Loan Agreement between Enclaves of Grand Oaks LLC and Sovereign Bank dated December 9, 2005

 Exhibit 10.4 LOAN AGREEMENT This Loan Agreement is executed as of the 9th day of December, 2005 by and between the Borrower, who hereby agrees to borrow, and the Lender, who hereby agrees to lend, the Loan Amount subject to and in accordance with the following terms and conditions: 1. DEFINITIONS. When used herein, the terms set forth below shall be defined as follows: "BORROWER" is Enclaves of Grand Oaks LLC, a South Carolina limited liability company. "BORROWER'S NOTICE ADDRESS" is c/o Enclaves Group, Inc., Attention: Daniel G. Hayes, 45 Knollwood Road, Elmsford, NY 10523. "COLLATERAL" is collectively all property now or hereafter pledged, mortgaged, assigned, hypothecated or otherwise provided to the Lender as collateral security for the obligations evidenced by the Loan Documents, whether to secure the Note, any guaranty, this Loan Agreement, or any other instrument, indebtedness or undertaking. "DEFAULT CONDITION" is the uncured existence of any Event of Default (as defined in Section 5.1) or any fact or circumstance which with the passage of time, giving of notice, or both, would constitute an Event of Default. "GOVERNING STATE" is the State of Connecticut. "GUARANTOR" means Homes for America Holdings, Inc. "LENDER" is Sovereign Bank. "LENDER'S NOTICE ADDRESS" is 1010 Farmington Avenue, West Hartford, CT 06107. "LOAN AMOUNT" is $4,615,000.00. "LOAN DOCUMENTS" are collectively this Loan Agreement as well as each and every other document, instrument and agreement now or hereafter executed or delivered in connection with the indebtedness evidenced by the Note, including, without limitation, any mortgage, security agreement, loan agreement, guaranty, indemnity, certification, assignment of leases and rents or pledge agreement, as each may be amended, extended or renewed. "MORTGAGED PROPERTY" is the real estate located at Longs Pond Road and Arrie Lane, Lexington County, South Carolina as more particularly described in the Mortgage (hereafter defined). "NOTE" is that certain Promissory Note of even date by the Borrower, as maker, to the Lender, as payee, in the Loan Amount.  "OBLIGORS" are collectively, jointly and severally, the Borrower, the Guarantor, and all other parties obligated under the Loan Documents (except the Lender). "SECURITY DOCUMENTS" means any mortgage, assignment, security agreement, pledge or other agreement or instrument granting to the Lender a security interest in or lien on any Collateral. All capitalized words and phrases in this Loan Agreement which are not otherwise specifically defined herein shall have the meaning as assigned in the other Loan Documents. 2. THE LOAN. 2.1. LOAN. On the date hereof Lender shall make the Loan to Borrower in the Loan Amount. The Loan is evidenced by a Promissory Note of even date herewith, which Note is hereby incorporated and made a part of this Agreement (the "Note"). The Note is secured, inter alia, by that certain Mortgage Deed and Security Agreement of even date herewith to be recorded in the land records of Lexington County, South Carolina (the "Mortgage") (the Note, the Mortgage, this Loan Agreement and any and all documents executed and delivered in connection therewith being herein referred to as the "Loan Documents"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Mortgage. 2.2. USE OF PROCEEDS. The Loan proceeds shall be used to fund the acquisition of the Mortgaged Property, and to fund an interest reserve to be maintained by the Lender in an interest bearing account at Lender in the amount of Two Hundred Seventy-Five Thousand Dollars ($275,000) to be utilized to fund monthly interest payments due under the Note. Such reserve funds shall be automatically debited by Lender to make such payments. 3. REPRESENTATIONS AND WARRANTIES. As a material inducement to Lender to make the Loan, the Obligors represent and warrant to the Lender the following, and such representations and warranties shall continue so long as any of the Loan Amount or other Obligations secured by the Security Documents shall remain outstanding: 3.1. INCORPORATION BY REFERENCE. Each warranty and representation made by the Obligors in the Loan Documents is true, accurate, and complete, and is incorporated herein by reference. 3.2. NO VIOLATION. The payment and performance by the Obligors of the Obligors' obligations hereunder or under any other Loan Document do not constitute a violation of any law, order, regulation, contract, or agreement to which any Obligor is a party or by which any Obligor or the Obligors' property may be bound; do not require the consent of any party (which has not already been obtained); and do not require any filing or registration with, or any permit, license, consent, or approval of, any governmental agency or regulatory authority. 