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LOT PURCHASE AND DEVELOPMENT AGREEMENT

BY AND BETWEEN

NTS / VIRGINIA DEVELOPMENT COMPANY
(“SELLER”)

AND

M/I HOMES OF DC, LLC
(“PURCHASER”)

November 30, 2011

 
 

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TABLE OF CONTENTS
 
 

Section 1.                         Lots.
Section 2.                         Purchase Price.           
Section 3.                         Study Period - Entry and Indemnity.
Section 4.                         Conditions Precedent and Development
Obligations.
Section 5.                         Costs of Developing Lots.
Section 6.                         Purchaser’s Warranties and Representations.
Section 7.                         Seller’s Representations and Warranties.
Section 8.                         Brokerage Commission.
Section 9.                         Governmental Compliance.
Section 10.                       Confidentiality.
Section 11.                       Notices.
Section 12.                       Facsimile.
Section 13.                       Interpretation.
Section 14.                       Binding Effect.
Section 15.                       Miscellaneous.
Section 16.                       Sales Center Use.
Section 17.                       Exclusive Dealings.
Section 18.                       Marketing.
Section 19.                       Competitive Lot Development.
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LOT PURCHASE AND DEVELOPMENT AGREEMENT

THIS LOT PURCHASE AND DEVELOPMENT AGREEMENT (the “Agreement”) is made  by and
between NTS / VIRGINIA DEVELOPMENT COMPANY, a Virginia corporation, (“Seller”),
and M/I HOMES OF DC, LLC, a Delaware limited liability company (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller is the owner of certain property located in Spotsylvania County
(the “County”), Virginia (the “State”), designated as Section 15 of the
subdivision known as Fawn Lake (the “Subdivision”), as more fully shown and
designated on the attached Exhibit A (the “Property”);

WHEREAS, Seller wishes to sell and Purchaser wishes to buy one hundred sixty
(160), more or less, duly and properly subdivided single family detached
residential lots (individually, a “Lot,” and, collectively, the “Lots”) to be
located on the Property;

WHEREAS, the Property is presently not developed and not ready for the
construction of residences thereon;

NOW, THEREFORE, in consideration of the premises and of the mutual promises
hereinafter set forth the parties agree as follows:

Section 1.     Lots.

Seller shall convey and Purchaser shall buy the Lots in accordance with the
terms of this Agreement.

Section 2.     Purchase Price.

The “Purchase Price” of the Lots shall be paid by Purchaser to Seller as
follows:

a)     Escrow Deposit.  Within five (5) days after the expiration of the Study
Period (as such term is defined in Section 3 below), Purchaser shall deposit
with Curran and Whittington, PLLC, 15100 Washington Street, Suite 201,
Haymarket, Virginia 20169 (the “Escrow Agent”) a sum in the amount of Two
Hundred Forty Thousand Dollars ($240,000.00) (the “Deposit”), to be held by the
Escrow Agent in an interest-bearing account.  The Deposit shall be in good and
collected funds, or in the form of a letter of credit (issued by Wells Fargo
Bank, N.A., Regions Bank or U.S. Bank, N.A. or other federally insured bank
acceptable to Seller in its reasonable discretion, to be substantially in the
same form as the specimen letter of credit attached as Exhibit C hereto).  The
Deposit shall be disbursed by the Escrow Agent to Seller, applied against the
Purchase Price of each Lot prorata at each Lot Settlement, or reduced if in the
form of a Letter of Credit, as more fully set forth herein.  The Deposit shall
be non-refundable to Purchaser upon the expiration of the Study Period, unless
this Agreement is terminated prior to the expiration of the Study Period in
accordance with the terms set forth in Section 3 or as otherwise provided for
herein.  All interest earned on the Deposit shall accrue to the benefit of the
Purchaser, except in the event of a default by Purchaser, in which event the
interest shall follow

 
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the Deposit.   Seller shall execute and deliver to Purchaser any documents
reasonably required to reduce/cancel any letter of credit and as applicable
authorize return thereof to the Purchaser.  Purchaser reserves the right to
replace any letter of credit with cash or any cash with a letter of credit, so
long as the letter of credit is issued by Wells Fargo Bank, N.A., Regions Bank
or U.S. Bank, N.A. or other federally insured bank acceptable to Seller in its
reasonable discretion, to be substantially in the same form as the specimen
letter of credit attached hereto as Exhibit C.

b)     Purchase Price.  The purchase price for the Lots shall be Sixty One
Thousand Dollars ($61,000.00) per Lot for any Lots closed within the first
twelve (12) months after the Initial Closing, increasing at an annual rate of
three percent (3%) commencing on the date which is twelve (12) months after the
Initial Lot Closing.  Notwithstanding the foregoing, the purchase price shall
not increase, on a per diem basis, for that number of days in any twelve (12)
month period after the Initial Closing where the Purchaser is ready, willing and
able to go to Closing on Lot(s) but the Seller is unable to deliver the minimum
number of Lots in accordance with the Agreement.  At such time thereafter as the
Seller can deliver said Lot(s) the escalator shall recommence.

c)     Payment of Purchase Price.  The purchase price for each Lot shall be paid
in cash, by wire transfer, title company check, or immediately available federal
funds at the Closing of such Lot.

d)     Closing.  The Initial Closing shall be for one (1) lot upon which a model
home is to be built by Purchaser, and shall be held within thirty (30) days
after the satisfaction of the Conditions Precedent (as such term is defined in
Section 4 hereof) for the first phase of Section 15 of Fawn Lake (estimated to
be in June 2012) (the “Initial Closing”).  Thereafter, Purchaser shall close on
the Lots at the rate of six (6) single family detached Lots per calendar
quarter, the first such take-down and Closing to occur within one hundred fifty
(150) days after the Initial Closing (collectively, the “Closings”, provided the
Conditions Precedent (as such term is defined in Section 4 hereof) for such Lots
have been satisfied or waived in writing by Purchaser.  Purchaser shall be
allowed to “pass” on Closing Lots only one (1) time during the twelve (12) month
period commencing after the Initial Closing, and during each successive twelve
(12) month period, but in no event shall the number of Lots closed during any
such twelve (12) month period following the Initial Closing be fewer than
twenty-four (24). Purchaser shall have the right at any time to close on more
Lots than the number of Lots required to be purchased in accordance herewith,
upon reasonable prior written notice to Seller, in which event Purchaser shall
receive cumulative credits toward the minimum number of Lots required to be
purchased in succeeding quarters.

