Exhibit 10.31
Execution Copy
ASSET PURCHASE AGREEMENT
Dated as of June 6, 2005
among
EH/TRANSEASTERN, LLC, a Delaware limited liability company
(“Buyer”)
and
TRANSEASTERN PROPERTIES, INC., a Florida corporation,
each of the Companies listed on the signature pages hereto
(collectively, the “Sellers”)
and
each of Arthur J. Falcone and Edward W. Falcone
and
Falcone/Ritchie LLC, a Florida limited liability company

 

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TABLE OF CONTENTS

              Page  
Article I DEFINITIONS AND INTERPRETATION
    2  
1.1 Definitions
    2  
1.2 Interpretation
    13  
1.3 Certain Other Definitions
    14  
 
       
Article II PURCHASE AND SALE
    15  
2.1 Purchased/Contributed Assets
    15  
2.2 Excluded Assets
    15  
2.3 Assumed Liabilities
    15  
2.4 Excluded Liabilities
    16  
 
       
Article III PURCHASE PRICE
    18  
3.1 Purchase Price
    18  
3.2 Determination of Estimated Purchase Price
    18  
3.3 Determination of Purchase Price
    18  
3.4 Adjustment
    20  
3.5 Allocation of Purchase Price
    20  
3.6 Post-Closing Payments
    20  
3.7 Proration of Taxes
    22  
 
       
Article IV CLOSING
    23  
4.1 Closing Date
    23  
4.2 Payment on the Closing Date
    23  
4.3 Buyer’s Additional Deliveries
    23  
4.4 Sellers’ Deliveries
    24  
4.5 Governmental Permits
    26  
4.6 Option Lots
    27  
4.7 Falcone/Ritchie
    27  
4.8 Assignment of Developer/Declarant Rights
    27  
4.9 FIRPTA Certificate
    27  
4.10 Other Deliverables
    27  
 
       
Article V REPRESENTATIONS AND WARRANTIES OF SELLERS
    28  
5.1 Organization and Authority of Sellers; No Conflict
    28  
5.2 Subsidiaries and Investments
    29  
5.3 Assets Generally
    29  
5.4 Financial Statements
    30  
5.5 Operations Since Balance Sheet Date
    30  
5.6 No Undisclosed Liabilities
    32  
5.7 Taxes
    32  
5.8 Availability of Assets
    33  
5.9 Governmental Permits
    33  
5.10 Real Property
    35  
5.11 Personal Property
    39  
5.12 Intellectual Property; Software
    39  
5.13 Work in Progress
    41  
5.14 Title to Property
    41  

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5.15 Employees and Related Agreements; ERISA
    41  
5.16 Employee Relations
    44  
5.17 Contracts
    44  
5.18 Status of Contracts
    46  
5.19 No Violation or Litigation
    46  
5.20 Environmental Matters
    47  
5.21 Insurance
    49  
5.22 Major Suppliers
    50  
5.23 Projections
    50  
5.24 Warranties; Construction Defects
    50  
5.25 No Finder
    51  
5.26 Reserved
    51  
5.27 Bank Accounts; Power of Attorney; Minute Books
    51  
5.28 Related Party and Other Transactions
    52  
5.29 Patriot Act
    52  
5.30 RESPA
    53  
5.31 Interstate Land Sales Full Disclosure Act
    53  
5.32 Coastal Construction Control Line
    54  
5.33 Homeowners’ Associations; Condominium Associations
    54  
5.34 Community Development Districts
    55  
5.35 Florida Uniform Land Sales Practices Law
    55  
5.36 No Restrictions
    55  
5.37 Compliance With Requirements of Law
    55  
5.38 Books and Records
    56  
5.39 Accounts Receivable
    56  
5.40 Sellers’ Names
    56  
5.41 Disclosure
    56  
 
       
Article VI REPRESENTATIONS AND WARRANTIES OF BUYER
    56  
6.1 Organization of Buyer
    56  
6.2 Authority of Buyer; No Conflict
    57  
6.3 No Finder
    57  
6.4 Financing
    57  
6.5 Ownership
    57  
 
       
Article VII ACTIONS PRIOR TO THE CLOSING DATE
    58  
7.1 Investigation by Buyer
    58  
7.2 Preserve Accuracy of Representations and Warranties; Notification of Certain
Matters
    58  
7.3 Consents of Third Parties
    58  
7.4 Operations Prior to the Closing Date
    59  
7.5 Licenses
    61  
7.6 Minimum Lot Transfer
    61  
7.7 Title Insurance
    61  
7.8 Warranty Administration
    62  
7.9 Acquisition Proposals
    62  
7.10 Legal Descriptions
    63  
 
       
Article VIII ADDITIONAL AGREEMENTS
    63  
8.1 Covenant Not to Compete or Solicit Business
    63  
8.2 Release of Bonds
    65  
8.3 Taxes
    65  

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8.4 Employees
    67  
8.5 Employee Benefit Plans
    68  
8.6 Use of Name
    69  
8.7 Filings with Governmental Bodies
    69  
8.8 First Florida Title Company
    69  
8.9 Cooperation on Bronson, Cummer, Heller and Independence Projects
    69  
8.10 Coral Lakes Construction
    70  
8.11 Life Insurance
    70  
8.12 Maintenance of Net Worth
    70  
8.13 Cummer
    70  
8.14 Cummer 1044
    70  
8.15 Kendall Commons (Vizcaya)
    70  
 
       
Article IX CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
    71  
9.1 No Misrepresentation or Breach of Covenants and Warranties
    71  
9.2 No Changes or Destruction of Property
    71  
9.3 No Restraint or Litigation
    71  
9.4 Necessary Governmental Approvals
    71  
9.5 Necessary Consents
    71  
9.6 Minimum Net Worth
    71  
9.7 Closing Deliveries
    72  
9.8 Approval by Shareholders or Members of Sellers
    72  
9.9 Releases
    72  
9.10 Environmental Report
    72  
9.11 Cummer West Property
    72  
9.12 Coral Lakes
    72  
9.13 Payments of Accounts Receivable
    72  
9.14 CMI Marketing
    73  
9.15 Employment Matters
    73  
9.16 Cummer 1400 Property
    73  
9.17 Live Oak
    73  
9.18 Construction on Lots
    73  
9.19 Cooperation Agreements
    73  
 
       
Article X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
    73  
10.1 No Misrepresentation or Breach of Covenants and Warranties
    73  
10.2 No Restraint or Litigation
    74  
10.3 Closing Deliveries
    74  
10.4 Minimum Net Worth
    74  
10.5 Financing
    74  
10.6 Cooperation Agreements
    74  
 
       
Article XI INDEMNIFICATION AND POST-CLOSING REMEDIES
    74  
11.1 Indemnification by Sellers
    74  
11.2 Indemnification by Buyer
    77  
11.3 Notice of Claims
    78  
11.4 Loss Calculation
    79  
11.5 Third Person Claims
    79  
11.6 Adjustment to Purchase Price
    80  
11.7 Failure to Make Certain Payments
    80  
11.8 Exclusive Remedies
    80  

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Article XII TERMINATION AND PRE-CLOSING REMEDIES
    80  
12.1 Termination
    80  
12.2 Notice of Termination
    81  
12.3 Effect of Termination; Remedies; Treatment of the Deposit
    81  
12.4 Special Termination
    82  
 
       
Article XIII GENERAL PROVISIONS
    83  
13.1 Survival of Obligations
    83  
13.2 Confidential Nature of Information
    83  
13.3 No Public Announcement
    83  
13.4 Notices
    84  
13.5 Successors and Assigns; No Third Party Beneficiaries
    84  
13.6 Access to Records after Closing
    85  
13.7 Entire Agreement; Amendments
    85  
13.8 Partial Invalidity
    86  
13.9 Waivers
    86  
13.10 Expenses
    86  
13.11 Execution in Counterparts
    86  
13.12 Enforcement of Agreement
    86  
13.13 Further Assurances; Power of Attorney
    86  
13.14 Sellers’ Representative
    87  
13.15 Governing Law; Jurisdiction
    87  
13.16 Time is of the Essence
    87  
13.17 Radon Gas
    88  
13.18 Titles and Subtitles
    88  
13.19 Legal Representation of the Parties
    88  
13.20 Disclosure
    88  
13.21 Laguna Lakes
    88  

Exhibits:

         
Exhibit A
  -   Form of Opinion of Counsel to Buyer
Exhibit B
  -   Form of Opinion of Counsel to Sellers
Exhibit C
  -   Form of Pay-Off Letter
Exhibit D
  -   Form of Indemnity Letter of Credit
Exhibit E
  -   Form of Assignment and Assumption Agreement
Exhibit E-1
  -   Form of Assignment and Assumption of Contracts
Exhibit E-2
  -   Form of Assignment and Assumption of Leases
Exhibit F
  -   Form of Bill of Sale
Exhibit G
  -   Form of Assignment of Option Documents
Exhibit H
  -   Form of Assignment of Developer/Declarant Rights
Exhibit I
  -   Form of Employment Agreement (Division President)
Exhibit I-1
  -   Form of Employment Letter (Division Manager)
Exhibit J
  -   Form of Right of First Offer Agreement
Exhibit K
  -   Form of Warranty Administration Agreement
Exhibit L
  -   Cummer 1400 Property
Exhibit M
  -   Cummer West Property
Exhibit N
  -   Form of Copyright Assignment
Exhibit O
  -   Form of Trademark and Domain Name Assignment
Exhibit P
  -   Definition of Fully Entitled

(iv)

 

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Exhibit Q
  -   Form of Promissory Note

(v)

 

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SCHEDULES:

      Schedule   Name
Schedule 2.1
  Contributed Assets
Schedule 2.2
  Excluded Assets
Schedule 2.3(A)
  Assumed Liabilities: Customer Deposits and Accounts Payable
Schedule 2.3(C)
  Assumed Liabilities: Obligations Under Roadway Improvement
 
  Agreements, Utility Agreements, etc.
Schedule 2.3(E)
  Assumed Liabilities: Obligations for Payment of Sales Commissions
Schedule 2.3(F)
  Assumed Liabilities: Obligations Under Seller Agreements Post-Closing
Schedule 2.3(G)
  Purchase Orders
Schedule 2.3(H)
  Cable Communities
Schedule 2.4
  Excluded Liabilities
Schedule 3.1(B)
  List of Indebtedness
Schedule 3.5
  Allocation Schedule
Schedule 3.6(A)
  Earn-Out Payments
Schedule 3.6(B)
  Entitlement Payments
Schedule 4.2
  Wire Instructions
Schedule 5.1(A)
  Companies
Schedule 5.1(C)
  Required Consents
Schedule 5.2
  Subsidiaries and Investments
Schedule 5.4
  Financial Statements
Schedule 5.5(A)
  Operations since Balance Sheet Date (No Material Adverse Change)
Schedule 5.5(B)
  Operations since Balance Sheet Date (Ordinary Course Transactions)
Schedule 5.6
  No Undisclosed Liabilities
Schedule 5.7(B)
  Tax Returns Filed
Schedule 5.7(C)
  Tax Audits
Schedule 5.7(D)
  Other Taxes
Schedule 5.9(A)
  Owned Property Governmental Permits
Schedule 5.9(B)
  Obligations Re: Owned Governmental Permits
Schedule 5.9(D)
  Option Governmental Permits
Schedule 5.9(E)
  Obligations Re: Option Property Governmental Permits
Schedule 5.10(A)
  Owned Real Property
Schedule 5.10(B)
  Optioned Real Property
Schedule 5.10(C)
  Obligations re: Owned Real Property
Schedule 5.10(D)
  Leased Real Property
Schedule 5.10(E)
  Real Property Pending Suits
Schedule 5.10(H)
  Improvements
Schedule 5.10(I)
  Concurrency Requirements
Schedule 5.10(K)
  Lessees or Tenants at Sufferance
Schedule 5.10(M)
  Developer-Related Fees and Impact Fees
Schedule 5.10(P)
  Environmental Protection Agency Matters
Schedule 5.10(R)
  Zoning Proceedings
Schedule 5.10(W)
  Historical or Archeological Materials
Schedule 5.10(X)
  Critical Habitat (Endangered Species Act)
Schedule 5.11(A)
  Personal Property – Machinery or Equipment
Schedule 5.11(B)
  Personal Property – Leases
Schedule 5.12(A)
  Intellectual Property
Schedule 5.12(B)
  Software

(vi)

 

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      Schedule   Name
Schedule 5.12(C)
  Contracts, Licenses, Sublicenses, Assignments
Schedule 5.12(D)
  Intellectual Property Encumbrances
Schedule 5.12(E)
  Registrations for Copyrights, Patent Rights and Trademarks
Schedule 5.12(F)
  Infringements, Misappropriations, Violations
Schedule 5.12(G)
  Limitations on Transfer and Assignment
Schedule 5.12(H)
  Work for Hire
Schedule 5.13
  Stop Work Orders
Schedule 5.14
  Permitted Encumbrances
Schedule 5.15(A)
  Seller Non-ERISA Plans
Schedule 5.15(B)
  Seller Compensation Commitments
Schedule 5.15(D)
  Seller Plans
Schedule 5.15(K)
  Sellers’ Employees
Schedule 5.15(L)
  Conflict of Interest Transactions
Schedule 5.15(M)
  Severance and Other Termination Matters
Schedule 5.16
  Employee Relations
Schedule 5.17
  Contracts
Schedule 5.18
  Status of Contracts
Schedule 5.19
  No Violation or Litigation
Schedule 5.20
  Environmental Matters
Schedule 5.21
  Insurance
Schedule 5.23
  Projections
Schedule 5.24(A)
  Warranty Matters
Schedule 5.24(B)
  Home Repurchases
Schedule 5.27
  Bank Accounts; Power of Attorney
Schedule 5.28(A)
  Related Party and Other Transactions
Schedule 5.30(B)
  RESPA
Schedule 5.30(E)
  Specimen Copies of Purchase and Sale Agreements
Schedule 5.31
  Interstate Land Sales Full Disclosure Act
Schedule 5.33
  Homeowners’ Associations
Schedule 5.35
  Florida Uniform Land Sales Practices Law
Schedule 5.36
  No Restrictions
Schedule 5.37
  Notices from Governmental Bodies
Schedule 5.39
  Accounts Receivable
Schedule 7.4(b)(xii)
  Cash Payments or Distributions of Assets to Sellers
Schedule 7.6
  Lot Count
Schedule 8.1(A)
  List of Counties where TEP Operates
Schedule 8.1(B)
  List of Counties Subject to Non-Compete
Schedule 8.1(C)
  List of Projects Excluded from Non-Compete
Schedule 8.2
  Release of Bonds
Schedule 10.5
  Financing Term Sheet
Schedule 12.4
  Terms of TEP’s Investment

(vii)

 

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THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S
INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF EXECUTION OF THIS AGREEMENT
BY BUYER, AND RECEIPT BY BUYER OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED TO
BUYER BY THE DEVELOPER UNDER SECTION 718.503, FLORIDA STATUTES. THIS AGREEMENT
IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S INTENTION TO
CANCEL WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER OF ANY
AMENDMENT WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS
ADVERSE TO BUYER. ANY PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF
NO EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR A PERIOD OF NOT MORE THAN
15 DAYS AFTER BUYER HAS RECEIVED ALL OF THE ITEMS REQUIRED. BUYER’S RIGHT TO
VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.
ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE
REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD
BE MADE TO THIS AGREEMENT AND THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA
STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE.
ASSET PURCHASE AGREEMENT
     ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of June 6, 2005, by
and among EH/TRANSEASTERN, LLC, a Delaware limited liability company (“Buyer”),
and TRANSEASTERN PROPERTIES, INC., a Florida corporation (“TEP”), each of the
limited liability companies or corporations, as the case may be, listed on the
signature pages hereto (the “Companies”, together with TEP, the “Sellers”), each
of Arthur J. Falcone and Edward W. Falcone (collectively, “Falcone”) with
respect solely to Sections 5.10(dd), 8.1 and 8.11, as applicable, and
Falcone/Ritchie LLC, a Florida limited liability company with respect to 2.1 and
12.4, (“Falcone/Ritchie LLC”).
RECITALS:
     WHEREAS, Sellers are engaged, directly or indirectly, as the case may be,
in the businesses of (a) acquiring and developing land on which Sellers build
and market homes and (b) homebuilding, including obtaining relevant land use
approvals and permits; overseeing the work of subcontractors; construction,
marketing and selling Lots and single family residences, townhomes, and
condominium units; overseeing warranty work; and other matters reasonably
related to the land development and homebuilding businesses, in each case solely
in the counties specified in Schedule 8.1(A) (the “Business”);
     WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to acquire from
Sellers, either by outright purchase or by the contribution of certain assets by
Falcone/Ritchie LLC to TE/TOUSA, LLC, in exchange for fifty percent (50%) of the
membership interests in TE/TOUSA, LLC, substantially all of the assets,
properties and business of Sellers used in connection with the Business on the
terms and subject to the conditions set forth herein.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties to this Agreement agree as follows:

 

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ARTICLE I
DEFINITIONS AND INTERPRETATION
     1.1 Definitions. In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms.
     “Accounts Receivable” means all accounts or notes receivable of Sellers and
the full benefit of all security for such accounts or notes, including draws
against commissions and receivables from homeowners’ associations and any claim,
remedy or other right related to any of the foregoing; provided, however, that
none of the foregoing shall be deemed to include any receivables from any of
Sellers’ Affiliates, any of Sellers’ intercompany receivables or any receivables
from Sellers’ related parties (including any officers or directors of Sellers).
     “Accounting Firm” has the meaning specified in Section 3.3(d).
     “Affiliate” means, with respect to any Person, any other Person which, at
the time of determination, directly or indirectly through one or more
intermediaries, Controls, is Controlled by or is under Common Control with such
Person and for each natural Person (a) his or her spouse, (b) his or her lineal
descendant or antecedent, brother, sister, aunt, uncle, cousin, niece or nephew,
as well as the spouse of any of the foregoing, and (c) any custodian or trustee
for the account of the Person. As to any corporation, limited liability company,
trust or partnership, any person with any of the foregoing relationships to any
person in control of such entity as general partner, member, shareholder,
trustee or otherwise shall be deemed to be an Affiliate of such entity.
     “Agreed Accounting Principles” means GAAP consistently applied, including,
but not limited to, all appropriate accruals; provided that, with respect to any
matter as to which there is more than one generally accepted accounting
principle, Agreed Accounting Principles means the generally accepted accounting
principles applied in the preparation of the Audited Financial Statements.
     “Agreed Adjustments” has the meaning specified in Section 3.3(c).
     “Allocation Schedule” has the meaning specified in Section 3.5.
     “Ancillary Agreements” means the Buyer Ancillary Agreements and the Seller
Ancillary Agreements.
     “Antitrust Division” means the Antitrust Division of the United States
Department of Justice.
     “Assigned Permits” has the meaning specified in Section 4.5.
     “Assignment and Assumption Agreement” has the meaning specified in Section
4.4(p).
     “Assignment and Assumption of Contracts” has the meaning specified in
Section 4.4(q).
     “Assignment and Assumption of Leases” has the meaning specified in Section
4.4(r).
     “Assignment of Developer/Declarant Rights” has the meaning specified in
Section 4.8.
     “Assumed Liabilities” has the meaning specified in Section 2.3.

 

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     “ASTM Guidelines” means the following ASTM International Standards:
E1527-00 Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process; E1528-00 Standard Practice for
Environmental Site Assessments: Transaction Screen Process; E1903-97(2002)
Standard Guide for Environmental Site Assessments: Phase II Environmental Site
Assessment Process; and related ASTM Standards and Guidelines, as the same may
be amended from time to time.
     “Balance Sheet” means the unaudited consolidated balance sheet of Sellers,
as adjusted to take account of the Excluded Assets and Excluded Liabilities, as
of the Balance Sheet Date.
     “Balance Sheet Date” means February 28, 2005.
     “Bill of Sale” means that certain bill of sale, substantially in the form
attached hereto as Exhibit F, to be executed and delivered on the Closing Date
among Buyer and Sellers, whereby Sellers convey to Buyer all personal property,
whether tangible or intangible, except those specified in Section 2.2.
     “Business” has the meaning specified in the first recital of this
Agreement.
     “Business Day” means any day other than a Saturday, Sunday or a day on
which banks in Broward County, Florida are permitted or required to be closed.
     “Buyer” has the meaning specified in the first paragraph of this Agreement.
     “Buyer Ancillary Agreements” means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement or
in connection herewith.
     “Buyer Group Member” means (i) Buyer and its Affiliates and (ii) the equity
holders, directors, officers, employees, agents and representatives of each of
Buyer and its Affiliates.
     “CERCLA” means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. 9601 et seq.
     “Charter Document” means the Certificate or Articles of Incorporation (in
the case of a corporation) or Certificate or Articles of Formation or equivalent
instrument (in the case of a limited liability company).
     “Claim Notice” has the meaning specified in Section 11.3.
     “Clean Air Act” means the Clean Air Act, 33 U.S.C. 7401 et seq.
     “Clean Water Act” means the Clean Water Act, 33 U.S.C. 1251 et seq.
     “Closing” means the closing of the transfer of the Purchased Assets from
Sellers to Buyer.
     “Closing Agent” means Greenberg Traurig, P.A.
     “Closing Date” has the meaning specified in Section 4.1.
     “Closing Date Balance Sheet” has the meaning specified in Section 3.3(b).

3

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     “Closing Date Net Worth” means the excess of the Purchased Assets over the
sum of (i) the Assumed Liabilities reflected in the Closing Date Balance Sheet
and (ii) without duplication, the amount necessary to retire the obligations
listed in Schedule 3.1(B).
     “Code” means the Internal Revenue Code of 1986.
     “Companies” are the entities listed on the signature pages hereto.
     “Contaminant” shall be construed broadly to mean and include pollutants,
hazardous substances, hazardous wastes, solid waste, biomedical waste, asbestos,
flammable materials, explosives, radioactive or nuclear substances,
polychlorinated biphenyls, other carcinogens, oil and other petroleum products,
radon gas, methane gas, urea formaldehyde, Mold, chemicals, gases, or solvents
that could be a detriment or pose a danger to the environment or to the health
or safety of any Person or that is otherwise defined, governed, and/or regulated
by or pursuant to any Environmental Law.
     “Contributed Assets” means the assets listed on Schedule 2.1, which shall
be deemed contributed by Falcone/Ritchie LLC to TE/TOUSA, LLC (or to Buyer, at
the direction of TE/TOUSA, LLC), in exchange for fifty percent (50%) of the
membership interests in TE/TOUSA, LLC.
     “Control” means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. The terms “Controlled
by,” “under Common Control with” and “Controlling” shall have correlative
meanings.
     “Copyrights” means United States and non-U.S. copyrights, copyrightable
works and mask works (as defined in 17 U.S.C. ‘901), whether registered or
unregistered, and pending applications to register the same.
     “Court Order” means any judgment, order, award or decree of any United
States federal, state or local, or any supra-national or non-U.S., court or
tribunal and any award in any arbitration Proceeding.
     “Cummer 1400 Property” means the Real Property described in Exhibit L
attached hereto.
     “Cummer West Property” means the Real Property described in Exhibit M
attached hereto.
     “Deposit” has the meaning specified in Section 3.1.
     “Division” means every area in the State of Florida where Sellers conduct
Business, including Jacksonville, Orlando, Southeast Florida, Southwest Florida
and Tampa.
     “Employment Agreement” means any employment agreement between Buyer and
Neil Eisner, Jan Ickovic, any Division President or Division Manager specified
by Buyer, substantially in the forms attached hereto as Exhibit I, Exhibit I-1
or as agreed by Buyer and such other party.
     “Encumbrance” means any lien (statutory or other), claim, charge, security
interest, mortgage, deed of trust, pledge, hypothecation, assignment, special
assessments, easements, reservations, restrictions, conditional sale or other
title retention agreement, preference, priority or other security agreement or
preferential arrangement of any kind.
     “Endangered Species Act” means the Endangered Species Act of 1973, 16
U.S.C. 1531 et seq.

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     “Entitlement Payment” has the meaning specified in Section 3.6(b).
     “Environmental Encumbrance” means an Encumbrance in favor of any
Governmental Body (i) for any liability under any Environmental Law; (ii) for
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment; or
(iii) in connection with any environmental engineering control or environmental
institutional control utilized to secure a conditional No Further Action letter
or a conditional Site Rehabilitation Completion Order.
     “Environmental Law” means all Requirements of Laws derived from or relating
to all non-U.S., federal, state and local laws or regulations relating to or
addressing the environment, health, safety, wetlands, jurisdictional waters,
and/or threatened or endangered species, including the Clean Water Act, the
Clean Air Act, the Endangered Species Act, CERCLA, OSHA and RCRA and any state
equivalent thereof including, but not limited to, Florida Statutes Chapters 161,
163, 373, 376, 380 and 403 and the rules promulgated thereunder and codified in
the Florida Administrative Code.
     “Environmental Stage I Work” has the meaning specified in Section 5.20(p),
and shall include Phase I work.
     “Environmental Stage II Work” has the meaning specified in Section 5.20(p),
and shall include Phase II work.
     “Environmental Stage III Work” has the meaning specified in
Section 5.20(p), and shall include Phase III work.
     “ERISA” means the Employee Retirement Income Security Act of 1974.
     “Escrow Agent” means Chicago Title Insurance Company.
     “Estimated Purchase Price” means the Purchase Price, as defined herein, but
determined on an estimated basis by Sellers in good faith and as reflected in
the certificate referred to in Section 3.2.
     “Executive Order” has the meaning specified in Section 5.29(a).
     “Excluded Assets” has the meaning specified in Section 2.2.
     “Excluded Liabilities” has the meaning specified in Section 2.4.
     “Expenses” means any and all out-of-pocket expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or Proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
     “Financial Statements” has the meaning specified in Section 5.4.
     “Force Majeure Event” means an act of God (including hurricanes), acts or
newly adopted regulations of Governmental Bodies, wars, accidents, floods,
fires, embargos, riots, strikes or industrial disputes, but excluding increases
in prices of construction materials, including mechanical and appliance
components of a home.

5

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     “Florida Uniform Land Sales Practices Law” means the Uniform Land Sales
Practices Law, Florida Statutes Chapter 498.
     “FTC” means the United States Federal Trade Commission.
     “Fully Entitled” has the meaning set forth on Exhibit P attached hereto
with respect to the projects listed on such exhibit.
     “GAAP” means accounting principles generally accepted in the United States
on the date hereof.
     “Governing Body” means the Board of Directors (in the case of a
corporation) or managing members (in the case of a limited liability company).
     “Governmental Body” means any United States federal, state or local, or any
supra national or non-U.S., government, political subdivision, governmental,
regulatory or administrative authority, instrumentality, agency body or
commission, self-regulatory organization, court, tribunal or judicial or
arbitral body.
     “Governmental Permits” means, collectively, the Owned Property Governmental
Permits and the Option Governmental Permits.
     “Holdback Amount” has the meaning specified in Section 4.2.
     “Holdback Funds” means the sum to be delivered to the Escrow Agent at the
Closing pursuant to Section 4.2 together with any earnings or interest thereon
from and after the Closing.
     “Income Taxes” has the meaning specified in Section 8.3(f).
     “Indemnified Party” has the meaning specified in Section 11.3.
     “Indemnitor” has the meaning specified in Section 11.3.
     “Indemnity Letter of Credit” has the meaning specified in Section 4.4(l).
     “Intellectual Property” means Copyrights, Patent Rights, Trademarks and
Trade Secrets.
     “Interstate Land Sales Full Disclosure Act” means The Interstate Land Sales
Full Disclosure Act, 15 U.S.C. § 1701 et seq.
     “IRS” means the Internal Revenue Service.
     “Knowledge” means (i) the actual knowledge or conscious awareness of any
officer, division president or division manager of any Seller of the facts or
matters that each such Person could reasonably be expected to discover or
otherwise become aware of in the course of performing their duties for Sellers
or conducting the Business in the ordinary course and (ii) the actual Knowledge
or conscious awareness of any of Neil Eisner, John Evasius, Arthur J. Falcone,
Edward W. Falcone, Jan Ickovic, Evan Rabinowitz and Paul Leikert of the facts or
matters that each such Person could reasonably be expected to discover or
otherwise become aware of in the course of performing their duties for Sellers
or conducting the Business and after due inquiry of the officers, division
presidents and division managers of Sellers.
     “Leased Real Property” has the meaning specified in Section 5.10(d).

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     “Losses” means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, Taxes, fines, penalties, damages,
deficiencies or other charges.
     “Lot” means a lawfully subdivided legal lot or condominium unit on or in
which a single family detached or attached home can be constructed and sold to
the public.
     “Material Adverse Effect” or “Material Adverse Change” means any fact,
occurrence, condition, circumstance, change, effect or development, whether
individually or in the aggregate, that could reasonably be expected to be
materially adverse to the Purchased Assets, the Business or the assets,
liabilities, equity, internal controls, profits, condition (financial or
otherwise), results of operations, prospects, cash flow or liquidity of the
Business other than those (i) generally affecting the industries in which
Sellers operate or arising from changes in general business or economic
conditions; and (ii) resulting from any change in law or GAAP which generally
affect entities such as Sellers, since June 30, 2004.
     “Mold” means the subset of organisms of the fungi family, including but not
limited to, aspergillus, penicillium and stachybotrys, which may produce
mycotoxins. The term “mold” also includes any molds which are not currently
toxic but may become toxic in the future.
     “Optioned Real Property” has the meaning specified in Section 5.10(b).
     “OSHA” means the Occupational Safety and Health Act, 29 U.S.C. § 651 et
seq.
     “Other Taxes” has the meaning specified in Section 8.3(f).
     “Owned Real Property” has the meaning specified in Section 5.10(a).
     “Owned Software” has the meaning specified in Section 5.12(g).
     “Patent Rights” means United States and non-U.S. patents, provisional
patent applications, patent applications, continuations, continuations-in-part,
divisions, reissues, patent disclosures, industrial designs, inventions (whether
or not patentable or reduced to practice) or improvements thereto.
     “Patriot Act” has the meaning specified in Section 5.29(a).
     “Permitted Encumbrances” means (i) liens for Taxes and other governmental
charges and assessments which are not yet due and payable; (ii) liens of
landlords, carriers, warehousemen and mechanics liens related to any Seller
Agreement or any Assumed Liability arising in the ordinary course of business
for sums not yet due and payable; (iii) liens and other items specified in
Schedule 5.14; (iv) liens securing payment obligations under the bonds specified
in Schedule 8.2; (v) other liens or imperfections on property which do not
adversely affect title to, detract from the value of, or impair the existing use
of, the property affected by such lien or imperfection; and (vi) lien rights of
contractors with respect to WIP.
     “Person” means any individual, corporation, partnership, business trust,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or Governmental Body, other government or
political subdivision or agent or instrumentality thereof or other entity or
organization.
     “Pre-Closing Warranty Claims” has the meaning specified in Section 7.8.