3.3. NO LITIGATION. There is no litigation or arbitration pending or, to the best of the Obligors' knowledge, threatened against any Obligor which, if adversely decided, could materially impair the ability of any Obligor to pay and perform the Obligors' obligations under any Loan Document. 3.4. ENTITY MATTERS. Those Obligors are and shall remain duly organized, validly existing entities in good standing under the laws of the state of their creation, have and shall have all requisite power and authority to conduct their -2-  business and to own their property as the same are and shall be conducted or owned, and are and shall remain qualified to do business in all jurisdictions where the nature and extent of their business is or may be such that qualification is required by law. Also, the execution of the Loan Documents does not require any consent(s) which have not otherwise been obtained, whether of any Obligor's directors, stockholders, partners, creditors, or otherwise; and does not and will not violate any Obligor's instruments of organization, bylaws, or similar documents or agreements of creation, governance, or management. 3.5. LOAN DOCUMENTS ENFORCEABLE. The Loan Documents were duly authorized, executed, and delivered and are and shall remain legal, valid, and binding instruments, enforceable against each party thereto in accordance with their respective terms. 3.6. NO DEFAULT. The Obligors are not in default in any material respect in the payment of any monies borrowed from or otherwise owed to any third party. The Obligors are not in default under any order, award, or decree of any court, arbitrator, or governmental authority which may at any time adversely affect the ability of any Obligor to carry on his/her/its business as presently conducted or to perform his/her/its obligations under any Loan Document. 3.7. NO NOTICE OF VIOLATIONS. The Obligors have no knowledge and have not received any notice or communication (a) from any public authority that the Collateral does not comply with zoning or that there exists any condition which violates any municipal, state, or federal law, rule, or regulation; (b) from any insurance carrier of the Collateral or any other party regarding any dangerous, illegal, or other condition requiring corrective action; (c) regarding any litigation or proceeding, pending or threatened, against or relating to the Collateral or any Obligor; or (d) regarding any taking, condemnation, or assessment, actual or proposed, with respect to the Collateral. 3.8. FINANCIAL STATEMENTS. All financial statements delivered to the Lender by the Obligors (previously or in the future) are and shall be true and correct in all material respects and such statements fairly present and shall fairly present the financial condition of such parties. 3.9. BUSINESS PURPOSE. All of the Loan Amount shall be used solely for business or commercial purposes, and specifically for the purchase of the Mortgaged Property, and none shall be used for personal, family, or household purposes, and no individual liable under any Loan Document shall at any time reside in any portion of the Collateral. 3.10. PERMITS AND UTILITIES. All permits and approvals required for the creation of 1,100 residential building lots have been duly obtained and remain in full force and effect. All utility services required for the operation of the Mortgaged Property in the ordinary course (such as water, gas, electric, telephone, sewer, and storm drainage) are available as a matter of right at the boundaries of the Mortgaged Property. 3.11. COMPLIANCE WITH LAW. The intended use of the Project complies, or when built will comply, with all applicable federal, state, and local laws and regulations (including, without limitation, those applicable to zoning, subdivision, building, health, safety, and sanitary codes, wetlands, environmental, and other land use restrictions). -3-  4. COVENANTS AND AGREEMENTS. 4.1. FINANCIAL STATEMENTS. The Obligors shall furnish or cause to be furnished to the Lender from time to time the following financial statements, reports, and other information: (i) Within ninety (90) days after the close of each fiscal year, financial statements of the Borrower, including a balance sheet, statement of cash flow and a statement of income and retained earnings prepared on a review basis by the Borrower's certified public accountant in form and detail acceptable to Lender; (ii) Within thirty (30) days of its due date, complete copies of all federal and state income tax returns of each Obligor (including all schedules); (iii) Copies of paid real estate tax bills for the Mortgaged Property from each applicable taxing authority on or before the due date thereof; and (iv) On or before March 30 of each year, an audited financial statement of Guarantor, prepared by a certified public accountant acceptable to Lender, in form and detail acceptable to Lender; and (v) Within a reasonable period of time and from time to time, such other financial data or information as the Lender may reasonably request with respect to any Collateral or any Obligor (including, without limitation, any information, schedules, or reports as shall be required from time to time by regulatory governmental agencies having supervisory authority over the Lender). 