e)     Seller’s Closing Costs.  Seller shall pay for the preparation of the
special warranty deeds conveying to Purchaser the Lots, any lien waivers,
grantor’s tax and the State excise tax stamps to be affixed thereto, if any.
Seller shall be responsible for its own attorneys’ fees and any recording fees
for the release of any monetary liens or encumbrances affecting the Property,
but for no other costs associated with the transfer of the Lots.

f)     Purchaser’s Closing Costs.  Purchaser shall be solely responsible for its
Closing costs, which shall include, but not be limited to, cost of examination
of title, title insurance premiums and fees, Purchaser’s closing fees,
Purchaser’s attorneys’ fees, any grantee’s tax or other applicable transfer tax
other than the grantor’s tax and document preparation fees for the

 
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Closing documents and any loan or other documents, if any, and any and all
inspections, surveys, and tests performed by or for the Purchaser or its
lenders.  Purchaser shall pay for recordation of the special warranty deeds.

Purchaser also agrees to pay to Seller, or to Seller’s designated affiliate,
sales commissions/fees as a percentage of the total value of the home sales
contract for each home built on a Lot, such fees to be paid at the time of the
home closing, as more fully described on Exhibit B attached hereto and made a
part hereof.

g)     Adjustments.  All property taxes, ad valorem taxes, and all other fees,
if any, payable on an annual or periodic basis shall be adjusted to the date(s)
of closing and thereafter assumed by Purchaser. Seller will be responsible for
the payment of any presently enacted rezoning or development tax which may be
imposed on the Lots or Property as a result of the conversion thereof to
residential use, including but not limited to any “rollback taxes”.

h)     Possession and Risk of Loss.  Possession of the Lots shall be delivered
at Closing on such Lots.  The risk of loss or damage to the Lots by fire or
other casualty is assumed by Seller until the Closing, except for damage caused
by Purchaser and/or its agents, contractors or representatives during the Study
Period.

Section 3.     Study Period - Entry and Indemnity.

a)     Confirmation or Automatic Termination.  The Purchaser shall have the
period of time commencing with the Effective Date and ending at 5:00 p.m.
Eastern time on the date which is thirty (30) days after the Effective Date (the
“Study Period”) to enter onto the Property and conduct such tests, studies and
investigations as it may in its sole discretion deem appropriate, and at
Purchaser’s sole discretion proceed with this Agreement by providing written
notice (the “Confirmation Notice”) thereof to Seller.  The Confirmation Notice
shall be delivered in accordance with the notice provisions of Section 11 hereof
not later than 5:00 p.m. Eastern time on the date which is thirty (30) days
after the Effective Date (the “Confirmation Notice Deadline”).  In the event
Purchaser fails to deliver the Confirmation Notice by the Confirmation Notice
Deadline, this Agreement shall automatically terminate and Seller and Purchaser
shall have no further obligations hereunder except for those obligations of
Purchaser which expressly survive termination of this Agreement.  If this
Agreement is terminated in accordance with the terms hereof, then within five
(5) business days  after expiration of the Study Period, Purchaser shall provide
Seller with a copy of any third-party reports or studies that were conducted on
Purchaser’s behalf during the Study Period, without cost or expense to Seller,
exclusive of any proprietary information of Purchaser. Purchaser shall conduct
its own review of zoning and other governmental regulations affecting the
Property. Seller, its employees and representatives shall cooperate fully with
Purchaser in connection with its review, including providing a right of entry on
the Property to obtain an appraisal and survey, to perform engineering and Phase
I environmental testing, and such other studies necessary or desired in
connection with Purchaser’s evaluation of the Property. However, Purchaser shall
not conduct any invasive or intrusive testing upon the Property without the
prior written consent of Seller. Purchaser agrees to promptly restore the
Property to its original condition and agrees to be responsible for any damage
incurred while performing its investigations.  Purchaser agrees to hold harmless
and indemnify Seller from any liability, lien, loss, cost or expense for the
actions or negligence of Purchaser’s agents and representatives while conducting
such inspection on the Property.  Prior

 
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to entry upon the Property, Purchaser shall provide Seller with copies of
certificates of insurance evidencing comprehensive general liability insurance,
naming Seller as an additional insured party, with a minimum coverage of One
Million Dollars ($1,000,000.00) per occurrence. The provisions of this paragraph
shall survive Closing or any earlier termination of this Contract and shall
remain fully binding on the Purchaser.  The foregoing repair, indemnity and
defense obligations do not apply to (a) any loss, liability, cost or expense to
the extent arising from or related to negligent or willful acts or omissions of
the Seller, or its agents or consultants, (b) any diminution of the Property
arising from or related to matters merely discovered (but not caused or
worsened) by Purchaser during its investigation of the Property, (c) latent
defects in the Property merely discovered (but not caused or worsened) by
Purchaser or (d) the release or spread of hazardous substances which were merely
discovered (but not caused, worsened or deposited) on or under the Property by
Purchaser.

b)     Condition of Property.  Notwithstanding the foregoing inspections, at the
Initial Closing or at the subsequent Closings, except as otherwise expressly
provided for herein, Purchaser is accepting the Property in its then “AS IS”,
“WHERE IS” condition.  However, nothing in this paragraph shall operate to
relieve or excuse Seller from its obligations under this Agreement not yet
completed or to be performed at or after the time of such Closings.

