. The Obligors shall pay the reasonable fees and
costs of Lender's Counsel in connection with the preparation, administration
and enforcement of this Agreement and the Loan Documents. Without limiting
the generality of the foregoing, if at any time or times hereafter Lender
employs counsel for advice or other representation with respect to any matter
concerning the Obligors, the Project, this Agreement or any of the other Loan
Documents or to protect, take possession of or liquidate all or any part of
the Project or to attempt to enforce or protect any security interest or lien
or other right contained herein or under any of the other Loan Documents, then
in any such event all reasonable attorneys' fees arising from such services
and any expenses, costs and charges relating thereto, shall constitute
additional indebtedness owed by the Obligors to Lender payable on demand and
evidenced and secured by the Loan Documents.

10.5 NO WAIVER. No failure by Lender to exercise, or delay by Lender
in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall be any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof,
or the exercise of any other right, power or privilege.

10.6 DEFAULT RATE. From and after the date of any Default, interest on
funds outstanding hereunder shall accrue at the Default Rate and be payable
on demand. The failure of Lender to charge interest at the Default Rate shall
not be evidence of the absence of a Default or waiver of a Default by Lender.

ARTICLE XI

MISCELLANEOUS

11.1 TIME IS OF THE ESSENCE. The Obligors agree that time is of the
essence of all of their covenants under this Agreement.

11.2 AMENDMENT. This Agreement and the other Loan Documents, and any
other documents or instruments executed pursuant thereto or contemplated
thereby, shall represent the entire agreement between the parties hereto with
respect to the transactions described herein, and

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shall supersede all prior negotiations, representations or agreements
pertaining thereto, either oral or written. This Agreement and any provision
hereof may not be modified or amended in any manner other than by a written
amendment executed by all parties hereto.

11.3 DISCLAIMER BY LENDER. Lender shall not be liable to any
contractor, supplier, laborer, architect, engineer or any other party for
services performed or materials supplied in connection with construction of
the Project. No Obligor is and no Obligor shall be an agent of Lender for any
purposes, and Lender is not a venture partner with any Obligor in any manner
whatsoever.

11.4 INDEMNIFICATION. To the fullest extent permitted by law, the
Obligors hereby agree to protect, indemnify, defend and save harmless Lender
and its directors, officers, agents and employees and any participants from
and against any and all liability, expense or damage of any kind or nature
and from any suits, claims or demands, including legal fees and expenses on
account of any matter, action or failure to act by Lender, whether in suit or
not, arising out of this Agreement or any of the other Loan Documents or in
connection herewith or therewith unless such suit, claim or damage is caused
solely by the gross negligence or willful malfeasance of Lender or its
officers, agents or authorized employees. Such obligation on the part of the
Obligors shall survive the repayment of the Loan described herein. The
Obligors shall pay, and hold Lender harmless from, any and all claims of any
brokers, finders or agents claiming a right to any fees in connection with
arranging the financing contemplated hereby. The Obligors represent and
warrant that no brokerage commission or finder's fees are to be paid in
connection with the Loan.

11.5 ERECTION OF SIGN. Upon the request of Lender, Borrower shall
erect a sign on the Land satisfactory to Lender indicating that financing for
the Project has been supplied by Lender, which sign shall comply with all
applicable laws, ordinances and regulations.

11.6 CAPTIONS. The captions and headings of various articles and
sections of this Agreement and exhibits hereto are for convenience only and
are not to be considered as defining or limiting in any way the scope or
intent of the provisions hereof.

11.7 INCONSISTENT TERMS AND PARTIAL INVALID. In the event of any
inconsistency among terms hereof, Lender may elect which terms shall govern
and prevail. In the event of any inconsistency between the terms of this
Agreement and the terms of any other Loan Documents, this Agreement shall
govern, except that in the event of any inconsistency between the terms of
any Environmental Indemnification Agreement and the terms of this Agreement,
the terms of the Environmental Indemnification Agreement shall govern. The
whole or partial invalidity, illegality or unenforceability of any provision
hereof at any time, whether under the terms of then applicable law or
otherwise, shall not affect the validity, legality or enforceability of such
provision at such time except to the extent of such invalidity, illegality or
unenforceability, or of any other provision hereof.

11.8 GENDER AND NUMBER. Any word herein that is expressed in the
masculine or neuter gender shall be deemed to include the masculine, feminine
and neuter genders. Any word

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herein that is expressed in the singular or plural number shall be deemed,
whenever appropriate in the context, to include the singular and the plural.

11.9 NOTICES. Any notice, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed given when
personally delivered or on the second (2nd) business day after being
deposited in United States registered or certified mail, postage prepaid, and
addressed to such party in accordance herewith. All written notices, demands,
and other communications shall be addressed as follows:

If to Lender:

First Bank National Association
410 North Michigan Avenue
Chicago, Illinois 60611
Attention: Commercial Real Estate Loan Department

with a copy to:

WILDMAN, HARROLD, ALLEN & DIXON
225 West Wacker Drive
Suite 3000
Chicago, Illinois 60606-1229
(312) 201-2000
Attention: Mr. Thomas P. Duffy

If to Borrower:

c/o United Development Management Company
2100 Golf Road
Suite 110
Rolling Meadows, Illinois 60008

with a copy to:

Shefsky & Froelich, Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Mr. David L. Feltman

or to such other address the party to receive such notice may have
theretofore furnished to all other parties by notice in accordance herewith.

11.10 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Illinois.

-31-
<PAGE>

11.11 JOINT AND SEVERAL. The obligations of the Obligors are and shall
at all times be joint and several.

11.12 COUNTERPART. The Agreement may be executed by the parties hereto
in counterpart with the same force and effect as if all parties hereto had
executed the same instrument.

-32-
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.