4.2. NOTICE OF MATERIAL EVENTS. The Obligors shall, promptly upon obtaining knowledge thereof, give notice to the Lender of (i) any Event of Default, (ii) any material casualty, loss, or depreciation to any Collateral or any other force majeure, or any litigation, investigation, or other proceeding against or involving any Obligor, the result of which might have a materially adverse effect upon the condition (financial or otherwise) or business of any Obligor, or the value of any Collateral, (iii) any litigation, investigation, arbitration, or other proceeding or dispute affecting any Obligor, (1) which relates, in whole or in part, to any of the transactions evidenced or contemplated by the Loan Documents, (2) which involves any amount in excess of Twenty Thousand Dollars ($20,000), or (3) which may exist between any Obligor and any governmental body with respect to any Collateral. Furthermore, the Obligors shall furnish to the Lender from time to time all information which the Lender shall reasonably request with respect to the status of any litigation, investigation, arbitration, or other proceeding or dispute to which any Obligor is a party. 4.3. INSURANCE COVERAGE. The Borrower will keep any buildings, improvements, fixtures, and personal property on the Mortgaged Property insured with so-called "all risk or special form" casualty insurance policies, and such other forms of coverage as the Lender shall require (which may include, without limitation, earthquake, steam boiler, plate glass, business interruption, and building ordinance coverages) in an amount which, in the Lender's judgment, shall be 100% of the full insurable value of said buildings, improvements, fixtures, and personal property and not less than an amount sufficient to prevent the Borrower or the Lender from becoming a co-insurer within the terms of such policies. The Borrower shall also provide, maintain, and keep in full force and effect (i) public liability insurance naming the Lender as an additional insured, with limits reasonably acceptable, from time to time, to the Lender with a contractual liability endorsement; and (ii) rent-loss insurance in an amount equal to one year's rent under the leases of the Mortgaged Property in effect from time to time. Borrower shall also provide, maintain, and keep in force, if the buildings and improvements (or any part thereof) are located in a flood prone, flood risk, or flood hazard area as designated pursuant to the Federal Flood Disaster Protection Act of 1973, as amended, and regulations thereunder, a policy of flood insurance issued under and in compliance with that Act and those regulations in an amount determined from time to time by the Lender and which will comply with the requirements of that Act and those regulations. -4-  Any insurance or condemnation proceeds shall, at the discretion of the Lender, be applied to or toward Borrower's obligations hereunder in such order as the Lender may determine; or if the Lender shall require repair of that part of the Mortgaged Property so damaged by such insured hazard, the Lender shall release to the Borrower insurance proceeds paid to it upon such conditions as the Lender may prescribe and the Borrower shall apply all of such proceeds to the repair and restoration of the Mortgaged Property. The Borrower shall promptly notify the Lender upon the occurrence of any loss or claim, and, except with respect to amounts less than $10,000, at the Lender's option in each instance, the Lender, to the exclusion of the Borrower, shall have the right and authority to file any proofs of claim and negotiate any adjustment or settlement thereof. Each insurance company is hereby directed and authorized to remit all payments (including the return of unearned premiums) directly to the Lender alone and not to the Borrower or the Borrower and Lender jointly. All insurance policies shall be subject to Lender's reasonable review and approval; shall be written by insurers which are rated at least "A" by Best's Key Rating Guide, authorized to conduct business in the state in which the Mortgaged Property is located, and otherwise acceptable to Lender; shall be first payable in case of loss to the Lender under the standard mortgagee clause, so-called, or its equivalent, provided, that the personal property and liability insurance policies shall designate the Lender as an additional insured; shall contain an agreed amount or waiver of co-insurance endorsement; shall be issued on a replacement cost basis; shall