c)     Construction Trailer.  At a mutually agreeable date, Purchaser may place
a construction and/or sales trailer on the Property at mutually agreeable
location.  The parties shall agree prior to the expiration of the Study Period
as to the date and location of the construction and/or sales trailer on the
Property.  Purchaser’s trailer(s) shall not impede development by Seller and
shall conform to all State and County codes.  Any trailer shall be at the sole
cost and expense of Purchaser.  Purchaser agrees that it shall promptly move
said trailer to another location on the Property agreeable to Seller upon
request by Seller in order to permit Seller to complete required development of
the Property in accordance with the terms of this Agreement.  Seller shall
attempt to verify that the trailer location selected by the Purchaser does not
interfere with the utility design prior to its placement.  Purchaser shall
indemnify and hold harmless Seller from and against any and all claims made
against Seller as a result of Purchaser’s (or Purchaser’s agents, contractors,
subcontractors or representatives) activities on the Property in connection with
Purchaser’s trailer(s), construction activity or otherwise. The provisions of
this paragraph shall survive Closing or any earlier termination of this Contract
and shall remain fully binding on the Purchaser.

d)     Title Insurance and Survey.  As a condition to each closing, title to the
Lots at Closing shall be good of record and fully merchantable, insurable and
conveyed to Purchaser by special warranty deeds subject only to the Permitted
Exceptions (as herein after defined).  During the first twenty (20) days of the
Study Period, Purchaser shall obtain, at Purchaser’s sole cost and expense, an
ALTA form title insurance commitment for the Property issued by Commonwealth
Land Title Insurance Company, a national title insurance company (the “Title
Company”). Purchaser may also obtain, during the first twenty (20) days of the
Study Period, at Purchaser’s sole cost and expense, a current ALTA/ACSM survey
of the Property.

In the event the title commitment discloses any exceptions to title or matters
which are not acceptable to Purchaser (each, a “Title Defect”), or the survey
discloses any encroachment or violation which is not acceptable to Purchaser
(each, a “Survey Defect”), Purchaser shall notify Seller in writing of such
Title Defect or Survey Defect, as the case may be, within five (5) days

 
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of Purchaser’s receipt of such title commitment or survey. If Purchaser fails to
timely notify Seller of a Title Defect or Survey Defect, Purchaser shall be
deemed to have accepted title and/or survey matters reflected in the title
commitment and/or survey.  Seller shall have thirty (30) days after receipt of
such notice to remove the Title Defect or Survey Defect and provide Purchaser
evidence of such removal. In the event that a Title Defect, other than one that
may be cured solely by the payment of money (which monetary lien Seller shall be
obligated to remedy), or a Survey Defect is not cured, Purchaser shall have the
right to either: (i) accept such Title Defect or Survey Defect and proceed to
Closing, or (ii) terminate this Contract, receive a return of the Deposit,
including any interest thereon, and in which event neither party shall have any
further liability to the other, except for those obligations which expressly
survive the termination hereof.  Any item contained in the title commitment or
any matter shown on the survey to which Purchaser does not timely object shall
be considered a “Permitted Exception” and Seller shall have no further
obligation with respect to such Permitted Exceptions.  Permitted Exceptions
shall also include real estate taxes not yet due and payable, utility and access
easements of record, and other title and survey matters which do not materially
interfere with or materially increase the cost of Purchaser’s home construction,
and the declarations, covenants, conditions and restrictions of record.

From and after the Effective Date, Seller shall not, except as otherwise
provided for herein, encumber or change the state to title.  Notwithstanding the
foregoing, Seller shall have the right to grant such easements as may be
required by applicable governmental authorities and/or utility providers in
connection with obtaining final site plan and/or subdivision plan for the
Property in accordance with the terms hereof.  In the event any such easements
materially interfere with or materially increase the cost of Purchaser’s home
construction or marketing activities Purchaser shall have the right to decline
to purchase any such Lot so affected.

e)     Default.  In the event Seller shall default under this Agreement, after
five (5) days written notice with opportunity to cure from Purchaser, then the
Purchaser may either terminate this Agreement, in which event the Deposit and
interest thereon shall be returned to Purchaser and this Agreement shall become
null and void, or Purchaser may enforce its right of specific performance,
provided litigation to enforce such right is commenced within ninety (90) days
after the date for Closing.  Purchaser shall have no other remedies at law or in
equity.  Notwithstanding the foregoing, in the event the practical benefits of
the equitable remedy of specific performance are unavailable to Purchaser due to
an action or inaction of Seller, but only in such event, if Purchaser elects to
terminate this Agreement, then in addition to the right obtain a refund of the
Deposit, Purchaser shall have the right to recover from Seller Purchaser’s
actual out of pocket expenses resulting from Seller’s default, not to exceed
fifty thousand dollars ($50,000.00).  In the event Purchaser, having provided
the Confirmation Notice, fails to Close any of the Lots as provided for in this
Agreement, after five (5) days written notice and opportunity to cure from
Seller, the Seller shall have the right to terminate this Agreement and the
Deposit and all interest thereon shall be retained by Seller as liquidated
damages, and this shall be the sole remedy at law and in equity of the Seller.
Seller specifically waives all rights to damages (other than liquidated damages)
and to specific performance of Purchaser’s obligation to close.  Upon the
occurrence of such a breach, this Agreement shall terminate and Seller shall
have no additional obligations to the Purchaser save and except those
obligations that expressly survive Closings, in accordance with the terms
hereof.
 
f)     Refund of Deposits.  In the event Purchaser fails to provide the
“Confirmation

 
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Notice” under this paragraph, the Agreement shall be deemed null and void.

Section 4.     Conditions Precedent and Development Obligations.

a)     Conditions Precedent.  The obligation of the Purchaser to purchase any
Lot is and shall be contingent upon each and all of the following (the
“Conditions Precedent”) having been satisfied or waived in writing by Purchaser
prior to the Closing for each Lot (or Lots) being conveyed to Purchaser at such
Closing, including the Initial Closing:
 
       (i)     Seller to Complete Obligations.  The Seller shall have completed
all of its Development Obligations which are applicable to the Lots scheduled
for purchase at that time except for those obligations which are specifically
designated as not being required prior to Closing.
 
       (ii)    No Pending Governmental Action.  On the date of each Closing no
condition, limitation or action by any applicable governmental authority,
including but not limited to the imposition of a sewer or water moratorium,
phasing plan or unresolved public facilities issue (e.g., roads, storm sewers,
water, schools) shall exist or have been taken or publicly announced to have
been taken, which: (A) materially and adversely affects the availability of
building permits or installation of sanitary sewer or water facilities,
electric, telephone, cable or other utilities to serve a residential dwelling to
be constructed on each Lot; or (B) in any other manner unreasonably prevents or
delays such residential dwellings to be constructed on the Lots from being
connected to the public sewer and water systems and to other utilities.
 