BORROWER:

UNITED-DARIEN LIMITED PARTNERSHIP,
an Illinois limited partnership

By: UNITED-DARIEN INC., an
Illinois corporation, its
sole general partner

By: /s/ [Illegible]
-----------------------------
Its:

By: UNITED-WOODMERE, INC.,
an Illinois corporation, its sole
limited partner

By: /s/ [Illegible]
------------------------------
Its:

-33-
<PAGE>

GUARANTORS:

UNITED HOMES OF ILLINOIS, INC., an Illinois
corporation

By: /s/ [Illegible]
-----------------------------------
Its: Secretary
------------------------------

UNITED HOMES, INC., an Illinois corporation

By: /s/ [Illegible]
------------------------------------
Its: Secretary
------------------------------

UNITED DEVELOPMENT MANAGEMENT
COMPANY, an Illinois corporation

By: /s/ [Illegible]
-----------------------------------
Its: Secretary
------------------------------

/s/ EDWARD HAVLIK
----------------------------------------
EDWARD HAVLIK

/s/ VIRGIL W. OWINGS
----------------------------------------
VIRGIL OWINGS

-34-
<PAGE>

LENDER:

FIRST BANK NATIONAL ASSOCIATION

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

-35-

<PAGE>

EXHIBIT 12

STATEMENT REGARDING RATIO OF EARNINGS TO FIXED CHARGES:

FIXED CHARGES:
- ---------------
Interest Expense $ 21,924 $ 3,067 $ 58,782 $ 79,998 $ 54,712 $ 90,247 $ 398,674
Interest Capitalized $4,975,018 $1,804,864 $3,901,554 $1,824,941 $ 716,667 $ 305,285 $ 158,830
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Fixed Charges $4,996,942 $1,807,931 $3,960,336 $1,904,939 $ 771,379 $ 395,532 $ 557,504
========== ========== ========== ========== ========== ========== ==========

Ratio of Earnings to Fixed Charges (1) 1.30 (1) 1.14 2.45 7.28 6.48
========== ========== ========== ========== ========== ========== ==========
</TABLE>

(1) Earnings were inadequate to cover fixed charges by approximately
$209,000 for the year ended September 30, 1997 and by approximately
$1,496,000 for the nine months ended June 30, 1997.
<PAGE>

Modified Ratio of Earnings to Fixed Charges Adjusted to Reduce Fixed Charges by
the Amount of Capitalized Interest Funded From Draws on Corporate Line of Credit

Nine Months
Ended June 30, Fiscal Year Ended September 30,
---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS: 1997 1996 1996 1995 1994 1993 1992
- ---------- ---- ---- ---- ---- ---- ---- ----
Income Before Minority Interests and
Income Taxes $ 1,575,241 $ 1,405,496 $ 1,784,555 $1,511,748 $1,168,851 $2,615,278 $2,730,062
Adjustment for Share of Net
Income from Minority-Owned
Land Development and Housing
Partnership --- $ (116,000) $ 21,767 $ (236,404) $ 174,363 $ (35,000) ---
Amortization of Interest Expense $ 1,903,277 $ 1,066,141 $ 1,886,662 $ 815,947 $ 491,612 $ 210,479 $ 482,611
Interest Expense $ 21,924 $ 3,067 $ 58,782 $ 79,998 $ 54,712 $ 90,247 $ 398,674
----------- ----------- ----------- ---------- ---------- ---------- ----------
Total Earnings $ 3,500,442 $ 2,358,704 $ 3,751,766 $2,171,289 $1,889,538 $2,881,004 $3,611,347
=========== =========== =========== ========== ========== ========== ==========
FIXED CHARGES:
- ---------------
Interest Expense $ 21,924 $ 3,067 $ 58,782 $ 79,998 $ 54,712 $ 90,247 $ 398,674
Interest Capitalized $ 4,975,018 $ 1,804,864 $ 3,901,554 $1,824,941 $ 716,667 $ 305,285 $ 158,830
LESS:
- ------
Capitalized Interest Funded from
Draws on Corporate Line of Credit $(1,692,956) $(1,247,069) $(1,757,456) $ (462,491) --- --- ---
----------- ----------- ----------- ---------- ---------- ---------- ----------
Total Adjusted Fixed
Charges $ 3,303,986 $ 560,862 $ 2,202,880 $1,442,448 $ 771,379 $ 395,532 $ 557,504
=========== =========== =========== ========== ========== ========== ==========
Ratio of Earnings to Adjusted
Fixed Charges 1.06 4.21 1.70 1.51 2.45 7.28 6.48
=========== =========== =========== ========== ========== ========== ==========
</TABLE>

<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT

United Homes, Inc., an Arizona corporation
United Homes of Illinois, Inc., an Illinois corporation
United Homes of Michigan, Inc., a Michigan corporation

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
December 12, 1996, except for Note 6(1), as to which the date is March 25,
1997, in the Registration Statement (Form S-1) and related Prospectus of
United Homes, Inc. for the registration of $6,000,000 of Debentures due March
15, 2005.

Ernst & Young LLP

Chicago, Illinois
August 15, 1997

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF INCOME AS OF JUNE
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 1,145
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 80,420
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 94,819
<CURRENT-LIABILITIES> 13,150
<BONDS> 70,293
0
0
<COMMON> 4
<OTHER-SE> 9,791
<TOTAL-LIABILITY-AND-EQUITY> 94,819
<SALES> 51,572
<TOTAL-REVENUES> 51,608
<CGS> 41,753
<TOTAL-COSTS> 48,131
<OTHER-EXPENSES> 2,366
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,110
<INCOME-TAX> 382
<INCOME-CONTINUING> 728
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 728
<EPS-PRIMARY> 727.86
<EPS-DILUTED> 727.86

</TABLE>