AGREEMENT AND PLAN OF MERGER
 
BY AND AMONG
 
KEY HOSPITALITY ACQUISITION CORPORATION,
 
KEY MERGER SUB, LLC,
 
CAY CLUBS LLC
 
AND
 
THE MEMBERS OF CAY CLUBS LLC
 
DATED AS OF MARCH 22, 2007
 
 

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AGREEMENT AND PLAN OF MERGER
 
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as
of March 22, 2007, by and among Key Hospitality Acquisition Corporation, a
Delaware corporation (“Parent”), Key Merger Sub, LLC, a Florida limited
liability company and a wholly-owned subsidiary of Parent (“Merger Sub”), Cay
Clubs LLC, a Florida limited liability company (the “Company”), and each of the
persons listed under the caption “Members” on the signature page hereof, such
persons being all of the members of the Company (each a “Member” and,
collectively, the “Members”).
 
 
RECITALS
 
WHEREAS, the Boards of Directors of Parent and Merger Sub and the Board of
Directors of the Company have each declared it to be advisable and in the best
interests of each company and their respective stockholders and owners that
Parent and the Company combine in order to advance their long-term business
interests; and
 
WHEREAS, the Boards of Directors of Parent and Merger Sub and the Board of
Directors of the Company have each approved this Agreement and the merger of
Merger Sub with and into the Company (the “Merger”), in accordance with the
Florida Limited Liability Company Act, Chapter 608 (the “Florida Act”) and the
terms and conditions set forth herein, which Merger will result in, among other
things, the Company becoming a wholly owned subsidiary of Parent and the Members
becoming stockholders of Parent; and
 
WHEREAS, for federal income tax purposes, it is intended the Members will not
recognize any gain or loss as a result of the Merger based upon Section 351 of
the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations
promulgated thereunder.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
 
ARTICLE I
THE MERGER
 
1.1  The Merger. At the Effective Time (as defined in Section 1.3), in
accordance with the Florida Act and the terms and conditions of this Agreement,
Merger Sub shall be merged with and into the Company. From and after the
Effective Time, the separate corporate existence of Merger Sub shall cease and
the Company, as the surviving entity in the Merger, shall continue its existence
under the Florida Act as a wholly owned subsidiary of Parent. The Company as the
surviving entity after the Merger is hereinafter sometimes referred to as the
“Surviving Entity.”
 
1.2  Closing. Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VIII, and subject to the satisfaction or waiver, as the case may be,
of the conditions set forth in Article VI, the closing of the Merger and other
transactions contemplated by this Agreement (the “Closing”) shall take place at
10:00 a.m. (Eastern Standard Time) on a date to be mutually agreed upon by the
parties (the “Closing Date”), which date shall be no later than the second
Business Day (as defined below) after all the conditions set forth in Article VI
(excluding conditions that, by their nature, cannot be satisfied until the
Closing) shall have been satisfied or waived in accordance with the terms of
this Agreement, unless another time and/or date is agreed to in writing by the
parties. The Closing shall take place at the offices of Mintz Levin Cohn Ferris
Glovsky and Popeo, P.C. in New York, New York. For purposes of this Agreement,
“Business Day” shall mean any day on which banks are permitted to be open in New
York, New York.
 

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1.3  Effective Time. Subject to the provisions of this Agreement, on the Closing
Date or as soon thereafter as is practicable the parties shall cause the Merger
to become effective by executing and filing in accordance with the Florida Act a
certificate of merger with the Secretary of State of the State of Florida in
substantially the form of Exhibit A attached hereto (the “Certificate of
Merger”), the date and time of such filing, or such later date and time as may
be agreed upon by the parties and specified therein, being hereinafter referred
to as the “Effective Time.”
 
1.4  Effect of the Merger. At the Effective Time, the Merger shall have the
effects set forth in this Agreement and in the Florida Act. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
assets, properties, rights, privileges, immunities, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Entity and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Entity.
 
1.5  Certificate of Formation and Limited Liability Company Agreement. From and
after the Effective Time and without further action on the part of the parties,
the Certificate of Formation of the Company immediately prior to the Effective
Time shall be the Certificate of Formation of the Surviving Entity until amended
in accordance with the terms thereof. From and after the Effective Time, the
operating agreement set forth on Exhibit B attached hereto shall be the
operating agreement of the Surviving Entity until amended in accordance with
terms thereof.
 