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     “Preliminary Accounting Report” has the meaning specified in
Section 3.3(a).
     “Preliminary Closing Date Balance Sheet” has the meaning specified in
Section 3.3(a).
     “Preliminary Purchase Price” has the meaning specified in Section 3.3(a).
     “Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by, before or on behalf of, or otherwise involving,
any Governmental Body or arbitrator.
     “Prohibited Person” has the meaning specified in Section 5.29(a).
     “Project” means a real estate development containing no fewer than one
hundred (100) Lots.
     “Purchase Price” has the meaning specified in Section 3.1.
     “Purchased Assets” means, other than Excluded Assets, all of the assets,
properties, rights, licenses, permits of Sellers as the same now exist (except
to the extent transferred in the ordinary course consistent with past practices
prior to the Closing Date) or exists on the Closing Date, wherever located,
real, personal, or mixed, tangible or intangible, owned by, optioned by, leased
by or in the possession of any Seller, whether or not reflected in the books and
records thereof, and held or used exclusively in the Business (except to the
extent transferred in the ordinary course consistent with past practices prior
to the Closing Date), and all assets of the Business acquired by any Seller or
any of its Affiliates, on or prior to the Closing Date and not disposed of prior
to the Closing Date in accordance with this Agreement, and including, without
limitation, except as otherwise specified herein, all direct or indirect, right,
title, and interest of any Seller or any of its Affiliates in, to and under:
          (a) all of the assets reflected on the Balance Sheet described in
Section 5.4(iii);
          (b) all cash (including, restricted cash, deposits received from
customers (whether or not held in escrow), checking account balances, savings
account balances, certificates of deposit, and other time deposits and petty
cash) and marketable and other securities net of overdrafts;
          (c) the right, title and interest of Sellers in the Seller Property;
including all residential Lots and rights to, and contracts for the purchase of
land, development orders and other entitlements;
          (d) the Intellectual Property and Software owned by Sellers;
          (e) the Seller Agreements, which are identified on the schedules
hereto as being assigned to Buyer;
          (f) all assets relating to the operation of Sellers’ design centers;
          (g) all of Sellers’ right to use architectural and engineering plans
for the design and construction of homes;
          (h) the Assigned Permits;
          (i) all Accounts Receivable and the full benefit of all security for
such accounts or rights to payment;

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          (j) all promotional allowances, rebates and similar items;
          (k) the right to receive and retain mail, accounts receivable payments
and other communications relating to the Business;
          (l) all rights relating to earnest money deposits from homebuyers held
in escrow or held by any Seller or any Affiliate of any Seller or any third
parties as well as any interest earned thereon;
          (m) all insurance benefits, including rights and proceeds, arising
from or relating to the Purchased Assets or the Seller Agreements prior to the
Closing, unless expended in accordance with this Agreement;
          (n) all office supplies, production supplies, spare parts and other
miscellaneous supplies, materials or inventory of any kind wherever located,
including, all property of any kind located in any building, office or other
space leased, owned or occupied by Sellers or in any warehouse where any of
Sellers’ properties and assets may be situated;
          (o) all rights relating to deposits or prepaid items made with or to
Governmental Bodies by Sellers or any Affiliate of Sellers as well as any
interest earned thereon;
          (p) all rights, claims or causes of action against third parties
relating to the assets, properties, business or operations of Sellers with
respect to the Business arising out of transactions occurring prior to the
Closing Date, solely with respect to the projects in which Lots (or the rights
to Lots) are being conveyed to Buyer and any matters as to which Buyer is
entitled to indemnification hereunder; and
          (q) all books and records (including all data and other information
stored on discs, tapes or other media) of Sellers relating to the assets,
properties, business and operations of the Business, including sales,
advertising and marketing materials, provided that Sellers shall be entitled to
retain for their records originals of all of the foregoing.
     “RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. § 6901
et seq.
     “Real Property” means the Owned Real Property, the Contract Real Property,
the Optioned Real Property and the Leased Real Property.
     “Related Owners” has the meaning specified in Section 8.9.
     “Release” means any intentional or unintentional release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the indoor or outdoor environment or into or
out of any Real Property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Property.
     “Remedial Action” means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment;
(ii) prevent the Release or threatened Release or minimize the further Release
of Contaminants; or (iii) investigate and determine if a remedial response is
needed and to design such a response and post-remedial investigation,
monitoring, operation and maintenance and care.
     “Requirements of Laws” means any United States federal, state and local,
and any non-U.S., laws, statutes, regulations, rules, codes or ordinances
enacted, adopted, issued or promulgated by any

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Governmental Body (including those pertaining to electrical, building, zoning,
subdivision, land use, environmental and occupational safety and health and real
estate settlement requirements) or common law.
     “RESPA” means the Real Estate Settlement Procedures Act of 1974, 12 U.S.C.
§ 2605 et seq.
     “Right of First Offer Agreement” means the Right of First Offer Agreement
between Buyer and Sellers substantially in the form attached hereto as
Exhibit J.
     “Sellers” have the meaning specified in the first paragraph of this
Agreement.
     “Seller Ancillary Agreements” means all agreements, instruments and
documents being or to be executed and delivered by any Seller under this
Agreement or in connection herewith.
     “Seller Agreements” means all contracts, agreements, leases, licenses,
commitments, sales and purchase orders, and other undertakings of any kind,
whether written or oral, relating exclusively to the Business.
     “Seller Compensation Commitments” has the meaning specified in Section
5.15(b).
     “Seller ERISA Plans” has the meaning specified in Section 5.15(d).
     “Seller Group” shall mean any affiliated group (as defined in Section
1504(a) of the Code without regard to the limitations contained in Section
1504(b) of the Code) that, at any time on or before the Closing Date, includes
or has included any Seller or any predecessor of or successor to any Seller (or
another such predecessor or successor), or any other group of corporations that,
at any time on or before the Closing Date, files or has filed Tax Returns on a
combined, consolidated or unitary basis with any Seller or any predecessor of or
successor to any Seller (or another such predecessor or successor).
     “Seller Group Member” means (i) any Seller and its Affiliates and (ii) the
equity holders, directors, officers, employees, agents and representatives of
such Seller and its Affiliates.
     “Seller Non-ERISA Plans” has the meaning specified in Section 5.15(a).
     “Seller Plans” has the meaning specified in Section 5.15(d).
     “Seller Property” means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
used in the Business or owned, leased or operated by, or under option to, any
Seller or any predecessor thereto, including, without limitation, the Owned Real
Property, the Optioned Real Property and the Leased Real Property.
     “Software” means computer software programs and software systems, including
all databases, compilations, tool sets, compilers, higher level or proprietary
languages, related documentation and materials, whether in source code, object
code or human readable form.
     “Substitute Lot” shall mean any Lot in a Substitute Project.
     “Substitute Project” shall mean a Project not listed on Schedule 7.6 which
Sellers and Buyer agree shall be (i) an additional Project whose Lots shall be
included in the Lots for which Entitlement Payments are made to Sellers under
Section 3.6(b) (an “Additional Project”), (ii) a replacement for a Project whose
Lots have not become Fully Entitled by June 30, 2010, (iii) a replacement for a
Project for

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which Sellers have been unable to obtain any consents required under
Section 4.4(q) or Section 4.6(b) (in either (ii) or (iii), a “Replaced
Project”), (iv) any Lot “lost” in Live Oak Phase II as a result of any action by
a Governmental Body in connection with the permitting process for such Projects
or (iv) any Lot which shall be the subject of an Unresolved Title Objection
under Section 7.7(c). In order to reach an agreement on a Substitute Project,
the parties shall engage in the following process:
          (a) Sellers or Buyer shall notify the other in writing of any Replaced
Project for which a Substitute Project is proposed, specifying such Replaced
Project or Replaced Projects and the reason for substitution (the “Request
Notice”);
          (b) Within thirty (30) days of issuing or receiving the Request
Notice, Sellers shall propose to Buyer in writing (the “Proposed Substitute
Project Notice”) a Substitute Project in the same market as the Replaced
Project, or in a different market if acceptable to Buyer in its sole and
absolute discretion. The Substitute Project proposed by Sellers are intended to
have a similar Value as the Replaced Project;
          (c) (i) For purposes of this definition, in determining “Value,” in
the case of a Replaced Project, the parties shall be bound by (1) the value
assigned to such Project as set forth on Schedule 3.6(B), or if no value is
assigned to such Project in Schedule 3.6(B), then (2) the discounted net present
value of the gross profit (as determined in accordance with the accounting
practices utilized by Sellers prior to the Closing Date) projected by the
Projections to be realized from the sale of completed homes on the Lots in such
Project over the period of time which the Projections forecast would be required
to sell completed homes on all of the Lots in such Replaced Project; provided
that all net present value calculations to be performed under this procedure
shall be calculated at a discount rate of ten percent (10%) per annum,
calculated on an annual basis. In calculating the net present value, the parties
shall also be bound by the sales prices and gross margin amounts for such
Project as shown in the Projections;
               (ii) For purposes of this definition, in determining “Value”, in
the case of a Substitute Project, the parties shall be bound by the discounted
value of the gross profit (as determined in accordance with the accounting
practices utilized by Sellers prior to the Closing Date) projected to be
realized from the sale of completed homes on the Lots in such Project over a
period of time which would reasonably be expected to be required to sell
completed homes on all of the Lots in such Substitute Project. The parties shall
also be bound by the sales prices and gross margin amounts which Sellers have
experienced in building and selling homes similar to the products which Sellers
have planned to offer for sale on lots similar in size to the Lots proposed in
such Substitute Project;
          (d) If Buyer does not agree that the proposed Substitute Project has
the same Value as the Replaced Project (or if Sellers and Buyer cannot agree on
the difference in value (the “Value Disparity”)), then Buyer shall so notify
Sellers in writing within fourteen (14) days of receipt of the Proposed
Substitute Project Notice (the “Value Disparity Notice”). Within seven (7) days
of receipt of the Value Disparity Notice, Buyer and Sellers shall each engage an
MAI appraiser experienced in the market in which the proposed Replaced Project
and Substitute Project are located. The appraisers shall determine the Value of
both the Replaced Project and the proposed Substitute Project to determine the
Value Disparity, in each case using the methodology described in subparagraph
(c) above. If the two appraisers’ determinations of the Value Disparity between
the Replaced Project and the proposed Substitute Project differ by less than
five percent (5%), the Value Disparity shall be the average of the two
(2) determinations. If the determinations differ by more than five percent (5%),
then the two (2) appraisers shall engage a third appraiser, whose determination
of the Value Disparity shall be averaged with the other two (2) valuations. Such
third appraiser shall also determine the Value of both the Replaced Project and
the proposed Substitute Project to determine the Value Disparity, in each case
using

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the methodology described in subparagraph (c) above. Buyer and Sellers
(collectively) shall each be responsible for one-half of the fees and expenses
of such appraisers;
          (e) Upon confirmation of the Value Disparity, if any, Buyer may elect
either (i) to accept the Proposed Substitute Project(s) and allow Sellers to
propose additional Substitute Projects to compensate for the amount of the Value
Disparity, or (ii) to require Sellers to propose new Substitute Projects,
whereupon the process described above shall be followed with respect to the new
proposed Substitute Projects;
          (f) Once Buyer has made its election as set forth in (e) above, Buyer
shall thereafter have a period of forty (40) days in which to perform due
diligence investigations of the proposed Substitute Project for which any Value
Disparity has been resolved. If Buyer is not satisfied with the proposed
Substitute Project in its sole and absolute discretion, then Buyer may elect
either (i) to accept the proposed Substitute Project, or (ii) to require Sellers
to propose new Substitute Projects, whereupon the process described above shall
be followed with respect to the new proposed Substitute Project;
          (g) Once Buyer has elected to proceed with the proposed Substitute
Project, then such Project shall be deemed to be “Project” for all purposes
hereunder;
          (h) Notwithstanding anything herein to the contrary, no provision of a
Substitute Project shall relieve Sellers of their obligation to offer the Three
Thousand (3,000) Lots under the Right of First Offer Agreement as specified on
Schedule 7.6; and
          (i) In the event that some, but not all, of the Lots in a Project
listed on Schedule 3.6(b) shall fail to become Fully Entitled, Sellers shall be
entitled to propose to Buyer an Additional Project which contains Lots which are
or will be Fully Entitled. Any individual Lots or group of Lots from a Project
listed on Schedule 3.6(b) which do not become Fully Entitled by June 30, 2010
may be replaced by Lots in an Additional Project. Upon the acceptance of such
replacement Lots, Sellers shall be entitled to receive payment of an Entitlement
Payment for such Lot, calculated and payable in the same manner set forth
herein.
     “Tax” (and, with correlative meaning, “Taxes”) shall mean: (i) any federal,
state, local or foreign net income, gross income, gross receipts, windfall
profit, severance, property, production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
value-added, transfer, stamp, or environmental tax (including taxes under Code
Section 59A), or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any governmental
authority; and (ii) any liability of Sellers for the payment of amounts with
respect to payments of a type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or as a result
of any obligation of any Seller under any Tax Sharing Arrangement or tax
indemnity arrangement.
     “Tax Return” means any return, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules), including
any information return, claim for refund, amended return or declaration of
estimated Tax.
     “Tax Sharing Arrangement” means any written or unwritten agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
Tax Return includes or included any Seller.
     “TEP” has the meaning specified in the first paragraph of this Agreement.

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     “Third Person Claim” has the meaning specified in Section 11.3.
     “Title Company” has the meaning specified in Section 7.7(a).
     “Trademarks” means United States, state and non-U.S. trademarks, service
marks, trade names, Internet domain names, URL’s, designs, logos, slogans,
project names, home model names and general intangibles of like nature, whether
registered or unregistered, and pending registrations and applications to
register the foregoing, together with all common law rights and the goodwill of
the business associated therewith.
     “Trade Secrets” means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, technology, algorithms, models, reports,
data, customer lists, supplier lists, mailing lists, business plans, or other
proprietary information.
     “Unentitled Lot” means a Lot that is included within the Owned Real
Property or Optioned Real Property but is not Fully Entitled as of the Closing.
     “WARN” has the meaning specified in Section 5.16.
     “Warranty Administration Agreement” means the Warranty Administration
Agreement between Buyer and Sellers substantially in the form attached hereto as
Exhibit K.
     1.2 Interpretation. For purposes of this Agreement (i) the words include,
includes, and including shall be deemed to be followed by the words without
limitation; (ii) the word or is not exclusive; (iii) the words herein, hereof,
hereby, hereto and hereunder refer to this Agreement as a whole; and the words
home and homes refer to residential dwelling units, whether detached, attached,
fee simple or condominium, which are intended to be marketed by the builder or
developer thereof for sale, rather than as rental units; (iv) the singular shall
include the plural and vice versa; and (v) the feminine, masculine and neuter
genders shall be interchangeable. Unless the context otherwise requires,
references herein (i) to Articles, Sections, Exhibits and Schedules mean the
Articles and Sections of, and the Exhibits and Schedules attached to, this
Agreement; and (ii) to a statute means such statute as amended from time to time
and any regulations promulgated thereunder. The Schedules and Exhibits referred
to herein shall be construed with and as an integral part of this Agreement to
the same extent as if they were set forth verbatim herein; provided, however,
that Sellers may, at any time prior to Closing, by written notice to Buyer,
amend any of Schedules 2.1, 2.3(A), 2.3(C), 2.3(E), 2.3(F), 2.3(G), 3.1(B),
5.9(A), 5.9(D), 5.17(I)(A), 5.27 and 5.39 to make such Schedules consistent with
the representations and warranties set forth in this Agreement by reflecting any
transactions entered into after the execution of this Agreement. Upon receipt by
Buyer of such notice, such amended Schedule shall become a part of this
Agreement. No amendments may be made to any Schedules where such amendment would
result in a violation of Section 7.4. Titles to Articles and headings of
Sections are inserted for convenience of reference only and shall not be deemed
a part of or to affect the meaning or interpretation of this Agreement. This
Agreement and the Ancillary Agreements shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be drafted.

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     1.3 Certain Other Definitions. The following terms are defined in the
Sections of the Agreement indicated:

          Term   Section  
Additional Projects
    1.1  
ACOE
    9.17  
Affiliated Business Arrangement Disclosure Statement
    5.30 (b)
Agreement
  Preamble
Assignment of Option Documents
    4.6 (b)
Associations
    5.33  
Audited Financial Statements
    5.4  
Change of Control
    3.6 (a)
Closing Date Certificate
    3.6 (b)
Competing Business
    5.28 (a)
Condominium Projects
    5.33  
Continued Welfare Plans
    8.5 (b)
Contract Real Property
    5.10 (c)
Controlled Business Arrangement Disclosure Statement
    5.30 (b)
Coral Lakes Lots
    8.10  
Cummer
    8.13  
Cummer 1044 Land Bank
    8.14  
Developer Agreements
  5.17(II)(c)
DRI
    5.10  
Earn-Out Determination
  Schedule 3.6(A)
Earn-Out Payments
  Schedule 3.6(A)
Earn-Out Periods
  Schedule 3.6(A)
EBITDA
  Schedule 3.6(A)
Entitlement Certificate
    3.6 (b)
Falcone
    8.1 (a)
Falcone/Ritchie
    1.1  
Final Extension Period
    12.4  
First Extension Period
    12.4  
First Florida Title Company
    5.30  
Florida Condominium Act
    5.33  
Hired Employee
    8.4 (a)
HUD
    5.30 (d)
Master Cable Agreement
    2.3 (h)
Model Homes
    9.12  
Moratorium
    5.10 (n)
Multiemployer Plans
    5.15 (d)
Negotiation Period
    12.4  
Option Agreements
    5.10 (b)
Option Documents
    4.6 (a)
Option Governmental Permits
    5.9 (d)
Owned Property Governmental Permits
    5.9 (a)
Owner
    4.6 (b)
Policy
    7.7 (d)
Projections
    5.23  
Proposed Substitute Project Notice
    1.1  
Purchase Contracts
    5.10 (c)

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          Term   Section  
Remaining Approvals
    3.6 (d)
Replaced Project
    1.1  
Request Notice
    1.1  
Required Consents
    5.1 (c)
Sellers’ Representative
    13.14  
Sellers’ Review Period
    3.3 (b)
SNDA
    4.6 (b)
Subcontractor Agreements
  5.17(II)(b)
Supply Agreements
  5.17(II)(a)
Surveys
    7.7 (b)
Title Commitments
    7.7 (b)
Unaudited Financial Statements
    5.4  
Unresolved Objections
    3.3 (d)
Value
    1.1  
Value Disparity
    1.1  
Value Disparity Notice
    1.1  
Vizcaya
    8.15  
WIP
    5.13  

ARTICLE II
PURCHASE AND SALE
     2.1 Purchased/Contributed Assets. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Sellers shall (i) sell,
transfer, assign, convey and deliver to Buyer, and Buyer shall purchase from
Sellers, on a going concern basis, free and clear of all Encumbrances (except
for Permitted Encumbrances), and in each case subject to the provisions of
Section 2.2 below, all Purchased Assets and (ii) cause the Contributed Assets to
be contributed by Falcone/Ritchie LLC to TE/TOUSA, LLC (or to Buyer at the
direction of TE/TOUSA, LLC), in exchange for fifty percent (50%) of the
membership interests in TE/TOUSA, LLC, free and clear of all Encumbrances
(except for Permitted Encumbrances).
     2.2 Excluded Assets. Notwithstanding the provisions of Section 2.1, the
Purchased Assets shall not include the assets described on Schedule 2.2
(hereinafter referred to as the “Excluded Assets”).
     2.3 Assumed Liabilities. As partial consideration for consummation of the
transactions contemplated hereby, at the Closing and subject to the last
sentence of this Section 2.3, Buyer shall assume and agree to perform when due
and discharge, the following debts, obligations and liabilities of Sellers
relating to the Business (the “Assumed Liabilities”):
          (a) all customer deposits and accounts payable specified in
Schedule 2.3(A), which Schedule includes a listing of the applicable customer
deposits relating to any Real Property that is the subject of a sale to a
customer and is reflected on the Closing Date Balance Sheet;
          (b) those obligations of Sellers reflected in existence as of the
Closing Date and included in the Closing Date Balance Sheet as a dollar amount
(including obligations for Other Taxes as provided in Section 8.3(b)(ii)) other
than those amounts to be retired pursuant to Section 3.1(b);

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          (c) all obligations of Sellers under any roadway improvement
agreements, utility agreements or other agreements with Governmental Bodies or
other third parties relating to the zoning, permitting or development of Lots
owned by or under option to Sellers and specified in Schedule 2.3(C);
          (d) all obligations of Sellers under any Option Documents specified in
the agreements identified in Section 5.17(o), including all obligations under
any construction agreements attached as exhibits to and forming a part of any
Option Document;
          (e) all obligations for payment of net commissions due to employees of
Sellers for the sale of homes on Lots owned by or under option to Sellers
reflected on the Closing Date Balance Sheet of Sellers and specified in
Schedule 2.3(E);
          (f) the liabilities and obligations identified on Schedule 2.3(F),
including without limitation, the obligations under the Seller Agreements being
assigned to Buyer, to be performed after the Closing;
          (g) all obligations of Sellers under purchase orders issued but not
recorded on the Closing Date Balance Sheet as listed on Schedule 2.3(G);
          (h) all obligations of Sellers under the Master Cable Services
Agreement dated as of June 7, 2002 by and between TEP and Century Communications
of Florida, Inc. (the “Master Cable Agreement”) solely with respect to
communities listed on Schedule 2.3(H), together with the individual cable
services agreements heretofore executed with respect to such communities; and
          (i) all other obligations which other provisions of this Agreement
provide are to be the responsibility of Buyer after Closing.
     2.4 Excluded Liabilities. Buyer shall not assume or be obligated to pay,
perform or otherwise discharge after the Closing, any liability or obligation of
Sellers, direct or indirect, known or unknown, absolute or contingent unless
expressly assumed by Buyer pursuant to this Agreement (all such liabilities and
obligations not being assumed being herein called the “Excluded Liabilities”).
Unless expressly agreed otherwise in this Agreement, including pursuant to
Section 2.3 the following shall be Excluded Liabilities for purposes of this
Agreement:
          (a) any liabilities arising from activities of Sellers prior to
Closing, other than with respect to work in progress acquired by Buyer
hereunder, including any liabilities and obligations related to or arising from
(i) the occupancy, operation, use or control of any of the Seller Property prior
to the Closing Date or (ii) the operation of the Business prior to the Closing
Date, in each case incurred or imposed by any Environmental Law, including
liabilities and obligations related to, or arising from, (1) any Release of any
Contaminant on, at or from the Seller Property, including all facilities,
improvements, structures and equipment thereon, surface water or sediments
thereon or adjacent thereto and soil or groundwater thereunder, or any
conditions whatsoever on, under or in the vicinity of such real property or
(2) the off-site disposal of any Contaminant that would create liability for
Sellers as a generator, arranger, or transporter under any applicable
Environmental Law;
          (b) any obligations related to home closings occurring prior to
Closing, except as specifically provided by the terms of the Warranty
Administration Agreement;
          (c) any liabilities in respect of Taxes for which Sellers are liable
pursuant to Section 8.3;

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          (d) any payables and other liabilities or obligations of the Companies
to TEP or any of its Affiliates;
          (e) any costs and expenses incurred by Sellers incident to the
negotiation and preparation of this Agreement and the pre-closing performance
and compliance by Sellers with the agreements and conditions contained herein;
          (f) any liabilities under RESPA arising from the operation of the
Business prior to the Closing Date;
          (g) any liabilities in respect of any Proceedings, including, without
limitation, any Proceeding listed on Schedule 5.19;
          (h) accrued liabilities of any kind required to be reflected on the
Closing Date Balance Sheet prepared in accordance with the Agreed Accounting
Principles which were not reflected thereon as a dollar amount;
          (i) any obligations to employees of Sellers (including, without
limitation, under the Seller Plans, any change of control, severance or other
payments), arising prior to Closing or as a result of the transactions
contemplated by this Agreement or any obligations under any Seller Plan, other
than those expressly assumed by Buyer under Section 8.4;
          (j) any liability for any fraud, bribery, kickback or similar
malfeasance;
          (k) any liability under any contract or any other instrument or
agreement assumed by Buyer pursuant to Section 2.3 that arises after the Closing
Date but that arises out of or relates to any breach or default that occurred
prior to the Closing Date;
          (l) any liability to any stockholder, member or partner of any Seller
or Affiliate of any Seller, including any liability of any Seller to distribute
to any such parties or otherwise apply all or any part of the consideration
received hereunder;
          (m) any liability to indemnify, reimburse or advance amounts to any
manager, employee or agent of Sellers or any Affiliate;
          (n) any liability based upon Sellers’ or their Affiliates’ acts or
omissions occurring after the Closing;
          (o) any obligation of any Seller to provide a discount off the listing
price to any employee or to any Affiliate of any Seller with respect to any home
purchases;
          (p) any liability for deferred payments to Ohio Savings Bank by
Sellers for the repurchase of warrants;
          (q) any liability to Colonial Crossing Associates, LLC by Sellers for
any lot deferred purchase price equal to water and sewer impact fees which would
have been payable to the City of Fort Myers;
          (r) any liability to North Cape Holdings, LLC by Sellers for the sale
of surplus fill from Coral Lakes; and

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          (s) the liabilities identified on Schedule 2.4.
ARTICLE III
PURCHASE PRICE
     3.1 Purchase Price. Simultaneously with the execution of this Agreement,
Buyer has delivered to Sellers immediately available funds in an amount equal to
Seven Million Five Hundred Thousand Dollars ($7,500,000.00), which shall serve
as a deposit towards the payment of the Purchase Price at the Closing (the
“Deposit”). The purchase price for the Purchased Assets (the “Purchase Price”)
shall be determined in accordance with Section 3.3 and shall be equal to:
          (a) Four Hundred Seventeen Million One Hundred Forty-Two Thousand Five
Hundred Dollars ($417,142,500.00) reduced by the difference between Seventy-Five
Million Dollars ($75,000,000.00) and the cost basis of the Contributed Assets;
plus
          (b) an amount sufficient to retire those certain obligations of
Sellers listed on Schedule 3.1(B) (none of which relate to any Excluded Asset)
which have a balance as of April 30, 2005 equal to One Hundred Sixty-Seven
Million Seven Hundred Twenty-Nine Thousand One Hundred Forty-One Dollars
($167,729,141), subject to adjustments in the amount of such obligations at
Closing by reason of paydowns or borrowings in accordance with the terms of this
Agreement by Sellers prior to the Closing Date, such amount to be established by
the pay-off letters delivered by the holders of such obligations to the Closing
Agent as described in Section 4.4(f) hereof; plus
          (c) the Closing Date Net Worth, as set forth in the certificate
prepared by Sellers as described in Section 3.2 hereof; plus
          (d) up to an aggregate of Thirty-Seven Million Five Hundred Thousand
Dollars ($37,500,000.00) as the Earn-Out Payments pursuant to Section 3.6(a);
plus
          (e) up to an aggregate of Thirty-Seven Million Five Hundred Thousand
Dollars ($37,500,000.00) as Entitlement Payments pursuant to Section 3.6(b).
     3.2 Determination of Estimated Purchase Price. Not less than two
(2) Business Days prior to the Closing Date, Sellers shall deliver to Buyer a
certificate executed on behalf of Sellers by the Chief Executive Officer of TEP,
dated the date of its delivery, stating that there has been conducted under the
supervision of such officer a review of all relevant information and data then
available and setting forth Sellers’ good faith best estimate of the Estimated
Purchase Price, including an estimate of the Closing Date Net Worth and an
estimate of the various accounts which such officer anticipates, based upon the
most recent available financial statements, will be reflected on the Closing
Date Balance Sheet prepared in accordance with the Agreed Accounting Principles.
     3.3 Determination of Purchase Price.
          (a) As promptly as practicable following the Closing Date (but not
later than sixty (60) days after the Closing Date), Buyer shall:
               (i) prepare, in accordance with the Agreed Accounting Principles,
a balance sheet as of the Closing Date (the “Preliminary Closing Date Balance
Sheet”);

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               (ii) determine Closing Date Net Worth and, therefore, the
Purchase Price in accordance with the provisions of this Agreement (such
Purchase Price as determined by Buyer being referred to as the “Preliminary
Purchase Price”) (the parties acknowledge that the amount set forth in
Section 3.1(a) and the maximum aggregate amounts in Sections 3.1(d) and (e)
shall not be subject to objection by Buyer); and
               (iii) deliver to Sellers the Preliminary Closing Date Balance
Sheet and a certificate setting forth the Preliminary Purchase Price
(collectively, the “Preliminary Accounting Report”).
          (b) Promptly following receipt of the Preliminary Accounting Report,
Sellers may review the same and, within thirty (30) days after the date of such
receipt (“Sellers’ Review Period”), may deliver to Buyer a certificate (signed
by the Chief Executive Officer of TEP) setting forth their objections to the
Preliminary Closing Date Balance Sheet and the Preliminary Purchase Price as set
forth in the Preliminary Accounting Report, together with a detailed explanation
of the reasons therefor and calculations which, in its view, are necessary to
eliminate such objections. If Sellers do not so object within Sellers’ Review
Period, the Preliminary Closing Date Balance Sheet and the Preliminary Purchase
Price set forth in the Preliminary Accounting Report shall be final and binding
as the Closing Date Balance Sheet (the “Closing Date Balance Sheet” and the
“Purchase Price” respectively), for purposes of this Agreement but shall not
limit the representations, warranties, covenants and agreements of the parties
set forth elsewhere in this Agreement.
          (c) If Sellers so object (and provide the required supporting
documentation) within the Sellers’ Review Period, Buyer and Sellers shall use
their reasonable efforts to resolve by written agreement (the “Agreed
Adjustments”) any differences as to the Preliminary Closing Date Balance Sheet
and the calculation of the Closing Date Net Worth included in the determination
of the Preliminary Purchase Price and, if Sellers and Buyer so resolve any such
differences, the Preliminary Closing Date Balance Sheet and the calculation of
the Closing Date Net Worth included in the determination of the Preliminary
Purchase Price set forth in the Preliminary Accounting Report as adjusted by the
Agreed Adjustments shall be final and binding as the Closing Date Balance Sheet
and the Purchase Price, respectively, for purposes of this Agreement but shall
not limit the representations, warranties, covenants and agreements of the
parties set forth elsewhere in this Agreement.
          (d) If any objections raised by Sellers are not resolved by Agreed
Adjustments within the thirty (30) day period next following the Sellers’ Review
Period, then Buyer and Sellers shall submit the objections that are then
unresolved (the “Unresolved Objections”) to BDO Seidman (or to such other
accounting firm acceptable to both Seller and Buyer) and such firm (the
“Accounting Firm”) shall be directed by Buyer and Sellers to resolve the
Unresolved Objections (based solely on the presentations by Buyer and by Sellers
as to whether any Unresolved Objection had been determined in a manner
consistent with the Agreed Accounting Principles) as promptly as reasonably
practicable and to deliver written notice to each of Buyer and Sellers setting
forth its resolution of the Unresolved Objections. The Preliminary Closing Date
Balance Sheet and the Closing Date Net Worth included in the determination of
the Preliminary Purchase Price, after giving effect to any Agreed Adjustments
and to the resolution of Unresolved Objections by the Accounting Firm, shall be
final and binding as the Closing Date Balance Sheet and the Closing Date Net
Worth included in the determination of Purchase Price, respectively, for
purposes of this Agreement but shall not limit the representations, warranties,
covenants and agreements of the parties set forth elsewhere in this Agreement.
          (e) The parties hereto shall make available to Buyer, Sellers and, if
applicable, the Accounting Firm, such books, records and other information
(including work papers) as any of the

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foregoing may reasonably request to prepare or review the Preliminary Accounting
Report or any matters submitted to the Accounting Firm.
          (f) If the Accounting Firm determines that the positions of Sellers
are correct as to thirty percent (30%) or more in dollar amount of the
Unresolved Objections, then Buyer shall pay the fees and expenses of the
Accounting Firm. In all other cases, Sellers shall pay the fees and expenses of
the Accounting Firm.
     3.4 Adjustment. Promptly (but not later than five (5) Business Days) after
the determination of the Purchase Price pursuant to Section 3.3 that is final
and binding as set forth therein:
          (a) if the Purchase Price exceeds the Estimated Purchase Price
(i) Buyer shall pay to Sellers, by wire transfer of immediately available funds
to such bank account of Sellers as Sellers shall designate in writing to Buyer,
an amount equal to the excess, if any, of the Purchase Price over the Estimated
Purchase Price and (ii) the Escrow Agent shall release the Holdback Funds to the
Seller; or
          (b) if the Estimated Purchase Price exceeds the Purchase Price by an
amount equal to or greater than the Holdback Amount (i) Sellers shall pay to
Buyer, by wire transfer of immediately available funds to such bank account of
Buyer as Buyer shall designate in writing to Sellers, an amount equal to the
excess of the Estimated Purchase Price minus the Holdback Amount over the
Purchase Price and (ii) the Escrow Agent shall release the Holdback Funds to
Buyer; or
          (c) if the Estimated Purchase Price exceeds the Purchase Price by an
amount less than the Holdback Amount, the Escrow Agent shall release from the
Holdback Funds (i) to Buyer, an amount equal to the excess of the Estimated
Purchase Price over the Purchase Price and (ii) to Sellers, the remainder of the
Holdback Funds after releasing the amount set forth in clause (i).
     3.5 Allocation of Purchase Price. The parties agree that, for federal
income tax purposes, the Purchase Price shall be allocated among the Purchased
Assets and the covenant not to compete granted pursuant to Section 8.1 in
accordance with a schedule (the “Allocation Schedule”), which shall be prepared
by Sellers and reviewed and approved by Buyer in accordance with the formula set
forth on Schedule 3.5 hereto at least five (5) days prior to the Closing Date.
The Allocation Schedule shall be reasonable and shall be prepared in accordance
with Section 1060 of the Code and the Treasury Regulations promulgated
thereunder. Sellers agree to complete and timely file Internal Revenue Service
Form 8594 in accordance with the Allocation Schedule pursuant to this
Section 3.5 and to furnish Buyer with a copy of such form prepared in draft form
at least forty-five (45) days prior to the filing due date of such form. Neither
Sellers nor Buyer shall file any return or take a position with any taxing
authority that is inconsistent with the Allocation Schedule. Sellers agree to
revise such Form 8594 after all adjustments, if any, have been made to the
Purchase Price in accordance with Section 3.4.
     3.6 Post-Closing Payments.
          (a) (i) As additional consideration for the sale and transfer of the
Purchased Assets, Buyer shall pay to Sellers by wire transfer of immediately
available funds the amounts determined pursuant to Schedule 3.6(A). EBITDA
received from the home closings in Substitute Projects and Additional Projects
shall be included in Buyer’s EBITDA for purposes of calculating Sellers’
entitlement to receive the Earn-Out Payments as provided on Schedule 3.6(A).
               (ii) In the event that Technical Olympic, S.A., a corporation
organized and existing under the laws of Greece shall no longer own or control
more than fifty percent (50%) of the outstanding equity interest in Technical
Olympic USA, Inc., or in the event that Tousa Homes LP, a