       (iii)   Building Pad.  Each Lot shall have a building pad consistent with
PDH Zoning, with a minimum width of approximately one hundred feet (100’) and a
building envelope of approximately sixty feet (60’), except on cul-de-sac Lots.
 
       (iv)    Easements and Dedications.  On the date of each Closing, all
off-site easements and dedications necessary for the Purchaser’s development and
construction of houses shall have been obtained by Seller at its cost.
 
       (v)     Plan Approvals.  Prior to the expiration of the Study Period, the
Purchaser may submit house plans for preliminary approval to Seller as agent for
the Architectural Review Committee (“ARC”).  Prior to construction, Purchaser
will submit for final approval plans and specifications and documentation as
required by the Declaration of Restrictive Covenants, Fawn Lake Community
Builders Guidelines and the Fawn Lake Signature Builder Program.  The final
house plan approval shall be a condition precedent to Closing.
 
       (vi)    Title.    Title to the Property is as required by Paragraph 3d.
hereof.
 
       (vii)   Seller’s Representations and Warranties. The representations,
warranties and covenants of Seller contained within this Agreement shall be true
and correct at the time of each Closing.
 
       (viii)  Utilities. All utilities, including but not limited to water and
sewer service, shall be located at and available to the Property;

 
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       (ix)  Easements. All offsite easements, if any, necessary for complete
access and utility availability, including but not limited to water and sewer
service, as well as any and all other easements needed to perform the site
development work shall be in place and of record.
 
       (x)       Base Paving and Approvals. Base paving of the streets providing
access to the Lots (“Base Paving”) shall have been completed and all necessary
approvals shall be in place so as to allow Purchaser to obtain building permits
and occupancy permits, or their equivalent, upon the posting of customary bonds
and/or payment of customary fees.

b)     Development Obligations of Seller.
 
       (i)        Finished Lot Improvements. Seller shall provide Purchaser the
Lots fully engineered, subdivided, recorded and approved by all government
authorities and agencies having jurisdiction in the matter substantially in
conformance with the plat attached hereto as Exhibit A, provided Seller may make
such changes to the plat as required by any governmental authority having
approval rights over such plat and as may be reasonably acceptable to
Buyer.  Lots shall be engineered in accordance with all applicable laws and
codes and in accordance with sound engineering practices and suitable for
construction of single family detached residences.  Lots shall be subdivided for
sale in which the following improvements shall have been accomplished by Seller,
as will be shown on the Final Site Subdivision Plan as approved by all
applicable County and State authorities.  Development obligations of the Seller
shall survive Closings.
 
          (A)     Public or community sewer shall have been installed, approved
and functioning without the need or expense of grinder pumps or ejector pumps
from the first floor elevations (with all offsite fees and charges paid by
Seller) with a lateral provided for connection, within eight feet (8’-0”) of the
surface.  Sewer tap fees for all Lots purchased will be paid by Purchaser.
 
          (B)  Public or community water shall have been installed, approved and
functioning, without the need for a booster pump from the first floor elevations
unless Seller provides such booster pump (with all offsite fees and charges paid
by Seller) with a lateral provided for connection to within one foot (1’-0”)
inside the property line.  Water tap fees for all Lots purchased by Purchaser
will be paid by Purchaser.  If Seller shall have paid water tap fees in advance,
then Purchaser may, at its option, reimburse Seller for the actual amount of
said water tap fees at the time of each Closing and Seller shall assign the
applicable water tap to the Purchaser.
 
          (C)  All storm drainage and storm drainage retention systems required
by appropriate County or other public authorities shall have been installed with
all offsite fees and charges paid by Seller.  Seller shall be responsible for
the installation and maintenance of sediment and erosion controls as shown on
Seller’s approved subdivision plans.  After said controls have been installed
the Purchaser shall have the right, to the extent possible, to utilize the said
controls in  connection with its on-lot development and construction; provided,
however, that to the extent that Purchaser damages said controls it shall be
responsible for the repair thereof.  Purchaser shall be responsible for all
on-lot sediment and erosion controls required in
 
 
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connection with Purchaser’s construction on the Lots.  Seller shall be
responsible for the removal and compaction of any sediment ponds on Lots.
 
          (D)     Streets, curbs, gutters, sidewalks across common areas and
along street right-of-ways adjacent to common areas and/or culverts and ditches
as applicable shall have been installed by Seller with dedicated and base
asphalt paved access to an existing public street which access may be across a
private street in accordance with the approved plans.  Final paving and
sidewalks across common areas and along street right-of-ways may be completed
after Lot Closings, provided such work is completed in a timely manner so as not
to delay the issuance of building permits or residential use or occupancy
permits for the Lots.  All driveways and on-Lot lead sidewalks and sidewalks
adjacent to the frontage of each Lot shall be Purchaser’s responsibility. Entry
aprons and curbs damaged during construction must be replaced per approved
design plans and standards and shall be Purchaser’s responsibility.
 
          (E)  All electric, gas and telephone main lines shall be available to
the Lots, but are not required to be extended to each Lot prior to Closing.  The
extension of such lines to the property line of each Lot shall be designed and
installed by the utilities associated therewith. Such utilities (except for
cable) shall be furnished in a timely manner so as not to delay the issuance of
building permits or residential use or occupancy permits for the
Lots.  Installation of such lines from the property line of each Lot to the
dwelling, and the connection fees associated therewith, shall be Purchaser’s
responsibility.
 
          (F)      Purchaser, at its sole cost and expense, shall be responsible
for the installation and maintenance of on-Lot dust and siltation controls as
required by applicable governmental authorities and for the restoration of all
areas of the Project or public roads disturbed by its construction activities.
 
          (G)     Common area trails and walks, culverts, common area amenities
and landscaping, street lights and signs shall be completed as required by
applicable County, State and any other governmental authority.  The items set
forth in this subparagraph (G) may be completed after Lot Closings, provided
such work is completed in a timely manner so as not to delay the issuance of
building permits or residential use or occupancy permits for the houses to be
constructed on the Lots.
 