1.6  Merger Consideration.
 
(a)  The aggregate consideration (the “Merger Consideration”) to be paid or
reserved for issuance by Parent and Merger Sub in the Merger to the Members
shall be (1) 50,000,000 fully paid and non-assessable shares of common stock of
Parent, par value $0.001 per share (the “Parent Common Stock”), and (2)
24,666,666 shares of Parent Common Stock which shall be deposited in and subject
to the Escrow created and established pursuant to Section 1.15 provided that all
the transactions contemplated by the Optioned Property Provider Agreement (as
defined in Section 2.3(a)) have been completed (in any event, such shares to be
deposited in the Escrow shall sometimes be referred to as the “Escrow Shares”).
At the Effective Time, each Company Membership Interest held by a Member
immediately prior to the Effective Time shall, by virtue of the Merger, and
without any action on the part of such Member, be converted automatically into
and become the aggregate of the Merger Consideration and shall be allocated
among the Members as set forth on Schedule 1.6(a) (which Schedule shall be
amended from time to time to reflect the addition of any new Members to the
Company and which final Schedule shall be delivered at least one week prior to
Closing). In the event that the transactions contemplated by the Optioned
Property Provider Agreement have not closed prior to the Closing Date, the first
12,500,000 shares of Parent Common Stock that would have been Earned Shares will
not be issued and the balance of 12,166,666 shares of Parent Common Stock will
be issued and deposited in Escrow and constitute part of the Merger
Consideration and be subject to return to Parent in accordance with the
provisions of Section 1.19.
 
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(b)  From and after the Effective Time, all membership interests of the Company,
(together, “Company Membership Interests”) (other than any Company Membership
Interests to be canceled and retired pursuant to Section 1.7) shall be deemed
canceled and shall cease to exist, and each holder of a Company Membership
Interest shall cease to have any rights with respect thereto except as set forth
herein or under applicable law. As soon as practicable after the Effective Time,
Parent shall furnish one or more certificates representing the prescribed number
of shares of Parent Common Stock to the Members in accordance with Section 1.14
hereof.
 
1.7  Cancellation of Membership Interests. Immediately prior to the Effective
Time, each Company Membership Interest owned by Parent or any direct or indirect
wholly owned Subsidiary (as defined in Section 2.2(a)) of Parent or the Company,
shall be canceled and extinguished without any conversion thereof or payment
therefor.
 
1.8  No Further Ownership Rights in Company Membership Interests. All shares of
Parent Common Stock issued upon the surrender for exchange of Company Membership
Interests in accordance with the terms of this Article I shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Company
Membership Interests under this Article I. If, after the Effective Time,
certificates representing Company Membership Interests are presented to Parent
or Surviving Entity for any reason, they shall be canceled and exchanged as
provided in this Article I.
 
1.9  Membership Interests of Merger Sub. Parent’s ownership interest in Merger
Sub (the “Merger Sub Membership Interest”) shall be converted automatically into
a 100% membership interest in the Company.
 
1.10  Adjustments to Merger Consideration. Notwithstanding any other provision
of this Agreement, the Merger Consideration shall be adjusted, at any time and
from time to time, to fully reflect the effect of any stock split, reverse
split, stock dividend (including, without limitation, any dividend or
distribution of securities convertible into Parent Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock, occurring prior to the Closing.
 
1.11  No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock shall be issued as part of the Merger
Consideration, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each holder of Company
Membership Interests who would otherwise be entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Company Membership
Interests) shall receive from Parent, in lieu thereof, the next highest number
of whole shares of Parent Common Stock.
 
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1.12  No Liability. Notwithstanding any other provision of this Agreement, none
of the Parent, Merger Sub or the Surviving Entity shall be liable to a Member
for any shares of Parent Common Stock or any amount of cash properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
 
1.13  Taking of Necessary Action; Further Action. If, at any time and from time
to time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest in the Surviving Entity
full right, title and possession of all assets, properties, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and directors
of the Surviving Entity shall be and are fully authorized and directed, in the
name of and on behalf of the Company and Merger Sub, to take, or cause to be
taken, all such lawful and necessary action as is not inconsistent with this
Agreement.
 