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Delaware limited partnership, or its Affiliates, shall no longer be the owner of
or control at least fifty percent (50%) of the membership interests in TE/TOUSA,
LLC (either event shall be a “Change of Control”), then Sellers shall be
entitled to receive and there shall be paid to Sellers within thirty (30) days
of the date that the Change of Control occurs an amount equal to (1) the sum of
the maximum Earn-Out Payments available for all remaining Earn-Out Periods
beginning with the period in which the Change of Control occurs, multiplied by
(2) a fraction (not to exceed 1.00), the numerator of which shall be the
aggregate Actual EBITDA achieved by Buyer for all Earn-Out Periods preceding the
Earn-Out Period in which the Change of Control occurs, and the denominator of
which shall be the aggregate Targeted EBITDA for such preceding Earn-Out
Periods. In no event shall the amount paid by Buyer as Earn-Out Payments exceed
Thirty Seven Million Five Hundred Thousand Dollars ($37,500,000.00).
          (b) (i) Buyer shall pay to Sellers by wire transfer of immediately
available funds the amounts set forth on Schedule 3.6(B) for each Unentitled Lot
listed on such schedule which becomes a Fully Entitled Lot. Each such payment,
if any, to be made to Sellers is referred to in this Agreement as an
“Entitlement Payment.” Prior to Closing, Sellers shall cause the engineer which
has been responsible for obtaining the land use change, zoning and other
governmental approvals and permits for each of the Unentitled Lots to deliver to
the parties a certificate (the “Closing Date Certificate”), setting forth each
of the permits and approvals which have been obtained for such respective Lots,
and each of the permits and approvals which remain to be obtained in order for
Buyer to be able to obtain building permits for the construction of homes on
such Lots, excluding the approval and recording of plats for such Lots. The
delivery by such engineer, or any replacement engineer which Buyer may retain to
replace the engineer which delivered the certificate as of the Closing Date, of
a second certificate (the “Entitlement Certificate”) certifying that all of the
permits and approvals listed on the Closing Date Certificate or a Lot or group
of Lots have been obtained shall constitute conclusive proof that such Lot(s) is
now Fully Entitled. Similarly, the delivery by Sellers to Buyer of certified
copies of all of the permits and approvals listed on the Closing Date
Certificate shall also constitute conclusive proof that such Lot(s) is Fully
Entitled. Sellers shall keep Buyer reasonably advised of any improvements which
are required to obtain such permits and approvals and the anticipated cost of
the same. Buyer shall pay to Sellers the Entitlement Payments due with respect
to any Lot for which an Entitlement Certificate has been delivered within ten
(10) Business Days of the invoice from Sellers. Sellers shall submit an invoice
to Buyer no more frequently than once every calendar month for Lots that were
not Fully Entitled at Closing, but have become Fully Entitled since Closing. In
no event shall the amount paid by Buyer as Entitlement Payments exceed
Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000.00).
               (ii) At any time prior to or after Closing, Sellers shall have
the right to replace any Project listed on Schedule 3.6(B) with a Substitute
Project. If any Substitute Lot is Fully Entitled at the time of the approval
thereof by Buyer, then the Entitlement Payment for such Lot shall be payable
with the next monthly payment following the earlier of execution of appropriate
transaction documents conveying such Substitute Lot to Buyer or granting to
Buyer the right to acquire such Substitute Lot. The amount which Sellers shall
be entitled to receive as Entitlement Payments for such Substitute Lot(s) shall
be calculated by taking the Value of the Substitute Project (calculated in the
same manner set forth in the definition of Substitute Project), and multiplying
such Value by .27998, to establish the aggregate amount of Entitlement Payments
available to Sellers for such Substitute Project. The amount of the additional
Entitlement Payment for each Lot in such Substitute Project shall be calculated
by dividing the total amount of Entitlement Payments for the Substitute Project
by the number of Fully Entitled Lots in the Substitute Project. In no event
shall the amount paid by Buyer as Entitlement Payments exceed Thirty-Seven
Million Five Hundred Thousand Dollars ($37,500,000.00).
               (iii) Sellers shall have the right to propose to Buyer Additional
Projects which are not presently part of the Purchased Assets but which are
offered to Buyer under the Right of First Offer Agreement. The projects
identified on Schedule 7.6 as “Independence 185” and

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“Summerport” shall also be considered Additional Projects. In the event that
Sellers and Buyer agree upon the terms and conditions upon which an Additional
Project will be sold to and purchased by Buyer, then Sellers shall be entitled
to receive Entitlement Payments with respect to such Lots within the Additional
Projects which shall be or become Fully Entitled. The amount which Sellers shall
be entitled to receive as Entitlement Payments for such additional Lots shall be
calculated by taking the Value of the Additional Project (calculated in the same
manner set forth in the definition of Substitute Project), and multiplying such
Value by .27998, to establish the aggregate amount of Entitlement Payments
available to Sellers for such Additional Project. The amount of the additional
Entitlement Payment for each Lot in such Additional Project shall be calculated
by dividing the total amount of Entitlement Payments for the Additional Project
by the number of Fully Entitled Lots in the Additional Project. Solely for
purposes of estimating, determining and adjusting the Purchase Price, including
the payments in respect thereof, pursuant to Sections 3.2, 3.3 and 3.4, it shall
be assumed that all of the Earn-Out Payments and the maximum amount of the
Entitlement Payments have been paid. In no event shall the amount paid by Buyer
as Entitlement Payments exceed Thirty-Seven Million Five Hundred Thousand
Dollars ($37,500,000.00). Buyer shall have the right to direct Sellers to convey
or to cause to be conveyed title to such Additional Project(s) to a separate
entity owned by Technical Olympic USA, Inc. or its Affiliates, if Buyer is
unable to purchase such Additional Project. In the event of such a conveyance,
the EBITDA (as defined in Schedule 3.6(A)) realized by such separate entity from
the sale of homes in such Additional Project(s) shall be added to the Actual
EBITDA of Buyer for each respective Earn-Out Period.
          (c) In the event of a Change of Control, one hundred percent (100%) of
the amount of the payments due under Section 3.6(b) which shall then be unpaid
to Sellers shall be earned and shall not be subject to reduction or set-off.
Such sums shall be paid to Sellers (i) with respect to the Contract Property, at
the time that Buyer acquires title to the Lot for which the Entitlement Payment
is due, and (ii) with respect to the Optioned Real Property, at the time that
the “Owner” under the respective Option Agreement for the Project which includes
such Lot acquires title to the respective Lot for which the Entitlement Payment
is due. With respect to Lots which are, at any time after Closing, already owned
by Buyer or by an Option Agreement “Owner,” the Entitlement Payment will be
immediately due and payable at the time that such Change of Control occurs.
          (d) Pursuant to the New Option Agreements and the New Purchase
Contract (as set forth on Schedule 5.17(I)), Buyer is responsible for obtaining
the governmental approvals and permits remaining to be obtained with respect to
the Projects which are the subject to such agreements in order for the Lots
within such respective projects to become Fully Entitled (the “Remaining
Approvals”) after (i) in the case of New Option Agreements, the date the owner
under each such New Option Agreement acquires title to the Real Property which
is the subject of such new Option Agreement, and (ii) in the case of New
Purchase Contracts, the date on which Buyer acquires title to the Real Property
which is the subject of such New Purchase Contract. Buyer shall keep Sellers
reasonably informed of the progress of its activities in obtaining such
Remaining Approvals and shall provide Sellers with copies of all submissions to,
or written communications with, the governmental agencies from which such
Remaining Approvals are to be obtained. Sellers shall be entitled to attend
meetings with such governmental agencies and shall be given reasonable notice of
such meetings.
     3.7 Proration of Taxes.
          Real estate and personal property taxes with respect to all of the
Real Property and any other Purchased Asset shall be prorated at Closing. Where
available, the 2005 Notice of Proposed Property Taxes will be used to estimate
the amount of property taxes due and when not available, the 2004 actual tax
bill. All such prorations are to be based on the maximum available discount for
early payment. Within thirty (30) days after the issuance of the actual 2005
real property and tangible personal property tax bills, the taxes shall be
reprorated based on the actual taxes. In the event that the actual taxes

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are higher than the estimate, Sellers shall promptly pay the difference to
Buyer. In the event that the actual taxes are less than estimated, Buyer shall
promptly pay the difference to Sellers. If Sellers fail to make the payment due
to Buyer, then Buyer, in addition to all other rights which it may have under
law, may offset such obligation as set forth in Section 11.1(c)(iii).
ARTICLE IV
CLOSING
     4.1 Closing Date. The Closing shall be consummated at 1:00 p.m., local
time, at the election of Buyer, with two (2) Business Days notice to Sellers, on
July 1, 2005, July 18, 2005 or August 1, 2005, at the offices of Greenberg
Traurig, P.A., 777 South Flagler Drive, Suite 300 East, West Palm Beach,
Florida, or at such other place or at such other time as shall be agreed upon by
Buyer and Sellers. The Closing shall be deemed to have become effective as of
11:59 p.m., Eastern time, on the date on which the Closing occurs (the “Closing
Date”), provided that if the Closing occurs on July 18, 2005, it shall be deemed
effective as of July 1, 2005 for purposes of home closings and all costs and
revenues associated with the operation of the Business, including the interest
payable in connection with Schedule 3.1(B) through July 18, 2005. If the Closing
shall occur on a date other than July 18, 2005, it shall be deemed effective as
of such date. Interest incurred for the period July 1, 2005 through July 18,
2005 shall be included in the Purchase Price to be paid by Buyer.
     4.2 Payment on the Closing Date. Subject to fulfillment or waiver of the
conditions set forth in Article 9 at Closing, Buyer shall pay Sellers by wire
transfer of immediately available funds to the account specified in Schedule 4.2
an amount equal to the Estimated Purchase Price, less:
               (i) the Deposit, less
               (ii) Seventy-Five Million Dollars ($75,000,000.00), representing
the Earn-Out Payments and the Entitlement Payments; and less
               (iii) Five Million Dollars ($5,000,000.00) (the “Holdback
Amount”), which Holdback Amount shall be delivered by Buyer to the Escrow Agent
by wire transfer of immediately available funds to the account specified by the
Escrow Agent along with instructions to hold and thereafter disburse the
Holdback Funds according to Section 3.4; and
               (iv) the amounts due as of the Closing Date to various parties to
which Sellers are indebted as of the Closing Date as set forth on
Schedule 3.1(B), which amounts shall be delivered by Buyer to the Closing Agent,
with instructions to pay such amounts to the respective parties in exchange for
the delivery of instruments of satisfaction of the obligations owed to such
parties.
     4.3 Buyer’s Additional Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article 9, at Closing, Buyer shall deliver to Sellers
all the following:
          (a) a copy of Buyer’s Certificate of Formation certified as of a
recent date by the Secretary of State of the State of Delaware;
          (b) a certificate of good standing of Buyer issued as of a recent date
by the Secretary of State of the State of Delaware;
          (c) a certificate of the secretary or an assistant secretary of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to
Sellers, as to (i) no amendments to the Charter Document of Buyer since the date
of the certified copy delivered pursuant to clause (a) above; (ii) the operating
agreement of Buyer; (iii) the resolutions of the Governing Body of Buyer
authorizing the

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execution, delivery and performance of this Agreement and the Buyer Ancillary
Agreements and the transactions contemplated hereby and thereby; and
(iv) incumbency and signatures of the officers of Buyer executing this Agreement
and any Buyer Ancillary Agreement;
          (d) the certificate of Buyer contemplated by Section 10.1 duly
executed by an authorized officer of Buyer;
          (e) an opinion of counsel to Buyer substantially in the form contained
in Exhibit A;
          (f) the Warranty Administration Agreement duly executed by Buyer;
          (g) the Employment Agreements duly executed by Buyer;
          (h) the Right of First Offer Agreement duly executed by Buyer;
          (i) the Assignment and Assumption Agreement (including the Copyright
Assignment and the Trademark and Domain Name Assignment, if applicable,
substantially in the forms attached hereto as Exhibits N and O, respectively)
duly executed by Buyer;
          (j) the Assignment and Assumption of Contracts duly executed by Buyer,
          (k) the Assignment and Assumption of Leases duly executed by Buyer;
          (l) the Assignment of Option Documents duly executed by Buyer;
          (m) a certificate evidencing Falcone/Ritchie LLC’s fifty percent (50%)
membership interest in TE/TOUSA, LLC; and
          (n) such other documents and instruments as Sellers may reasonably
request for facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
     4.4 Sellers’ Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article 10 at Closing, Sellers shall deliver to Buyer all the
following:
          (a) a copy of the Charter Document of such Seller certified as of a
recent date by the Secretary of State of the State of Florida;
          (b) a certificate of good standing of such Seller issued as of a
recent date by the Secretary of State of the State of Florida;
          (c) a certificate of the manager, managing member or secretary or an
assistant secretary of such Seller, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, as to (i) no amendments to the
Charter Document of such Seller since the date of the certified copy delivered
pursuant to clause (a) above; (ii) the by-laws or operating agreement of such
Seller; (iii) with respect to such Seller, the resolutions of the Governing Body
of such Seller and the written consent of the shareholders or members, as the
case may be, authorizing the execution, delivery and performance of this
Agreement and the Seller Ancillary Agreements and the transactions contemplated
hereby and thereby; (iv) any other resolutions or approvals authorizing the
execution, delivery and performance of this Agreement and the Seller Ancillary
Agreements and the transactions contemplated hereby and thereby to the extent
required pursuant to any of the organizational documents of any Seller; and
(v) incumbency and signatures of the officers of each Seller executing this
Agreement and any Seller Ancillary Agreement;

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          (d) an opinion of counsel to Sellers substantially in the form
contained in Exhibit B;
          (e) copies of all consents, waivers or approvals obtained by Sellers
with respect to the transfer of the Purchased Assets, or the consummation of the
transactions contemplated by this Agreement;
          (f) one or more payoff letters, substantially in the form attached
hereto as Exhibit C, from any Person to whom Sellers owe indebtedness for
borrowed money or as a deferred purchase price, on terms reasonably satisfactory
to Buyer, which commit to release any Encumbrances upon payment of a specific
amount from the proceeds of the sale of the Purchased Assets, it being
understood that Sellers represent that all such Persons and the amounts due to
each of them as of the date hereof are specified in Schedule 3.1(B) subject to
adjustment as of the date of Closing as provided in Section 3.1(b);
          (g) duly executed notices terminating each of the powers of attorney
specified in Schedule 5.27 and replacing the authorized signatories with respect
to each of the accounts specified in Schedule 5.27 with individuals designated
by Buyer;
          (h) the certificates to be delivered to Buyer pursuant to Section 4.9;
          (i) the Warranty Administration Agreement duly executed by Sellers;
          (j) the Employment Agreements duly executed by Neil Eisner, Jan
Ickovic, any Division President or any Division Manager identified by Buyer;
          (k) the Right of First Offer Agreement duly executed by Sellers;
          (l) a letter of credit (the “Indemnity Letter of Credit”) in the
amount of Fifteen Million Dollars ($15,000,000.00) from Ohio Savings Bank or
such other independent financial institution as Buyer may approve, substantially
in the form attached hereto as Exhibit D, securing a portion of Sellers’
indemnification obligations under Section 11.1;
          (m) the certificates contemplated by Sections 9.1 and 9.2, duly
executed by the Chief Executive Officer of each Seller;
          (n) a signed resignation letter by each of the individuals designated
or appointed by Sellers to serve as an officer or director of any homeowners’ or
condominium association or community development district;
          (o) all existing minute books, stock ledgers and corporate seals of
each of the homeowners or condominium association or community development
districts of which any Seller is the declarant and true and complete copies of
the offering prospectus and of all offering materials required to be provided to
retail buyers by the Florida Condominium Act;
          (p) an Assignment and Assumption Agreement (the “Assignment and
Assumption Agreement”), substantially in the form attached hereto as Exhibit E,
duly executed by Sellers, dated the Closing Date, assigning the Purchased Assets
(other than Owned Real Property) to Buyer (including the Copyright Assignment
and the Trademark and Domain Name Assignment, if applicable, substantially in
the forms attached hereto as Exhibits N and O, respectively) and such other
documents and other instruments as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer;

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          (q) an Assignment and Assumption Agreement with respect to each of the
Purchase Contracts (the “Assignment and Assumption of Contracts”), substantially
in the form attached hereto as Exhibit E-1, duly executed by Sellers, and
consented to in writing by the applicable Seller under each such Purchase
Contract, dated the Closing Date, assigning the Purchase Contracts to Buyer and
such other documents and other instruments as Buyer may reasonably request or as
may be otherwise necessary to evidence and effect the sale, assignment,
transfer, conveyance and delivery of the Purchase Contracts to Buyer. If the
consent of any contract seller is not obtained with respect to any Purchase
Contract, such fact shall not result in a delay of Closing, but Sellers shall
replace such Lots with Substitute Lots;
          (r) an Assignment and Assumption Agreement with respect to each of the
Leased Real Property (the “Assignment and Assumption of Leases”), substantially
in the form attached hereto as Exhibit E-2, duly executed by Sellers, and
consented to in writing by the landlord with respect to each Leased Real
Property, dated the Closing Date, assigning the Leased Real Property to Buyer
and such other documents and other instruments as Buyer may reasonably request
or as may be otherwise necessary to evidence and effect the sale, assignment,
transfer, conveyance and delivery of the Leased Real Property to Buyer;
          (s) a bill of sale, substantially in the form attached hereto as
Exhibit F, duly executed by Sellers, dated the Closing Date, assigning the
Purchased Assets to Buyer and such other documents and other instruments as
Buyer may reasonably request or as may be otherwise necessary to evidence and
effect the sale, assignment, transfer, conveyance and delivery of the Purchased
Assets to Buyer;
          (t) special warranty deeds conveying to Buyer fee simple marketable
title to the Owned Real Property listed in Schedule 5.10(A), free and clear of
all Encumbrances, excepting only Permitted Encumbrances, including taxes for the
year 2005;
          (u) owners’ affidavits in form sufficient to enable the Title Company
to delete from the Policy, the standard exceptions for parties in possession and
for construction liens (except with respect to WIP);
          (v) gap affidavits in form sufficient to enable the Title Company to
delete the gap exception, solely with respect to mechanics’ liens arising from
the Excluded Liabilities; and
          (w) a promissory note payable by TEP to Buyer in the form attached
hereto as Exhibit Q in the principal amount of One Million Four Hundred
Thirty-Five Thousand Dollars ($1,435,000.00).
     4.5 Governmental Permits. For each Owned Property Governmental Permit
listed on Schedule 5.9(A) hereto (the “Assigned Permits”), Sellers shall execute
and deliver to Buyer at Closing such assignments and other documents as may
reasonably be necessary to transfer or cause to be transferred to Buyer such
Owned Property Governmental Permit by the parties having the authority to so
transfer; provided, however, with respect to any Owned Property Governmental
Permit identified on Schedule 5.9(A) hereto as “not transferable,” Sellers shall
be obligated as set forth in Section 7.3 hereof. After Closing, Buyer shall be
responsible for taking such further actions as may be necessary to complete the
transfer of such permits, and Sellers shall execute such further instruments as
may be necessary to effectuate such transfer, providing that the cost of
completing such transfer shall be borne solely by Buyer.

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     4.6 Option Lots.
          (a) Prior to Closing, Buyer shall have the right to review all
agreements relating to the Optioned Real Property (the “Option Documents”)
including, without limitation, option agreements, construction agreements,
memoranda of option and ancillary documents.
          (b) At Closing, Sellers shall deliver to Buyer, with respect to each
parcel of Optioned Real Property, an Assignment and Assumption of Option
Agreement and Related Documents in the form attached hereto as Exhibit G (the
“Assignment of Option Documents”). Each such Assignment of Option Documents
shall be consented to by the holder of fee simple title to such Optioned Real
Property (the “Owner”), as set forth in the “Consent of Owner” section of the
Assignment of Option Documents. For any Optioned Real Property with respect to
which a Seller has a recorded memorandum of option, the Assignment of Option
Documents shall be recorded in the public records of the county in which such
Optioned Real Property is located. For any Optioned Real Property with respect
to which Seller does not have a recorded memorandum of option, Sellers shall
cause the applicable Owner to execute a Memorandum of Option and Development
Agreement in the form attached as Exhibit “B” to the Assignment of Option
Documents, which shall also be executed by Buyer at Closing. In the event that
there is a mortgage on any of the Optioned Real Property, Sellers shall cause
the applicable Owner to obtain from the holder of such mortgage a recognition,
subordination, non-disturbance and attornment agreement (“SNDA”) in the form
attached as Exhibit “D” to the Assignment of Option Documents. If the “Consent
of Owner” and SNDA are not obtained with respect to any Optioned Real Property,
such fact shall not result in a delay of Closing, but such affected Lot shall be
excluded from the Optioned Real Property and Sellers shall replace such Lots
with Substitute Lots. Buyer shall not unreasonably withhold its consent to any
proposed modification of the “Consent of Owner” or SNDA requested by an Owner or
mortgagee.
     4.7 Falcone/Ritchie.(a) Falcone/Ritchie shall have delivered a certificate
of its manager, managing member, secretary or an assistant secretary, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer, as to
(i) no amendments to its Charter Document since the date of the certified copy
delivered as of the date of execution of this Agreement; (ii) its operating
agreement; (iii) resolutions of its Governing Body and the written consent of
its members, authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby; (iv) any other resolutions
or approvals authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby to the extent required
pursuant to any of its organizational documents; and (v) incumbency and
signatures of the officers or manager of Falcone/Ritchie executing this
Agreement.
     4.8 Assignment of Developer/Declarant Rights. Sellers shall have delivered
to Buyer an assignment of developer/declarant rights (the “Assignment of
Developer/Declarant Rights”), substantially in the form attached hereto as
Exhibit H, with respect to each Association listed on Schedule 5.33.
     4.9 FIRPTA Certificate. Sellers shall have delivered to Buyer a
certification of non-foreign status, in form and substance reasonably
satisfactory to Buyer, in accordance with Treas. Reg. §1.1445-2(b), and Buyer
shall have no actual knowledge that such certification is false or receive a
notice that the certification is false pursuant to Treas. Reg. §1.1445-4.
     4.10 Other Deliverables. Sellers shall execute and deliver (and cause its
Affiliates to execute and deliver) all such other and further materials and
documents and instruments of conveyance, transfer or assignment as Buyer
reasonably requests to effect, record or verify the transfer to and vesting in
Buyer, of the right, title and interest of Sellers and their Affiliates and to
the Purchased Assets, free and clear of

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all Encumbrances other than Permitted Encumbrances, in accordance with the terms
of this Agreement. To the extent title to the Purchased Assets is held by an
Affiliate of Sellers, Sellers shall cause such Affiliate to execute and deliver
all such other and further materials and documents and instruments of
conveyance, transfer or assignment as Buyer reasonably requests to effect,
record or verify the transfer to and vesting in Buyer, of the right, title and
interest of such Affiliate in and to the Purchased Assets, free and clear of all
Encumbrances other than the Permitted Encumbrances, in accordance with the terms
of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
     As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, Sellers hereby, jointly and severally,
represent and warrant to Buyer and agrees as follows1:
     5.1 Organization and Authority of Sellers; No Conflict.
          (a) Each Seller is a corporation or limited liability company, as
indicated on Schedule 5.1(A) duly organized, validly existing and in good
standing under the laws of the State of its formation, as indicated on
Schedule 5.1(A) and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction listed in Schedule
5.1(A), which jurisdictions are the only ones in which the ownership or leasing
of its assets and properties or the conduct of its business requires such
qualification. Sellers, collectively have full power and authority to own the
Purchased Assets and to execute, deliver and perform this Agreement and all of
the Seller Ancillary Agreements. The execution, delivery and performance of this
Agreement and the Seller Ancillary Agreements by each Seller have been duly
authorized and approved by such Seller’s Governing Body and other than as may
have been obtained, do not require any further authorization or consent of any
Seller or any of their respective stockholders or other equity owners, as the
case may be. This Agreement is the legal, valid and binding obligation of each
Seller enforceable in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general applicability affecting the enforcement of
creditors’ rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and upon execution and delivery by each Seller, each Seller
Ancillary Agreement will be a legal, valid and binding obligation of each Seller
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability affecting the enforcement of creditors’
rights and (ii) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
          (b) True and complete copies of the Charter Documents and all
amendments thereto and of the by-laws or operating agreement, as amended to
date, of each Seller have been delivered to Buyer.
          (c) Except as set forth on Schedule 5.1(C), (the “Required Consents”),
neither the execution and delivery of this Agreement or any of the Seller
Ancillary Agreements, the consummation of
 

1   For purposes of this Article V, all references to the “Purchased Assets”
shall be deemed to include the “Contributed Assets.”

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any of the transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof will:
               (i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Encumbrance, other than Permitted
Encumbrances, upon any of the Purchased Assets or any assets or properties of
any Seller, under (A) the Charter Document, by-laws, operating agreement or
other organizational documents of any Seller, (B) any Seller Agreement, (C) any
note, instrument, agreement, mortgage, lease, license, franchise, permit or
other authorization, right, restriction or obligation to which any Seller is a
party or the Purchased Assets or the assets or properties of any Seller are
subject or by which any Seller is bound, the default under which could
reasonably be expected to have a Material Adverse Effect, (D) any Court Order to
which any Seller is a party or any of the Purchased Assets are subject or by
which any Seller is bound, or (E) to the Knowledge of Sellers, any Requirements
of Laws affecting any Seller, the Purchased Assets or the Business of any
Seller; or
               (ii) require the approval, consent, authorization or act of, or
the making by Sellers of any declaration, filing or registration with, any
Person, except for those declarations, filings or registrations, the failure of
which to obtain could not reasonably be expected to have a Material Adverse
Effect.
          (d) Upon delivery to Buyer on the Closing Date of the assignment
documents contemplated by Section 4.4, Sellers shall thereby transfer to Buyer
good and marketable title to the Purchased Assets, free and clear of all
Encumbrances, other than Permitted Encumbrances.
     5.2 Subsidiaries and Investments. Except as set forth on Schedule 5.2, no
Seller directly or indirectly (i) except for TEP’s interests in the Companies,
owns, of record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, limited liability company,
joint venture or other entity which is currently involved in or related to the
Business or (ii) except for any homeowners’ association of which Sellers may be
members, control any corporation, partnership, limited liability company, joint
venture or other entity which is involved in or related to the Business.
     5.3 Assets Generally
          (a) Other than the Excluded Assets, the Purchased Assets, together
with the services to be provided to Buyer pursuant to the Supply Agreements and
the Subcontractor Agreements, constitute, and on the Closing Date will
constitute, all of the assets and services that are necessary or appropriate to
permit the operation of the Business in substantially the same manner as such
operations have heretofore been conducted.
          (b) Sellers hold, as applicable, good and marketable fee title, a
valid contract, a valid and exclusive option, a license to or a leasehold
interest in all of the Purchased Assets, free and clear of any Encumbrance,
other than the Permitted Encumbrances. Upon consummation of the transactions
contemplated by this Agreement, Buyer, will acquire good and marketable title to
all of the Purchased Assets, free and clear of all Encumbrances, other than the
Permitted Encumbrances. Once Buyer has made the payments relating to the
Sellers’ debt required by Section 3.1(b) hereof, no Person other than Sellers
shall have any right or interest in the Purchased Assets, including the right to
grant interests in the Purchased Assets to third parties, except for assets
licensed or leased from third parties which are set forth in the schedules
hereto and identified as such.

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          (c) To the extent any asset material to the conduct of the Business is
held under any lease, security agreement, conditional sales contract, lien, or
other title retention or security arrangement, then any such document is listed
on Schedule 5.11(B) hereto.
          (d) Except as provided in this Agreement or limited by a Requirement
of Law or Seller Agreement to the Knowledge of Sellers, no restrictions will
exist on Buyer’s right to sell, resell, license or sublicense any of the
Purchased Assets or engage in the Business, nor will any such restrictions be
imposed on Buyer as a consequence of the transactions contemplated by this
Agreement.
          (e) All of the tangible personal property included in the Purchased
Assets is in good operating condition and repair, ordinary wear and tear
excepted. Sellers have not received notice of any violation of any Requirement
of Law relating to any of the Purchased Assets which violation would have a
Material Adverse Effect.
     5.4 Financial Statements. Schedule 5.4 contains (i) the audited balance
sheet of Sellers on a consolidated basis as of June 30, 2003 and June 30, 2004
and the related statements of income and cash flows for the years then ended,
together with the audit report thereon of Deloitte & Touche LLP (the “Audited
Financial Statements”), (ii) the unaudited balance sheet of Sellers on a
consolidated basis as of the Balance Sheet Date and the related statements of
income and cash flows for the eight (8) months then ended, (iii) the unaudited
balance sheet reflecting the Purchased Assets and Assumed Liabilities as of the
Balance Sheet Date and the related actual and as adjusted statements of income
and cash flows for the eight (8) months then ended related to such Purchased
Assets and Assumed Liabilities and (iv) the unaudited balance sheet of Sellers
on a consolidated basis as of March 31, 2005 and the related actual and as
adjusted statements of income and cash flows for the nine (9) months then ended
(collectively (ii), (iii) and (iv), the “Unaudited Financial Statements” and
together with the Audited Financial Statements, the “Financial Statements”).
Schedule 5.4 also contains a detailed composition of Sellers’ restricted cash.
Except as set forth therein or in the notes thereto, such Financial Statements
have been prepared in conformity with GAAP consistently applied, and such
balance sheets and related statements of income and cash flow present fairly the
financial position and results of operations and cash flows of Sellers, the
Purchased Assets and Assumed Liabilities on a consolidated basis as of their
respective dates and for the respective periods covered thereby; provided that
such unaudited financial statements do not include any notes with respect
thereto. Sellers have also delivered to Buyer copies of all letters from
Sellers’ auditors to Sellers’ officers, directors or shareholders or other
equity owners, as the case may be, during the eighteen (18) months preceding the
execution of this Agreement, together with copies of all responses thereto.
     5.5 Operations Since Balance Sheet Date.
          (a) Except as set forth on Schedule 5.5(A), since the Balance Sheet
Date there has been:
               (i) no Material Adverse Change, and no fact or condition exists
or is threatened which might reasonably be expected to cause a Material Adverse
Change in the future; and
               (ii) no damage which could reasonably be expected to have a
Material Adverse Effect, destruction, loss or claim, whether or not covered by
insurance, or condemnation or other taking adversely affecting any of the
Purchased Assets, the assets or properties of any Seller or the Business.
          (b) Except as set forth on Schedule 5.5(B), since the Balance Sheet
Date, each Seller has conducted the Business only in the ordinary course and in
conformity with past practice and has not

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entered into any transaction outside of the ordinary course of business. Without
limiting the generality of the foregoing, since the date of the Audited
Financials, except as set forth on such Schedule, no Seller has:
               (i) sold, leased (as lessor), transferred or otherwise disposed
of (including any transfers from one of the Companies to TEP or any of its
Affiliates), or mortgaged or pledged, or imposed or suffered to be imposed any
Encumbrance on, any of the assets reflected on the Balance Sheet or any assets
acquired after the Balance Sheet Date, except (a) for the sale of homes to
third-party homebuyers in the ordinary course of the Business consistent with
past practice, (b) for minor amounts of personal property sold or otherwise
disposed of for fair value in the ordinary course of the Business consistent
with past practice, (c) Permitted Encumbrances and (d) borrowings in the
ordinary course of the Business consistent with past practice;
               (ii) cancelled without receiving full consideration therefor any
debts owed to or claims held (including the settlement of any claims or
litigation) by any Seller in excess of Five Thousand Dollars ($5,000.00)
individually or Two Hundred Thousand Dollars ($200,000.00) in the aggregate;
               (iii) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money or as a deferred purchase price or
entered into, as lessee, any capitalized lease obligations (as defined in
Statement of Financial Accounting Standards No. 13) other than in the ordinary
course of the Business consistent with past practice;
               (iv) accelerated or delayed collection of notes or accounts
receivable in advance of or beyond their regular due dates or the dates when the
same would have been collected in the ordinary course of the Business consistent
with past practice;
               (v) delayed or accelerated payment of any account payable or
other liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of the Business consistent
with past practice;
               (vi) allowed the aggregate levels of raw materials, supplies,
work-in-process, finished goods or other materials included in the inventory of
the Business to vary in any respect from the levels customarily maintained in
the Business, except where such variance could not reasonably be expected to
have a Material Adverse Effect;
               (vii) made, or agreed to make, any payment of cash or
distribution of assets to any Seller or any its Affiliates other than salaries
paid to employees in accordance with the levels of compensation set forth on
Schedule 5.15(K);
               (viii) instituted any increase in any compensation payable to any
employee of any Seller with respect to the Business or in any profit-sharing,
bonus, incentive, contingent commission, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare or other benefits
made available to employees of any Seller with respect to the Business;
               (ix) undergone any Material Adverse Change in any Seller’s
relationships with its customers, suppliers or others having business relations
with any Seller, including but not limited to, any arrangements with suppliers
of goods or services relating to billing practices;

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               (x) made any change in the accounting principles and practices
used by any Seller from those applied in the preparation of the Audited
Financials and the related statements of income and cash flow for the period
then ended;
               (xi) undertaken or committed to undertake capital expenditures,
not including the purchase or expenses related to the development of Lots,
exceeding One Million Dollars ($1,000,000.00) in the aggregate;
               (xii) made any change to its internal control over financial
reporting, or identified or became aware of any fraud or any significant
deficiency or weakness in internal control over financial reporting, except
where such change or weakness could not reasonably be expected to have a
Material Adverse Effect;
               (xiii) entered into or become committed to enter into any other
transaction which could reasonably be expected to have a Material Adverse
Effect;
               (xiv) commenced a lawsuit relating to or involving the Purchased
Assets or the Business;
               (xv) failed to comply with any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect;
               (xvi) amended its Charter Document or by-laws or operating
agreement, as applicable; or
               (xvii) entered into any agreement or commitment, whether written
or otherwise, with respect to any of the foregoing.
     5.6 No Undisclosed Liabilities. Except as set forth on Schedule 5.6, no
Seller with respect to the Business is subject to any liability, whether
absolute, contingent, accrued or otherwise, which is not shown or which is in
excess of amounts shown or reserved for in the Balance Sheet (whether or not
required by GAAP to be reflected on the Balance Sheet), other than liabilities
of the same nature as those set forth in the Balance Sheet and reasonably
incurred in the ordinary course of the Business after the Balance Sheet Date
consistent with past practice.
     5.7 Taxes.
          (a) Provision for Taxes. The provisions made for Taxes on the Balance
Sheet are and the provisions to be set forth on the Closing Date Balance Sheet
will be sufficient for the payment of all Taxes of Sellers, whether or not
disputed, at the date of the Balance Sheet and Closing Date Balance Sheet,
respectively, and for all years and periods prior thereto. Since the Balance
Sheet Date, no Seller has incurred any Taxes other than Taxes incurred in the
ordinary course of business consistent in type and amount with past practices of
each Seller.
          (b) Tax Returns Filed. Except as set forth on Schedule 5.7(B), all
federal, state, foreign, county, local and other Tax Returns required to be
filed by or on behalf of each Seller have been timely filed and when filed were
complete and accurate in all respects, except where such incompleteness or
inaccuracies could not reasonably be expected to have a Material Adverse Effect,
and the Taxes shown as due thereon were paid or adequately accrued on the books
of each Seller. Except as set forth on Schedule 5.7(B) there is no claim by any
jurisdiction for Taxes in which any Seller does not currently file Tax Returns
and, to the Knowledge of any Seller, there is no expectation or basis for such
claim to be