          (H)     All common area retaining and screening walls and entry
features and signage shall be completed in accordance with the approved Final
Site Subdivision Plan.
 
          (I)  All required off-site easements, dedications or permissions
necessary for Purchaser’s development and construction of houses on the Lots
shall have been obtained and all off-site improvements as required by the
applicable governmental authorities and necessary for Purchaser’s development
and construction of houses on the Lots shall have been completed, and all
related off-site fees for the water tower shall be paid by Seller.
 
          (J)      All recreation facilities and amenities as shown on the
approved site/plans for the Project.
 
          (K)     All bonded improvements, preliminary plan conditions, and all
proffered development conditions and contributions, whether they are to be made
or performed

 
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before or after Closing, shall be completed and satisfied.
 
          (L)  All other site improvements or actions whether on or off the
Property required by any governmental authority having jurisdiction, exclusive
of house construction, as a condition for the occupancy of residential dwellings
constructed by Purchaser.
 
          (M)  Preparation and approval of all homeowners’ association
documents, including approval to the extent required by applicable County
authorities.
 
          (N)  Seller shall perform over Lot clearing and rough grading of the
Property, Seller shall cut, fill and grade each Lot as necessary to the proper
and lawful drainage of such Lot before the erection of a building thereon in
accordance with the approved site plan.  Each Lot will be graded in accordance
with the Lot grade specified grades shown on the approved site plan.  Seller
shall install verification stakes to facilitate the determination of elevations.
Seller will notify Purchaser of such time as grading is complete on a Lot(s).  A
walk-thru inspection will be made by a representative of both Purchaser and
Seller, and a list of discrepancies, if any, will be prepared.  Seller will
promptly correct said deficiencies. If all or part of the foundation cannot be
placed at natural grade capable of supporting such foundation, Seller will
supply control house pads with dimensions to be provided by Purchaser. Each such
fill pad must be certified to Purchaser by a registered engineer who is approved
by Purchaser to support a footing/foundation (“Lot Certification”) A copy of the
Lot Certification shall be provided by Seller to Purchaser no less than ten (10)
days prior to the date of Closing for such Lot. In the event that rock is
encountered on any Lot by Seller during its grading operation, Seller will blast
and/or excavate rock twenty-four (24) inches below the Lot slab or as otherwise
reasonably requested by Purchaser as well as blasting and/or excavating rock if
necessary in order to facilitate utility laterals to Purchaser’s house
location(s).
 
       (ii)  Workmanship.  All engineering plans, work, materials and
improvements done or to be installed or furnished by Seller under this Agreement
have been or shall be done and completed by Seller in a good and workmanlike
manner in accordance with the rules, regulations, laws and ordinances of the
applicable governmental authorities, shall be for the construction of the
planned residences and shall be approved by all applicable governmental
authorities, in a timely manner so as not to delay the issuance of building
permits or residential use or occupancy permits for the Lots.
 
       (iii)     Dedication of Public Improvements.  Seller shall cause all
public improvements to be dedicated to public or private use and shall be
responsible for causing all such public improvements to be accepted for
maintenance by the applicable governmental authorities or by the HOA at such
time as required by the Declaration of Restrictive Covenants, at no expense to
Purchaser.
 
       (iv)  Bond and Escrows.  Seller agrees at its own expense to post and
keep in effect street, storm drain, maintenance and other forms of surety bonds
and escrows as may be required by the applicable County authorities for the
Seller’s development of the Property.  Seller shall furnish Purchaser copies of
such bond and escrow documents upon request and shall be solely responsible for
the timely release of said bonds and escrows.  Seller shall be entitled to
receive the return of any deposits paid or refunds for fees paid by Seller in
connection with its

 
11
 
 
development obligations free from all claims of Purchaser or any of its
assignees.  Purchaser shall be responsible for any bonds or escrows related to
on-lot erosion and siltation control required in connection with Purchaser’s
construction of houses.
 
       (v)       Timely Performance by Seller.  Seller represents and warrants
that it will use due diligence to perform all tasks required by this Paragraph
in a timely manner so as not to delay; (A) any Closing hereunder; (B)
Purchaser’s construction work; or (C) the issuance of building or occupancy
permits for any houses constructed or to be constructed by Purchaser.
 
       (vi)  Indemnification by Seller.  Seller shall defend, indemnify and hold
Purchaser harmless from and against any and all claims and suits of any kind,
all costs and expenses including attorney’s fees and other defense costs
resulting from or arising out of the work done or required to be done hereunder
by Seller, as well as attorney’s fees incurred in enforcing this indemnity, and
warrants that all work is and shall be free of mechanics’ and materialmen’s
liens.

Section 5.     Costs of Developing Lots.

Seller shall be responsible, at its cost and expense, for the development
obligations as set forth in Section 4. Conditions Precedent and Development
Obligations including but not limited to: preparation of sketch plans,
preliminary and final subdivision plans/plats; jurisdiction fees associated with
obtaining approvals, and a wetland permit, if required; completion of public
water and sewer main lines and laterals to within one foot two inches (1’-2”) of
the Lot boundary (electric, telephone and cable to be installed per such utility
company’s standards);  all rough Lot grading completed in accordance with
Buyer’s house products, including any controlled fills and blasting and removal
of rock necessary to provide a certified building pad, as well as utility
laterals; installation and completion of all roads, utilities, storm water
drainage systems, off-site improvements and utilities, street trees, street
signs, street lights and common area amenities, entrance features, proffers if
any.

Section 6.     Purchaser’s Warranties and Representations.