1.14  Letter of Transmittal. As promptly as practicable before or after the
Effective Time, Parent (or its designee or exchange agent) will send to each
Member as set forth on Schedule 1.6(a) a letter of transmittal for use in
enabling Parent to issue one or more certificates representing the prescribed
number of shares of Parent Common Stock to which such Member may be entitled as
determined in accordance with the provisions of this Agreement. Upon delivery of
a duly executed letter of transmittal, such Member will be entitled to receive
the portion of the Merger Consideration to which such Member may be entitled (as
determined in accordance with the provisions of this Agreement). It is intended
that such letter of transmittal will contain provisions requiring each executing
Member thereof to (a) acknowledge and agree to be bound by Sections 1.6 (Merger
Consideration) and 1.19 (Earn-Out) of this Agreement, (b) make representations
and warranties with respect to ownership of the Company Membership Interests
owned or held by such Member at that time, and (c) waive all appraisal or
dissenter’s rights, in each case, in a form reasonably satisfactory to Parent
and as a condition precedent to Parent’s obligation to issue shares of Parent
Common Stock to such Member. If any certificate representing shares of Parent
Common Stock are to be issued in a name other than that as set forth in Schedule
1.6(a), it shall be a condition that the person requesting such shall deliver to
Parent (or its designee) all documents necessary to evidence and effect such
transfer and pay to Parent (or its designee) any transfer or other taxes
required by reason of such issuance or establish to the satisfaction of Parent
(or its designee) that such tax has been paid or is not applicable.
 
1.15  Escrow. (a) To provide for the indemnity obligations set forth in Article
VII and to provide for the return of certain shares of Parent Common Stock in
the event that certain performance criteria set forth in Section 1.19 are not
met, the Escrow Shares shall be deposited in escrow (the “Escrow”).  The Escrow
Shares shall be subject to the terms and conditions provided herein and the
Escrow Agreement to be entered into at the Closing between Parent, F. Dave Clark
Irrevocable Trust under Agreement dated August 31, 2004 (the “Clark Trust”),
David Schwarz and Continental Stock Transfer and Trust Company (“Continental”)
(or another escrow agent acceptable to the parties), as Escrow Agent, in
substantially the form annexed hereto as Exhibit C (the “Escrow Agreement”). 
 
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(b) Any Escrow Shares that become Forfeited Shares pursuant to the operation of
Section 1.19 (due to the failure to satisfy certain performance targets provided
therein) shall be removed from the Escrow, shall cease to be Escrowed Shares and
shall be returned to Parent, at such time such shares shall be retired by
Parent.
 
(c) Except as provided in subsection (d) hereof (providing for certain Earned
Shares to be set aside to cover the indemnification obligations of the Members
as set forth in Article VII), any Escrow Shares that become Earned Shares
pursuant to the operation of Section 1.19 (due to the satisfaction of certain
performance targets provided therein) shall be released from the Escrow and the
Escrow Agent shall deliver the Escrow Shares to the Clark Trust and David
Schwarz, pro rata among them in accordance with the distribution of the Merger
Consideration as set forth on Schedule 1.6(a).
 
(d) Until the date that is twelve (12) months subsequent to the Closing Date,
the first 10,000,000 Earned Shares shall be retained in the Escrow and treated
as deposited into a separate account for the purpose of setting aside certain
Earned Shares for the possible satisfaction of the indemnification obligations
of the Clark Trust and David Schwarz pursuant to Article VII (such account shall
be referred to herein as the “Earned Shares Indemnity Escrow Account”). On the
date that is twelve (12) months and one day subsequent to the Closing Date, only
5,000,000 Earned Shares, shall be retained in the Earned Shares Indemnity Escrow
Account and the excess Earned Shares shall be released from the Escrow and the
Escrow Agent shall deliver such excess Escrow Shares to the Clark Trust and
David Schwarz, pro rata among them in accordance with the distribution of the
Merger Consideration as set forth on Schedule 1.6(a). On the date that is
eighteen (18) months subsequent to the Closing Date, pursuant to Article VII,
the indemnity obligation of the Clark Trust and David Schwarz shall terminate
under this Agreement and any shares remaining in the Earned Shares Indemnity
Escrow Account shall be released from the Escrow and the Escrow Agent shall
deliver the Escrow Shares to the Clark Trust and David Schwarz, pro rata among
them in accordance with the distribution of the Merger Consideration as set
forth on Schedule 1.6(a). Any Earned Shares that are deposited in the Earned
Shares Indemnity Escrow Account and are used to satisfy an indemnification
obligation pursuant to Article VII shall be removed from the Escrow, shall cease
to be Escrowed Shares and shall be returned to Parent, at such time such shares
shall be retired by Parent. Notwithstanding anything set forth in this Section
1.15(d), the indemnification provisions of Article VII, and specifically Section
7.4, and the Escrow Agreement shall control any releases of Earned Shares from
the Earned Shares Indemnity Escrow Account to satisfy the Article VII
indemnification obligations and the general operation and maintenance of such
Account.
 
(e) Escrow Shares shall be issued and outstanding on the balance sheet of Parent
and it is the intention of the parties hereto that such shares be legally
outstanding under Delaware law.  All dividends payable on the Escrow Shares
shall be distributed to the Clark Trust and David Schwarz pro rata among them in
accordance with the distribution of the Merger Consideration as set forth on
Schedule 1.6(a). The Clark Trust and David Schwarz shall be entitled to vote the
Escrow Shares. .
 