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made. True and complete copies of all Tax Returns filed by each Seller for each
of its four most recent fiscal years have been delivered to Buyer and are listed
on Schedule 5.7(B).
          (c) Tax Audits. No Tax Returns of any Seller have been audited by any
Taxing authority except to the extent set forth on Schedule 5.7(C) and no Seller
has received from any Taxing authority, any notice of underpayment of Taxes or
other deficiency that has not been paid, nor any objection to any Tax Return
filed by such Seller and, to the Knowledge of any Seller, no such audit, notice
or objection is expected, except as set forth on Schedule 5.7(C). There are no
Encumbrances for unpaid Taxes and, to the Knowledge of any Seller, there is no
reasonable basis for any Encumbrance to be filed relating to Taxes. There are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any Tax Return of any Seller, and no Seller has been requested to
waive any statute of limitations in respect of Taxes or has granted any
extension of time with respect to a Tax assessment.
          (d) Other. Except as set forth on Schedule 5.7(D), (i) all Taxes which
any Seller is required by law to withhold or to collect for payment for any
purpose (including with respect to salaries and other compensation) have been
duly withheld and collected, and have been paid to the appropriate Governmental
Body or accrued, reserved against and entered on the books of such Seller;
(ii) no Seller has been a member of any Seller Group; (iii) there are no Tax
rulings, requests for rulings, or closing agreements relating to any Seller;
(iv) as a result of any closing agreement (as described in Section 7121 of the
Code or any corresponding provision of state or local Tax law), no Seller will
be required to include any item of income in, or exclude any item of deduction
from, any taxable period beginning on or after the Closing Date; (v) no Seller
is currently a party to any Tax allocation agreement or Tax Sharing Arrangement
or has an obligation to make a payment under such an agreement or arrangement;
(vi) no power of attorney is currently in effect for any Seller for any purpose
related to Taxes; (vii) no Seller has made any payment, or has been a party to
any agreement obligating it to make a payment, that will not be deductible
because of Section 162, Section 280G or Section 404 of the Code; (viii) no
Seller has entered into any reportable transaction or transaction expected to be
reportable pursuant to Treasury Regulations § 1.6011-4(c); (ix) no Seller has
been a party to any agreement that would require any Seller to indemnify any
third party for Taxes; (x) none of the property of any Seller is treated for
income Tax purposes as owned by a Person other than such Seller; and (xi) no
interests in any Seller are subject to risk of forfeiture under Section 83 of
the Code.
     5.8 Availability of Assets. Except for Owned Property Governmental Permits
specified in Schedule 5.9(A) that do not constitute Assigned Permits, the
Purchased Assets, including assets and properties owned or leased by Sellers,
will at Closing (i) constitute all the assets and properties, tangible and
intangible, of any nature whatsoever, used in or necessary or appropriate for
the operation of the Business as currently conducted (including all books,
records, computers and computer programs and data processing systems); (ii) are
in good condition (subject to normal wear and tear) and serviceable condition;
(iii) are suitable for the uses for which intended and; (iv) include
substantially all of the operating assets of Sellers.
     5.9 Governmental Permits.
          (a) Except as set forth on Schedule 5.9(A), for all of the Owned Real
Property, each Seller owns, holds, possesses or has applied or will apply for
(as set forth on the Engineers’ Certificates identified on Schedule 5.9(A)) all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body which are necessary to entitle it to own
or lease, construct improvements, operate and use its assets and to carry on and
conduct the Business as currently conducted (collectively, the “Owned Property
Governmental Permits”), except where the failure to hold such Owned Property
Governmental Permit could not reasonably be expected to have a Material

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Adverse Effect. Schedule 5.9(A) also separately sets forth, with respect to each
Owned Real Property, a list and brief description of (i) each Owned Property
Governmental Permit, specifying with respect to each such Owned Property
Governmental Permit whether such Owned Property Governmental Permit has been
applied for and obtained or for which an application is pending and (ii) each
Owned Property Governmental Permit owned, held or possessed by any Seller or a
party acting on its behalf and used in connection with the Owned Real Property.
Complete and correct copies of all of the Owned Property Governmental Permits
that have been obtained by each Seller and relating to the Owned Real Property
have heretofore been delivered to Buyer by Sellers.
          (b) Except as set forth on Schedule 5.9(B), (i) each Seller has
fulfilled and performed in all respects all of its obligations under each of the
Owned Property Governmental Permits that are required to have been performed as
of the date hereof, and, to the Knowledge of each Seller, no event has occurred
or condition or state of facts exists which constitutes or, after notice or
lapse of time or both, would constitute a breach or default under any such Owned
Property Governmental Permit or which permits or, after notice or lapse of time
or both, would permit revocation or termination of any such Owned Property
Governmental Permit, or which might adversely affect the rights of any Seller
under any such Owned Property Governmental Permit, except where the failure to
fulfill or perform its obligations could not reasonably be expected to have a
Material Adverse Effect; (ii) no notice of cancellation, of default or of any
dispute concerning any Owned Property Governmental Permit, or of any event,
condition or state of facts described in the preceding clause, has been received
by, or is Known to, any Seller; and (iii) each Owned Property Governmental
Permit is valid, subsisting and in full force and effect and may, upon the
proper application and governmental approval, be assigned and transferred to
Buyer in accordance with this Agreement and will continue in full force and
effect thereafter, in each case without the occurrence of any breach, default or
forfeiture of rights thereunder.
          (c) The governmental permits listed on Schedule 5.9(A) collectively
constitute all of the Owned Property Governmental Permits necessary to permit
the applicable Seller to lawfully conduct and operate the Business for its Owned
Real Property in the manner in which it currently conducts and operates such
Business and to permit such Seller to own and use the Purchased Assets for such
Owned Real Property in the manner in which it currently owns and uses such
Purchased Assets.
          (d) Except as set forth on Schedule 5.9(D), for all of the Optioned
Real Property, the owner of such Optioned Real Property or a party acting on its
behalf owns, holds or possesses all licenses, franchises, permits, privileges,
immunities, approvals and other authorizations from a Governmental Body which
are necessary to entitle it to deliver Fully Entitled Lots to Sellers under the
agreements existing between such property owner and Sellers (collectively, the
“Option Governmental Permits”), except where the failure to hold such Option
Governmental Permit could not reasonably be expected to have a Material Adverse
Effect. Schedule 5.9(D) also separately sets forth, with respect to each
Optioned Real Property, a list and brief description of (i) each Option
Governmental Permit, specifying with respect to each such Option Governmental
Permit whether such Option Governmental Permit has been applied for and obtained
or for which an application is pending and (ii) each Option Governmental Permit
owned, held or possessed by each such property owner or a party acting on its
behalf and used in connection with the Optioned Real Property. Complete and
correct copies of all of the Option Governmental Permits that have been obtained
by and relating to the Optioned Real Property have heretofore been delivered to
Buyer by Sellers.
          (e) Except as set forth on Schedule 5.9(E), to the Knowledge of
Sellers (i) the owners of all of the Optioned Real Property have fulfilled and
performed in all respects all of their obligations under each of the Option
Governmental Permits that are required to have been performed as of the date
hereof, and, to the Knowledge of each Seller, no event has occurred or condition
or state of facts exists which constitutes or, after notice or lapse of time or
both, would constitute a breach or default

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under any such Option Governmental Permit or which permits or, after notice or
lapse of time or both, would permit revocation or termination of any such Option
Governmental Permit, or which might adversely affect the rights of any Seller
under any such Option Governmental Permit, except where the failure to fulfill
or perform its obligations could not reasonably be expected to have a Material
Adverse Effect; (ii) no notice of cancellation, of default or of any dispute
concerning any Option Governmental Permit, or of any event, condition or state
of facts described in the preceding clause, has been received by, or is Known
to, any Seller; and (iii) each Option Governmental Permit is valid, subsisting
and in full force and effect.
          (f) The Option Governmental Permits listed on Schedule 5.9(D)
collectively constitute all of the Option Governmental Permits necessary to
permit the applicable Seller to lawfully conduct and operate the Business for
the Optioned Real Property in the manner in which it currently conducts and
operates such Business and to permit such Seller to own and use the Purchased
Assets for such Optioned Real Property in the manner in which it currently owns
and uses such Purchased Assets.
     5.10 Real Property.
          (a) Schedule 5.10(A) contains a description (showing the record title
holder, legal description, tax parcel identification number, location by city
and/or county) of all tracts, parcels and subdivided Lots in which Sellers have
an ownership interest (the “Owned Real Property”).
          (b) Schedule 5.10(B) contains a description (showing the record title
holder, legal description, tax parcel identification number, location by city
and/or county) of all tracts, parcels and subdivided Lots that are subject to
option contracts (the “Optioned Real Property”) to which Sellers are currently a
party, together with a listing of all such agreements (collectively, the “Option
Agreements”). To the extent not otherwise reflected in the Balance Sheet,
Schedule 5.10(B) also contains a list of all earnest money deposits or option
payments paid by Sellers in connection with such contracts which have not yet
been credited to the benefit of Sellers. Schedule 5.10(B) also identifies those
Lots which have heretofore been acquired by Sellers under the Option Agreements.
The Option Agreements and any construction agreements related thereto constitute
valid and binding obligations of the parties thereto and are in full force and
effect. Correct and complete copies of all Option Agreements have been delivered
by Sellers to Buyer.
          (c) (i) Except as set forth on Schedule 5.10(C), each Seller has
fulfilled and performed in all respects all its obligations, and all obligations
binding upon any Owned Real Property, required to have been fulfilled or
performed prior to the Closing Date under each of the Encumbrances to which any
Owned Real Property is subject which could reasonably be expected to have a
Material Adverse Effect, and no Seller nor any Owned Real Property is in breach
or default under, or in violation of or noncompliance with, any such
Encumbrances, and, to the Knowledge of Sellers, no event has occurred and no
condition or state of facts exists which, with the passage of time or the giving
of notice or both, would constitute such a breach, default, violation or
noncompliance. The consummation of the transactions contemplated by this
Agreement will not result in any breach or violation of, default under or
noncompliance with, or any forfeiture or impairment of any rights under, any
Encumbrance to which any Owned Real Property is subject, or require any consent,
approval or act of, or the making of any filing with, any Person party to or
benefited by or possessing the power or authority to exercise rights or remedies
under or with respect to any such Encumbrance. Complete and correct copies of
any title opinions, surveys and appraisals in any Seller’s possession or any
policies of title insurance currently in force and in the possession of Sellers
with respect to each parcel of Owned Real Property have heretofore been
delivered by Seller to Buyer.

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               (ii) Schedule 5.17 also contains a description (showing the
record titleholder, legal description, tax parcel identification number,
location by city and/or county) of all tracts, parcels and subdivided Lots that
are subject to purchase contracts (the “Contract Real Property”) to which
Sellers are party (collectively, the “Purchase Contracts”). To the extent not
otherwise reflected in the Balance Sheet, Schedule 5.10(C) also contains a list
of all earnest money deposits paid by Sellers in connection with such contracts
which have not yet been credited to the benefit of Sellers. Correct and complete
copies of all Purchase Contracts have been delivered by Sellers to Buyer.
          (d) Schedule 5.10(D) sets forth a list of each lease or similar
agreement (showing the parties thereto) under which (i) any Seller is lessee of,
or holds or operates, any real property owned by any third Person (the “Leased
Real Property”) or (ii) any Seller is lessor of any of the Owned Real Property.
Except as set forth on such Schedule, each Seller has the right to quiet
enjoyment of all the Leased Real Property for the full term of the lease or
similar agreement (and any renewal option related thereto) relating thereto, and
the leasehold or other interest of Sellers in the Leased Real Property is not
subject or subordinate to any Encumbrance except for Permitted Encumbrances.
Except as set forth on Schedule 5.10(D), and except for Permitted Encumbrances,
there are no agreements or other documents governing or affecting the occupancy
or tenancy of any of the Leased Real Property by Sellers or of any of the Owned
Real Property by any Person other than Sellers. Complete and correct copies of
each such lease or other agreement have heretofore been delivered by Sellers to
Buyer.
          (e) Except as set forth on Schedule 5.10(E), neither the whole nor any
part of the Real Property is subject to any pending suit for condemnation or
other taking by any Governmental Body, and, to the Knowledge of Sellers, no such
condemnation or other taking is threatened or contemplated.
          (f) With respect to any agreements, arrangements, contracts, Leases,
licenses, covenants, conditions, deeds, deeds of trust, rights-of-way,
easements, mortgages, restrictions, surveys, title insurance policies, and other
documents granting to Sellers title to or an interest in or otherwise affecting
the Owned Real Property, no breach or event of default by Sellers, to the
Knowledge of Sellers, any other Person exists, and no condition or event has
occurred that with the giving of notice, the lapse of time, or both would
constitute a breach or event of default, by Sellers or, to the Knowledge of
Sellers, any other Person.
          (g) The Real Property has all necessary access to and from public
highways, streets, and roads, and/or private roads or rights of way in which
Sellers have, or in the case of Optioned Real Property, upon the acquisition of
title to the respective portions of the Optioned Real Property, will have rights
of ingress and egress of record, and no pending Proceeding or other fact or
condition exists that could limit or result in the termination of such access,
nor, to Sellers’ Knowledge, is there any threatened Proceeding. To the extent
that such access is achieved by means of an easement (other than an easement
established by a recorded plat), such easement is insured under Sellers’
applicable title insurance policy.
          (h) Except as set forth on Schedule 5.10(H) and on Schedule 5.9(A),
electric, gas (if applicable), sewage, telephone, and water utility facilities
and other necessary services are available with sufficient capacity and without
requiring any offsite easements for connection and service to homes constructed
or being constructed on the Real Property, in order to permit the issuance of
building permits and subject only to the construction of the improvements
identified in such Schedules 5.10(H) and 5.9(A) and payment of such
installation, connection and other charges common to the locale in which such
Real Property is located (including impact fees) with respect thereto which in
the ordinary course of business are payable to permit the issuance of
certificates of occupancy for the improvements being constructed on the Real
Property.
          (i) Except as set forth on Schedule 5.10(I), all of the Real Property
has satisfied all concurrency requirements from all applicable governmental
authorities and the appropriate concurrency

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reservations are in full force and effect and assuming (x) after the Closing,
continued performance of and compliance with all conditions or requirements
imposed in connection with the original issuance thereof, including the
construction of any required improvements and (y) after the Closing, no action
by any Governmental Agency to attempt to revoke or disregard such concurrency
reservation, will remain in full force and effect after the Closing with respect
to all of the Real Property so as to permit Buyer and Sellers to continue to
obtain the necessary building permits and certificates of occupancy for their
contemplated improvements on the Real Property without unusual or unreasonable
cost or delay.
          (j) All buildings and improvements on the Real Property to the extent
installed or constructed by Sellers are in compliance in all respects with all
Requirements of Law, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect.
          (k) Except as set forth on Schedule 5.10(K), there are no parties in
possession of any portion of the Real Property as lessees or tenants at
sufferance.
          (l) Except as incurred in the ordinary course of the Business after
the date of the Audited Financials, there are no unpaid charges, debts,
liabilities, claims, or obligations arising from the construction, occupancy,
ownership, use, or operation of the Real Property.
          (m) Except as set forth on Schedule 5.10(M) and other than fee
arrangements which could be discovered by an examination of public records and
those impact fees, connection and other charges which may be contemplated in the
conditions of approval and contained in the Governmental Permits for such
projects, no developer-related fees, charges, impact fees or assessments for
public improvements or otherwise made against the Real Property or any Lots
included therein are due and unpaid. Schedule 5.10(M) sets forth all impact fee
arrangements with respect to the Real Property or any Lots.
          (n) There is no moratorium applicable to any of the Real Property on
(i) the issuance of building permits for the construction of residences, or
certificates of occupancy therefor, or (ii) the allocation of sewer or water
service or the purchase of sewer or water taps (a “Moratorium”).
          (o) Each of the Lots included in the Real Property is stable and
otherwise suitable for the construction of a residential structure suitable to
the soil conditions thereon.
          (p) Except as listed on Schedule 5.10(P), the Real Property does not
contain “wetlands” as defined under Environmental Law, nor is it subject to
regulation by the U.S. Army Corps of Engineers or the U.S. Environmental
Protection Agency or equivalent state or local Governmental Bodies, or is it
located within a “critical”, “preservation”, “conservation”, “habitat
conservation area”, or similar type of area subject to regulation under any
Environmental Law, nor, to the Knowledge of Sellers, does it contain a level of
radon above action levels of the U.S. Environmental Protection Agency.
          (q) The Real Property has not been used as a landfill, unregulated
dump site, or waste disposal area, nor to the Knowledge of Sellers, has it been
used as a gravesite.
          (r) Other than proceedings for the zoning of Real Property for
residential uses or as otherwise described on Schedule 5.10(R), no Proceeding is
pending or, to the Knowledge of Sellers, threatened which involves any of the
Real Property, or against Sellers with respect to any of the Real Property; all
of the developed Real Property that is not the subject of zoning proceedings
described in Schedule 5.10(R) and the Lots included therein are in compliance
with all Requirements of Laws, including zoning and subdivision laws and
ordinances and the Real Property is zoned to permit single family home, townhome
or condominium construction, as applicable; and none of the development-site

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preparation and construction work performed on the Real Property has
concentrated or diverted surface water or percolating water improperly onto or
from the Real Property or caused or resulted in a Release of any Contaminant in
violation of any Environmental Law or which otherwise requires any Remedial
Action or disclosure or notification to any Governmental Body or third party.
          (s) No Seller has granted to any Person any contract or other right to
the use of any portion of the Real Property or to the furnishing or use of any
facility or amenity on or relating to the Real Property except as shown on the
recorded subdivision plats for the Owned Real Property, homeowners’ or
condominium association declarations and except as otherwise set forth in the
Permitted Encumbrances listed on Schedule 5.14.
          (t) All of the improvements and buildings on the Real Property were
constructed in a good and workmanlike manner; substantially comply with all
Requirements of Law; do not violate any set back, zoning law, ordinance,
regulation, or statute, or other governmental restriction or any restrictive
covenant affecting any such Real Property; are in good and proper working
condition and repair, normal wear and tear, normal maintenance and normal
warranty and customer services matters excepted; and are useful for their
intended purposes.
          (u) Any improvements and buildings included within the Real Property
are located within the boundary lines of the Real Property and do not encroach
upon the land of any adjacent owner; no improvements of any third Person
encroach upon the Real Property.
          (v) The recorded easements, rights-of-way, covenants, and other title
exceptions and survey matters do not adversely affect the current or proposed
beneficial use of the Real Property. The Real Property is being developed and
used in compliance with all covenants, easements, and restrictions affecting the
Real Property, and all obligations of Sellers on the Real Property with regard
to such covenants, easements, and restrictions have been and are being performed
in a proper and timely manner.
          (w) Except as set forth on Schedule 5.10(W), to the Knowledge of
Sellers, there are no historical or archeological materials or artifacts of any
kind or any Native American ruins of any kind located on the Real Property.
          (x) Except as set forth on Schedule 5.10(X), no part of the Real
Property is “critical habitat” as defined in the Endangered Species Act, or in
regulations promulgated thereunder, nor are any “endangered species” or
“threatened species” located on the Real Property, as defined therein, or under
any similar state or local Environmental Law.
          (y) All Lots within Owned Real Property and Optioned Real Property
which have been graded as of the date of this Agreement and as of the Closing
Date shall have building pads that are graded to an elevation where the finished
floor elevation of the residence to be built thereon are above the 100-year
flood plain (as shown on Federal Emergency Management Agency Maps) using
sufficient materials to grade the entire Lot for proper drainage and, with
respect to Lots within Optioned Real Property to be graded after Closing, will
be outside the 100-year flood plain if the Lots are graded pursuant to grading
plans approved by the applicable city and/or county in which such Lots are
located.
          (z) Sellers do not have any liability for any Taxes, or any interest
or penalty in respect thereof, of any nature that may be assessed against Buyer
or Sellers or that are or may become a lien against the Real Property, other
than the lien for current real property taxes, special taxes and assessments and
community development district assessments which are not yet due and payable.

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          (aa) Except as disclosed in Schedule 2.3(C), there are no commitments
to any Governmental Body, school board, church or other religious body or to any
other organization, group or individual relating to the Real Property that would
impose any obligations upon the Buyer to make any contributions of money or land
or to install or maintain any improvements.
          (bb) There is no Mold which renders any homes built by Sellers unfit
for its intended residential use (even if there is no violation of any
Requirements of Laws) unless caused by the actions of the homeowner after the
closing of the sale of such home to the homeowner and there is no design defect,
construction defect, use or defective construction materials which has caused,
or is reasonably likely to cause, the growth of Mold which will render any homes
built by Sellers or to be built by Sellers on the Real Property, assuming the
development of such property in the ordinary course of the Business, unfit for
residential use.
          (cc) Neither the “Cummer” property nor any other Real Property which
constitutes a Development of Regional Impact (“DRI”) or is subject to a pending
application for DRI approval is subject to aggregation with any adjacent lands,
assuming continued separate ownership of the “Cummer” property. In the event
that such adjacent lands are hereinafter owned by a single entity, or multiple
entities under common control, the properties will likely be subject to
aggregation.
          (dd) The Owned Real Property, the Optioned Real Property, the Coral
Lakes Lots, the Contributed Assets, the Contract Real Property and the
properties currently subject to the Right of First Offer Agreement as identified
on Schedule 7.6 together constitute all of the Real Property owned, under option
or under contract by Sellers and each of Arthur J. Falcone and Edward W. Falcone
for the development of residences pursuant to the Business.
     5.11 Personal Property.
          (a) Schedule 5.11(A) contains a list of all machinery, equipment,
vehicles, furniture and other tangible personal property owned by Sellers having
an original cost of Fifty Thousand Dollars ($50,000.00) or more and used in or
relating to the Business.
          (b) Schedule 5.11(B) contains a list of each lease or other agreement
or right, whether written or oral (showing in each case the parties thereto),
under which any Seller with respect to the Business is lessee of, or holds or
operates, any machinery, equipment, vehicle or other tangible personal property
owned by a third Person.
     5.12 Intellectual Property; Software.
          (a) Schedule 5.12(A) contains a list and description (showing in each
case the registered or other owner, expiration date and registration or
application number, if any) of all Intellectual Property (including all assumed
or fictitious names under which any Seller is conducting the Business or has
within the previous five (5) years conducted the Business and telephone numbers
used in connection with the Business) owned by, licensed to or used by any
Sellers. The Intellectual Property listed on Schedule 5.12(A) is sufficient and
includes all Intellectual Property necessary for Sellers to conduct the Business
as presently conducted.
          (b) Schedule 5.12(B) contains a list and description (showing in each
case any owner, licensor or licensee) of all Software owned by, licensed to or
used by any Seller and used in the Business, including mass market Software
licensed to any Seller that is available in consumer retail stores or otherwise
commercially available and subject to “shrink-wrap” or “click-through” license
agreements.

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          (c) Schedule 5.12(C) contains a list and description of all written
and unwritten agreements, contracts, licenses, sublicenses, assignments and
indemnities which relate to (i) any Intellectual Property listed in
Schedule 5.12(A) or (ii) any Software listed in Schedule 5.12(B).
          (d) Except as disclosed in Schedule 5.12(D), Sellers own the entire
right, title and interest in and to their Intellectual Property and Software
free and clear of any Encumbrance, except with respect to licensed Software for
which Sellers have the perpetual, royalty-free right to use the same. Except as
set forth on Schedule 5.12(D), Sellers are listed in the records of the
appropriate United States, state or non-U.S. registry as the sole current owner
of record for each application or registration identified in Schedule 5.12(A) or
as being owned by such Person. Except as disclosed on Schedule 5.12(D), no
royalties, fees, honorariums or other consideration is required to be paid to
any Person with respect to any of the Intellectual Property or Software.
          (e) Except as disclosed on Schedule 5.12(E), (i) all registrations for
Intellectual Property identified on Schedule 5.12(A) as being owned by any
Seller are valid and in force, and all applications to register any unregistered
Intellectual Property so identified are pending and in good standing, all
without challenge of any kind; (ii) the Intellectual Property owned by Sellers
has not been cancelled or abandoned and is valid and enforceable; (iii) Sellers
have the sole and exclusive right to bring actions for infringement,
misappropriation, dilution, violation or unauthorized use of the Intellectual
Property and Software owned by Sellers, and to the Knowledge of Sellers, there
is no basis for any such action; (iv) Sellers have taken all actions reasonably
necessary to protect, maintain and where necessary register, the Copyrights,
Trademarks, Software, Patent Rights or Trade Secrets; and (v) no Seller is in
breach of any agreement affecting the Intellectual Property, nor has any Seller
taken any action which would impair or otherwise adversely affect its rights in
the Intellectual Property.
          (f) Except as set forth on Schedule 5.12(F), (i) no infringement,
misappropriation, violation or dilution of any Intellectual Property, or any
rights of publicity or privacy relating to the use of names, likenesses, voices,
signatures or biographical information, of any other Person has occurred or
results in any way from the operations of the Business or any other use of any
Seller’s Intellectual Property by any Seller; (ii) no claim of any infringement,
misappropriation, violation or dilution of any Intellectual Property or any such
rights of any other Person has been made or asserted in respect of the
operations of the Business or any use of any Seller’s Intellectual Property by
any Seller or any other action by any Seller; (iii) no claim of invalidity of
any Seller’s Intellectual Property has been made; (iv) no Proceeding is pending
or, to the Knowledge of any Seller, threatened which challenge the validity,
ownership or use of any of their Intellectual Property; and (v) no Seller has
received any notice of, or has any Knowledge of any basis for, a claim against
any Seller that the operations, activities, products, Software, equipment,
machinery, processes, any of the Purchased Assets or any other aspect of the
Business infringe, misappropriate, violate or dilute any Intellectual Property
or any other rights of any other Person.
          (g) Except as disclosed on Schedule 5.12(G), (i) the Software
identified on Schedule 5.12(B) is not subject to any transfer, assignment,
change of control, site, equipment, or other operational limitations; (ii) each
Seller has maintained and protected the Quality Assurance Software identified on
Schedule 5.12(B), as well as any other Software owned by Sellers (collectively,
the “Owned Software”) (including all source code and system specifications) with
appropriate proprietary notices (including the notice of copyright in accordance
with the requirements of 17 U.S.C. §401), confidentiality and non-disclosure
agreements and such other measures as are necessary to protect the proprietary,
trade secret or confidential information contained therein; (iii) each Seller
has copies of all releases or separate versions of the Owned Software (including
all object code and source code) so that the same may be subject to registration
in the United States Copyright Office; (iv) each Seller has complete and
exclusive right, title and interest in and to all versions of the Owned
Software, free and clear

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of any Encumbrance, other than Permitted Encumbrances, or any restriction on
creating derivative works based upon any of the Owned Software or any
restriction on assignment of the Owned Software to Buyer; (v) the Owned Software
does not, as a whole or in any part, infringe, misappropriate, violate or dilute
any Intellectual Property of any other Person; and (vi) there are no agreements
or arrangements in effect with respect to the marketing, distribution, licensing
or promotion of the Owned Software by any other Person.
          (h) Except as disclosed in Schedule 5.12(H), all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any Intellectual Property or Software on behalf of
any Seller or any predecessor in interest thereto either: (i) created such
materials in the scope of his or her employment; (ii) is a party to a
“work-for-hire” agreement under which Sellers are deemed to be the original
owner/author of all rights, title and interest therein; or (iii) has executed an
assignment or an agreement to assign in favor of Sellers (or such predecessor in
interest, as applicable) of all right, title and interest in such material.
     5.13 Work in Progress. To the Knowledge of Sellers, the portions of the
work in progress reflected in the Balance Sheet consisting of partially
completed subdivision improvements and fully or partially completed homes (the
“WIP”) has been constructed substantially in accordance with plans and
specifications approved by all applicable Governmental Bodies and in accordance
with all applicable permits, licenses, building codes and other regulations,
except where such noncompliance could not reasonably be expected to have a
Material Adverse Effect; the liabilities reflected in the Balance Sheet
accurately reflects the amounts owing under all contracts for partially
completed subdivision improvements and fully or partially completed homes; and
the inventory of raw materials is not defective, substandard, or in violation of
the building codes and other regulations applicable to the homes in which it
will be incorporated. No allegations have been made or “stop work order(s)”
issued by any applicable Governmental Body with respect to any work in progress
reflected in the Balance Sheet, except as set forth on Schedule 5.13 or where
such allegations or issuances could not reasonably be expected to have a
Material Adverse Effect.
     5.14 Title to Property. Sellers, collectively, have good and marketable
title in fee simple absolute to all Owned Real Property and to all buildings,
structures and other improvements thereon, in each case free and clear of all
Encumbrances, except for Permitted Encumbrances (which include those items
specified in Schedule 5.14). Sellers, collectively, have valid, exclusive
options to acquire marketable title in fee simple absolute to all Optioned Real
Property, all Lots and to all buildings, structures, and other improvements
thereon, in each case, free and clear of all Encumbrances, other than Permitted
Encumbrances. Sellers, collectively, have valid contracts to acquire marketable
title in fee simple absolute to all Contract Real Property and to all buildings,
structures, and other improvements thereon, in each case, free and clear of all
Encumbrances, other than Permitted Encumbrances. True and complete copies of
(i) all deeds, existing title insurance policies, plans of subdivision, all
title encumbrances and exceptions and surveys of or pertaining to the Real
Property and (ii) all instruments, agreements and other documents evidencing,
creating or constituting any Encumbrance, on the Real Property have been
delivered to Buyer. Each Seller represents and warrants to Buyer, that, at the
time of Closing, the Real Property shall be free and clear of all Encumbrances,
other than Permitted Encumbrances. Sellers, collectively, have good and
marketable title to all of its other assets and properties, free and clear of
all Encumbrances, except for Permitted Encumbrances. No Person other than
Sellers is in possession or has a right to possession of the Owned Real
Property.
     5.15 Employees and Related Agreements; ERISA.
          (a) Schedule 5.15(A) sets forth a list of each retirement, savings,
thrift, deferred compensation, bonus, commission, severance, stock ownership,
stock purchase, stock option, performance, bonus, incentive, vacation pay, sick
pay, holiday pay, personal or paid time off,

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hospitalization or other medical, disability, life or other insurance, or other
welfare, retiree welfare or benefit plan, policy, practice, trust, contract,
understanding or arrangement of any kind, whether written or oral, to which any
Seller with respect to the Business, is a party or by which it is bound or
pursuant to which it may be required to make any payment or provide any benefit
at any time, other than plans of the type described in Section 5.15(d) (“Seller
Non-ERISA Plans”). The Financial Statements reflect (and the Closing Date
Balance Sheet will reflect) all amounts which should be appropriately accrued
under any Seller Non-ERISA Plan.
          (b) Schedule 5.15(B) sets forth a list of each (i) employee collective
bargaining agreement, (ii) affirmative action plan, and (iii) agreement,
commitment, understanding, plan, employee handbook, procedure, human resources
policy or procedure manual, policy or arrangement of any kind, whether written,
implied or oral, with or for the benefit of any current or former officer,
director, employee, independent contractor or consultant (including each
employment, compensation, deferred compensation, severance, supplemental
pension, life insurance, termination or consulting agreement or arrangement and
any agreements or arrangements associated with a change in control), to which
any Seller with respect to the Business, is a party or by which it is bound or
pursuant to which it may be required to make any payment at any time, other than
Seller Non-ERISA Plans and other than plans of the type described in
Section 5.15(d) (“Seller Compensation Commitments”).
          (c) Sellers have delivered to Buyer correct and complete copies of all
written Seller Non-ERISA Plans and Seller Compensation Commitments and of all
related insurance and annuity policies and contracts and other documents with
respect to each Seller Non-ERISA Plan and Seller Compensation Commitment.
Schedules 5.15(A) and 5.15(B) contain a description of all oral Seller Non-ERISA
Plans and Seller Compensation Commitments.
          (d) Schedule 5.15(D) sets forth a list of each “employee pension
benefit plan” (as such term is defined in Section 3(2) of ERISA) and each
“employee welfare benefit plan” (as such term is defined in Section 3(1) of
ERISA) covering any employee or former employee of any Seller with respect to
the Business (collectively, “Seller ERISA Plans” and, together with the “Seller
Non-ERISA Plans” and the “Seller Compensation Commitments”, the “Seller Plans”).
Except as set forth on Schedule 5.15(D) (i) no Seller with respect to the
Business has ever maintained any employee pension benefit plan, (ii) no Seller
has ever maintained any employee pension benefit plan subject to Section 302 of
ERISA or Section 412 of the Code or Title IV of ERISA, and (iii) no Seller with
respect to the Business has ever been required to contribute to any
“multiemployer plan” (as such term is defined in Section 3(37) of ERISA) (any
such multi-employer plan listed on such Schedule being referred to herein as the
“Multiemployer Plans”).
          (e) Sellers have delivered to Buyer, with respect to each Seller ERISA
Plan, correct and complete copies, where applicable, of (i) all plan documents
and amendments, trust agreements and insurance and annuity contracts and
policies, (ii) the most recent IRS determination letter, (iii) the Annual
Reports (Form 5500 Series) and accompanying schedules and actuarial reports, as
filed, for the most recently completed three plan years, (iv) the summary plan
description currently in use and any other summary plan description in use at
any time since January 1, 2003, (v) copies of correspondence from the IRS, the
Department of Labor or the Pension Benefit Guaranty Corporation regarding any
plan audit or investigation or any intent to conduct a plan audit, and (vi) in
the case of any Seller ERISA Plan that includes a “cash or deferred
arrangement”, defined in Section 401(K)(2) of the Code, copies of the
non-discrimination testing results for the three (3) most recent plan years.
          (f) Each Seller ERISA Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the IRS
that such Plan is so qualified under the Code; and no circumstance exists which
might cause such Plan to cease being so qualified.