Purchaser hereby represents and warrants to Seller as of the Effective Date and
as of the date of each Closing, including the Initial Closing, as follows:

a)     Authority.  The execution and delivery of this Agreement by Purchaser and
the consummation by Purchaser of the transactions contemplated by this Agreement
are within its legal capacity and authority and all requisite action has been
taken to make this Agreement valid and binding on Purchaser in accordance with
its terms.
 
b)     No Legal Bar.  The execution by Purchaser of this Agreement and the
consummation by Purchaser of the transactions hereby contemplated does not, and
on the Closing Date(s) will not (i) result in a breach of or default under any
indenture, agreement, instrument or obligation to which Purchaser is a party and
which affects all or any portion of the Property, or (ii) to Purchaser’s
knowledge, constitute a violation of any governmental requirement.
 
c)     No Default.  Purchaser is not in default under any indenture, mortgage,
deed of

 
12
 

trust, loan agreement, or other agreement to which Purchaser is a party and
which affects any portion of the Property.

d)     Signature Builder Program.  Purchaser has read the Declaration of Fawn
Lake and is familiar with the development plans for the Subdivision and the
Property, including the importance the Seller attaches to the Signature Builder
Program. Seller and Purchaser shall, during the Study Period, negotiate and
enter into a modified Signature Builder Agreement (“Signature Builder
Agreement”) which shall set forth the terms and conditions of the Signature
Builder Program applicable to Purchaser’s construction and sale of homes on the
Lots. In the event the parties do not agree on the terms and conditions of the
Signature Builder Agreement, prior to the expiration of the Study Period, then
either party may, at its option, terminate this Agreement and have no further
obligations to the other hereunder. Purchaser has applied or will apply for
acceptance into the Signature Builder Program and will, at all times relevant to
this Agreement after the expiration of the Study Period, remain in good standing
as a Signature Builder under the Signature Builder Agreement. Purchaser’s
failure to remain in good standing under the Signature Builder Agreement shall
constitute a breach of this Agreement at the option of Seller. Commissions
associated with the Signature Builder Program shall be modified in accordance
with Exhibit B.  The Initial Closing is conditioned upon Purchaser’s acceptance
into the Signature Builder Program.

e)     Architectural Requirements.  Purchaser agrees to maintain the existing
architectural and design requirements for the homes to be constructed at the
Property.  Prior to the end of the Study Period, Seller shall provide Purchaser
any printed and/or formalized architectural and design guidelines with respect
to the Property.  If Purchaser does not terminate this Agreement and proceeds to
Closing, Purchaser will comply with such architectural and design guidelines.
Purchaser shall delver to Seller architectural sketches and renderings of the
homes to be constructed at least five (5) business days prior to the end of the
Study Period, and Seller shall provide Purchaser with preliminary approval of
such sketches prior to the end of the Study Period. Purchaser shall provide full
architectural and design plans to Seller for approval of the Architectural
Review Committee (“ARC”)  pursuant to the ARC rules and regulations prior to
commencing construction of any home on the Lots.

f)     Seller’s Preconditions to Closing.  The Purchaser’s obligation to proceed
to Closing under this Contract shall be contingent upon (i) the approval of the
transactions referred to herein by the Board of Directors of NTS Mortgage Income
Fund on or before the end of the Study Period, and (ii) such other terms and
conditions specifically set forth in this Agreement.

g)     Indemnification by Purchaser.  Purchaser shall indemnify, defend and hold
Seller harmless from and against any and all claims or suits resulting from or
arising out of the construction by Purchaser, its employees, agents,
subcontractors, materialmen or invitees, of its houses upon the Property and
Seller agrees to give Purchaser prompt notice of any such claim or suit.
 
Section 7.     Seller’s Representations and Warranties.
 
    In addition to any other warranty made in connection with this Agreement,
the Seller warrants and agrees (a) that the Seller is the fee simple owner of
all of the Property which shall

 
13
 
 
be sold to and acquired by Purchaser under this Agreement and at Closing will be
the fee simple owner of the Property, and has no knowledge of off-record or
undisclosed interest in the Property, and, to Seller’s knowledge and belief, the
Property is free and clear of all liens and encumbrances other than those of
record; (b) that the Property is not subject to any unrecorded restrictive
covenant or equitable servitude of any kind which would in any way limit the
free choice of the Purchaser with respect to the nature or location of homes to
be constructed on the Property, except as provided herein and in recorded
instruments and documents; (c)  that to the  best of Seller’s knowledge:  The
Property does not contain any hazardous substance, the Seller has not conducted
or authorized the generation, transportation, storage, treatment or disposal at
the Property of any hazardous substance other than is customary resulting from
construction on surrounding properties; that the Seller has not received any
notice of, and has no knowledge that, any government authority or any employee
or agent thereof, or any private citizen, has determined, or threatens to
determine, or has made any claim in any form, that there is a presence, release,
threat of release, placement on or in the Property, or the generation,
transportation, storage, treatment or disposal at the Property, of any hazardous
substance; nor has any “clean-up” of the Property occurred pursuant to the
Environmental Laws (as hereinafter defined) which could give rise to liability
on the part of Purchaser to reimburse any governmental authority for the costs
of such clean-up or a lien or encumbrance on the Property.  For purposes of this
paragraph, “hazardous substance” means any materials in violation of any
applicable environmental laws or regulations including, but not limited to,
Section 103 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C., 9601 et seq., any “superlien” laws, any “superfund”
laws, or similar federal, state or local laws, or any successor statutes thereto
(the Environmental Laws”); (d) that to the best of Seller’s knowledge the
Property does not contain levels of natural asbestos unacceptable to any local,
state or federal authority; (e) that to the best of Seller’s knowledge the
Property has not been used as a grave site or fill or borrow area; (f) no suit,
actions, arbitration or legal, administrative or other proceeding is pending or
has been threatened against the Property, or against Seller with respect to the
Property, which, if adversely determined, could prevent or impair the ability of
Seller to perform this Agreement or restrict Purchaser’s use or development of
the Property, or any part thereof; (g) no bankruptcy, insolvency, rearrangement,
or similar action or proceeding, whether voluntary or involuntary, is pending or
threatened against Seller, and Seller has no intention of filing or commencing
any such action or proceeding; (h) that the Property, is in compliance with all
applicable zoning and subdivision ordinances; (i) that Seller has granted no
person any contract right or other legal right to the use of any portion of the
Property or to the furnishing or use of any facility or amenity on or relating
solely to the Property; (j) that no part of the Property is subject to a right
of first refusal which has not been waived or other right which Seller, or any
predecessor in title, may have granted to other persons or parties as to the
Property, or any part thereof, whether written or verbal; (k) that no notice,
either oral or written, has been received by Seller that any governmental or
quasi-governmental agency or authority intends to commence construction of any
special or off-site improvements or impose any special or other assessment
against the Property, or any part thereof; (l) that the Property is not located
within a flood hazard area or wetland; (m) that Seller has not received any
notice alleging that it or the Property to be, or that with due notice or lapse
of time or both it or the Property will be, in breach of default of any lawful
statute, ordinance or regulation of the United States, State, County or City
applicable to the Lots (“Legal Requirement”) which could materially adversely
affect the ability of Seller to perform this Agreement or restrict Purchaser’s
use or construction of residential homes on the Lots; and (n) that the executing
of this Agreement will not conflict with or result in a breach of any of the
terms or provisions of, constitute a default under, or cause or allow an
acceleration of

