FIRST MODIFICATION AND WAIVER AGREEMENT TO THE AMENDED AND RESTATED MASTER CREDIT AGREEMENT

Exhibit 10(r)

FIRST MODIFICATION AND WAIVER AGREEMENT
TO THE AMENDED AND RESTATED MASTER CREDIT AGREEMENT

               THIS FIRST MODIFICATION AND WAIVER AGREEMENT (this “Agreement”) is made as of the 31st day of July, 2003, by and among WACHOVIA BANK, NATIONAL ASSOCIATION (the “Bank”), SEA PINES ASSOCIATES, INC. and SEA PINES COMPANY, INC. (if more than one, collectively, the “Borrower”).

WITNESSETH:

               WHEREAS, the Borrower has made and issued to the Bank: (1) a Second Amended and Restated Revolving Line of Credit Note, dated the 31st day of October, 2002, evidencing an original indebtedness of EIGHTEEN MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($18,300,000.00); (2) a Second Amended and Restated Term Note, dated the 31st day of October, 2002, evidencing an original indebtedness of FIFTEEN MILLION NINE HUNDRED THIRTY-NINE THOUSAND SEVEN HUNDRED FIFTY-EIGHT AND NO/100 DOLLARS ($15,939,758.00); and (3) a Second Amended and Restated Seasonal Line of Credit Note, dated the 31st day of October, 2002, evidencing an original indebtedness of FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($4,500,000.00) (such documents, as same may have been heretofore amended, being herein referred to as the “Notes”); and

               WHEREAS, the Borrower and the Bank have executed and delivered an Amended and Restated Master Credit Agreement dated October 31, 2002, made a part hereof by this reference as fully as if set out herein verbatim (such document, as same may have been heretofore amended, being herein referenced to as the “Master Credit Agreement”), which establishes uniform agreements, obligations, and covenants and other matters concerning the Notes and other Obligations (as defined in the Master Credit Agreement) of the Borrower to the Bank; and

               WHEREAS, to secure the Notes and other Obligations, the Borrower has executed and delivered certain Mortgages, Mortgage Modifications, Assignments and Assignment Modifications (as those terms are defined in the Master Credit Agreement) made a part hereof by this reference as fully as if set out herein verbatim (such documents as same may have been heretofore amended, being herein referred to as the “Security Instruments”); and

               WHEREAS, the Borrower has requested the Bank make certain modifications to the Master Credit Agreement and to waive certain Events of Default under the Master Credit Agreement, a portion of such Events of Default having already been waived pursuant to that certain Waiver dated June 16, 2003 by the Bank, the terms of which are incorporated herein by reference; and

               WHEREAS, the Bank, as party to the Master Credit Agreement, and the Borrower mutually desire to modify and amend the provisions of the same in the manner hereinafter set out, it being specifically understood that except as herein modified and amended, the terms and provisions of the Master Credit Agreement shall remain unchanged and continue in full force and effect as therein written.

               NOW, THEREFORE, the Bank and the Borrower in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each, and each does hereby agree that the Master Credit Agreement should be, and the same hereby is, modified and amended as follows:

          1. Section 1.01 of the Master Credit Agreement is hereby amended by adding to such Section the following definitions, in each case in alphabetical order:

          2. Section 1.01 of the Master Credit Agreement is hereby further amended by deleting in their entirety the definitions of “Facilities”, “Notes”, and “Permitted Encumbrances” and inserting in lieu thereof the following:

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          3. Section 1.01 of the Master Credit Agreement is hereby further amended by amending the definition of “Applicable Margin” by adding the following language after the table in the first paragraph of such definition:

          4. The Master Credit Agreement is hereby amended by adding the following new Article V(A) following Article V:

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          5. Section 7.01(d) of the Master Credit Agreement is hereby amended by adding “and except for the Lawsuit, the Judgment and the Settlement, if applicable” following the clause “Except as set forth in the Financial Statements”.

          6. Section 7.01(f) of the Master Credit Agreement is hereby amended by deleting the first word of such paragraph and by adding at the beginning of such paragraph the clause “Except for the Judgment, the”.

          7. Section 8.02(a)(i) of the Master Credit Agreement is hereby amended by adding the following language following the first sentence of such subsection:

          8. The Bank hereby waives the requirement that the Borrower maintain the Net Worth Ratio specified by Section 8.02(a)(i) for the fiscal year ended October 31, 2003.