require at least thirty (30) days written notice to the Lender before cancellation or material coverage reductions; shall include deductible amounts satisfactory to the Lender; and shall contain a so-called lender's loss payable endorsement. The original of all such policies of insurance (or certificates thereof issued by the insurer in form, content and manner of execution satisfactory to the Lender) shall be delivered to the Lender, and the Borrower shall deliver to the Lender a new policy (or such a certificate) as replacement for an expiring policy (or such a certificate) required to be deposited hereunder together with proof of payment of the premiums therefor annually at least thirty (30) days before the date of such expiration. The acceptance by the Lender of any insurance policies or certificates it may receive from the Borrower or the Borrower's insurance agent shall not be deemed or construed as an approval by the Lender of the form, sufficiency, or amount of such insurance. The Borrower hereby irrevocably appoints the Lender its true and lawful attorney-in-fact, with full power of substitution, upon an Event of Default, to deal with the insurer with respect to all matters arising under the policy, and, in the event the Lender forecloses upon the Mortgaged Property to assign any policy to any subsequent owner of the Mortgaged Property. 4.4. TAX AND INSURANCE RESERVE. The Borrower shall, upon the request of the Lender after the occurrence of an Event of Default, pay to the Lender on the dates upon which installments of principal or interest are payable under the Note, such amount as the Lender from time to time estimates as necessary to create and maintain a reserve fund from which to pay, before the same become due, all taxes, assessments, liens, and charges on or against the Mortgaged Property as well as the full annual premium for the insurance coverage required to be maintained by the Borrower hereunder. Such payments may be mingled with the general funds of the Lender, who shall not be liable for interest thereon unless applicable law shall provide otherwise. Upon an Event of Default, any part or all of said reserve fund may be applied, at the discretion of the Lender, against any part of the Obligations evidenced by the Loan Documents. 4.5. BOOKS AND RECORDS. The Borrower hereby covenants and agrees to permit the Lender, through its authorized attorneys, accountants, architects, engineers, and representatives, to enter and inspect the Collateral and to examine the books, records, accounts, computer tapes and disks, ledgers, and -5-  assets of every kind and description of the Borrower at all reasonable times and upon reasonable notice and to contact the Borrower's accountants directly. 4.6. LEASING MATTERS. The Borrower shall not enter into leases or occupancy agreements (or extend, amend, or modify existing leases) with respect to any tenant at the Mortgaged Property without the Lender's prior written consent. 4.7. GUARANTOR'S COMPLIANCE. The Borrower shall cause each Guarantor (if any) to execute all instruments, supply all financial information, pay all amounts, and perform all other obligations of such Guarantor arising or imposed under the Loan Documents, and shall cause Guarantor to maintain a minimum net worth of $1,500,000 and unencumbered liquid assets of $500,000, such compliance to be tested annually based on the financial statements required in Section 4.1. 4.8. LOAN-TO-VALUE RATIO. The Borrower shall maintain a Loan-to-Value Ratio of not greater than 65%. "Loan-to-Value Ratio" shall mean the ratio, expressed as a percentage, of (a) the outstanding principal balance plus any accrued but unpaid interest under the Note, divided by (b) the Mortgaged Property Value. The "Mortgaged Property Value" shall mean the fair market value of the Mortgaged Property based upon the most recent appraisal obtained from time to time at the Lender's request (at the Lender's expense before the occurrence of an Event of Default and at the Borrower's expense after the occurrence of an Event of Default) and satisfactory to the Lender. 4.9. VISITS AND INSPECTIONS. Upon not less than three (3) days advance notice (no advance notice being required after the occurrence and during the continuance of an Event of Default), permit representatives of Lender and Lender's Consultant from time to time, as often as may be reasonably requested, but only during normal business hours, to visit and inspect the Mortgaged Property, inspect, audit and make extracts from its books and records, and discuss the Mortgaged Property with its officers, its employees and its independent accountants. 4.10. OPERATING ACCOUNT. Borrower shall maintain its principal operating account relating to the Mortgaged Property with Lender. 