 
14
 

any note, mortgage, deed of trust, loan agreement or other document, instrument
or agreement to which Seller is a party or by which the Property is encumbered
or affected.

“Seller’s knowledge” or terms to such effect shall mean the actual knowledge of
Ralph DeRosa without any inquiry.  Such warranties shall survive for a period of
one year following each Lot Closing as to the effected Lots.

Section 8.     Brokerage Commission.

Seller and Purchaser each represent and warrant to the other that no real estate
brokers have been involved in this transaction and each indemnifies the other
from any brokers or finders claiming any real estate commissions or marketing
fees related to this transaction by or through such party.

Section 9.     Governmental Compliance.

Parties agree to comply with the applicable reporting requirements of the
Internal Revenue Code and the Real Estate Closing Procedures Act of 1974, as
amended.

Section 10.   Confidentiality.

Prior to the Initial Closing, and/or after any earlier termination of this
Agreement, and except to the extent required to be disclosed by Purchaser to its
employees, directors, officers, agents, representatives, attorneys, lenders,
accountants and/or advisors (“Purchaser Representatives”), and/or to the extent
required by law or order of a court of competent jurisdiction, Purchaser shall
not disclose or use and Purchaser shall cause the Purchaser Representatives not
to disclose or use any “Confidential Information” (as such term is defined
below) with respect to the Property furnished or to be furnished by Seller or
its representatives to Purchaser or Purchaser Representatives in connection
herewith at any time or in any manner other than to Purchaser or Purchaser’s
Representatives in connection with its investigations of the Property, provided
that each of Purchaser’s Representatives shall be informed of this
confidentiality requirement and shall agree in writing to abide by the terms of
this Section 10, prior to receipt of any such “Confidential Information.” For
purposes of this paragraph, “Confidential Information” means the fact of the
proposed sale and any information about the Property identified in writing,
including any third-party reports identified or obtained by Purchaser during its
Study Period, except for information which Purchaser can reasonably demonstrate
is generally available to or known by the public other than as a result of
improper disclosure by Purchaser.  The provisions of this Section 10 shall
survive any termination of this Agreement and shall remain fully binding on the
Purchaser for twenty four (24) months after any such termination of this
Agreement.
 
Section 11.   Notices.

Any and all notices required to be delivered hereunder shall be deemed properly
delivered when and if personally delivered, or the second day after being mailed
by registered or certified mail, return receipt requested, postage prepaid (or
the day after being sent by a recognized overnight courier service with
instructions and payment for delivery on the next business day), electronic
mail, or delivered by facsimile with confirmation of receipt to the Parties as
set forth below:

 
15
 

 
And if to Purchaser to:
 
 
 
 
 
 
 
and a copy to:
 
 
 
 
 
 
And to Escrow Agent:
 
 
 
 
 
 
And if to Seller:
 
 
 
 
With a copy to:                  
M/I Homes of DC, LLC
c/o M/I Homes, Inc.
3 Easton Oval, Suite 500
Columbus, OH 43219
Attn: Thomas Mason, Esquire
Telecopier #(614) 418-8030
EMAIL:  tmason@mihomes.com
 
M/I Homes of DC, LLC
21355 Ridgetop Circle, Suite 220
Sterling, Virginia 20166-6503
Attn: Dennis Kelleher
Telecopier #(703) 404-3040
EMAIL:  dkelleher@mihomes.com
 
Curran & Whittington, PLLC
15100 Washington Street, Suite 201
Haymarket, Va  20169
Attn:  Joseph F. Curran, Esq.
Telecopier #(571) 248-4436
EMAIL:  jcurran@curranwhittington.com

NTS/Virginia Development Company
10172 Linn Station Road
Louisville, Kentucky  40223
Attn:  Brian F. Lavin

NTS Development Company
10172 Linn Station Road
Louisville, Kentucky 40223
Attn: Rosann D. Tafel, Esq.

 
Either party hereto may change the names and addresses of the designee to whom
notice shall be sent by giving written notice of such change to the other party
hereto in the same manner as all other notices are required to be delivered
hereunder.

Section 12.   Facsimile.

Facsimile and/or electronically transmitted signatures shall be sufficient for
purposes of executing, negotiating, and finalizing this Agreement.  In the event
notice is transmitted by facsimile or electronic mail after 5:00 p.m. Eastern
Time, the effective date and time of such notice is the first hour of the next
business day after transmission.

Section 13.   Interpretation.

If there is more than one Purchaser, Seller or entity other than a natural
person, the pronouns and grammatical structure shall be understood to
conform.  Section headings shall not be used in construing this Agreement.  Each
party acknowledges that such party and its counsel, after

 
16
 

negotiation and consultation, have reviewed and revised this Agreement.  As
such, the terms of this Agreement shall be fairly construed and the usual rule
of construction, to the effect that any ambiguities herein should be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any amendments, modifications or exhibits hereto.

Section 14.   Binding Effect.

This Agreement shall inure to the benefit of, and shall be binding upon, the
successors and permitted assigns of the Parties hereto.