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          (g) Each Seller ERISA Plan complies, and has been administered to
comply, with all Requirements of Laws, and in compliance with its terms, and
there has been no notice issued by any Governmental Body questioning or
challenging such compliance, and there are no actions, suits or claims (other
than routine claims for benefits) pending or, to the Knowledge of Sellers,
threatened involving any such Plan or the assets of any such Plan.
          (h) No Seller has any obligations under any of Seller Non ERISA Plans,
Seller Compensation Commitments or Seller ERISA Plans or otherwise to provide
health or death benefits to or in respect of former employees of any Seller,
except as specifically required by the continuation requirements of Part 6 of
Title I of ERISA.
          (i) No Seller has any liability of any kind whatsoever, whether
direct, indirect, contingent or otherwise, on account of (i) any violation of
the health care requirements of Part 6 of Title I of ERISA or Section 4980B of
the Code; (ii) under Section 502(i) or Section 502(1) of ERISA or Section 4975
of the Code; (iii) under Section 302 of ERISA or Section 412 of the Code; or
(iv) under Title IV of ERISA.
          (j) No Seller is an “employee benefit plan” as defined in Section 3(3)
of ERISA or a “plan” as defined in Section 4975 of the Code and none of the
Companies constitute the assets of an employee benefit plan under Department of
Labor Regulation Section 2510.3-101.
          (k) Schedule 5.15(K) contains: (i) a list of all employees of Sellers
with respect to the Business as of the Balance Sheet Date; (ii) the then current
annual compensation (including commissions and bonuses) of, and a description of
the fringe benefits (other than those generally available to employees of
Sellers) provided to any such employees; (iii) a list of all present or former
employees of Sellers with respect to the Business who have terminated or given
notice of their intention to terminate their relationship with Sellers since the
Balance Sheet Date; (iv) a list of any increase, effective after the Balance
Sheet Date, in the salary or rate of commission of any employees or commission
salespersons if such increase exceeds twenty percent (20%) of such employee’s
previous annual salary with respect to salaried employees or twenty-five percent
(25%) of such employee’s previous rate of commission with respect to commission
salespersons; and (v) a list of all substantial changes in job assignments of,
or arrangements with, or promotions or appointments of, any employees or
commission salespersons. None of the Companies currently has, or at any time in
the past has had, any employees.
          (l) Except as set forth on Schedule 5.15(L) (i) no Seller is involved
in any transaction or other situation with any employee, officer, director or
Affiliate of any Seller which may be generally characterized as a “conflict of
interest”, including direct or indirect interests in the business of
competitors, suppliers or customers of Sellers, and (ii) there are no situations
with respect to the Business which involved or involves (A) the use of any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity; (B) the making of any direct or
indirect unlawful payments to government officials or others from corporate
funds or the establishment or maintenance of any unlawful or unrecorded funds;
(C) the violation of any of the provisions of The Foreign Corrupt Practices Act
of 1977, or any rules or regulations promulgated thereunder; or (D) the receipt
of any illegal discounts or rebates or any other violation of the antitrust
laws.
          (m) Except as set forth on Schedule 5.15(M), (i) no Seller is or will
be obligated to pay separation, severance, termination or similar benefits as a
result of any transaction contemplated by this Agreement, nor will any such
transaction accelerate the time of payment or vesting, or increase the amount,
of any benefit or other compensation due to any individual; (ii) the
transactions contemplated by this Agreement will not be the direct or indirect
cause of any amount paid or payable by any Seller being classified as an excess
parachute payment under Section 280G of the Code; (iii) all required or

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discretionary (in accordance with historical practices) payments, premiums,
contributions, reimbursements, or accruals for all periods ending prior to or as
of the Closing Date shall have been made or properly accrued on the Balance
Sheet prior to the Closing Date; and (iv) no Seller has or will have, as of the
Closing Date, any material unfunded actual or contingent liabilities or
obligations with respect to any Seller Plans that are not reflected on the
Balance Sheet.
     5.16 Employee Relations. Except as set forth on Schedule 5.16 Sellers have
complied with all applicable Requirements of Laws (including, the Fair Labor
Standards Act) relating to prices, wages, hours (including, overtime hours),
working conditions, compensation, employee benefits, employment taxes,
affirmative action, discrimination in employment and collective bargaining and
is not liable for any arrears of wages, any Taxes or any penalties for failure
to comply with any of the foregoing. There is no labor strike, dispute, request
for representation, slowdown or stoppage actually pending or, to the Knowledge
of any Seller, threatened against or affecting any Seller. No Seller is a party
to, and none of them is affected by or threatened with, any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving such employees. No Seller is adversely affected by any
dispute or controversy with a union or with respect to unionization or
collective bargaining involving any supplier or customer of Sellers with respect
to the Business. Assuming compliance by Buyer with the provisions of
Section 8.4(a), each Seller is in compliance with the Workers Adjustment and
Retraining Notification Act (“WARN”) and has no liabilities pursuant to WARN.
Except as set forth on Schedule 5.16, there are no administrative charges,
grievances, internal complaints, audits or investigations by a Governmental
Body, arbitration claims or demands, court complaints or consent decrees against
any Seller concerning alleged employment discrimination or other employee
relations related matters that are pending, or to the Knowledge of any Seller,
threatened before any Governmental Body. There are no right to sue letters
issued to any employee or former employee by a Governmental Body for which the
time to initiate an action in court has not expired.
     5.17 Contracts.
     (I) Except as set forth on Schedule 5.17(I), no Seller with respect to the
Business is a party to or bound by:
          (a) any contract for the option, purchase or sale of real property not
specified in Schedule 5.10(B) or Schedule 5.10(C), including options, letters of
intent, rights of first offer and other similar contracts;
          (b) any contract for the purchase of services, materials, supplies or
equipment which involved the payment of more than Fifty Thousand Dollars
($50,000.00) (or Two Hundred Fifty Thousand Dollars ($250,000.00) with respect
to construction and development contracts) in the most recent fiscal year, which
can reasonably be expected to involve the payment of more than Fifty Thousand
Dollars ($50,000.00) (or Two Hundred Fifty Thousand Dollars ($250,000.00) with
respect to construction and development contracts) in the current fiscal year
(it being understood that any contract either listed on Schedule 5.17(II) or not
otherwise required to be listed on Schedule 5.17(II) and not exceeding the
thresholds set forth herein need not be listed);
          (c) any contract for the sale of goods (other than homes) or services
which involved the payment of more than Twenty-Five Thousand Dollars
($25,000.00) in the most recent fiscal year, which can reasonably be expected to
involve the payment of more than Twenty-Five Thousand Dollars ($25,000.00) in
the current fiscal year or which extends beyond six (6) months from the date
hereof;
          (d) any contract for the purchase, licensing or development of
software;

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          (e) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract;
          (f) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others;
          (g) any collective bargaining agreements or any contracts and
agreements with any labor union or other employee representative of a group of
employees relating to wages, hours and other conditions of employment;
          (h) any joint venture agreements;
          (i) any contract which limits or restricts where Sellers may conduct
the Business or the type or line of business in which Sellers may engage;
          (j) any powers of attorney;
          (k) contracts not made in the ordinary course of business;
          (l) any other contracts (A) which are material to the Business or
(B) the termination or cancellation of which would have a Material Adverse
Effect, or (C) which are believed by any Seller to be of unique value even
though not material to the Business;
          (m) any contract with any title or mortgage companies;
          (n) any contract (excluding routine checking account overdraft
agreements involving petty cash amounts) under which any Seller has created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee)
indebtedness of more than Fifty Thousand Dollars ($50,000.00) which remains
unpaid as of the date hereof, or under which any Seller has imposed (or may
impose) a security interest or Encumbrance on any of its assets, whether
tangible or intangible, to secure indebtedness, other than as set forth on
Schedule 3.1(B);
          (o) any Option Agreements for the purchase of Lots or undeveloped land
owned by or under options to Sellers other than those listed on
Schedule 5.10(B);
          (p) except for those contracts otherwise listed on Schedule 5.17(I) or
(II), any contract which by its terms has a duration of more than twelve
(12) months from the date hereof (including any contract which may be extended
by the unilateral action of the counterparty);
          (q) except for those contracts otherwise listed on Schedule 5.17(I) or
(II), any contract which by its terms provides for the provision of goods or
services (whether by a Seller or the counterparty) in more than one community;
or
          (r) any amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
     (II) Set forth on Schedule 5.17(II) are:
          (a) with respect to each of Sellers’ Divisions, all agreements or
other arrangements (oral or written) with those fifteen (15) suppliers and
vendors (other than those subcontractors or developers listed in clauses (b) and
(c) below and other than those professional services such as attorneys

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or accountants) to whom Sellers have paid the greatest amounts for goods and
services during the twelve (12) months ended as of the Balance Sheet Date (such
agreements are referred to collectively as the “Supply Agreements”);
          (b) with respect to each of Sellers’ Divisions, all agreements or
other arrangements (oral or written) with those fifteen (15) subcontractors to
whom Sellers have paid the greatest amounts for goods and services during the
twelve (12) months ended as of the Balance Sheet Date (such agreements are
referred to collectively as the “Subcontractor Agreements”);
          (c) with respect to each of Sellers’ Divisions, all agreements or
other arrangements (oral or written) with those fifteen (15) developers to whom
Sellers have paid the greatest amounts for goods and services during the twelve
(12) months ended as of the Balance Sheet Date (such agreements are referred to
collectively as the “Developer Agreements”); or
          (d) any amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
     5.18 Status of Contracts. Except as set forth on Schedule 5.18, each Seller
Agreement constitutes a valid and binding obligation of the parties thereto and
is in full force and effect and is disclosed on the appropriate Schedule except
for those Seller Agreements which, pursuant to a provision of this Agreement,
need not be disclosed. Except as set forth on Schedule 5.1(C) and except for
those Seller Agreements which by their terms will expire prior to the Closing
Date or are otherwise to be terminated prior to the Closing Date in accordance
with the provisions hereof, each of the Seller Agreements will continue in full
force and effect after the Closing, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights thereunder,
and without the consent, approval or act of, or the making of any filing with,
any other party. Each Seller has fulfilled and performed its obligations under
each of the Seller Agreements, and no Seller is in, or alleged to be in, breach
or default under, nor is there alleged to be any basis for termination of, any
of the Seller Agreements, except where such breach could not reasonably be
expected to have a Material Adverse Effect. No other party to any of the Seller
Agreements has breached or defaulted thereunder, and no event has occurred and
no condition or state of facts exists which, with the passage of time or the
giving of notice or both, would constitute such a default or breach by any
Seller or by any such other party. There are no renegotiations of, attempts to
renegotiate or outstanding rights to renegotiate any amounts paid or payable to
Sellers under current or completed contracts with any Person having the
contractual or statutory right to demand or require such renegotiation and no
such Person has made written demand for such renegotiation, where in any such
case the change in any such amount would have a Material Adverse Effect.
     5.19 No Violation or Litigation. Except as set forth on Schedule 5.19:
               (i) none of the Purchased Assets, Sellers or any of their assets
or properties are subject to any Court Order;
               (ii) Sellers have complied with all Requirements of Laws and
Court Orders which are applicable to the Purchased Assets and the assets or
properties of Sellers or the Business;
               (iii) there are no lawsuits, claims, suits, Proceedings or
investigations pending or, to the Knowledge of Sellers, threatened, at law or in
equity, against or affecting the Purchased Assets, Sellers or their assets or
properties or the Business nor, to the Knowledge of any Seller, is there any
basis for any of the same, and there are no lawsuits, suits or Proceedings
pending in which Sellers is the

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plaintiff or claimant or which relates to the Purchased Assets, Sellers or their
assets or properties or the Business;
               (iv) there is no action, suit or Proceeding pending or, to the
Knowledge of Sellers, threatened, at law or in equity, which questions the
legality or propriety of the transactions contemplated by this Agreement and
Sellers have no Knowledge of any basis for such actions, suits or Proceeding;
               (v) to the Knowledge of Sellers, no legislative or regulatory
proposal has been adopted which could adversely affect the Purchased Assets,
Sellers or the Business;
               (vi) there is no Court Order to which any Seller or its
Affiliates, the Business or any of the Purchased Assets is subject; and no
officer, manager, agent or employee of any Seller or its Affiliates is subject
to any Court Order that prohibits such officer, manager, agent or employee from
engaging in or continuing any conduct, activity or practice relating to the
Business;
               (vii) no Governmental Body has at any time taken any action to
prevent Sellers from manufacturing, offering or selling any of its homes or
services in the present manner or style thereof; and
               (viii) no homebuyer has challenged the provision in Sellers’ home
sales contracts which permits Sellers to increase the purchase price to cover
cost increases.
     5.20 Environmental Matters. Except as set forth in Part I of Schedule 5.20
or expressly specified in any reports specified in Part II of Schedule 5.20;
          (a) the operations of Sellers comply with all applicable Environmental
Laws, except where such noncompliance could not reasonably be expected to have a
Material Adverse Effect;
          (b) except as set forth on Schedule 5.9(A), each Seller has obtained
all environmental, health and safety governmental permits necessary for its
operations on the Owned Real Property, and all such Owned Property Governmental
Permits are in good standing and each Seller is in compliance with all terms and
conditions of such permits and except as set forth on Schedule 5.9(D), each
Seller has obtained all environmental, health and safety governmental permits
necessary for its operations on the Optioned Real Property, and all such Option
Governmental Permits are in good standing and each Seller is in compliance with
all terms and conditions of such permits;
          (c) all improvements to the Owned Real Property or Optioned Real
Property or any of the other Purchased Assets, including grading, have been made
pursuant to all required Governmental Permits, including Governmental Permits
required under Environmental Laws;
          (d) there are no (and, to the Knowledge of Sellers, there is no basis
for any) (i) noncompliance orders, warning letters, claims, or notices of
violation issued to or, to the Knowledge of Sellers, threatened against;
(ii) suits, actions, or administrative, regulatory, or judicial investigations
or proceedings commenced or, to the Knowledge of Sellers, threatened against;
and/or (iii) judgments, penalties, decrees or fines imposed or, to the Knowledge
of Seller, threatened against Sellers, or the Purchased Assets by any
Governmental Body or third party relating to or arising out of any Environmental
Law, Remedial Action, or any claim of Losses and Expenses in connection with a
Release or threatened Release of a Contaminant into the environment, or the
violation or alleged violation of any Environmental Law;

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          (e) no Seller has entered into any settlement agreement, consent
order, or consent decrees with a Governmental Body or third party relating to or
arising out of any Environmental Law, Remedial Action, or any claim of Losses
and Expenses in connection with a Release or threatened Release of a Contaminant
into the environment, or the violation or alleged violation of any Environmental
Law;
          (f) no Seller has:
               (i) reported a Release of a hazardous substance pursuant to
Section 103(a) of CERCLA, or any state equivalent;
               (ii) filed a notice pursuant to Section 103(c) of CERCLA;
               (iii) filed a notice pursuant to Section 3010 of RCRA indicating
the generation of any hazardous waste, as that term is defined under 40 CFR
Part 261 or any state equivalent;
               (iv) filed any notice under any Environmental Law reporting a
violation of any Environmental Law which could reasonably be expected to have a
Material Adverse Effect; or
               (v) filed a notice with the Florida Department of Environmental
Protection (or any delegated or contracted local agency) voluntarily or
otherwise pursuant to Chapters 376 or 403, Florida Statutes, and the regulations
promulgated thereunder and codified in the Florida Administrative Code or any
other Governmental Body pursuant to any other Environmental Law, reporting or
otherwise disclosing the Release of any Contaminant into any structure, onto any
surface, or into the environment, including but not limited to soil,
groundwater, surface water, and/or sediments;
          (g) there is not now, nor to the Knowledge of Sellers has there ever
been, on or in any Seller Property:
               (i) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 CFR Part 261 or any state
equivalent, that requires or required a Governmental Permit pursuant to
Section 3005 of RCRA; or
               (ii) any cattle dipping vat, aboveground storage tank,
underground storage tank, surface impoundment, waste pile, landfill, or
uncontrolled dumping or staging of solid waste;
          (h) there is not now on or in any Purchased Asset any polychlorinated
biphenyls (PCB) used in pigments, hydraulic oils, electrical transformers or
other equipment;
          (i) no Seller has received any notice or claim to the effect that it
is or may be liable to any Person as a result of the Release or threatened
Release of a Contaminant;
          (j) there has not occurred, nor is there presently occurring, any
Release or, to the Knowledge of any Seller, any threatened Release of any
Contaminant on, into, under, from, or towards the Real Property;
          (k) no Environmental Encumbrance has attached to any Seller Property;
          (l) any asbestos-containing material which is on or part of any Seller
Property which contains any asbestos material is in good repair and in a friable
condition according to the current

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standards and practices governing such material, and its presence or condition
does not violate any currently applicable Environmental Law;
          (m) Sellers have adopted and follow procedures for the investigation
of matters covered by Environmental Laws in the evaluation of real property for
purchase or development, including the retention of properly licensed
environmental engineers to perform environmental assessments in compliance with
ASTM Guidelines;
          (n) All of Sellers’ communities are in compliance with the federal and
Florida National Pollutant Discharge Elimination System stormwater regulations;
and all of Sellers (i) have filed Notices of Intent with the Florida Department
of Environmental Protection for each community; (ii) have stormwater pollution
prevention plans in place, utilizing best management practices; and (iii) have
up to date inspection procedures in place;
          (o) Part II of Schedule 5.20 identifies all Phase I and Phase II
Environmental Site Assessment Reports, Environmental Compliance Audits, Site
Assessment Reports, Remedial Action Plans, Risk Assessments, Tank Closure
Reports, Groundwater Monitoring Reports, Asbestos Surveys, Geotechnical Surveys,
Wetland Surveys, and other reports and correspondence (i) prepared by or at the
direction of Sellers (or, to the Knowledge of Sellers, any of Sellers’
predecessors) for internal review or review by third parties or (ii) submitted
to any Governmental Body that relate in any way to the Real Property or to any
other real property ever owned, leased or used at any time by Sellers; and
          (p) Part III of Schedule 5.20 identifies:
               (i) all ongoing or pending environmental assessment work
(“Environmental Stage I Work”), the name of the environmental engineer
conducting (or that will be conducting) the Environmental Stage I Work, and the
proposal issued by the environmental engineer to conduct the Environmental Stage
I Work;
               (ii) all ongoing or pending environmental remediation work
(“Environmental Stage II Work”) the name of the environmental engineer
conducting (or that will be conducting) the Environmental Stage II Work, and the
proposal issued by the environmental engineer to conduct the Environmental Stage
II Work; and
               (iii) all ongoing or pending environmental monitoring work or
environmental operations and maintenance activities (“Environmental Stage III
Work”), the name of the environmental engineer conducting (or that will be
conducting) the Environmental Stage III Work, and the proposal issued by the
environmental engineer to conduct the Environmental Stage III Work.
     5.21 Insurance. Schedule 5.21 sets forth a list and brief description
(including nature of coverage, limits, deductibles, self-insured retentions,
premiums and the loss experience for the most recent five (5) years with respect
to each type of coverage) of all policies of insurance maintained, owned or held
by any Seller on the date hereof with respect to the ongoing, products/completed
operations, assets or properties of Sellers or the Business. Each Seller, has
delivered to Buyer accurate and complete copies of all such policies of
insurance and correspondence relating to a denial of coverage thereunder, as
well as accurate and complete copies of all pending applications by any Seller
for policies of insurance and any statement by the auditor of Sellers’ Financial
Statements or any consultant or risk management advisor with regard to the
adequacy of any Seller’s coverage or of the reserves for claims, except where
Sellers have not received such policies of insurance, in which case, copies of
the binders have been delivered to Buyer. There is no claim by any Seller
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies and bonds.
All premiums

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due and payable under all such policies and bonds have been paid and each Seller
is otherwise in compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage), except
where such noncompliance could not reasonably be expected to have a Material
Adverse Effect. To each Seller’s Knowledge, there is no threatened termination
of any of such policies, other than as set forth on Schedule 5.21 hereto. Each
Seller shall keep or cause such insurance or comparable insurance to be kept in
full force and effect through the Closing Date. Each Seller has complied in all
respects with each of such insurance policies and has not failed to give any
notice or present any claim thereunder in a due and timely manner, except where
such noncompliance, failure to give notice or present any claim could not
reasonably be expected to have a Material Adverse Effect.
     5.22 Major Suppliers.
          (a) All Supply Agreements are in full force and effect and are valid
and enforceable in accordance with their respective terms against the applicable
Seller and against the other party thereto. No Seller is in default of any term
or provision of any Supply Agreement (nor has any Seller caused an event which
with notice or lapse of time, or both, would constitute such a default), nor, to
any Seller’s Knowledge, is any other party thereto in default (nor is there any
event which with notice or lapse of time, or both, would constitute a default)
under any Supply Agreement, which could reasonably be expected to have a
Material Adverse Effect.
          (b) All Subcontractor Agreements are in full force and effect and are
valid and enforceable in accordance with their respective terms against the
applicable Seller and against the other party thereto. No Seller is in default
of any term or provision of any Subcontractor Agreement (nor has any Seller
caused an event which with notice of lapse of time, or both, would constitute
such a default), nor, to any Seller’s Knowledge, is any other party thereto in
default (nor is there any event which with notice or lapse of time, or both,
would constitute a default) under any Subcontractor Agreement, which could
reasonably be expected to have a Material Adverse Effect.
     5.23 Projections. Sellers have made available to Buyer certain projections
for each of the years ending June 30, 2005, 2006, 2007, 2008 and 2009 with
respect to the Business (the “Projections”) as set forth on Schedule 5.23,
including, without limitation, the budgets of capital, payroll and other
material expenditures (including expenditures related to the cable systems in
the communities listed on Schedule 2.3(H) of the Business, prepared in the
ordinary course of the Business and the total capital expenditures through the
Balance Sheet Date for each capital expenditure project for which funds are
proposed to be expended, the projected delivery dates of homes, the pre-tax
contributions, the dates by which the Lots will be Fully Entitled and the costs
to complete construction obligations under “land banking” arrangements. Sellers
represent and warrant that such Projections were prepared in good faith and are
based on assumptions that are reasonable.
5.24 Warranties; Construction Defects.
          (a) Schedule 5.24(A) sets forth (i) specimen copies of the forms of
written warranties issued by Sellers to third-party homebuyers and (ii) a
summary of the warranty expense incurred by Sellers during each of its last
fiscal year and from July 1, 2004 through the Balance Sheet Date. The warranty
reserve set forth in the Financial Statements are adequate as of the Closing
Date. Except with respect to electrical wiring within walls for which the
warranty is for two (2) years, condensers for air conditioners (parts only) for
which the warranty is for five (5) years, load bearing structure of homes for
which the warranty is for ten (10) years and roof trusses for which the warranty
is for ten (10) years, all other warranties are limited to one (1) year. All
homes and all products manufactured, merchandised, serviced, distributed, sold
or delivered by Sellers at any time on or prior to the Closing Date have been in
conformity in all respects with all basic plans and specifications and

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applicable contractual commitments agreed to between the applicable Seller and
the purchaser of such home and express or implied warranties, except where such
non-conformity could not reasonably be expected to have a Material Adverse
Effect. There is no design defect or construction defect or common element
defect with respect to any of such homes that could reasonably be expected to
have a Material Adverse Effect. There are no Proceedings pending or threatened
against any Seller or pending by any Seller, relating to the Business and
containing allegations that any homes are defective or were improperly designed
or constructed or improperly labeled or otherwise improperly described for use
and there is no known basis for any of the foregoing. To the Knowledge of
Sellers, no liability exists for any return claim, warranty claim or other
obligation to provide service on, or to repair or replace, any products sold or
delivered by Sellers at any time on or prior to the Closing Date beyond the
amounts reserved for warranty expense reflected in the Balance Sheet or to be
reflected in the Closing Date Balance Sheet that could reasonably be expected to
have a Material Adverse Effect. No homes products heretofore sold by Sellers are
now the subject of any guarantee or warranty other than Sellers’ standard forms
of written warranties, except as specifically described in Schedule 5.24(A).
          (b) Schedule 5.24(B) sets forth: (i) a true and complete list of all
home repurchases by any Seller which closed escrow since January 1, 2003; and
(ii) the number of customer service requests by tract with respect to any home
sold by any Seller which were open and not resolved as of the Balance Sheet
Date. Except as set forth on Schedule 5.24(B) there are no warranty claims which
have been asserted against any Seller exceeding One Thousand Dollars ($1,000.00)
per individual house pending or settled or which resulted in home purchases
since January 1, 2004.
     5.25 No Finder. No Seller and any Person acting on their behalf has paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement other than to JMP Securities, whose fees and expenses, to the extent
payable, shall be paid solely by Sellers pursuant to a separate agreement
between TEP and JMP Securities.
     5.26 Reserved.
     5.27 Bank Accounts; Power of Attorney; Minute Books.
          (a) Schedule 5.27 sets forth a complete and correct list of all bank
accounts and safe deposit boxes of Sellers and Persons authorized to sign or
otherwise act with respect thereto as of the date hereof, specifying with
respect to each, the name and address of the institution, the name under which
the account is maintained, the account number, and the name and title or
capacity of each person authorized to have access thereto and a complete and
correct list of all Persons holding a general or special power of attorney
granted by Sellers and a complete and correct copy thereof. Also set forth on
Schedule 5.27 is the balance in the “sweep” account as of the Business Day prior
to the date of this Agreement and the balances in all other accounts of Sellers
as of the second Business Day prior to the date of this Agreement. The balances
in each bank account shall be updated as of the first and second Business Days
immediately preceding the Closing Date, respectively.
          (b) True and complete copies of the minute books, if any, of Sellers
have been delivered to Buyer. Such minute books contain true and complete
records of all meetings and other corporate or limited liability company action
taken by the Governing Bodies and stockholders or members of Sellers.

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     5.28 Related Party and Other Transactions.
          (a) Except as set forth on Schedule 5.28(A) since July 1, 2003, no
Seller (i) has directly or indirectly, purchased, leased or otherwise acquired
any property or obtained any services, or sold, leased or otherwise disposed of
any property or furnished any services (except with respect to remuneration for
services rendered as a director, officer or employee of any Seller as disclosed
to the Buyer), in the ordinary course of business or otherwise (or is a party to
any agreement to do any of the foregoing), from or to (1) any other Affiliate of
Sellers, or (2) any Person who is an officer or director of any Seller; or
(ii) owns or has owned, of record or as a beneficial owner, an equity interest
or any other financial or profit interest in any Person that has (1) had
business dealings or a material financial interest in any transaction with any
Seller or pertaining to the Purchased Assets, other than business dealings or
transactions disclosed on Schedule 5.28(A), each of which has been conducted in
the ordinary course of business with Sellers at substantially prevailing market
prices and on substantially prevailing market terms or (2) engaged in
competition with any Seller with respect to any line of the products or services
of Sellers (a “Competing Business”) in any market presently served by any
Seller, except for ownership of less than one percent (1%) of the outstanding
capital stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market.
          (b) No Seller nor any officer, employee or agent or other Person
acting on their behalf has, directly or indirectly, since July 1, 2003, given or
agreed to give any gift or similar benefit (other than with respect to bona fide
payments for which adequate consideration has been given) to any customer,
supplier, governmental employee or other Person who is or may be in a position
to help or hinder the Business (or assist Sellers in connection with any actual
or proposed transaction) (i) which might subject Sellers to any damage or
penalty in any civil, criminal or governmental litigation or Proceeding,
(ii) which, if not continued in the future, could have a Material Adverse Effect
or which would subject Sellers to suit or penalty in any private or governmental
litigation or Proceeding, (iii) for any of the purposes described in Section
162(c) of the Code, or (iv) for establishment or maintenance of any concealed
fund or concealed bank account.
          (c) No Seller nor any Seller’s Affiliate is a party to any contract or
agreement with, or has any claim or right against, any Seller, except as set
forth on Schedule 5.28(A) .
     5.29 Patriot Act.
          (a) No Seller is in violation of any laws relating to terrorism or
money laundering, including the Executive Order and/or the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56., the “Patriot Act”). No
Seller is a “Prohibited Person”, which is defined as follows:
               (i) a person or entity that is listed in the Annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001 and relating to Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (the “Executive Order”);
               (ii) a person or entity owned or controlled by, or acting for or
on behalf of, any person or entity that is listed in the Annex to, or is
otherwise subject to the provisions of, the Executive Order;
               (iii) a person or entity with whom Buyer is prohibited from
dealing or otherwise engaging in any transaction by any terrorism or money
laundering Law, including the Executive Order and the Patriot Act;

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               (iv) a person or entity who commits, threatens or conspires to
commit or supports “terrorism” as defined in the Executive Order;
               (v) a person or entity that is named as a “specially designated
national and blocked person” on the most current list published by the U.S.
Treasury Department Office of Foreign Assets Control at its official website,
http://www.treas.gov/ofac/tllsdn.pdf or at any replacement website or other
replacement official publication of such list; and
               (vi) a person or entity who is Affiliated with a person or entity
listed above.
          (b) No Seller: (i) to the Knowledge of any Seller, conducts any
business or engages in any transaction or dealing with any Prohibited Person,
including the making or receiving of any contribution of funds, goods or
services to or for the benefit of any Prohibited Person, (ii) deal in or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order; or (iii) engage in or conspire
to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth
in the Executed Order or the Patriot Act.
     5.30 RESPA.
          (a) No Seller or any Affiliate of any Seller (including, but not
limited to the First Florida Title Services II, LLC (the “First Florida Title
Company”) and Liberty Mortgage of South Florida, LLC) has violated any provision
of RESPA, including (without limitation) (i) Section 8(a), which prohibits
kickbacks and referral fees among settlement service providers,
(ii) Section 8(b), which prohibits the charging of unearned fees for settlement
services, and (iii) Section 9, which prohibits requiring the use of a particular
title company.
          (b) No Seller or any Affiliate of any Seller has a “controlled
business arrangement” or an “affiliated business arrangement” with any title
company, lender, broker or other entity which has not been properly disclosed to
purchasers and prospective purchasers pursuant to a “Controlled Business
Arrangement Disclosure Statement” or an “Affiliated Business Arrangement
Disclosure Statement.” Attached hereto as Schedule 5.30(B) are specimen copies
of the forms of all “Controlled Business Arrangement Disclosure Statements” and
“Affiliated Business Arrangement Disclosure Statements” so disclosed.
          (c) No Seller or any Affiliate of any Seller has charged or accepted
“markups” (i.e., closing or settlement fees or charges to purchasers which
exceed the actual cost to seller for such settlement charges or fees) in
connection with their sale of single family residences.
          (d) No Seller or any Affiliate of any Seller is under investigation
by, or has received any request for information from or on behalf of the
Department of Housing and Urban Development (“HUD”) or other law enforcement
authority with respect to such entity’s compliance or possible violation under
RESPA.
          (e) Attached hereto as Schedule 5.30(E) are specimen copies of the
forms of all purchase and sale agreements and related addenda and riders
utilized by Sellers in connection with sales of single family residences.
     5.31 Interstate Land Sales Full Disclosure Act. No Seller has violated any
provision of the Interstate Land Sales Full Disclosure Act, except where such
violation could not reasonably be expected to have a Material Adverse Effect.
Attached hereto as Schedule 5.31 is an identification of (a) all

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subdivisions developed by Sellers which are or were exempt from the registration
requirements of the Interstate Land Sales Full Disclosure Act, indicating the
particular grounds for exemption and (b) all statements of record filed pursuant
to 15 U.S.C. §1706 and all property reports furnished pursuant to 15 U.S.C.
§1707 for subdivisions which are or were not exempt from the registration
requirements of the Interstate Land Sales Full Disclosure Act. Sellers have
furnished true and correct copies or each of such property reports to Buyer.
Sellers’ standard retail home sales contract is in compliance with the
Interstate Land Sales Full Disclosure Act.
     5.32 Coastal Construction Control Line. No Seller has sold any property
located either partially or totally seaward of the coastal construction control
line as defined in Florida Statutes §161.57.
     5.33 Homeowners’ Associations; Condominium Associations.
          (a) Each Seller has complied in all respects with the provisions of
Florida Statutes §720.401, requiring the giving of a disclosure statement to
each prospective purchaser of real property to which membership in a residential
homeowners association is a prerequisite to ownership, except where such
noncompliance could not reasonably be expected to have a Material Adverse
Effect. Each such disclosure statement contains any description required by law
of any recreational or other facilities which are available for use by the
property owners, and a statement of any charges for the use of those facilities.
Each improvement conveyed by Sellers to any homeowners association at any time
on or prior to the Closing Date has been in conformity in all respects with all
basic plans and specifications and applicable contractual commitments agreed to
between the applicable Seller and such association, except where such
non-conformity could not reasonably be expected to have a Material Adverse
Effect. There is no design defect or construction defect or common element
defect with respect to any such improvement that could reasonably be expected to
have a Material Adverse Effect. Schedule 5.33 lists all homeowners and
condominium associations that burden the Owned Real Property and Optioned Real
Property. All of the associations are controlled by Sellers unless otherwise
indicated on Schedule 5.33 as “homeowner controlled” (the “Associations”). The
Associations have been duly organized, are in good standing, will be in good
standing as of the Closing, and have been operated and managed in accordance
with all Requirements of Law and all organizational documents applicable
thereto, including without limitation, the articles of incorporation, bylaws and
covenants applicable to each Association. Sellers have funded all of their
obligations to the Associations, and reasonable reserves have been established
for and are held by each Association, where required by law or the provisions of
the applicable homeowners or condominium association documents, which reserves
shall remain the property of the Associations after the Closing Date.
          (b) Condominiums. The following projects are hereinafter referred to
as the condominium projects (the “Condominium Projects”): Moss Park; Young
Pines; South Park; Williams Island and Laguna Lakes. With respect to the
Condominium Projects:
               (i) All improvements constructed as of the Closing Date within
the Condominium Projects have been constructed pursuant to the Requirements of
Law, the applicable declaration of condominium, and the statutory warranties
provided in Florida Statutes § 718.203, are hereby made and extended by each
Seller, as developer, to (i) Buyer, (ii) the respective condominium association,
and (iii) all retail buyers within the Condominium Project for all improvements
built prior to the Closing.
               (ii) Each Seller has established and funded all capital reserves
for each Condominium Project as required by the Requirements of Law, which
reserves shall remain the property of each such condominium association after
the Closing Date.