4.11. PRINCIPAL REPAYMENTS UPON SALE OF LOTS. Upon the sale of any portion of the Mortgaged Property, Borrower shall make principal repayments on the Note equal to the greater of (i) the Net Sales Proceeds of such sale (defined as the gross sales price as set forth on the purchase and sale agreement for the land being sold, less customary sales commissions and closing costs) or (ii) 94% of the gross sales price. 4.12. SITE PLAN APPROVAL. Borrower agrees to obtain site plan approval for the creation of 1,100 residential building lots for the Mortgaged Property on or before ninety (90) days from the date of this Agreement. Borrower shall also provide to Lender a copy of any proposed submissions for site plan approval five (5) days prior to such submission so that Lender shall have the opportunity to review the same with counsel. 5. EVENTS OF DEFAULT. 5.1. DEFINITION. The occurrence of any of the following shall constitute an event of default for purposes of this Loan Agreement and the other Loan Documents (an "Event of Default"): -6-  (a) The Borrower shall fail to pay any principal, interest, or other sum owed under the Loan Documents within ten (10) days after the same is due and payable; (b) Any representation, warranty, certificate, or other information provided in or pursuant to the Loan Documents is or shall be untrue or misleading in any material respect; (c) The occurrence of any event of default under any agreement (other than the Loan Documents) between the Lender and any Obligor or any Affiliate of any Obligor, whether now existing or hereafter arising (notwithstanding that the Lender may not have exercised its rights upon default under such other agreement) (and for theses purposes, the term "Affiliate" shall mean, as to any person or entity, any other person or entity who directly or indirectly owns or controls, is under common ownership or control with, or is owned or controlled by or is an officer or director of such person or entity; and without limitation, any person or entity who owns or controls, directly or indirectly, ten percent (75%) or more of the equity or voting interests of an entity shall be deemed to control such entity); (d) The acceleration of or the failure to pay upon maturity or demand any debt owed by Borrower or any Guarantor to any lender other than the Lender; (e) If any Obligor (i) commences a voluntary case under the Bankruptcy Reform Act of 1978 as now or hereafter in effect (the "Bankruptcy Code"); (ii) files a petition or commences any case, proceeding, or action seeking relief under any other bankruptcy, insolvency, reorganization, or similar act or law providing relief from creditors generally in any jurisdiction, now or hereafter existing; (iii) takes any action indicating its consent to, approval of, or acquiescence in, any such case, proceeding or other action; (iv) applies for a receiver, trustee, or custodian of such party or for all or a substantial part of such party's property; (v) makes an assignment for the benefit of creditors; (vi) is unable to pay its debts as they mature or admits in writing such inability; or (vii) is adjudicated insolvent or bankrupt; (f) (i) If there is commenced against any Obligor (1) an involuntary case under the Bankruptcy Code; or (2) any case, proceeding, or any action seeking relief under any other bankruptcy, insolvency, reorganization, or similar act or law providing relief from creditors generally in any jurisdiction, now or hereafter existing, or seeking appointment of a receiver, trustee, or custodian of any Obligor or for all or a substantial part of such party's property; and any of the foregoing cases, proceedings, or actions are not dismissed within sixty (60) days; or (ii) if an order, judgment, or decree approving any of the foregoing is entered and such order, judgment, decree, or similar process is not vacated or stayed within sixty (60) days; or (iii) if an order for relief under the Bankruptcy Code is entered against any Obligor; (g) The entry of a judgment against any Obligor which is not satisfied or appealed from (with execution and similar process stayed or bonded) within thirty (30) days after its entry; (h) The death, incapacity, incompetency, termination of existence, dissolution, winding up, or liquidation of any Obligor; (i) If any Security Document ceases at any time to be in full force and effect or to create in favor of the Lender, valid and enforceable liens in the Collateral subject thereto, having priority over all liens except as otherwise expressly permitted in the Loan Documents; (j) The termination or purported revocation of any guaranty by any Guarantor; -7-  (k) If all or any part of the Collateral or any ownership of the Borrower shall, without the prior written consent of the Lender, become subject to any lien or encumbrance or shall be transferred or conveyed to any other party; provided that in the event of a mechanic's lien Borrower shall not be in default unless within thirty (30) days of lien notice