Section 15.   Miscellaneous.

a)     Business Days.  Business days are defined as Monday through Friday,
excluding Federal holidays.  Any date specified in this Agreement which is a
Saturday, Sunday or legal holiday, shall be extended to the first regular
business after such date which is not a Saturday, Sunday or legal holiday.

b)     Time of Essence. Time is of the essence to the terms of this Agreement.

c)     Survival.  None of the representations, warranties, covenants,
agreements, indemnifications or other undertakings hereunder shall survive the
Closings on the Lots except as specifically noted herein.  Nothing herein shall
relieve Seller of its development responsibilities as set for in Section 4 for
any Lots closed.

d)     Entire Agreement.  This Agreement and the Exhibits thereto contain the
entire understanding between the Seller and Purchaser and are intended to be an
integration of all prior agreements, conditions or undertakings between
them.  Except as expressly set forth herein, there are no promises, agreements,
conditions, undertakings, warranties, or representations, oral or written,
expressed or implied, between Purchaser and Seller.

e)     Relationship of the Parties.  Notwithstanding any other provision of this
Agreement, or any agreements, contracts or obligations which may derive
herefrom, nothing herein shall be construed to make the parties hereto partners
or joint venturers, or to render either party liable for any of the debts or
obligations of the other party, it being the intention of this Agreement to
merely create the relationship of Seller and Purchaser with regard to the
Property and the Lots to be conveyed hereby.

f)     Amendments; Waivers.  No change or modification of this Agreement shall
be valid unless the same is in writing and signed by Purchaser and Seller. No
purported or alleged waiver of any of the provisions of this Agreement shall be
binding or effective unless in writing and signed by the party against whom it
is sought to be enforced.
 
g)    Assignment of Agreement.  Neither party shall have the right to assign
this Agreement without the prior written consent of the other and any such
assignment will be void and of not effect; provided, however, Seller may assign
this Agreement without such consent to any entity owned or controlled by any
persons or entities that own or control NTS Development Company, a Kentucky
corporation.

 
17
 
 
h)    Applicable Law.  This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.

i)     Recovery.  In the event of litigation the prevailing party shall have the
right to recover its reasonable attorney’s fees.

j)     Counterparts.  This Agreement may be executed in several counterparts,
each of which shall be deemed an original, all of which shall constitute one in
the same instrument.  Any signature delivered by a party by facsimile or other
electronic transmission shall be deemed to be an original signature to this
Agreement.  In such event, the parties hereto shall promptly thereafter deliver
to each other executed counterpart originals.

Section 16.   Sales Center Use.

Seller shall, or shall cause its affiliate, Fawn Lake Sales Center, LLC, to
grant to Buyer a non-exclusive license or right to use, during the regular
office hours of Fawn Lake Realty, one standard-sized salesperson’s office on the
first floor of the sales center building, plus use of such common areas as may
be necessary such as restrooms, kitchen, etc., as an office for the sole purpose
of marketing Purchaser’s homes in Fawn Lake to third party purchasers.  The
sales center shall not be used by Purchaser for any construction meetings,
activities or materials selections.  The term of the license or use shall begin
after the Initial Closing and continue  annually for so long as Purchaser is
actively building and selling homes at the Property.

Section 17.   Exclusive Dealings.

Seller agrees that upon the Effective Date of this Agreement it shall not sell,
contract to sell or enter into any discussions regarding selling the Property or
any part thereof to any other person.

Section 18.   Marketing.

A joint marketing agreement for the Lots shall be negotiated in good faith
between the parties during the Study Period and an agreement reasonably
acceptable to the parties shall be executed upon the expiration of the Study
Period if Buyer has not terminated the Agreement.

Section 19.   Competitive Lot Development.

Seller agrees to use reasonable efforts to delay development of additional
competitive lot inventory (defined as any lot in Fawn Lake intended to be priced
for sale at purchase price less than or equal to the Purchase Price for the
Initial Lot Closing plus one hundred and twenty-five percent (125%) for a period
not to exceed twelve (12) months from the date of the Initial Lot Closing to
focus marketing and sales efforts on Purchaser’s Section 15 inventory and
listing obligations.
 
Section 20.   Purchaser Execution.
 
This Agreement and any amendments hereto, shall not be effective against
Purchaser unless executed and delivered by at least one of the following
officers on behalf of the Purchaser

 
18
 

(each, an “Authorized Officer”): Robert H. Schottenstein, Chief Executive
Officer and President; Phillip G. Creek, its Executive Vice President and Chief
Financial Officer; or J. Thomas Mason, its Executive Vice President and General
Counsel.  Execution and delivery by anyone in addition to an Authorized Officer
may be for the Purchaser’s convenience but is not effective as against Purchaser
unless, as noted above, at least one Authorized Officer also executes and
delivers this Agreement and any amendment hereto.  Once this Agreement has been
executed by an Authorized Officer, Dennis Kelleher, an Area President is
authorized and empowered to execute and deliver in the name and on behalf of
Purchaser any and all documents that may be required to effectuate the closing
of the purchase of the Property in accordance with this Agreement.  The
foregoing shall not limit Purchaser’s right through a duly adopted resolution of
Purchaser, to add to, reduce or substitute any Authorized Officer, or any Area
President, for any purpose.
 
Section 21.   Effective Date.
 
The date on which this Agreement is accepted by the last party to accept and
sign the Agreement shall be the effective date of this Agreement. If this
Agreement is not signed by a party, in order to become effective within five (5)
days of the date it is signed by the other party, this Agreement shall be void
and of no effect.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the dates
shown below.

-SIGNATURE PAGES TO FOLLOW-

 
19
 

 
 
 
 
 
 
 
 
Date: November 30, 2011
SELLER:
 
NTS/Virginia Development Company,
a Virginia corporation
 
 
 
By: /s/ Brian F. Lavin        
Name: Brian F. Lavin          
Its: President              

 
 

 
20
 

 
 
 
 
 
 
 
 
 
Date: November 30, 2011
PURCHASER:
 
M/I Homes LLC,
a Delaware limited liability company
 
 
 
By:  /s/ D K            
Name: D. Kelleher         
Its: Area President         

 
 
 
 
 
 
 
 
 
 
Date: November 30, 2011
PURCHASER:
 
M/I Homes LLC,
a Delaware limited liability company
 
 
 
By: /s/ J. Thomas Mason       
Name: J. Thomas Mason        
Its: Executive Vice President       

 
 
 
21