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               (iii) All retail sales contracts for condominium units within the
Condominium Projects comply with the Requirements of Law, and the retail buyers
thereunder have been provided with all documents and materials required by the
Requirements of Law.
               (iv) All earnest money deposits received by Sellers for
residential condominium units within the Condominium Projects are held in escrow
with the Title Company, in accordance with the Florida Condominium Act,
Chapter 718, Florida Statutes (the “Florida Condominium Act”). No reservation or
other deposits have been accepted. Each Seller’s rights in and to the escrow
account holding the foregoing deposits shall be assigned to Buyer at Closing.
     5.34 Community Development Districts. Each Seller has complied in all
respects with the provisions of Florida Statutes §190.048 requiring the giving
of a disclosure statement to each prospective purchaser of real property which
is part of a Community Development District.
     5.35 Florida Uniform Land Sales Practices Law. No Seller has violated any
provision of the Florida Uniform Land Sales Practices Law, except where such
violation could not reasonably be expected to have a Material Adverse Effect.
Attached hereto as Schedule 5.35 is an identification of (a) all subdivisions
developed by Sellers which are or were exempt from the registration requirements
of the Florida Uniform Land Sales Practices Law pursuant to Florida Statutes
§498.027, and (b) all public offering statements and registration statements
filed pursuant to §498.033 or §498.037 for subdivisions which are or were not
exempt from the registration requirements of the Florida Uniform Land Sales
Practices Law, together with all disclosure documents received from any
community development district with respect to the public financing and the
maintenance of the improvements to the subdivision are or were undertaken by
said district. Sellers have furnished true and correct copies of each of such
public offering statement, registration statement and community development
district disclosure document to Buyer. Sellers’ standard retail home sales
contract is in compliance with the Florida Uniform Land Sales Practices Law.
     5.36 No Restrictions. Except as set forth on Schedule 5.36, or as imposed
by any Governmental Body, no Seller has entered into any agreement under which
any Seller is restricted from developing land, building residential properties
or otherwise operating the Business in any manner with respect to any class of
customers, in any geographic area, during any period of time or in any segment
of the market which would be binding upon Buyer after Closing. After the
Closing, Buyer will not be prevented by any act of Sellers from developing land,
building residential properties or otherwise operating the Business in any
manner with respect to any class of customers, in any geographic area, during
any period of time or in any segment of the market.
     5.37 Compliance With Requirements of Law.
          (a) Except where the same could not reasonably be expected to have a
Material Adverse Effect, all contracts and agreements pursuant to which any
Seller has conveyed or agreed to convey title to any Purchased Assets were, when
executed and at the time of such conveyance, if applicable, in compliance with
all Requirements of Law.
          (b) Except where the same could not reasonably be expected to have a
Material Adverse Effect, no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a violation
by any Seller of, or a failure on the part of any Seller to comply with, any
Requirements of Law or (B) may give rise to any obligation on the part of any
Seller to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature.

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          (c) To Sellers’ Knowledge, no violation of any Requirements of Laws,
including laws, regulations or ordinances relating to zoning, environmental,
city planning or similar matters, relating to the Business or any Purchased
Asset currently exists or has existed at any time during any Seller’s ownership.
          (d) Except as set forth on Schedule 5.37, Sellers have not received,
at any time since June 30, 2003, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of, or failure to comply with,
any Requirement of Law or (B) any actual, alleged, possible or potential
obligation on the part of any Seller to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature, which could reasonably be
expected to have a Material Adverse Effect.
     5.38 Books and Records. The books of account and other financial records of
Sellers, all of which have been made available to Buyer, are complete and
correct and represent actual, bona fide transactions and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls.
     5.39 Accounts Receivable. All Accounts Receivable that are reflected on the
Financial Statements listed on Schedule 5.39, as attached and to be updated,
represent or will represent valid obligations and all are, or will be as of the
Closing Date, current and collectible (other than commission advances to sales
agents). Sellers represent and warrant that as of the date of execution of this
Agreement such commission advances do not exceed Four Million Dollars
($4,000,000.00). There is no and will not be any contest, claim, defense or
right of set-off under any contract with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable.
Schedule 5.39 contains a complete and accurate list of all Accounts Receivables
as of the date of execution of this Agreement, which list sets forth the aging
of each such Account Receivable. Such list shall be updated at Closing.
     5.40 Sellers’ Names. Each Seller’s exact legal name is correctly set forth
on Schedule 5.1(A) hereto. No Seller has previously changed its name from that
set forth on Schedule 5.1(A), except as disclosed on such Schedule.
     5.41 Disclosure. None of the representations or warranties contained
herein, none of the information contained in the Schedules hereto and none of
the other certificates, information or documents furnished to Buyer or any of
its representatives by any Seller or its representatives pursuant to the terms
of this Agreement, is false or misleading in any material respect or omits to
state a material fact herein or therein necessary to make the statements herein
or therein not misleading in any material respect. To the Knowledge of Sellers,
there is no fact which has or in the future is likely to cause a Material
Adverse Effect which has not been set forth or referred to in this Agreement or
the Schedules hereto.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
     As an inducement to Sellers to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby represents and warrants to
Sellers and agrees as follows:
     6.1 Organization of Buyer. Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to

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own or lease and to operate and use its assets and properties and to carry on
its business as now conducted.
     6.2 Authority of Buyer; No Conflict.
          (a) Buyer has full power and authority to execute, deliver and perform
this Agreement and all of the Buyer Ancillary Agreements. The execution,
delivery and performance of this Agreement and the Buyer Ancillary Agreements by
Buyer have been duly authorized and approved by Buyer’s Governing Body and do
not require any further authorization or consent of Buyer. This Agreement has
been duly authorized, executed and delivered by Buyer and is the legal, valid
and binding agreement of Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors’ rights and (ii) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer and upon execution and delivery by
Buyer will be a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general applicability affecting the enforcement of creditors’ rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
          (b) Neither the execution and delivery of this Agreement or any of the
Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
               (i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under
(A) the Charter Document or operating agreement of Buyer, (B) any note,
instrument, agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which Buyer is a party or any
of its assets or properties is subject or by which Buyer is bound, the default
under which could reasonably be expected to have a Material Adverse Effect,
(C) any Court Order to which Buyer is a party or by which it is bound or (D) to
Buyer’s knowledge, any Requirements of Laws affecting Buyer; or
               (ii) require the approval, consent, authorization or act of, or
the making by Buyer of any declaration, filing or registration with, any Person,
except for those declarations, filings or registrations, the failure of which to
obtain could not reasonably be expected to have a Material Adverse Effect.
     6.3 No Finder. Neither Buyer nor any Person acting on its behalf has paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
     6.4 Financing. Buyer has sufficient funds available for it to pay the
Purchase Price.
     6.5 Ownership. All of the membership interests in Buyer are owned by
TE/TOUSA Senior, LLC. All of the membership interests in TE/TOUSA Senior, LLC
are owned by TE/TOUSA Mezzanine, LLC, which is in turn owned one hundred percent
(100%) by TE/TOUSA, LLC.

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ARTICLE VII
ACTIONS PRIOR TO THE CLOSING DATE
     The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
     7.1 Investigation by Buyer. Each Seller shall afford the officers,
employees and authorized representatives of Buyer (including independent public
accountants, engineers, consultants and attorneys) complete access during normal
business hours to the offices, properties, employees, consultants, advisors and
business and financial records (including computer files, retrieval programs and
similar documentation and such access and information that may be necessary in
connection with an environmental audit) of any Seller to the extent Buyer shall
deem necessary or desirable and shall furnish to Buyer or its authorized
representatives such additional information concerning the Purchased Assets, the
Contributed Assets, the Business and the operations of any Seller as shall be
reasonably requested, including all such information as shall be necessary to
enable Buyer or its representatives to verify the accuracy of the
representations and warranties contained in this Agreement, to verify that the
covenants of any Seller contained in this Agreement have been complied with and
to determine whether the conditions set forth in Article 9 have been satisfied.
Buyer agrees that such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operations of any Seller. To the extent that
Buyer shall learn any information during the course of its due diligence
investigation of Sellers which shall conflict with any representation or
warranty made by any Seller hereunder, then Buyer shall be deemed for all
purposes to be aware of such information notwithstanding any representation or
warranty to the contrary made herein by any Seller.
     7.2 Preserve Accuracy of Representations and Warranties; Notification of
Certain Matters.
          (a) Each party hereto shall refrain from taking any action which would
render any representation or warranty contained in Article 5 or 6 inaccurate in
any respect as of the Closing Date. Each party shall promptly notify the other
of (i) any event or matter that could reasonably be expected to cause any of its
representations or warranties to be untrue in any respect or (ii) any action,
suit or Proceeding that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement.
          (b) During the period prior to the Closing Date, each Seller will
notify Buyer of (i) any Material Adverse Change, (ii) any lawsuit, claim,
Proceeding or investigation that is threatened, brought, asserted or commenced
against such Seller which would have been listed in Schedule 5.19 if such
lawsuit, claim, Proceeding or investigation had arisen prior to the date hereof,
(iii) any notice or other communication from any third Person alleging that the
consent of such third Person is or may be required in connection with the
transactions contemplated by this Agreement, and (iv) any default under any
Seller Agreement or event which, with notice or lapse of time or both, would
become such a default on or prior to the Closing Date and of which Sellers have
Knowledge and could reasonably be expected to result in a Material Adverse
Change.
     7.3 Consents of Third Parties.
     Sellers will act diligently and reasonably in attempting to obtain, on or
before the Closing Date, the consent, approval or waiver, in form and substance
reasonably satisfactory to Buyer, from any party to any Seller Agreement
required to be obtained to assign and transfer the Purchased Assets, the
Contributed Assets to Buyer or to otherwise satisfy the conditions set forth in
Section 9.5; provided, that Sellers shall

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not make any agreement or understanding affecting the Purchased Assets, the
Contributed Assets, or the Business as a condition for obtaining any such
consents or waivers except with the prior written consent of Buyer. During the
period prior to the Closing Date, Buyer shall act diligently and reasonably to
cooperate with Sellers in attempting to obtain the consents, approvals and
waivers contemplated by this Section 7.3. If the applicable consents are not
obtained with respect to any Real Property, such affected Lot shall be excluded
from the Real Property and replaced with a Substitute Lot.
     7.4 Operations Prior to the Closing Date.
          (a) Sellers shall operate the Business only in the ordinary course
consistent with past practice. Consistent with the foregoing, Sellers shall keep
and maintain the Purchased Assets and the Contributed Assets in good operating
condition and repair and shall use their commercially reasonable efforts
consistent with good business practice to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and others
having business relations with Sellers in connection with the Business. In
connection therewith, Sellers shall not, with respect to any employee of Sellers
(i) transfer such employee to another business unit of TEP, (ii) offer such
employee employment by another business unit of Sellers or its Affiliate after
the Closing Date or (iii) otherwise attempt to persuade any such employee to
terminate his or her relationship with Seller or not to commence employment with
Buyer after the Closing.
          (b) Notwithstanding Section 7.4(a) except as expressly contemplated by
this Agreement or except with the express written approval of Buyer, no Seller
shall:
               (i) change the operations or finances of the Business in a manner
which could reasonably be expected to have a Material Adverse Effect, without
making periodic reports to Buyer;
               (ii) implement operational decisions inconsistent with past
practices of Sellers with respect to the Business of a nature which could
reasonably be expected to have a Material Adverse Effect without first
conferring with Buyer;
               (iii) make any change in the Business or the operations of any
Seller which could reasonably be expected to have a Material Adverse Effect;
               (iv) make any capital expenditure or enter into any contract or
commitment therefor other than capital expenditures or commitments for capital
expenditures specifically referred to in the Projections set forth on
Schedule 5.23, in excess of One Hundred Thousand Dollars ($100,000.00) in the
aggregate; provided, however, that lot purchases and development and
construction expenditures shall not be considered as capital expenditures so
long as such expenditures are consistent with the Projections set forth on
Schedule 5.23 and are otherwise permissible under this Agreement;
               (v) except as contemplated by the Projections set forth on
Schedule 5.23, and except for home sales in the ordinary course of business,
enter into any contract, agreement, undertaking or commitment which would have
been required to be set forth on Schedule 5.17 if in effect on the date hereof
or enter into any contract or make any material modification or terminate any
Seller Agreement or Governmental Permit which cannot be assigned to Buyer or a
permitted assignee of Buyer under Section 13.5;
               (vi) except for home sales in the ordinary course of business and
except for closings under home sales contracts in effect on the date hereof and
set forth on Schedule 5.17, sell, lease (as lessor), transfer or otherwise
dispose of (including any transfers from the Companies to TEP or any of

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their Affiliates), or mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Assets, the Contributed Assets or the
assets or properties of Sellers, other than for indebtedness incurred in the
ordinary course of the Business as contemplated by Section 3.1(b) and other than
minor amounts of personal property sold or otherwise disposed of for fair value
in the ordinary course of the Business consistent with past practice and other
than Permitted Encumbrances;
               (vii) cancel without receiving full consideration therefore any
debts owed to or claims held by Sellers (including the settlement of any claims
or litigation) in excess of Five Thousand Dollars ($5,000.00) individually or
Two Hundred Thousand Dollars ($200,000.00) in the aggregate;
               (viii) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money or enter into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial Accounting
Standards No. 13) other than in the ordinary course of the Business consistent
with past practice;
               (ix) accelerate or delay collection of any notes or accounts
receivable in advance of or beyond their regular due dates or the dates when the
same would have been collected in the ordinary course of the Business consistent
with past practice;
               (x) delay or accelerate payment of any account payable or other
liability of Sellers beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of the Business consistent
with past practice;
               (xi) except to the extent that the same is the result of an event
which adversely impacts the homebuilding industry in general, allow the levels
of raw materials, supplies, work-in-process, finished goods or other materials
included in the inventory of Sellers to vary in any respect from the levels
customarily maintained in the Business which could reasonably be expected to
have a Material Adverse Effect;
               (xii) except as set forth on Schedule 7.4(b)(xii) make, or agree
to make, any payment of cash or distribution of assets to Sellers or any of its
Affiliates other than salaries paid to employees in accordance with the levels
of compensation set forth on Schedule 5.15(K);
               (xiii) institute any increase in any profit-sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement, medical,
hospital, disability, welfare or other employee benefit plan with respect to
employees of Sellers with respect to the Business;
               (xiv) make any change in the compensation of Sellers’ employees,
other than changes made to comply with changes in Requirements of Laws or
changes for non-officer employees made in accordance with normal compensation
practices and consistent with past compensation practices;
               (xv) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any election, or
adopt any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods
(including positions, elections or methods which would have the effect of
deferring income to periods for which Buyer is liable pursuant to Section 8.3(a)
or accelerating deductions to periods for which any Seller is liable pursuant to
Section 8.3(a));
               (xvi) make any change in the accounting policies applied in the
preparation of the financial statements contained in Schedule 5.4;

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               (xvii) make any change in internal control over financial
reporting;
               (xviii) maintain the Purchased Assets and the Contributed Assets
in a state of repair and condition that does not comply with Requirements of Law
and is not consistent with the requirements and normal condition of Sellers’
Business;
               (xix) discontinue its insurance coverage under the policies set
forth on Schedule 5.21, unless it obtains a substantially equivalent policy; or
               (xx) enter into any agreement or commitment, whether written or
otherwise, with respect to any of the foregoing.
     7.5 Licenses. Prior to Closing, Sellers shall cooperate with Buyer to
obtain all licenses necessary to conduct the Business, including the
contractor’s license. All third party costs incurred in connection with
obtaining such licenses shall be borne by Buyer.
     7.6 Minimum Lot Transfer. The Contract Real Property, the Optioned Real
Property and the Owned Real Property are comprised of Twenty Thousand, Six
Hundred Fifty Nine (20,659) approved or proposed individual Lots, all as set
forth on Schedule 7.6. Schedule 7.6 also sets forth a listing of the Lots which
are currently subject to the Right of First Offer Agreement. Sellers have
heretofore paid deposits required with respect to the Option Agreements and the
Purchase Contracts as set forth on Schedules 5.10(B) and 5.10(C). The amount of
such deposits shall be included as assets of Sellers in the determination of the
Closing Date Net Worth. Additional deposits which are required to be made under
such Option Agreements and the Purchase Contracts after the Closing shall be the
sole responsibility of Buyer.
     7.7 Title Insurance.
          (a) Buyer shall obtain from Chicago Title Insurance Company or another
title insurance company approved by Buyer in its sole discretion (the “Title
Company”) and it shall be a condition to Buyer’s obligations to consummate the
acquisition of the Purchased Assets and TE/TOUSA, LLC’s agreement to accept the
contribution of the Contributed Assets that the Title Company shall issue:
               (i) title insurance in favor of Buyer subject only to the
Permitted Encumbrances for all Owned Real Property transferred to Buyer
hereunder, in an amount, pursuant to policy forms and subject to such
endorsements as Buyer may require, all, however, at Buyer’s sole cost and
expense; and
               (ii) title insurance in favor of Buyer, subject only to the
Permitted Encumbrances, for Buyer’s option interest in all Optioned Real
Property transferred to Buyer hereunder, in an amount pursuant to policy forms
and subject to such endorsements as Buyer may require, all however, at Buyer’s
sole cost and expense.
          (b) Title Commitments and Surveys. Buyer shall arrange for the Title
Company to issue and deliver to Buyer title insurance commitments for each
portion of the Real Property, together with copies of all instruments giving
rise to any exceptions or requirements contained therein (referred to herein
collectively as the “Title Commitments”). Buyer has arranged to have an ALTA
land title survey completed for such Real Property which is not currently fully
platted (referred to herein collectively as the “Surveys”). Each Survey shall be
completed by a professional land surveyor reasonably acceptable to Buyer and, in
addition to all other requirements for ALTA land title survey, satisfy Table A
items 1, 2, 3, 4, 10, and 11(a) and any other items specifically requested by
Buyer or any permitted successor or assign

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of Buyer. The Title Commitments and the Surveys shall be issued and certified to
Buyer or any permitted successor or assign of Buyer and shall otherwise be in a
form reasonably acceptable to Buyer. With respect to any Survey ordered by
Buyer, a special survey exception will be added for matters shown by such
Survey.
          (c) Title Objections. No later than noon, local time on the eleventh
(11th) day preceding the Closing Date, Buyer shall cause the Title Company to
perform updated title searches with respect to the Seller Property. No later
than noon, local time on the fifth day preceding the Closing Date, Buyer shall
notify Sellers as to any exceptions to title shown by updated title searches or
on the Surveys which are not Permitted Encumbrances. With respect to any
exceptions as to which any such objection is made, Sellers and Buyer shall
negotiate in good faith to agree no later than the Closing Date as to the
actions to be taken by Buyer and Sellers to cure or resolve such objections in a
manner reasonably acceptable to Buyer; provided, however, that unless Buyer and
Sellers otherwise specifically agree in writing, neither party shall be
obligated to take any specific action with respect to any such objection and
neither party shall be liable for any failure to reach an agreement for curing
or resolving the objections; provided, further, that if the parties do not reach
an agreement, then, at Buyer’s option, Buyer may require Sellers to replace the
affected Lot with a Substitute Lot. A general survey exception shall be included
on the Title Commitment at Closing for any Seller Property that has not been
surveyed. With respect to existing Surveys of the Seller Property heretofore
delivered to Buyer that are not updated, provided the existing Survey is
certified to the Title Company, the general survey exception will be limited to
matters arising after the date of such existing Surveys.
          (d) Closing Endorsements. At the Closing (and as a condition to
Buyer’s obligation to proceed with the consummation of the Closing), the Title
Company shall have delivered to Buyer endorsements to the Title Commitment
showing that all requirements have been satisfied (excepting those requirements
solely within the control of Buyer), and deleting all exceptions, other than
Permitted Encumbrances, so that the Title Company is unconditionally obligated
upon payment of the applicable premium to issue to Buyer or any permitted
successor or assign of Buyer, title insurance policies insuring title to the
Owned Real Property and the Optioned Real Property, in the amount of the portion
of the Purchase Price allocable to such portion of the Owned Real Property and
Sellers’ option interest in all Optioned Real Property transferred to Buyer
hereunder, subject only to the Permitted Encumbrances applicable to such portion
of the Property (each, a “Policy”). Buyer and Sellers recognize that Buyer or
any permitted successor or assign of Buyer may desire to have some or all of the
Policies to be issued to such party pursuant hereto combined into a single
policy (each, also a “Policy”), listing separately all of such portions of the
Owned Real Property or the property which is the subject of any Seller Agreement
and the Permitted Encumbrances applicable thereto and providing for an amount of
insurance equal to the sum of the portions of the Purchase Price allocable to
all such portions of the Owned Real Property or the property which is the
subject of any Seller Agreement to be so combined into the single Policy and,
notwithstanding any other provision of this Section 7.7, if so elected by Buyer
or any permitted successor or assign of Buyer, the Policies shall be so
combined.
     7.8 Warranty Administration. Effective upon Closing, Sellers and Buyer
shall enter into the Warranty Administration Agreement with respect to warranty
claims for those homes which Sellers have settled or closed prior to Closing
(the “Pre-Closing Warranty Claims”).
     7.9 Acquisition Proposals. No Seller will nor will it authorize or permit
any of its officers, directors or employees or any Affiliate or authorize any
investment banker, attorney, accountant or other representative retained by it
or any of its Affiliates to, directly or indirectly, solicit or encourage, or
furnish information with respect to the Purchased Assets, the Contributed Assets
or assets or properties of Sellers or the Business or engage in any discussions
with any Person in connection with, any proposal for the acquisition of any
portion of the Purchased Assets, the Contributed Assets or the Business, other
than

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as contemplated by this Agreement and except for sales of individual residences
to third party homebuyers in the ordinary course of Business consistent with
past practice. Sellers will promptly cease or cause to be terminated any
existing activities or discussions with any Person (other than Buyer) with
respect to any of the foregoing and will promptly request the return of any
confidential information provided to any Person in connection with a prospective
acquisition of the Purchased Assets, the Contributed Assets, or any assets or
properties of Sellers or the Business.
     7.10 Legal Descriptions. Buyer and Sellers acknowledge that some of the
legal descriptions set forth on Schedule 5.10(A) and Schedule 5.10(B) may need
to be revised, in such a manner as not to materially adversely impact the Real
Property to be acquired. Buyer and Sellers shall continue to cooperate with one
another to finalize the legal descriptions within ten (10) days of the date of
this Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
     8.1 Covenant Not to Compete or Solicit Business.
          (a) In furtherance of the sale of the Purchased Assets to Buyer and
the contribution of the Contributed Assets to TE/TOUSA, LLC hereunder by virtue
of the transactions contemplated hereby and to more effectively protect the
value and goodwill of the Purchased Assets, the Contributed Assets and the
Business being sold to Buyer, Sellers together with Falcone covenant and agree
that, for a period ending on the third anniversary of the Closing Date, none of
them, nor any of their Affiliates will, anywhere in the counties specified in
Schedule 8.1(B):
               (i) directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage, operate, control,
participate in, perform services for, sell materials to, or otherwise carry on,
a business similar to or competitive with the Business as conducted by Sellers
as of Closing, including the sale or production of new, single-family, detached
homes but excluding mixed-use projects (being defined as projects which are
primarily commercial but also include residential elements as an ancillary use);
provided that such prohibition shall not apply to any Lot listed on
Schedule 8.1(C) hereto (including the thirty-two (32) Lots in Coral Lakes (the
“Coral Lakes Lots”) identified on such Schedule) or the Right of First Offer
Agreement, which Lot is not acquired by Buyer by reason of non-exercise of the
option or right of first offer relating to such Lot for any reason other than
the breach of any Seller or its Affiliates or to the ownership by
Falcone/Ritchie LLC of any interest in TE/TOUSA, LLC or its Subsidiaries; or
               (ii) induce or attempt to persuade any employee, agent or
supplier of any Seller with respect to the Business to terminate such
employment, agency or business relationship with Buyer in order to enter into
any such relationship on behalf of any other business organization in
competition with the Business (except for those employees of Sellers who may
after Closing be employed by Century Marketing International, LLC);
provided, however that nothing in clause (i) above shall prohibit Sellers or
Falcone from engaging in the following businesses:

  (1)   acquiring and converting existing apartment buildings into condominiums
for sale;

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  (2)   projects to develop multi-family apartment rental properties, including
the conversion of such rental communities into condominiums for sale;     (3)  
“land banking”, meaning taking title to, providing land improvements, and
financing raw land on behalf of homebuilders that prefer to acquire only
finished lots; provided, however, that in the event that the “builder” under a
land banking arrangement fails to acquire all of the real property subject to
such land banking arrangement, then such real property shall be subject to the
Right of First Offer Agreement;     (4)   commercial real estate projects,
including office, commercial, retail and industrial building;     (5)   projects
to develop residential condominiums over four (4) stories in height;     (6)  
development of raw land, including any combination of acquisition, entitlement
and infrastructure improvement of residential lots for sale to homebuilders or
individual owners; provided that Buyer shall be given the right of first offer
with respect to the development of any residential lots located within the
counties listed on Schedule 8.1(B);     (7)   providing real estate mezzanine
and other debt financing to real estate companies and entities, including
companies and entities that are in the business of the sale or production of
new, single-family, detached homes; provided that none of Sellers or Falcone may
acquire any equity ownership interest in such companies or entities or their
underlying assets or properties, except: (i) profit participation rights; and
(ii) if, through the exercise of foreclosure and similar enforcement remedies
upon default, Sellers or Falcone obtain direct ownership rights in the companies
or entities or their assets and properties, with the right to operate the assets
and properties of such entities, so long as such entities do not build, market
or sell single-family detached homes, townhomes, or residential condominiums
less than five (5) stories in height; provided, however, that in the event that
Sellers acquire any such real property through foreclosure or deed in lieu of
foreclosure, such real property shall be subject to the Right of First Offer
Agreement;     (8)   building and marketing a maximum of two spec homes each
year, provided that such homes are marketed and sold for a sales price no less
than Two Million Dollars ($2,000,000.00) each; and     (9)   development,
construction and sale of the projects listed on Schedule 8.1(C) attached hereto,
which shall also be excluded from the Right of First Offer Agreement.

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          (b) Each of Sellers and Falcone also covenants and agrees that it will
not, and will not permit any of its Affiliates to, divulge any trade secrets or
other confidential information of Sellers or the Business other than to disclose
such secrets and information to Buyer or its Affiliates.
          (c) If any Seller, Falcone or any Affiliate of any Seller or Falcone
violates any of its obligations under this Section 8.1 Buyer may proceed against
it in law or in equity for such damages or other relief as a court may deem
appropriate. Each of Sellers and Falcone acknowledges that a violation of this
Section 8.1 may cause Buyer irreparable harm which may not be adequately
compensated for by money damages. Each of Sellers and Falcone therefore agrees
that in the event of any actual or threatened violation of this Section 8.1,
Buyer shall be entitled, in addition to other remedies that it may have, to a
temporary restraining order and to preliminary and final injunctive relief
against Sellers, Falcone or such Affiliate of Sellers to prevent any violations
of this Section 8.1. The prevailing party in any action commenced under this
Section 8.1 shall also be entitled to receive reasonable attorneys’ fees and
court costs. It is the intent and understanding of each party hereto that if, in
any action before any court or agency legally empowered to enforce this
Section 8.1 any term, restriction, covenant or promise in this Section 8.1 is
found to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
     8.2 Release of Bonds. Buyer shall obtain bonds in replacement of (or in
support of) bonds delivered by any Seller to Governmental Bodies or otherwise in
connection with the Purchased Assets, the Contributed Assets and the Business
being transferred to Buyer and specified in Schedule 8.2 and shall use
commercially reasonable efforts to cause such Governmental Bodies to accept such
replacement bonds within sixty (60) days of Closing. To the extent that any of
the bonds specified in Schedule 8.2 shall come up for renewal following the
Closing but prior to the replacement thereof by Buyer, Sellers shall cause such
renewal to occur; provided that Buyer shall be responsible for all fees incurred
with respect thereto. If Buyer elects to obtain bonds in support of existing
bonds delivered by Sellers to Governmental Bodies rather than replacement bonds,
Buyer shall be responsible for the payment of all fees, costs, premiums or other
expenses incurred by Sellers in any required renewals or extensions of Sellers’
existing bonds. In the event that any amounts shall be paid under or against any
bond delivered by Sellers to Governmental Bodies resulting from conditions
arising or events occurring after the Closing, which sums are not reimbursed
under supporting bonds posted by Buyer, then Buyer shall reimburse Sellers for
any amounts so paid under Sellers’ bonds, together with any costs incurred by
Sellers in connection therewith.
     8.3 Taxes
          (a) Liability for Federal, State, Local and Foreign Income Taxes
(collectively “Income Taxes”).
               (i) Sellers shall be liable for and pay, and pursuant to
Article 11 shall jointly and severally indemnify and hold harmless each Buyer
Group Member from and against any and all Losses and Expenses incurred by such
Buyer Group Member in connection with or arising from (A) all Income Taxes
imposed on any Seller, or for which such Seller may otherwise be liable as a
result of having been a member of a Seller Group (including Income Taxes for
which Sellers may be liable pursuant to Treas. Reg. Section 1.1502-6 or similar
provisions of state, local or foreign law as a result of having been a member of
a Seller Group and any Income Taxes resulting from Sellers’ ceasing to be a
member of any Seller Group), and (B) all Income Taxes imposed on Sellers and for
which Sellers may otherwise be liable, for any taxable year or period that ends
prior to or concurrently with the Closing Date.