it fails to remove or bond over such lien to the Lender's satisfaction; (l) The failure to pay any real estate, AD VALOREM, or other taxes which, if not paid, create a lien on any Collateral, when due and prior to the date any penalty or interest first accrues thereon; (m) The failure to pay any premium of insurance on any Collateral when due; (n) If, in the Lender's judgment, any Obligor shall have concealed or removed any part of such party's property with intent to hinder, delay, or defraud creditors, or made or suffered a fraudulent transfer as defined by any bankruptcy, fraudulent conveyance, or similar law; (o) If a state or federal income tax lien is filed against any Obligor and the same is not discharged or contested (PROVIDED that such contest is made in good faith, is effective to stay collection of such tax, and the Borrower has established adequate reserves for payment of such tax) within thirty (30) days; (p) If any Obligor shall fail to observe or perform any covenants, terms, conditions, or agreements contained in the Loan Documents (other than as set forth in the other paragraphs of this Section 5.1), and, if the same is susceptible of cure, the same is not cured within thirty (30) days after notice thereof from the Lender to Borrower, or within a reasonable time thereafter so long as such Obligor is proceeding diligently to cure the same; or (q) If any attachment, garnishment, trustee process, or other pre-judgment security is granted against any Obligor and is not dissolved within thirty (30) days (with respect to amounts over $50,000) or ninety (90) days (with respect to amounts of $50,000 or less) after its issuance. 5.2. REMEDIES. Upon the occurrence of any Event of Default, the Lender shall have and may exercise any one or more of following rights and remedies: (a) The Lender shall have the right to accelerate the Note, declare all obligations from the Obligors to the Lender immediately due and payable, and exercise any and all rights and remedies under the Loan Documents as the Lender in its sole discretion may elect; provided, however, that upon the occurrence of an Event of Default specified in items 6.1 (e) or (f) above, then such acceleration shall be automatic without any other action necessary. (b) At the Lender's option and without demand, notice, or protest, the occurrence of any such Event of Default shall also constitute a default under all other agreements between the Lender and the Obligor(s). (c) All of the costs and expenses incurred by the Lender in connection with exercising all or any of the foregoing rights shall be evidenced and secured by the Loan Documents. -8-  6. GENERAL PROVISIONS. 6.1. TIME OF THE ESSENCE. Time is of the essence in this Loan Agreement and each other Loan Document. 6.2. FURTHER ASSURANCES. The Obligors shall promptly, upon the reasonable request of the Lender and at the Obligors' expense, execute, acknowledge, and deliver, or cause the execution, acknowledgment, and delivery of, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise necessary or desirable in the Lender's opinion for the creation, preservation, and/or perfection of any liens on the Collateral. 6.3. RIGHTS CUMULATIVE. To the extent permitted by applicable law, the Lender's rights and remedies under this Loan Agreement and the other Loan Documents shall be cumulative and may be exercised in such manner, order, and combination as the Lender may determine in its sole discretion. Without limiting the generality of the foregoing, the Lender shall not be required to proceed against the Collateral before proceeding against any Obligor or to proceed against the Obligors in any particular order. Likewise, the enforcement of the Lender's rights and remedies against any Obligor or the Collateral shall not impair the Lender's ability to enforce its rights against any other party or Collateral, it being expressly agreed that any such action by the Lender shall never operate as a release or other diminution of the liability of any party under the Loan Documents. 6.4. NO WAIVER. The failure of the Lender at any time or times to require strict performance by any party of any of the provisions, warranties, terms, and conditions contained in this Loan Agreement or any other Loan Document shall not waive, affect, or diminish any right of the Lender at any time or times thereafter to demand strict performance thereof. Furthermore, no rights or remedies of the Lender under the Loan Documents shall be deemed to have been waived by any action or knowledge of the Lender, its agents, officers, or employees, unless such waiver is contained in an instrument in writing, signed by an officer of the Lender and directed to the applicable party specifying the exact defaults or provisions which are being waived. No waiver by the Lender of any of its rights shall operate as a waiver of any other of its rights on a future occasion. Delay by the Lender in exercising any of its rights or remedies or in declaring or giving notice of default shall not constitute a waiver of its rights to exercise the same at a later time for the same or other cause. 