          9. Section 8.02(b) of the Master Credit Agreement is hereby amended by deleting the period at the end of the first sentence and inserting in lieu thereof the following proviso:

          ; provided, that with respect to the fiscal quarters identified below, the Borrower shall maintain a minimum DSC Ratio as identified below, such DSC Ratio to be measured as of the end of each such fiscal quarter on a rolling four-quarter basis:

          10. Section 8.02(b) of the Master Credit Agreement is hereby further amended by adding the following proviso at the end of the definition of “Debt Service”:

          11. Section 8.02 of the Master Credit Agreement is hereby further amended by adding the following new subsection:

          12. Section 9.01(l) of the Master Credit Agreement is hereby amended by adding the following language at the end of such subjection:

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          13. Section 9.01 of the Master Credit Agreement is hereby further amended by adding the following new subsection:

          14. Section 10.01(j) of the Master Credit Agreement is hereby amended by deleting the first word of such subsection and inserting in lieu thereof “Except for the Judgment, the Settlement or the Deposit, in”.

          15. Schedule II attached to the Master Credit Agreement is hereby amended by adding the following language at the end of Section V:

          16. The Bank hereby waives any Event of Default arising from (a) the existence of the Lawsuit, (ii) the entering of the Judgment and the payment thereof or of the Deposit, or (iii) the Settlement thereof, if and when the Borrower determines to pay the Settlement. This waiver is limited solely to Events of Default arising in connection with the Lawsuit, including but not limited to the entry of the Judgment thereon, and shall not be effective as to the occurrence of any other events or matters which would result in an Event of Default.

The effectiveness of this Agreement shall be conditional upon (a) the Bank’s receipt of Borrower’s executed counterpart to this Agreement, (b) no occurrence of any material adverse change in the financial condition of Borrower, and (c) the Bank’s receipt of a non-refundable loan fee equal to 0.50% of the amount of the Advance made under the Judgment Loan Facility, not to exceed $40,000 less the previously paid non-refundable loan fee of $30,000.

               IT IS MUTUALLY AGREED by and between the parties hereto that this Agreement shall become a part of the Master Credit Agreement by reference and that nothing herein contained shall impair the security now held for said indebtedness, nor shall waive, annul, vary or affect any provision, condition, covenant or agreement contained in the Notes or Master Credit Agreement except as herein amended, nor affect or impair any rights, powers or remedies under the Notes or Master Credit Agreement as hereby amended. Furthermore, the Bank does hereby reserve all rights and remedies it may have as against all parties who may be or may hereafter become primarily or secondarily liable for the repayment of the indebtedness evidenced by the Notes.

               The Borrower promises and agrees to pay the indebtedness evidenced by the Notes in accordance with the terms thereof and agrees to perform all of the requirements, conditions and obligations under the terms of the Notes and Master Credit Agreement as hereby modified and amended, said documents being hereby ratified and affirmed. The execution and delivery hereof shall not constitute a novation or modification of the lien, encumbrance or security title of the security instruments, which security instruments shall retain their priority as originally filed for record. Borrower expressly agrees that the Notes are in full force and effect and that Borrower has no right to setoff, counterclaim or defense to the payment thereof.

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               Any reference contained in the Notes, security instruments or Master Credit Agreement, as amended herein, to the Master Credit Agreement shall hereinafter be deemed to be a reference to such document as amended hereby.

               Borrower acknowledges that Bank may reproduce (by electronic means or otherwise) any of the documents evidencing and/or securing the Notes and thereafter may destroy the original documents. Borrower does hereby agree that any document so reproduced shall be the binding obligation of Borrower, enforceable and admissible in evidence against it to the same extent as if the original documents had not been destroyed; provided, however, any original of a document executed by the parties shall be conclusive evidence as to the terms of that document.

               This Agreement shall be closed without cost to the Bank and all expenses incurred in connection with this closing (including, without limitation, all attorneys’ fees) are to be paid by the Borrower. The Bank is not providing legal advice or services to the Borrower.

               This Agreement shall be governed by and construed in accordance with the laws of the State of South Carolina without regard to principles of conflict of laws.

               This Agreement shall be binding upon and inure to the benefit of any assignee or the respective heirs, executors, administrators, successors and assigns of the parties hereto.

               This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute any of such counterparts.

               All capitalized terms used but not defined herein shall have the meanings assigned thereto in the Master Credit Agreement.

[Signature Page Follows.]

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               IN WITNESS WHEREOF, this instrument has been executed under seal by the parties hereto and delivered on the date and year first above written.

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