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               (ii) Buyer shall be liable for and pay, and pursuant to
Article 11 shall indemnify and hold harmless each Seller Group Member from and
against any and all Losses and Expenses incurred by such Seller Group Member in
connection with or arising from all Income Taxes imposed on any Seller in
connection with the Purchased Assets and the Contributed Assets for any taxable
year or period that begins on or after the Closing Date; provided, however that
Buyer shall not be liable for or pay, and shall not indemnify or hold harmless
any Seller Group Member from and against any Losses or Expenses incurred by such
Seller Group Member in connection with or arising from any Income Taxes for
which Sellers are liable under this Agreement (including under Section 5.7 or
Section 8.3(a)(i)).
          (b) Liability For All Taxes Other Than Federal, State, Local and
Foreign Income Taxes (collectively “Other Taxes”).
               (i) Sellers shall be liable for and pay, and pursuant to
Article 11 shall jointly and severally indemnify and hold harmless each Buyer
Group Member from and against any and all Losses and Expenses incurred by such
Buyer Group Member in connection with or arising from (A) all Other Taxes
imposed on Sellers, or for which Sellers may otherwise be liable as a result of
having been a member of a Seller Group or resulting from Sellers ceasing to be a
member of any Seller Group, and (B) all Other Taxes imposed on Sellers or for
which Sellers may otherwise be liable for any taxable year or period that ends
prior to or concurrently with the Closing Date, except to the extent that the
obligations of Sellers for such Other Taxes are reflected in existence as of the
Closing Date and included in the Closing Date Balance Sheet as a liability which
is an Assumed Liability.
               (ii) Buyer shall be liable for and pay, and pursuant to
Article 11 shall indemnify and hold harmless each Seller Group Member from and
against any and all Losses and Expenses incurred by such Seller Group Member in
connection with or arising from all Other Taxes relating to the Purchased Assets
and the Contributed Assets to the extent that the obligations for such Other
Taxes relate to a taxable year or period that begins on or after the Closing
Date; provided, however that Buyer shall not be liable for or pay, and shall not
indemnify or hold harmless any Seller Group Member from and against any Losses
or Expenses incurred by such Seller Group Member in connection with or arising
from any Other Taxes for which Sellers are liable under this Agreement
(including under Section 5.7 or Section 8.3(b)(i).
          (c) Tax Returns. (i) Sellers shall timely file or cause to be timely
filed when due (taking into account all extensions properly obtained) all Tax
Returns that are required to be filed for taxable years or periods of Sellers
ending prior to or concurrently with the Closing Date (in the case of Tax
Returns required to be filed by or with respect to Sellers for such taxable
years or periods on a combined, consolidated or unitary basis with any entity
other than solely Sellers) or due on or before the Closing Date (in the case of
other Tax Returns), and in each case Sellers shall remit or cause to be remitted
to the taxing authorities any Taxes due in respect of such Tax Returns, and
(ii) Buyer shall timely file or cause to be timely filed when due (taking into
account all extensions properly obtained) all other Tax Returns that are
required to be filed on or after the Closing Date by or with respect to Sellers
and Buyer shall remit or cause to be remitted to the taxing authorities any
Taxes due in respect of such Tax Returns. Sellers or Buyer shall reimburse the
other party the Taxes for which Sellers or Buyer is liable pursuant to
Section 8.3 but which are remitted in respect of any Tax Return to be filed by
the other party pursuant to this Section 8.3(c) upon the written request of the
party entitled to reimbursement setting forth in detail the computation of the
amount owed by Sellers or Buyer, as the case may be, not later than thirty
(30) days after the payment of such Taxes. All Tax Returns which Sellers are
required to file or cause to be filed in accordance with this Section 8.3(c)
shall be prepared and filed in a manner consistent with past practice and, on
such Tax Returns, no position shall be taken, election made or method adopted
that is inconsistent with positions taken, elections made or methods used in
preparing and

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filing similar Tax Returns in prior periods (including, but not limited to,
positions, elections or methods which would have the effect of deferring income
to periods for which Buyer is liable under this Section 8.3 or accelerating
deductions to periods for which Sellers are liable under this Section 8.3).
          (d) Assistance and Cooperation. After the Closing Date, each of
Sellers and Buyer shall (and shall cause their respective Affiliates to):
               (i) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from or reduce the filing of
all Tax Returns or other reports with respect to Other Taxes described in
Section 8.3(b) (relating to sales, transfer and similar Taxes);
               (ii) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in accordance with
Section 8.3(c), and in connection therewith provide the other party necessary
powers of attorney;
               (iii) cooperate fully in preparing for and conducting any audits
of, or disputes with taxing authorities regarding, any Tax Returns of Sellers;
               (iv) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of Sellers; and
               (v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or information
request with respect to any such taxable period.
          (e) Survival of Obligations. Notwithstanding anything to the contrary
in this Agreement, and notwithstanding Section. 13.1 of this Agreement, the
obligations of the parties set forth in this Section 8.3 shall be unconditional
and absolute and shall remain in effect without limitation as to time.
          (f) Meaning of “Income Taxes” and “Other Taxes”. For purposes of this
Section 8.3, the term “Income Taxes” shall mean any federal, state, local or
foreign net income, gross income, gross receipts and windfall profit tax. The
term “Other Taxes” shall mean each and every tax (including, but not limited to,
sales and use taxes and ad valorem taxes) enumerated in the definition section
of this Agreement under the term “Tax” other than those identified in the
immediately preceding sentence as “Income Taxes”.
     8.4 Employees.
          (a) Offer of Employment. On the Closing Date, Buyer shall offer
employment to substantially all of Sellers’ employees (except for those
employees of Sellers who may after Closing be employed by Century Marketing
International, LLC) authorized to work in the United States then primarily
engaged in the Business. For purposes of this Section 8.4(a), “substantially
all” shall mean the then-current number of all of Sellers’ employees so employed
less no more than ten (10). The terms and conditions of employment shall be
comparable in the aggregate to the terms and conditions of their employment with
Sellers as of such date. Each such employee who is employed by Sellers on the
Closing Date and who actually transfers to employment with Buyer (or any
Affiliate designated by Buyer) at or after the Closing Date as a result of an
offer of employment made by Buyer is hereafter referred to as a “Hired
Employee.” Buyer shall have no obligation to hire any other employees of Seller
after the Closing Date.

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          (b) Transition. The employment by Sellers of the Hired Employees shall
end at the Closing and the employment of the Hired Employees by Buyer shall
commence immediately after the Closing. The terms of employment with Buyer (or
Buyer’s Affiliates) shall be as mutually agreed to between each Hired Employee
and Buyer (or Buyer’s Affiliate, as the case may be), subject to the provisions
of Section 8.4(a). Buyer shall have no obligation with respect to payments of
salary, compensation, wages, health or similar benefits, commissions, overtime
hours, bonuses (deferred or otherwise), severance, stock or stock options or any
other sums due to any Hired Employee that accrued before the Closing Date,
except as set forth in this Section 8.4 or Section 8.5. Where a bonus relates to
a period which commenced before, but ends after, the Closing Date, Sellers shall
be responsible for the pro rata portion of such bonus relating to the period
prior to the Closing Date. Sellers will be fully responsible for all amounts
payable to or claims made by any employee, for all termination payments,
redundancy compensation and severance pay. In addition, Sellers will be fully
responsible for all amounts owing to Hired Employees prior to Closing.
          (c) Seniority. Buyer shall grant Hired Employees seniority rights
(such as seniority for vacation) based on their service with Sellers. Buyer
shall credit Hired Employees with the vacation, sick and holiday banks they had
at the time of termination from Sellers, and Sellers shall reimburse Buyer at
Closing for the liability of the total vacation, sick and holiday banks credited
to the Hired Employees.
          (d) Personnel Files. Sellers agree that they will allow Buyer to take
custody of and maintain all personnel files of the Hired Employees currently in
possession of Sellers, except confidential medical files. Buyer agrees to give
Sellers access to said files, during normal business hours, and to provide
copies when requested, and to assist Sellers when necessary to respond to or
defend a claim or otherwise take an action which necessitates access to the
files.
          (e) Workers’ Compensation. Sellers are and shall be fully responsible
and liable for all workers’ compensation benefits payable to Sellers’ employees
for any claim for such benefits arising as the result of an injury or
occupational disease sustained while employed by Sellers. However, on reasonable
notice and during normal business hours, Buyer shall make its employees
available to Sellers for purposes of defending workers’ compensation claims by
employees.
          (f) Cooperation. Buyer shall cooperate with Sellers in making
employees and records available, upon reasonable notice, to assist Sellers in
defending any claims brought against them by current or former employees.
          (g) Third Party Beneficiary. No provision in this Agreement shall
create any third-party beneficiary or other right in any Person (including any
beneficiary or dependent thereof) for any reason, including in respect of
continued, resumed or new employment with Buyer (or any Affiliate of Buyer) or
in respect of any benefits that may be provided, directly or indirectly, under
any plan or arrangement maintained by Sellers, Buyer or any Affiliate. Except as
otherwise expressly provided in this Agreement, Buyer is under no obligation to
hire any employee of Sellers, provide any employee with any particular benefits,
or make any payments or provide any benefits to those employees of Sellers whom
Buyer chooses not to employ.
     8.5 Employee Benefit Plans.
          (a) Service Crediting. Service by Hired Employees with Sellers shall
be considered service with Buyer for purposes of determining vesting
participation and benefit eligibility (but not for purposes of accruals or
benefits) under Buyer’s employee benefit plans.

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          (b) Welfare Plans. Sellers shall maintain health, dental, life, short
and long term disability, and supplemental benefit insurance for the Hired
Employees under the Seller Plans in effect on the Closing Date until the earlier
of (i) the date on which Buyer notifies Sellers of its intent to terminate the
Seller Plans or as soon as practicable thereafter, or (ii) December 31, 2005.
Buyer shall be responsible for administering such Seller Plans (the “Continued
Welfare Plans”) for periods beginning on or after the Closing Date, including
filing any necessary paperwork with any applicable Governmental Body with
respect to plan years ending on or after the Closing Date, and shall be
responsible for all costs and expenses incurred with respect to Hired Employees
from the Closing Date until the Continued Welfare Plans are terminated.
          (c) Deductibles and Out-of-Pocket Payments. If Buyer elects to place
any of the Hired Employees in its employee benefit plans before January 1, 2006,
Buyer shall credit deductibles and out-of-pocket amounts paid during the current
year by such Hired Employees under Seller Plans against deductibles and
out-of-pocket maximums under Buyer’s employee benefit plans.
          (d) COBRA. Buyer agrees to assume all COBRA obligations of Sellers
with respect to Sellers’ group health plans as they relate to the Hired
Employees from and after the Closing Date.
          (e) TEP Savings Plans. Buyer agrees that its mirror 401(k) Plan and
trust will accept roll-overs of all account balances in TEP’s Savings Plan and
associated trust which are attributable to the Hired Employees.
     8.6 Use of Name. From and after the Closing Date, no Seller or any of its
Affiliates shall use the name “Transeastern Properties”, or any variation
thereof, or any name using the word Transeastern or any word that is similar in
sound or appearance in the conduct of any business. Promptly following the
Closing, each Seller shall take all necessary actions to change its corporate
name to a name that does not include the name “Transeastern” or any part or
variation thereof and shall deliver to Buyer evidence of such name change within
three (3) Business Days.
     8.7 Filings with Governmental Bodies. From and after the Closing Date,
Sellers and Buyer shall act diligently and reasonably, and shall cooperate with
each other, in making any required filing or notification and in attempting to
obtain any consents and approvals of any Governmental Body required to be
obtained by them in order to assign or transfer any Owned Property Governmental
Permits to Buyer and to assign to Buyer any pending applications for Owned
Property Governmental Permits, to permit the consummation of the transactions
contemplated by this Agreement, or to otherwise satisfy the conditions set forth
in Section 9.4; provided that Sellers shall not make any agreement or
understanding affecting the Purchased Assets, the Contributed Assets, or their
assets or Business as a condition for obtaining any such consents or approvals
except with the prior written consent of Buyer. Buyer shall pay all fees and
expenses in connection with obtaining any consents and approvals from such
Governmental Bodies.
     8.8 First Florida Title Company. Within fourteen (14) days of the Closing
Date, Sellers shall have caused First Florida Title Company to assign to
Universal Land Title at no cost all files relating to the issuance of a title
policy for transactions which are not closed as of such date.
     8.9 Cooperation on Bronson, Cummer, Heller and Independence Projects. Buyer
and Sellers acknowledge that the Bronson, Cummer, Heller and Independence
projects will contain commercial and/or multifamily parcels, which will be
controlled by entities controlled by certain of TEP’s owners (the “Related
Owners”) after Closing. Buyer and Sellers shall cooperate to develop these
projects in a manner which is mutually beneficial to all components of each such
project. Without limitation, such cooperation shall include the granting of
cross access and drainage easements, execution of plats and development
documents, dedication of common areas to the applicable community

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development district, and proportionate representation on the board of directors
of the community development district.
     8.10 Coral Lakes Construction.Buyer shall cooperate with Sellers in making
construction supervisory employees available, upon reasonable notice, to assist
Sellers in the construction of homes on the Coral Lakes Lots. Buyer shall retain
the subcontractors for such construction. Sellers shall reimburse Buyer on a
monthly basis for all costs incurred by Buyer, subject to provision by Buyer of
customary documentation. Buyer shall afford Sellers the right to inspect
progress and confirm the appropriateness of any draw requests. Sellers shall be
responsible for the sale of homes to be constructed on the Coral Lakes Lots and
shall be entitled to retain all proceeds from the sale of such homes. From such
proceeds, Sellers shall pay to Buyer the amount of the net profits anticipated
to be received from the sale of such homes as shown in the Projections within
thirty (30) days of the closing of such sale.
     8.11 Life Insurance. From and after the date hereof, Arthur J. Falcone
shall cooperate with Buyer in obtaining life insurance on his life with Buyer,
as beneficiary; provided that Buyer shall be responsible for all costs in
connection therewith. Such cooperation shall not include restrictions on any
activity.
     8.12 Maintenance of Net Worth. Buyer shall maintain a net worth in
compliance with the financing terms of the term sheet attached hereto as
Schedule 10.5.
     8.13 Cummer. Sellers agree to cause the current owner of the overall metes
and bounds legal description encompassing, inter alia, Cummer 1400, Cummer 1044
and Cummer 691 (collectively “Cummer”) to continue to hold title to the common
areas, roadways, conservation areas, elementary school site, and activity center
site located north of s.r. 210 and will convey each of the foregoing tracts to
the Community Development District to be created for Cummer, the applicable
homeowners association, and/or school board, as the case may be, as soon as the
foregoing grantees are created and ready to receive title thereto, in accordance
with the DRI application and order, once issued. The conveyance shall be
accomplished in separate parts and as each grantee becomes ready. The size and
location of the foregoing tracts are shown on the Map H Conceptual Master Plan
in Schedule 5.10(B) attached hereto are approximate and may change from time to
time in accordance with the DRI application and order, once issued.
     8.14 Cummer 1044. The Owner under the land bank agreement for Cummer 1044
(the “Cummer 1044 Land Bank”) shall hold title in such Cummer 1044 Land Bank to
all of the common areas, roadways, conservation areas, school sites, and
recreation tracts located within Cummer south of s.r. 210, which sites shall
have a value of One Hundred Dollars ($100.00). The foregoing tracts shall be
conveyed to the Community Development District to be created for Cummer, the
applicable homeowners association, and/or school board as the case may be, when
the first Lots are conveyed from the Cummer 1044 Land Bank if the foregoing
grantees are created and ready to receive the title thereto. If the foregoing
grantees are not created and ready to receive title, the Cummer 1044 Land Bank
shall continue to hold said tracts and shall convey them to the foregoing
grantees once they are created and ready to receive title. The foregoing
conveyances shall be accomplished in separate parts and as each grantee becomes
ready. The size and location of the foregoing tracts are shown on the Map H
Conceptual Master Plan for Cummer included in Schedule 5.10(B) attached hereto
are approximate and may change from time to time in accordance with the DRI
application and order, once issued.
     8.15 Kendall Commons (Vizcaya). Sellers shall use their good faith efforts
to cause the T-Plat for Kendall Commons (otherwise known as “Vizcaya”) to be
revised to avoid the tree island in the southwest corner of the site and to
submit same to Miami-Dade County for approval by June 24, 2005 and shall
diligently pursue the county’s approval of the same.

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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
     The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
     9.1 No Misrepresentation or Breach of Covenants and Warranties. There shall
have been no breach by Sellers in the performance of any of their covenants and
agreements herein; each of the representations and warranties of Sellers
contained or referred to herein shall be true and correct in all respects on the
Closing Date as though made on the Closing Date, except for (A) changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Buyer or any transaction permitted by this
Agreement or (B) those breaches or inaccuracies that could not reasonably be
expected to have a Material Adverse Effect; and there shall have been delivered
to Buyer a certificate to such effect, dated the Closing Date, signed by the
Chief Executive Officer of TEP. To the extent that at the Closing Sellers
deliver to Buyer a written notice specifying in reasonable detail the breach by
Sellers of any of the representations or warranties of Sellers contained herein,
and nevertheless Buyer proceeds with the Closing, Buyer shall be deemed to have
waived any rights or remedies it may have against Sellers by reason of the
breach of any such representations or warranties to the extent described in such
notice.
     9.2 No Changes or Destruction of Property. Between the date hereof and the
Closing Date, there shall have been (a) no Material Adverse Change; and (b) no
damage to the assets or properties of Sellers by fire, flood, casualty, act of
God or the public enemy or other cause, regardless of insurance coverage for
such damage unless such insurance has made Sellers whole, in excess of Five
Hundred Thousand Dollars ($500,000.00) in the aggregate; and there shall have
been delivered to Buyer a certificate to such effect, dated the Closing Date and
signed on behalf of Sellers by the Chief Executive Officer of Sellers.
     9.3 No Restraint or Litigation. No action, suit, investigation or
Proceeding shall have been instituted or threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
     9.4 Necessary Governmental Approvals. The parties shall have received all
approvals and actions of or by all Governmental Bodies which are necessary to
consummate the Closing of the purchase and sale transactions contemplated
hereby, which are either specified in Schedule 5.1(C) or otherwise required to
be obtained prior to Closing by applicable Requirements of Laws or which are
necessary to prevent a Material Adverse Change. Notwithstanding the foregoing,
the parties have acknowledged in Section 8.7 that approval of the assignment of
all Owned Property Governmental Permits may not be obtained by Closing, that
such failure shall not constitute a valid objection by Buyer to not proceed with
Closing and that the parties shall work together after Closing to obtain
approval of such assignments.
     9.5 Necessary Consents. Sellers shall have received consents, in form and
substance reasonably satisfactory to Buyer, to the transactions contemplated
hereby from (a) the other parties to all contracts, leases and agreements
assigned to Buyer hereunder, including those listed on Schedule 5.17, (b) the
architects who prepared the plans for each project listed on Exhibit I to
Schedule 5.12(A), (c) the party who prepared the brochures/renderings for each
project listed on Exhibit I to Schedule 5.12(B), and (d) which are otherwise
necessary to prevent a Material Adverse Change.
     9.6 Minimum Net Worth. The Closing Date Net Worth, as estimated in the
certificate delivered pursuant to Section 3.2 shall be no less than One Hundred
Million Dollars ($100,000,000.00).

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     9.7 Closing Deliveries. Sellers shall have delivered all documents and
instruments required pursuant to Sections 4.4, 4.5, 4.6, 4.8, 4.9, and 4.10.
     9.8 Approval by Shareholders or Members of Sellers. This Agreement and the
transactions it contemplates shall have been approved and adopted by such vote
of the shareholders or members, as applicable, of Sellers entitled to vote
thereon or as is required to approve such transactions, and shall have otherwise
been approved as required by law and the Charter Documents of each Seller.
     9.9 Releases. Sellers shall have obtained releases of all Encumbrances on
the Owned Real Property, other than Permitted Encumbrances, including, subject
to payments by Buyer of Sellers’ debt set forth on Schedule 3.1(B), releases of
each mortgage of record and reconveyances of each deed of trust with respect to
each parcel of real property included in the Purchased Assets, the Contributed
Assets and Sellers’ security instruments. Sellers shall have also obtained
releases of all Encumbrances on all personal property included in the Purchased
Assets or the Contributed Assets, including, without limitation, the liens of
Whirlpool Corporation.
     9.10 Environmental Report. Any environmental site assessment report ordered
by Buyer with respect to all Seller Property shall not reflect any condition
which would constitute a violation of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect, excepting such
temporary conditions as could reasonably be expected to result from development
activities currently on-going at such property.
     9.11 Cummer West Property. Sellers shall have entered into an Option
Agreement with the owner of the Cummer West Property described on Exhibit M
attached hereto in form and substance reasonably acceptable to Buyer.
     9.12 Coral Lakes. As to all Lots in the developments identified as Coral
Lake I and II except for the Coral Lakes Lots, and except with regard to the six
(6) lots in Coral Lakes I which have been designated for construction of model
homes (the “Model Homes”), Sellers shall, at their cost, remove any foundations
that have been constructed and remediate all adverse soil conditions pursuant to
a method or methods approved by Buyer’s geotechnical consultants and the City of
Cape Coral. In the course of remediation, all substandard soil shall be removed
and mixed, blended and/or replaced with clean and proper fill in 12” lifts, and
the soil shall be compacted to satisfy all applicable industry standards. With
respect to the Model Homes, Sellers shall provide Buyer with third party
certified soil tests confirming that the Model Homes meet applicable industry
standards, and if said results do not meet applicable industry standards,
Sellers shall remediate the soil on the Model Homes using the soil injection
process used on the Coral Lakes Lots. Sellers shall be entitled to retain the
proceeds of any surplus fill not used in the foregoing remediation. All
remediation work shall be supervised and approved by Buyer’s geotechnical
consultants and the City of Cape Coral, if the city elects to do so. Sellers
shall diligently commence and continuously pursue said remediation using their
commercially reasonable efforts and shall cause the remediation to be completed
no later than December 31, 2006. Sellers and their engineers and consultants
shall coordinate their remediation work with Buyer so as to complete the
remediation work on those Lots scheduled for immediate vertical construction
first. At Closing, Buyer and the owners of the Coral Lakes I and II developments
will execute easements in form and substance to be agreed upon by the parties
necessary to allow Sellers to perform the work described in this Section.
     9.13 Payments of Accounts Receivable. All Accounts Receivable due to
Sellers from Affiliates, all intercompany receivables due to Sellers and all
Accounts Receivable due to Sellers from officers and directors shall have been
paid in full.

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     9.14 CMI Marketing. Buyer shall have either executed a marketing agreement
with Century Marketing International, LLC or in the event such agreement is not
executed, the employees of Sellers responsible for community pre-launch
marketing activities shall have become employees of Buyer.
     9.15 Employment Matters. Sellers shall have no pending or to the Knowledge
of Sellers, threatened litigation relating to overtime hours involving any of
its employees. All such litigation pending prior to the Closing shall have been
dismissed with prejudice and all rights to appeal shall have expired.
     9.16 Cummer 1400 Property. Buyer shall have entered into an agreement with
the appropriate Seller to purchase the Cummer 1400 Property described on
Exhibit L attached hereto on terms and conditions reasonably satisfactory to
Buyer.
     9.17 Live Oak. Sellers shall have remedied any violations relating to the
Army Corps of Engineers (the “ACOE”) Permit No. 200103845 (IP-JPF) and any other
violations alleged by any other Governmental Body having jurisdiction over the
subject Real Property, including the payment of any fees or penalties. Sellers
shall have provided Buyer with the Notice of Violation from the ACOE and any
correspondence in connection therewith. Sellers shall remain responsible for any
costs of remediation or expenses associated with such violation after the
Closing Date and any such remediation performed by Sellers shall be acceptable
to the ACOE.
     9.18 Construction on Lots. Sellers shall have ceased vertical construction
on any Lot which they do not own and Sellers shall have acquired fee title to
such Lots.
     9.19 Cooperation Agreements. Sellers and the applicable Related Owner of
each of the Bronson, Cummer, Heller and Independence Projects shall have entered
into a Cooperation Agreement for each of their respective projects, which shall
outline the matters as to which the parties will be required to cooperate to
develop these projects in a manner which is mutually beneficial to all
components of the applicable project.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
     The obligations of Sellers under this Agreement shall, at the option of
Sellers, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
     10.1 No Misrepresentation or Breach of Covenants and Warranties. There
shall have been no breach by Buyer in the performance of any of its covenants
and agreements herein; each of the representations and warranties of Buyer
contained or referred to herein shall be true and correct in all respects on the
Closing Date as though made on the Closing Date (except to the extent that such
representations and warranties expressly speak of another date, in which case
such representations and warranties shall be true and correct as of such other
date), except for (A) changes therein specifically permitted by this Agreement
or resulting from any transaction expressly consented to in writing by Sellers
or any transaction permitted by this Agreement or (B) those breaches or
inaccuracies that could not reasonably be expected to have a Material Adverse
Effect; and there shall have been delivered to Sellers a certificate to such
effect, dated the Closing Date and signed on behalf of Buyer by an authorized
officer of Buyer. To the extent that at the Closing Buyer delivers to Sellers a
written notice specifying in reasonable detail the breach by Buyer of any of the
representations or warranties of Buyer contained herein, and nevertheless
Sellers proceed with the Closing, Sellers shall be deemed to have waived any

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rights or remedies they may have against Buyer by reason of the breach of any
such representations or warranties to the extent described in such notice.
     10.2 No Restraint or Litigation. No action, suit or Proceeding by any
Governmental Body shall have been instituted or threatened to restrain, prohibit
or otherwise challenge the legality or validity of the transactions contemplated
hereby.
     10.3 Closing Deliveries. Buyer shall have delivered all documents,
instruments and funds required pursuant to Sections 4.2 and 4.3 or any other
provision hereof.
     10.4 Minimum Net Worth. At Closing, Buyer shall have a net worth of no less
than One Hundred Fifty Million Dollars ($150,000,000.00).
     10.5 Financing Concurrent with the execution of this Agreement, Buyer shall
have entered into a commitment letter with Deutsche Bank AG or one of its
affiliates providing for a minimum financing of Seven Hundred Million Dollars
($700,000,000.00) in accordance with the terms of the term sheet attached hereto
as Schedule 10.5, and Buyer shall have paid the applicable commitment fee
therefor.
     10.6 Cooperation Agreements. Buyer and the applicable Related Owner of each
of the Bronson, Cummer, Heller and Independence Projects shall have entered into
a Cooperation Agreement for each of their respective projects, which shall
outline the matters as to which the parties will be required to cooperate to
develop these projects in a manner which is mutually beneficial to all
components of the applicable project.
ARTICLE XI
INDEMNIFICATION AND POST-CLOSING REMEDIES
     11.1 Indemnification by Sellers.
          (a) Sellers agree to indemnify and hold harmless each Buyer Group
Member from and against any and all Losses and Expenses incurred by such Buyer
Group Member in connection with or arising from:
               (i) subject to the last sentence of Section 7.1 and Section 9.1,
any breach of any warranty or the inaccuracy of any representation of Sellers
contained or referred to in this Agreement or any certificate delivered by or on
behalf of Sellers pursuant hereto or in any Seller Ancillary Agreement;
               (ii) subject to the provisions of the Warranty Administration
Agreement, any Pre-Closing Warranty Claims;
               (iii) any breach by any Seller of any of its covenants or
agreements, or any failure of any Seller to perform any of its obligations, in
this Agreement or in any Seller Ancillary Agreement, in each case to be
performed after the Closing;
               (iv) the failure of Sellers to pay, perform or discharge any
Excluded Liability;

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               (v) any loss or expense in connection with any Lot for which
there is an unresolved title objection pursuant to Section 7.7;
               (vi) notwithstanding any disclosure with respect to Section 5.12
(or any failure to make a required disclosure), any claim alleging infringement,
misappropriation or other violation of any third party Intellectual Property
right relating to the Intellectual Property and/or Owned Software used by
Sellers in the Business during the five (5) years preceding the Closing Date; or
               (vii) any loss or expense in connection with any soil condition
at any Lot in Coral Lakes I or II (other than the Coral Lakes Lots) or at any
Model Home.
provided, however that:

  (1)   Sellers shall not be required to indemnify and hold harmless Buyer under
clause (i) of this Section 11.1 with respect to Losses and Expenses incurred by
Buyer Group Members (other than Losses and Expenses incurred as a result of
inaccuracies of the representations and warranties contained in Sections 5.1,
5.2, 5.7, 5.14 (excepting those matters covered by the Policy), and 5.25, as to
which this proviso shall have no effect) unless the aggregate amount of such
Losses and Expenses subject to indemnification by Sellers exceeds One Hundred
Thousand Dollars ($100,000.00), and once aggregate Losses exceed One Hundred
Thousand Dollars ($100,000.00), Sellers will be liable for all Losses (i.e. from
the first dollar) and Expenses, subject to the limitation contained in subclause
(2) below; provided that, solely for purposes of calculating the amount of
damages incurred by any Buyer Group Member and whether the threshold for such
damages is reached, no Material Adverse Effect or other materiality
qualification to a representation or warranty shall be considered;     (2)   in
no event shall the aggregate amount required to be paid by Sellers under clauses
(i) and (ii) of Section 11.1(a) (other than with respect to Sections 5.1, 5.2,
5.7, 5.10 (excepting 5.10(A) and 5.10(B)), 5.14 (excepting those matters covered
by the Policy), 5.25, 5.28, and 5.30) exceed Thirty-Five Million Dollars
($35,000,000.00);     (3)   if a claim for indemnification arises from or in
connection with the fraudulent, willful or intentional misrepresentation by any
Seller of any representation or warranty in this Agreement or any Ancillary
Agreement, the maximum aggregate amount that Sellers, collectively, will be
required to pay shall not be subject to any limit;     (4)   if Buyer’s claim
for indemnification arises because the warranty expenses resulting from the
Warranty Administration Agreement (after recourse to the other sources for
payment of such expenses described in the Warranty Administration Agreement)
exceed the warranty reserves set forth in the Financial Statements, the

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      maximum aggregate amount that Sellers, collectively, will be required to
pay shall not be subject to any limit; and     (5)   if Buyer’s claim for
indemnification arises because of any loss or expense in connection with the
soil condition at any Lot in Coral Lakes I or II (other than the Coral Lakes
Lots) or at any Model Home, the maximum aggregate amount that Sellers,
collectively, will be required to pay shall not be subject to any limit.

          (b) The indemnification provided for in Section 11.1(a) shall
terminate three (3) years after the Closing Date (and no claims shall be made by
any Buyer Group Member under Section 11.1(a) thereafter), except that the
indemnification by Sellers shall continue as to:
               (i) the representations and warranties set forth in Sections 5.1,
5.2, 5.7, 5.10 (excepting 5.10(A) and 5.10(B)), 5.14 (excepting those matters
covered by the Policy), 5.25, 5.28 and 5.30 and the covenants of Sellers set
forth in Sections 8.6 and 11.1(a)(vii) as to which no time limitation shall
apply;
               (ii) the covenants set forth in Section 8.3 and
Section 11.1(a)(vi) which shall survive until the expiration of the relevant
statutory period of limitations applicable to the underlying claim, giving
effect to any waiver, mitigation or extension thereof;
               (iii) the covenants set forth in Sections 11.1(a)(iii) and (iv)
(as to which the statute of limitations applicable to such post-closing breach
shall apply);
               (iv) the covenant set forth in Section 13.6 which shall survive
until the expiration of the six-year period referenced therein;
               (v) the covenant set forth in Section 8.1 as to which the
indemnification provided for in this Section 11.1 shall terminate one (1) year
after the expiration of the noncompetition period provided for therein; and
               (vi) any Loss or Expense of which any Buyer Group Member has
notified Sellers in accordance with the requirements of Section 11.3 on or prior
to the date such indemnification would otherwise terminate in accordance with
this Section 11.1, as to which the obligation of Sellers shall continue until
the liability of Sellers shall have been determined pursuant to this Article 11
and Sellers shall have reimbursed all Buyer Group Members for the full amount of
such Loss and Expense in accordance with this Article 11.
          (c) Any Loss or Expense suffered by Buyer or any Buyer Group Member
shall be reimbursed and satisfied:
               (i) first, by proceeding against any third party, including any
materialman, manufacturer or subcontractor; and, if full reimbursement is not
received by Buyer within thirty (30) days of Buyer’s first demand and Buyer has
used its diligent efforts with respect thereto; then
               (ii) second, by using reasonable efforts to seek payment under
any applicable insurance policies, including any title insurance policies,
obtained by Sellers covering such Loss or Expense; and, if full reimbursement is
not received by Buyer within thirty (30) days of Buyer’s first demand and Buyer
has used its diligent efforts with respect thereto; then

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               (iii) third, by using the warranty reserve on the Closing Date
Balance Sheet, to the extent that the claim relates to the Warranty
Administration Agreement; then
               (iv) fourth, if Buyer or any Buyer Group Member have claims which
have not been satisfied under subclauses (i), (ii) or (iii) above and which
exceed One Hundred Thousand Dollars ($100,000.00) (except for claims pursuant to
Sections 5.1, 5.2, 5.7, 5.14 (excepting those matters covered by the Policy) and
5.25 as to which no such threshold shall apply), then by drawing upon the
Indemnity Letter of Credit for the full unsatisfied amount of such claim; then
               (v) fifth, by set-off of up to Twenty Million Dollars
($20,000,000.00) against the sums then due and owing and unpaid to Sellers as
Earn-Out Payments or Entitlement Payments pursuant to Section 3.6 hereof; and
               (vi) sixth, by proceeding directly against Sellers.
               In the event that Sellers shall make any payment under this
Section, Sellers shall be subrogated to the rights of Buyer against any third
party, including materialmen, manufacturers and subcontractors against which
Buyer had recourse for such claim but from which Buyer did not receive payment.
          (d) Notwithstanding anything in the foregoing to the contrary, (i) any
Losses or Expenses incurred by Buyer as a result of a breach of the
representations and warranties contained in Section 5.23 shall be deemed to
affect the rights of Sellers to payment under Section 3.6(a) but are not to be a
basis for a claim under this Section 11.1 and (ii) any Losses or Expenses
incurred by Buyer as a result of warranty claims under Section 5.24 shall be
reimbursed under this Section 11.1 and shall not be deemed to affect Sellers’
right to payment under Section 3.6(a).
     11.2 Indemnification by Buyer.
          (a) Buyer agrees to indemnify and hold harmless each Seller Group
Member from and against any and all Losses and Expenses incurred by such Seller
Group Member in connection with or arising from:
               (i) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in any
certificate delivered by or on behalf of Buyer pursuant hereto or in any Buyer
Ancillary Agreement;
               (ii) any breach by Buyer of any of its covenants or agreements,
or any failure by Buyer to perform any of its obligations, in this Agreement or
in any Buyer Ancillary Agreement, in each case, to be performed after the
Closing;
               (iii) the failure of Buyer to pay, perform or discharge the
Assumed Liabilities;
               (iv) any claim raised or filed by any Hired Employee if such
claim arises as a result of the termination or other adverse action of Buyer
subsequent to its purchase of the Purchased Assets, any claim incurred against
or by the Continued Welfare Plans after the Closing, including claims resulting
from administrative errors or failures (except for those claims arising or that
result from actions or omissions prior to Closing), or any claim arising out of
any failure to properly administer COBRA under Seller Plans after the Closing
Date; or

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               (v) any loss or expense in connection with Buyer’s construction
of homes on the Coral Lakes Lots, unless caused by Sellers’ gross negligence or
willful misconduct.
provided, however that Buyer shall not be required to indemnify and hold
harmless under clause (i) of this Section 11.2(a) with respect to Losses and
Expenses incurred by Seller Group Members (other than Losses and Expenses
incurred as a result of inaccuracies of the representations and warranties
contained in Section 6.3 as to which this proviso shall have no effect) unless
the aggregate amount of such Losses and Expenses subject to indemnification by
Buyer exceeds One Hundred Thousand Dollars ($100,000.00), and once the aggregate
Losses exceed One Hundred Thousand Dollars ($100,000.00), Buyer will be liable
for such Losses (i.e. from the first dollar) and Expenses.
          (b) The indemnification provided for in Section 11.2(a) shall
terminate three (3) years after the Closing Date (and no claims shall be made by
any Seller Group Member under Section 11.2(a) thereafter), except that the
indemnification by Buyer shall continue as to:
               (i) the representations and warranties set forth in Sections 6.1
and 6.2, as to all of which no time limitation shall apply;
               (ii) the representations and warranties set forth in Section 5.7
and covenants set forth in Section 8.3 which shall survive until the expiration
of the relevant statutory period of limitations applicable to the underlying
claim, giving effect to any waiver, mitigation or extension thereof;
               (iii) the covenants set forth in Sections 11.2(a)(ii) and
11.2(a)(iii) as to which no time limitation shall apply;
               (iv) the covenant set forth in Section 13.6 which shall survive
until the expiration of the six-year period referenced therein; and
               (v) any Loss or Expense of which any Seller Group Member has
notified Buyer in accordance with the requirements of Section 11.3 on or prior
to the date such indemnification would otherwise terminate in accordance with
this Section 11.2, as to which the obligation of Buyer shall continue until the
liability of Buyer shall have been determined pursuant to this Article 11 and
Buyer shall have reimbursed all Seller Group Members for the full amount of such
Loss and Expense in accordance with this Article 11.
     11.3 Notice of Claims Any Buyer Group Member or Seller Group Member (the
“Indemnified Party”) seeking indemnification hereunder shall give to the party
obligated to provide indemnification to such Indemnified Party (the
“Indemnitor”) a notice (a “Claim Notice”) describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; Buyer shall further notify Sellers upon
proceeding under Section 11.1(c)(i) and thereafter under each of
Sections 11.1(c)(ii), 11.1(c)(iii), 11.1(c)(iv), 11.1(c)(v) and 11.1(c)(vi);
provided that a Claim Notice in respect of any pending or threatened action at
law or suit in equity by or against a third Person as to which indemnification
will be sought (each such action or suit being a “Third Person Claim”) shall be
given promptly after the action or suit is commenced; provided further that
failure to give such notice shall not relieve the Indemnitor of its obligations
hereunder except to the extent it shall have been prejudiced by such failure.