6.5. MODIFICATIONS MUST BE IN WRITING. The Loan Documents may only be amended, terminated, extended, or otherwise modified by a writing signed by the party to be charged. In no event whatsoever shall any oral agreements, promises, actions, inactions, knowledge, course of conduct, course of dealing, or the like be effective to modify, terminate, extend, or otherwise amend any Loan Document. 6.6. NOTICES. All notices, demands, and other communications made with respect to any Loan Document shall be in writing and given by hand; by telegram; by federal express, express mail, or any other nationally recognized overnight delivery service; by telecopier (provided a copy is also sent via first class mail); or by certified or registered first class mail, return receipt requested, postage prepaid; and addressed as specified on page one hereof. Each of the foregoing addresses may be changed upon fifteen (15) days prior written notice given by any of the foregoing prescribed methods. All notices shall be deemed to have been given, delivered, and received on the -9-  earlier of (i) actual receipt; or (ii) the tender of delivery by one of the above prescribed methods during normal business hours at the specified address. 6.7. SUCCESSORS AND ASSIGNS. The Loan Documents shall bind and inure to the benefit of the parties, their respective heirs, executors, administrators, personal representatives, successors, and assigns. 6.8. PARTIAL INVALIDITY. Whenever possible, each provision of the Loan Documents shall be interpreted and construed in such manner as to be effective and valid to the fullest extent possible under applicable law. However, in the event any one portion of any Loan Document shall be determined by a court of competent jurisdiction to be unenforceable, then the remaining provisions shall remain enforceable in accordance with their terms as if the unenforceable provisions were never contained in such Loan Document. 6.9. INTEGRATION. The Loan Documents supersede all prior agreements between the parties with respect to the loan transactions which they evidence, whether oral or written, including, without limitation, all correspondence between counsel for the respective parties, commitment letters, and term sheets. The Loan Documents constitute the sole and entire agreement between the parties with respect to the subject loan transaction, and the rights, duties, and obligations of the parties with respect thereto. 6.10. MUTUAL WAIVERS OF JURY TRIAL. EACH PARTY TO THE LOAN DOCUMENTS HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED UPON THE LOAN DOCUMENTS, ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE LOAN TRANSACTIONS WHICH THE LOAN DOCUMENTS EVIDENCE, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS BY ANY PARTY. THIS MUTUAL WAIVER IS GIVEN AS A MATERIAL INDUCEMENT FOR THE LENDER TO EXECUTE THIS LOAN AGREEMENT AND LEND THE LOAN FUNDS. 6.11. TRANSFER OF LOAN DOCUMENTS; PARTICIPATIONS. Lender may, without notice to or the consent of any party, sell, assign, transfer, or otherwise dispose of all or any portion of its rights under the Loan Documents. In the event all of such rights are transferred to another person or entity (including, without limitation, any trustee or other fiduciary), then such party shall succeed to and become vested with all rights, remedies, powers, privileges, and duties of the Lender under the Loan Documents and, upon written notice thereof to the Borrower, the Lender shall thereupon be discharged and relieved from all duties and obligations assumed by such transferee. Provided, however, notwithstanding the foregoing, such transferee shall take the Loan Documents free from all claims and defenses of any Obligor except those disclosed in writing to the transferee prior to the transfer of the Loan Documents. Also, without notice to or the consent of any party, the Lender may sell or grant participation interests in all or any portion of the loan transactions evidenced by the Loan Documents to one or more financial institutions or other parties. In connection therewith, the Lender may disclose to prospective or actual participants or transferees any information in its files relating to any Obligor, the Collateral, the Loan Documents, or the credit transaction which they evidence. 6.12. DESCRIPTIVE HEADINGS; CONTEXT. The captions in the Loan Documents are for convenience of reference only and shall not define or limit any provision. Whenever the context so requires, reference in the Loan Documents to -10-  the neuter gender shall include the masculine and/or feminine gender, and the singular number shall include the plural, and, in each case, vice versa. 6.13. COUNTERPARTS. The Loan Documents may be executed by one or more of the parties on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 6.14. SETOFF. Borrower hereby grants to Lender a lien, security interest and a right of setoff as security for all of the present or future obligations of the Borrower to the Lender, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Lender or any entity under the control of Lender, or in transit to any of them. At any time, without demand or notice, Lender may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing such obligations. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES SUCH OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Lender shall not be required to marshal any present or future security for, or guarantees of, such obligations or to resort to any such security or guarantee in any particular order and the Borrower waives to the fullest extent that it lawfully can, (a) any right it might have to require the Lender to pursue any particular remedy before proceeding against the Lender and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until such obligations are paid in full. 6.15. INDEMNIFICATION; COSTS AND EXPENSES. With the exception of any loss caused by the willful misconduct of the Lender taken or omitted in bad faith, the Obligors shall indemnify, defend, and hold the Lender harmless against (a) any claim brought or threatened against the Lender by any Obligor, or any other party (including, without limitation, reasonable attorney's fees and expenses incurred in connection therewith) on account of the loan transaction evidenced by the Loan Documents or the credit relationship with respect thereto, and (b) any harm suffered or incurred by the Lender as a result of the inaccuracy of any representation or warranty set forth or incorporated herein; each of which may be defended, compromised, settled, or pursued by the Lender with counsel of the Lender's selection but at the expense of the Obligors. The Obligors agree to pay all reasonable costs and expenses incurred by the Lender in connection with the loan evidenced by the Loan Documents, including all costs payable to third parties for the implementation and (after the occurrence of an Event of Default) administration of the Loan, the collection of outstanding indebtedness, and the enforcement of the Lender's rights under the Loan Documents, whether incurred prior or subsequent to any judgment which may be obtained by the Lender against any Obligor. Without limiting the generality of the foregoing, such costs and expenses shall include (i) all reasonable attorneys' fees and costs (including the time of any in-house counsel for the Lender charged at the same rate as comparable outside attorneys), and the following only if incurred after the occurrence of an Event of Default (ii) appraisal fees (including annual updates), (iii) tax service fees, (iv) property inspection costs (including annual updates), and (v) environmental site assessment, consultant fees, remediation expenses, and related costs. 6.16. CHOICE OF LAW. It is understood and agreed that all of the Loan Documents were negotiated, executed, and delivered in the Governing State, which state the parties agree has a substantial relationship to the parties and to the -11-  underlying transactions embodied by the Loan Documents. Accordingly, this Loan Agreement and each of the other Loan Documents shall in all respects be governed, construed, applied, and enforced in accordance with the laws of the Governing State. Provided, however, if any Collateral is located outside of the Governing State, then the procedures governing the enforcement by the Lender of its foreclosure and other similar remedies under the Security Documents with respect thereto shall be governed by the laws of the state(s) wherein such Collateral is situated. 6.17. VENUE. It is expressly agreed that any suit or claim by any Obligor against the Lender with respect to the Loan Documents or the transaction which they evidence, whether by way of claim, counterclaim, or otherwise, shall be filed and adjudicated exclusively in the courts of the Governing State and the Obligors hereby expressly consent to and waive any right to contest the appropriateness of any proceeding brought by the Lender within such jurisdiction based upon lack of personal jurisdiction, improper venue, or FORUM NON CONVENIENS. Executed by the Lender and the Borrower by their duly authorized officers as of the date first above-written. LENDER: BORROWER: SOVEREIGN BANK ENCLAVES OF GRAND OAKS LLC By: Enclaves Group, Inc. Its Managing Member By: ______________________________ By: /s/ Daniel G. Hayes Richard J. Staples ---------------------------- Its Vice President Daniel G. Hayes President and CEO AGREED AND ASSENTED TO: GUARANTOR: HOMES FOR AMERICA HOLDINGS, INC. By: ______________________________ Its -12-