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     11.4 Loss Calculation. In calculating any Loss or Expense there shall be
deducted any insurance recovery in respect thereof (and no right of subrogation
shall accrue hereunder to any insurer).
     11.5 Third Person Claims.
          (a) Promptly after receipt by an Indemnified Party of notice of the
assertion of a Third Person Claim against it, such Indemnified Party shall give
notice to the Indemnitor of the assertion of such Third Person Claim; provided,
however, that the failure to notify the Indemnitor will not relieve the
Indemnitor of any liability that it may have to any Indemnified Party.
          (b) If an Indemnified Party gives notice to the Indemnitor pursuant to
this Section of the assertion of a Third Person Claim, the Indemnitor shall be
entitled to participate in the defense of such Third Person Claim and, to the
extent that it wishes (unless (i) the Indemnitor is also a Person against whom
the Third Person Claim is made and the Indemnified Party determines in good
faith that joint representation would be inappropriate or (ii) the Indemnitor
fails to provide reasonable assurance to the Indemnified Party of its commitment
and financial capacity to defend such Third Person Claim and provide
indemnification with respect to such Third Person Claim), to assume the defense
of such Third Person Claim with counsel satisfactory to the Indemnified Party
(except to the extent the Indemnified Party has other issues involved in the
same dispute or to the extent resolution of the Third Person Claim could affect
liability of the Indemnified Party in other periods or in respect of other
issues). After notice from the Indemnitor to the Indemnified Party of its
election to assume the defense of such Third Person Claim, and conditioned upon
continuing satisfaction of conditions (i) and (ii) of this Section, the
Indemnitor shall not, so long as it diligently conducts such defense, be liable
to the Indemnified Party under this Section for any fees of other counsel or any
other expenses with respect to the defense of such Third Person Claim, in each
case subsequently incurred by the Indemnified Party in connection with the
defense of such Third Person Claim. No compromise or settlement of such Third
Person Claims may be effected by the Indemnitor without the Indemnified Party’s
consent unless (A) there is no finding or admission of any violation of
Requirement of Law or any violation of the rights of any Person; (B) the sole
relief provided is monetary damages that are paid in full by the Indemnitor;
(C) the settlement could not give rise to any other liability of the Indemnified
Party; and (D) the Indemnified Party shall have no liability or be subject to
any compromise or restriction with respect to any such compromise or settlement.
If notice is given to an Indemnitor of the assertion of any Third Person Claim
and the Indemnitor does not, within ten (10) Business Days after the Indemnified
Party’s notice is given, give notice to the Indemnified Party of its election to
assume the defense of such Third Person Claim, the Indemnitor will be bound by
any determination made in such Third Person Claim or any compromise or
settlement effected by the Indemnified Party.
          (c) Notwithstanding the provisions of Section 13.6 hereof, each Seller
hereby consents to the nonexclusive jurisdiction of any court in which a
proceeding in respect of a Third Person Claim is brought against any Buyer Group
Member for purposes of any claim that any Buyer Group Member may have under this
Agreement with respect to such proceeding or the matters alleged therein and
agree that process may be served on any Seller with respect to such a claim
anywhere in the world.
          (d) With respect to any Third Person Claim subject to indemnification
under this Section: (i) both the Indemnified Party and the Indemnitor, as the
case may be, shall keep the other Person fully informed of the status of such
Third Person Claim and any related suit, claim, proceeding, demand, order,
investigation or request or demand for information at all stages thereof where
such Person is not represented by its own counsel; and (ii) the parties agree to
render to each other such assistance as they may reasonably require of each
other and to cooperate in good faith with each other in order to ensure the
proper and adequate defense of any Third Person Claim.

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     11.6 Adjustment to Purchase Price. To the extent any payment under this
Article 11 can be properly so characterized under applicable Tax law, it shall
be treated by the parties as an adjustment to the Purchase Price.
     11.7 Failure to Make Certain Payments. In the event that any payment due
under this Agreement is not paid when due, the amount of such non-payment shall
begin to accrue interest on the sixth (6th) day after written demand therefor by
the other party at the rate of eighteen percent (18%) per annum for each day
thereafter that such payment shall remain unpaid. In the event that any party
shall fail to make any payment, including interest thereon as provided herein,
within forty-five (45) days of written demand therefor by the other party, such
party shall be deemed to be in default of this Agreement, and the entire unpaid
balance of the subject payment (or in the case of a failure to pay an
installment of the Earn-Out Payments or the Entitlement Payments, as applicable,
the entire unpaid balance of the total Earn-Out Payments or the total
Entitlement Payments, as applicable, due under this Agreement) shall become
immediately due and payable, and such accelerated amount shall also accrue
interest at the maximum rate allowed by law; provided that no payment shall be
accelerated hereunder if such payment is being contested in good faith by a
party, unless and until a final determination is adjudged against such party by
a court of competent jurisdiction.
     11.8 Exclusive Remedies. All claims after the completion of the Closing for
breaches of any representations or warranties in this Agreement or in any
Ancillary Agreement or any breach of covenant or other provision of this
Agreement (other than a claim for specific performance or injunctive relief)
shall be made exclusively under and in accordance with this Article 11.
ARTICLE XII
TERMINATION AND PRE-CLOSING REMEDIES
     12.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
          (a) by the mutual written consent of Buyer and Sellers;
          (b) by Buyer or Sellers if the Closing shall not have occurred on or
before August 1, 2005 (or such later date as may be mutually agreed to by Buyer
and Sellers); provided, however, that neither Sellers nor Buyer may terminate
the Agreement pursuant to this clause (b) if the Closing shall not have occurred
by reason of the failure of such party to perform in all material respects any
of its or their respective covenants or agreements herein);
          (c) by Buyer in the event of any breach by any Seller of any of
Sellers’ agreements, representations or warranties contained herein and the
failure of any Sellers to cure such breach within fifteen (15) days after
receipt of written notice from Buyer requesting such breach to be cured, except
for those breaches or inaccuracies that could not reasonably be expected to have
a Material Adverse Effect;
          (d) by Sellers in the event of any breach by Buyer of any of Buyer’s
agreements, representations or warranties contained herein and the failure of
Buyer to cure such breach within fifteen (15) days after receipt of written
notice from Seller requesting such breach to be cured, except for those breaches
or inaccuracies that could not reasonably be expected to have a Material Adverse
Effect, and except that Buyer shall have no right to cure its failure to close
upon the purchase of the Purchased Assets by August 1, 2005;

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          (e) by either Buyer or Sellers if the other party goes into
liquidation, has an application or order made for its winding up or dissolution,
has a resolution passed or steps taken to pass a resolution for its winding up
or dissolution, becomes unable to pay its debts as and when they fall due, or
has a receiver, receiver and manager, administrator, liquidator, provisional
liquidator, official manager or administrator appointed to it or any of its
assets;
          (f) by Buyer or Sellers if any Governmental Body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement;
          (g) by Buyer if any condition in Article 9 has not been satisfied as
of the Closing Date or if satisfaction of such a condition by such date is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement), and Buyer has not waived such condition on or
before such date;
          (h) by Sellers if any condition in Article 10 has not been satisfied
as of the Closing Date or if satisfaction of such a condition by such date is or
becomes impossible (other than through the failure of Sellers to comply with
their obligations under this Agreement), and Sellers have not waived such
condition on or before such date; or
          (i) by Buyer upon receipt of advice from any Governmental Body that
more than ten percent (10%) of Lots will not be Fully Entitled within the time
periods set forth in the Projections provided by Sellers to Buyer.
     12.2 Notice of Termination. Any party desiring to terminate this Agreement
pursuant to Section 12.1 shall give written notice of such termination to the
other parties to this Agreement.
     12.3 Effect of Termination; Remedies; Treatment of the Deposit.
          (a) If this Agreement is terminated pursuant to this Article 12 all
further obligations of the parties under this Agreement (other than their
obligations under Section 12.3, Sections 13.2, 13.10 and 13.12) shall be
terminated without further liability of any party to the other; provided that:
          (b) Sellers’ sole remedy for breach of this Agreement by Buyer before
Closing after expiration of the applicable cure period under Section 12.1
without cure shall be termination of this Agreement pursuant to this Article 12
and retention of the Deposit by Sellers as Sellers’ liquidated damages. Except
as otherwise expressly provided in this Agreement, each Seller waives any and
all other rights and remedies, at law or in equity, to which such Seller may
otherwise be entitled by reason of Buyer’s breach of this Agreement before
Closing.
          (c) Except as provided in Section 12.1, and except as otherwise
expressly provided in this Agreement, Buyer’s sole remedy for breach of this
Agreement by Sellers before Closing after expiration of the applicable cure
period under Section 12.1 without cure shall be termination of this Agreement
pursuant to this Article 12, return of the Deposit to Buyer by Sellers under
Section 12.3(c) below, plus the payment to Buyer of Five Million Dollars
($5,000,000.00) by Sellers as Buyer’s liquidated damages. Notwithstanding the
foregoing, (i) in the event of a breach by Sellers of the Closing covenants set
forth in Section 4.4(r), Buyer’s sole remedy shall be termination of this
Agreement pursuant to this Article 12 and return of the Deposit to Buyer by
Sellers under this Section 12.3(c) and (ii) in the event of a breach by Sellers
of the Closing covenants set forth in Section 4.6(b) as a result of the failure
of the Owners of “Westyn Bay” or “Legacy Park” to execute a “Consent of Owner”
or the failure of any Mortgagee to execute a SNDA, Buyer’s sole remedy shall be
the receipt of Two Million Five Hundred

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Thousand Dollars ($2,500,000.00) as Buyer’s liquidated damages and the
termination of this Agreement pursuant to this Article 12 and return of the
Deposit to Buyer by Sellers under this Section 12.3(c). In addition to the
foregoing, Buyer shall not be entitled to the receipt of the Five Million
Dollars ($5,000,000.00) referred to above if the termination of this Agreement
is a result of the failure of Sellers to satisfy the condition set forth in
Section 4.4(j) due to the failure of any single Division President or Division
Manager identified by Buyer (other than Neil Eisner, Jan Ickovic, Daniel
Andreacci or Robert Krief) to enter into Employee Agreements. Except as provided
in Section 12.3(e) and (f), and except as otherwise expressly provided in this
Agreement, Buyer waives any and all other rights and remedies, at law or in
equity, to which Sellers may otherwise be entitled by reason of Buyer’s breach
of this Agreement before Closing.
          (d) Sellers shall be entitled to retain the Deposit upon termination
of this Agreement pursuant to this Article 12 if they have terminated the
Agreement (i) pursuant to Sections 12.1(a), (b), or (d), (ii) as a result of the
liquidation of Buyer or (iii) as a result of Buyer’s failure to satisfy the
conditions set forth in Article 10 of this Agreement which have not otherwise
been waived by Sellers at Closing.
          (e) Sellers shall immediately return the Deposit by wire transfer of
immediately available funds to an account designated by Buyer in the event that
Buyer terminates this Agreement as a result of a breach by Sellers of one of its
covenants contained herein which could reasonably be expected to have a Material
Adverse Effect, excepting Section 7.2(a).
          (f) In addition to any payments and damages to which Buyer may be
entitled pursuant to Section 12.3(a) in the event that (x) Buyer is prepared to
consummate the transactions contemplated hereby and Sellers are unwilling or
unable to perform their obligations at the Closing and (y) Sellers agree to sell
the Business (whether through sale of assets, stock, merger or other business
combination) to another Person on or prior to June 30, 2006, then Sellers shall
pay to Buyer promptly upon the consummation of such transaction by wire transfer
of immediately available funds the amount, if any, by which the total
consideration received or to be received (assuming the maximum amount of any
deferred consideration will be received) by Sellers or its Affiliates (excluding
any sums to be paid to Affiliates of Sellers for the purchase of Lots or other
developed or undeveloped real property under “land banking” or other option
arrangements but including any purchase premium reasonably allocated thereto) as
a result of such transaction, including (i) with respect to any covenant not to
compete, employment agreements or similar arrangements, (ii) the amount of any
indebtedness for borrowed money or similar liabilities discharged or assumed by
such Person and (iii) the maximum amount of any contingent or deferred
consideration payable by such Person, exceeds the Purchase Price, calculated as
if the Closing had occurred as of the Balance Sheet Date.
     12.4 Special Termination. In the event that TOUSA Homes LP and
Falcone/Ritchie LLC are unable, within thirty (30) days after the date of this
Agreement (the “Negotiation Period”) to reach an agreement, after good faith
negotiations during such period, regarding the final terms and conditions which
are acceptable to both parties in their sole and absolute discretion, regarding
the acquisition by Falcon/Ritchie LLC of a fifty percent (50%) equity interest
in TE/TOUSA, LLC in exchange for the contribution of the Contributed Assets,
then (A) the portion of the Purchase Price as described in Section 3.1(a) shall
be increased by the difference between Seventy-Five Million Dollars
($75,000,000.00) and the cost basis of the Contributed Assets for a total of
Four Hundred Seventeen Million One Hundred Forty-Two Thousand Five Hundred
Dollars ($417,142,500.00), and (B) Buyer shall have the extension rights set
forth below. The foregoing negotiations shall be based on the terms set forth in
Schedule 12.4.
               (i) If the parties are unable to reach an agreement within the
Negotiation Period, Buyer shall have the right to extend the Closing Date to
August 31, 2005 (the “First Extension Period”) in order to find a suitable
replacement equity partner;

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               (ii) If TOUSA Homes LP and Falcone/Ritchie LLC reach an agreement
within the First Extension Period, but Falcone/Ritchie LLC fails to convey the
Contributed Assets to TE/TOUSA, LLC at or prior to Closing, Buyer may extend the
Closing Date to September 30, 2005 day period (the “Final Extension Period”);
and
               (iii) If, after the First Extension Period or the Final Extension
Period, as the case may be, Buyer is unable to find a suitable equity partner in
TE/TOUSA LLC after diligent search, Buyer may terminate this Agreement and
Sellers shall return the Deposit paid hereunder.
ARTICLE XIII
GENERAL PROVISIONS
     13.1 Survival of Obligations. All representations, warranties, covenants
and obligations contained in this Agreement shall survive the consummation of
the transactions contemplated by this Agreement except as set forth in
Article 11. Except as otherwise provided herein, no claim shall be made for the
breach of any representation or warranty contained in Article 5 or 6 or under
any certificate delivered with respect thereto under this Agreement after the
date on which such representations and warranties terminate as set forth in this
Section.
     13.2 Confidential Nature of Information. Buyer and each Seller agrees that
it will treat in confidence all documents, materials and other information which
it shall have obtained regarding the other parties during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, if the transactions contemplated hereby are not consummated,
each party will return to the other parties all copies of nonpublic documents
and materials which have been furnished in connection therewith. Such documents,
materials and information shall not be communicated to any third Person (other
than, in the case of Buyer, to its counsel, accountants, financial advisors or
lenders, and in the case of Sellers to their counsel, accountants or financial
advisors). No other party shall use any confidential information in any manner
whatsoever except solely for the purpose of evaluating the proposed purchase and
sale of the Purchased Assets; or acceptance of the contribution of the
Contributed Assets provided, however that after the Closing, Buyer may use or
disclose any confidential information with respect to or about Sellers or
otherwise reasonably related to the Business or the Purchased Assets or the
Contributed Assets. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (i) is or becomes available to such party from a source other than the
other party, (ii) is or becomes available to the public other than as a result
of disclosure by such party or its agents, (iii) is required to be disclosed
under applicable law, judicial process or the rules of any stock exchange on
which such party’s securities are listed, but only to the extent it must be
disclosed, or (iv) such party reasonably deems necessary to disclose to obtain
any of the consents or approvals contemplated hereby.
     13.3 No Public Announcement. No party shall, without the approval of the
other parties make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by law or the rules of any stock exchange,
in which case the other party shall be advised and the parties shall use their
commercially reasonable efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and Securities and Exchange
Commission disclosure obligations.

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     13.4 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
(i) delivered personally, (ii) if transmitted by facsimile upon confirmation
that such facsimile has been received or (iii) when sent by registered or
certified mail or by overnight courier service that obtains a receipt, addressed
as follows:

         
 
  If to Buyer, to:   EH/TRANSEASTERN, LLC
 
      c/o Tousa Homes LP
 
      Suite 500-N
 
      4000 Hollywood Blvd.
 
      Hollywood, Florida 33021
 
       
 
  With a copy to:   Technical Olympic USA, Inc.
 
      Suite 500-N
 
      4000 Hollywood Blvd.
 
      Hollywood, Florida 33021
 
      Attention: Tommy McAden, Executive Vice President
 
      Fax No.: (954) 364-4010
 
       
 
  With a copy to:   Technical Olympic USA, Inc.
 
      Suite 500-N
 
      4000 Hollywood Blvd.
 
      Hollywood, Florida 33021
 
      Attention: Patricia Petersen
 
      Senior Vice President & General Counsel
 
      Fax No.: (954) 364-4037
 
       
 
  If to Sellers, to:   Falcone Group, LLC
 
      1951 N.W. 19th Street, Suite 200
 
      Boca Raton, Florida 3343 l
 
      Attention: Arthur Falcone, Chief Executive Officer
 
      Fax No.: (561) 338-2971
 
       
 
  With a copy to:   Nason Yeager Gerson White & Lioce, P.A.
 
      Mellon United National Bank Tower
 
      1645 Palm Beach Lakes Boulevard
 
      Suite 1200
 
      West Palm Beach, Florida 3340l
 
      Attention: Gary Gerson
 
      Fax No.: (561) 686-5442

or to such other address as such party may indicate by a notice delivered to the
other party hereto.
     13.5 Successors and Assigns; No Third Party Beneficiaries.
          (a) The rights of a party under this Agreement shall not be assignable
by such party hereto prior to the Closing without the written consent of the
other, except that the rights of Buyer hereunder (including, without limitation,
the rights to acquire certain Real Property pursuant to the Option Documents)
may be assigned prior to the Closing, without the consent of Sellers to one or
more of its Affiliates, provided that (i) the assignee shall assume in writing
all of Buyer’s obligations to Sellers hereunder, (ii) Buyer shall not be
released from any of its obligations hereunder by reason of such assignment and
(iii) Sellers’ obligations under this Agreement shall be subject to the delivery
by such

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assignee, on or prior to the Closing Date, of a certificate signed on its behalf
containing representations and warranties similar to those made by Buyer in
Article 6.
          (b) Following the Closing, this Agreement and the Ancillary Agreements
executed in connection herewith may not be assigned by either party hereto
without the prior written consent of the other party, which consent may be
withheld for any reason whatsoever in the sole and absolute discretion of the
non-assigning party; provided, however, that Buyer may assign this Agreement and
the Buyer Ancillary Agreements to any of its Affiliates. Such assignment or
transfer shall not relieve the assignor of its obligations hereunder.
          (c) The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
waive any rights, defenses or remedies available under this Agreement, the
Exhibits and Schedules at law or in equity or to confer upon any Person, other
than the parties hereto and their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
     13.6 Access to Records after Closing.
          (a) For a period of six (6) years after the Closing Date, each Seller
and its representatives shall have reasonable access to all of the books and
records of Sellers transferred to Buyer hereunder to the extent that such access
may reasonably be required by such Seller in connection with matters relating to
or affected by the operations of Sellers prior to the Closing Date. Such access
shall be afforded by Buyer upon receipt of reasonable advance notice and during
normal business hours. Sellers shall be solely responsible for any costs or
expenses incurred by them pursuant to this Section 13.6. If Buyer shall desire
to dispose of any of such books and records prior to the expiration of such
six-year period, Buyer shall, prior to such disposition, give Sellers a
reasonable opportunity, at Sellers’ expense, to segregate and remove such books
and records as Sellers may select.
          (b) For a period of six (6) years after the Closing Date, Buyer and
its representatives shall have reasonable access to all of the books and records
relating to the Purchased Assets and the Contributed Assets, Sellers or the
Business which Sellers or any of their Affiliates may retain after the Closing
Date. Such access shall be afforded by Sellers and their Affiliates upon receipt
of reasonable advance notice and during normal business hours. Buyer shall be
solely responsible for any costs and expenses incurred by it pursuant to this
Section 13.6. If Sellers or any of its Affiliates shall desire to dispose of any
of such books and records prior to the expiration of such six-year period,
Sellers shall, prior to such disposition, give Buyer a reasonable opportunity,
at Buyer’s expense, to segregate and remove such books and records as Buyer may
select.
          (c) Buyer shall provide Sellers with reasonable access to any Hired
Employee to permit Sellers to review and resolve any disputes relating to the
Preliminary Closing Date Balance Sheet and to assist in preparing or resolving
any audit of Sellers’ tax returns for the years ended on or prior to
December 31, 2005.
     13.7 Entire Agreement; Amendments. This Agreement and the Exhibits and
Schedules referred to herein and the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements or
understandings between or among any of the parties hereto, including the
Confidentiality Agreement. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.

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     13.8 Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
     13.9 Waivers. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, by the party or parties entitled to
the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
     13.10 Expenses. Except as otherwise provided for herein, each party hereto
shall pay all costs and expenses incident to its negotiation and preparation of
this Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and accountants.
All costs and expenses, if any, incurred by Sellers in connection with this
Agreement and the transactions contemplated hereby, including the fees, expenses
and disbursements of counsel and accountants to Sellers shall be paid by
Sellers. Notwithstanding the foregoing and any other provision of this
Agreement, Buyer shall pay at the Closing any transfer Taxes, documentary stamps
and title insurance premiums; provided that the parties agree to cooperate to
minimize costs related to title insurance and transfer Taxes arising therefrom.
     13.11 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to Sellers and Buyer. Signatures of the parties transmitted
by facsimile shall be deemed to be original signatures for all purposes.
     13.12 Enforcement of Agreement. In the event of an action at law or in
equity between the parties hereto to enforce any of the provisions hereof, the
non-prevailing party to such litigation or Proceeding shall pay to the
prevailing party all costs and expenses, including reasonable attorneys’ fees,
incurred therein by such prevailing party on trial and appeal as adjudged by the
court, and if such prevailing party or parties shall recover judgment in any
such action or Proceeding, such costs, expenses and attorneys’ fees may be
included as part of such judgment. In the event that a party prevails on some
but not all of the issues, the costs and expenses shall be apportioned based on
the value of the issues on which it prevailed as compared to the issues on which
it did not prevail.
     13.13 Further Assurances; Power of Attorney. From time to time following
the Closing, Sellers shall, with reimbursement from Buyer for all reasonable
costs incurred, execute and deliver, or cause to be executed and delivered, to
Buyer such other instruments of conveyance and transfer as Buyer may reasonably
request or as may be otherwise necessary to more effectively convey and transfer
to Buyer the Purchased Assets and the Contributed Assets, and, in the case of
any licenses, certificates, approvals, authorizations, agreements, contracts,
leases, easements and other commitments (a) which cannot be transferred or
assigned effectively without the consent of third parties which consent has not
been obtained prior to the Closing, to cooperate with Buyer at its request in
endeavoring to obtain such consent promptly, and if any such consent is
unobtainable, to use its commercially reasonable efforts to secure to Buyer the
benefits thereof in a manner mutually agreeable to both parties, or (b) which
are

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otherwise not transferable or assignable, to use its commercially reasonable
efforts jointly with Buyer to secure to Buyer the benefits thereof in a manner
mutually agreeable to both parties (including the exercise of the rights of
Sellers thereunder); provided, however that nothing herein shall relieve Sellers
of their obligations under Section 7.3. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not constitute an agreement to
assign any license, certificate, approval, authorization, agreement, contract,
lease, easement or other commitment if an attempted assignment thereof without
the consent of a third party thereto would constitute a breach thereof.
     Each Seller hereby constitutes and appoints Buyer, with full power of
substitution, as such party’s true and lawful attorney in fact, authorizing
Buyer to open mail addressed to such party, to endorse checks and other
instruments payable to such Seller, to execute, acknowledge, deliver and file
such deeds, transfers, conveyances, assignments, instruments, certificates and
documents and to take such other actions in the name, place and stead of such
Seller as Buyer may find necessary or appropriate to effectuate or carry out the
intent of any provision of this Agreement; provided, however said power of
attorney shall not authorize Buyer to pay, perform or discharge any liabilities
of any Seller not included within the Assumed Liabilities or to receive any
monies or other things of value associated with or resulting from the Excluded
Assets. Not later than the fifteenth (15th) day after the end of each calendar
month for the twenty-four (24) months following the Closing Date, Buyer shall
provide to Sellers copies of (x) all mail addressed to Sellers which was opened
by Buyer and any correspondence or other documents evidencing action taken by
Buyer with respect thereto and (y) all deeds, transfers, conveyances,
assignments, instruments, certificates and documents which were executed,
acknowledged or delivered by Buyer under the foregoing appointment, including
all checks payable to any Seller which may have been endorsed or negotiated by
Buyer.
     13.14 Sellers’ Representative. Sellers hereby appoint Arthur J. Falcone as
their agent and attorney-in-fact to give and receive notices and communications
on behalf of Sellers; to perform the covenants and future acts required or
permitted under this Agreement or the Exhibits and Schedules hereto; to
negotiate, consent, settle, compromise or waive Buyer’s obligations under this
Agreement; or to comply with orders of courts with respect to such claims; and
to take all actions necessary or appropriate in the judgment of Arthur J.
Falcone for the accomplishment of the foregoing. Arthur J. Falcone hereby
consents to such appointment (the “Sellers’ Representative”).
     13.15 Governing Law; Jurisdiction. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Florida, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the state and federal courts of the State of Florida,
County of Broward. Under no circumstances will any Seller assert any claim or
cause of action in any state or federal court outside of the State of Florida.
THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED IN
THIS AGREEMENT, WHETHER NOT EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A
COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING,
VOLUNTARY AND BARGAINED-FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE
TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT
A JURY.
     13.16 Time is of the Essence. With respect to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.

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     13.17 Radon Gas. In accordance with the requirements of Florida Statutes
Section 404.056(5), the following notice is hereby given:
“RADON GAS: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon testing may be obtained from your county public health unit.”
     13.18 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing and
interpreting this Agreement.
     13.19 Legal Representation of the Parties. This Agreement was negotiated by
the parties with the benefit of legal representation, and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof.
     13.20 Disclosure IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401,
FLORIDA STATUTES, HAS NOT BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE
EXECUTING THIS AGREEMENT FOR SALE, THIS AGREEMENT IS VOIDABLE BY BUYER BY
DELIVERING TO SELLERS OR SELLERS’ AGENT OR REPRESENTATIVE WRITTEN NOTICE OF THE
BUYER’S INTENTION TO CANCEL WITHIN 3 DAYS AFTER RECEIPT OF THE DISCLOSURE
SUMMARY OR PRIOR TO CLOSING, WHICHEVER OCCURS FIRST. ANY PURPORTED WAIVER OF
THIS VOIDABILITY RIGHT HAS NO EFFECT. BUYER’S RIGHT TO VOID THIS AGREEMENT SHALL
TERMINATE AT CLOSING.
     13.21 Laguna Lakes
          (a) Buyer agrees and acknowledges that as part of the purchase of the
Laguna Lakes project which is a part of the Owned Real Property, Buyer is
acquiring substantially completed condominium units and condominium units that
are not yet completed and are not yet certified complete as required by the
provisions of Chapter 718, Florida Statutes.
          (b) With respect to such condominium units, Buyer further agrees and
acknowledges that it is acquiring them in the ordinary course of business for
resale to individual purchasers subject to existing contracts to purchase such
condominium units.
          (c) Buyer further agrees and acknowledges that Sellers have prepared
the prospectuses and all documents required to be delivered to such purchasers
pursuant to Chapter 718, Florida Statutes, and that Buyer has been furnished
copies of such condominium documents.
          (d) Buyer further agrees and acknowledges that no portion of the
Deposit to be delivered pursuant to this Agreement is attributable to the
condominium units and the escrow requirements of Chapter 718, Florida Statutes
do not apply to this transaction.
          (e) Buyer further agrees and acknowledges that Buyer’s rescission
rights only pertain to the condominium units within the Laguna Lakes project.

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THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S
INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF EXECUTION OF THIS AGREEMENT
BY BUYER, AND RECEIPT BY BUYER OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED TO
BUYER BY THE DEVELOPER UNDER SECTION 718.503, FLORIDA STATUTES. THIS AGREEMENT
IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S INTENTION TO
CANCEL WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER OF ANY
AMENDMENT WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS
ADVERSE TO BUYER. ANY PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF
NO EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR A PERIOD OF NOT MORE THAN
15 DAYS AFTER BUYER HAS RECEIVED ALL OF THE ITEMS REQUIRED. BUYER’S RIGHT TO
VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.

              BUYER
 
            EH/TRANSEASTERN, LLC, a Delaware limited
liability company
 
       
 
  By:   /s/ Tommy McAden
 
       
 
  Name:    
 
  Title:    
 
            SELLERS
 
            TRANSEASTERN PROPERTIES, INC., a Florida corporation
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            LIVE OAK DEVELOPMENT I, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            LIVE OAK DEVELOPMENT II, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    

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              SERVICES MANAGEMENT, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TEP OF TRADITION, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TEPSR7, LLC, a Florida limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN ANTHONY GROVES, INC., a Florida corporation
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN BAYSHORE, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN BRONSON, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    

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              TRANSEASTERN CORAL LAKES, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN CYPRESS LANDING, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN DANIEL’S LANDING, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN HAMMOCKS, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN HELLER, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    

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              TRANSEASTERN HOMES, INC., a Florida corporation
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN INDEPENDENCE, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN JONATHAN’S BAY, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN KENDALL POINTE, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN LAGUNA LAKES, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    

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              TRANSEASTERN LEGACY PARK, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN OAK CREEK, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN OAK CREEK II, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN OLYMPIA POINTE, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN SAVANNAH, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    

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              TRANSEASTERN TRADITION, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN VERSAILLES, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN VICTORIA DUVAL, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN VILLA CAPRI AT METROWEST, LLC, a
Florida limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN VIZCAYA, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    

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              TRANSEASTERN WESTON RESERVE, LLC, a Florida
limited liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            TRANSEASTERN YOUNG PINES, LLC, a Florida limited
liability company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            Solely with respect to Section 2.1 and 12.4:
 
            FALCONE/RITCHIE, LLC, a Florida limited liability
company
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
  Name:    
 
  Title:    
 
            Solely with respect to Sections 5.10(dd), 8.1, and 8.11:
 
            ARTHUR J. FALCONE
 
       
 
  By:   /s/ Arthur Falcone
 
       
 
            Solely with respect to Sections 5.10(dd) and 8.1:
 
            EDWARD W. FALCONE
 
       
 
  By:   /s/ Edward W. Falcone
 
       

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