1.16  Rule 145. All shares of Parent Common Stock issued pursuant to this
Agreement to “affiliates” of the Company listed on Schedule 1.16 will be subject
to certain resale restrictions under Rule 145 promulgated under the Securities
Act of 1933, as amended (the “Securities Act”) and all certificates representing
such shares shall bear an appropriate restrictive legend. At the Closing, Parent
and the Members shall execute and deliver a Registration Rights Agreement in the
form annexed hereto as Exhibit D with respect to registration of the shares of
Parent Common Stock under the Securities Act (the “Registration Rights
Agreement”).
 
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1.17  Member Matters.  Each Member, for itself only, represents and warrants as
follows: (i) all Parent Common Stock to be acquired by such Member pursuant to
this Agreement will be acquired for his, her or its account and not with a view
towards distribution thereof other than, with respect to Members that are
entities, transfers to its stockholders, partners or members; (ii) it
understands that he, she or it must bear the economic risk of the investment in
the Parent Common Stock, which cannot be sold by he, she or it unless it is
registered under the Securities Act, or an exemption therefrom is available
thereunder; (iii) he, she or it has had both the opportunity to ask questions
and receive answers from the officers and directors of Parent and all persons
acting on Parent’s behalf concerning the business and operations of Parent and
to obtain any additional information to the extent Parent possesses or may
possess such information or can acquire it without unreasonable effort or
expense necessary to verify the accuracy of such information; and (iv) he, she
or it has had access to the Parent SEC Reports filed prior to the date of this
Agreement. Each Member acknowledges, as to himself, herself or itself only, that
(v) he, she or it is either (A) an “accredited investor” as such term is defined
in Rule 501(a) promulgated under the Securities Act, or (B) a person possessing
sufficient knowledge and experience in financial and business matters to enable
it to evaluate the merits and risks of an investment in Parent; and (vi) he, she
or it understands that the certificates representing the Parent Common Stock to
be received by he, she or it may bear legends to the effect that the Parent
Common Stock may not be transferred except upon compliance with (C) the
registration requirements of the Securities Act (or an exemption therefrom), and
(D) the provisions of this Agreement. Each Member that is an entity, for itself,
represents, warrants and acknowledges, with respect to each holder of its equity
interests, to the same effect as the foregoing provisions of this Section
1.17(a).
 
(b)  Each Member, for himself, herself or itself, represents and warrants that
the execution and delivery of this Agreement by such Member does not, and the
performance of his, her or its obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a “Governmental Entity”), except (i) for
applicable requirements, if any, of the Securities Act, the Securities Exchange
Act of 1934, as amended (“Exchange Act”), state securities laws (“Blue Sky
Laws”), and the rules and regulations thereunder, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on such Member or the
Company or, after the Closing, the Parent, or prevent consummation of the Merger
or otherwise prevent the parties hereto from performing their obligations under
this Agreement.
 
1.18  Committee for Purposes of Agreement. Prior to the Closing, the Board of
Directors of Parent shall appoint a committee consisting of one of its then
members to act on behalf of Parent to take all necessary actions and make all
decisions pursuant to the Escrow Agreement regarding Parent’s right to
indemnification pursuant to Article VII hereof. In the event of a vacancy in
such committee, the Board of Directors of Parent shall appoint as a successor a
Person who was a director of Parent prior to the Closing Date or some other
Person who would qualify as an “independent” director of Parent and who has not
had any relationship with the Company prior to the Closing. Such committee is
intended to be the “Committee” referred to in Article VII hereof and the Escrow
Agreement.
 
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1.19  Return of Escrow Shares for Failure to Meet Performance Measures 
 
(a)  As promptly as practicable after the end of the twelve (12) month period
commencing on January 1, 2007 and ending on December 31, 2007 and the twelve
(12) month period commencing on January 1, 2008 and ending on December 31, 2008
(each, a “Performance Period”) but in no event later than 90 days thereafter,
Parent will deliver or cause to be delivered to the Clark Trust and David
Schwarz a statement for the applicable Performance Period (the “Net Income
Statement”) setting forth the calculation of the net income (after taxes) of the
Company for such Performance Period. The Net Income Statement shall be prepared
using the audited financial statements of Parent and shall be final and binding
on the parties. In order to facilitate the calculation of any Escrow Shares that
shall be returned to the Company pursuant to this Section 1.19 and retired
by the Company ("Forfeited Shares"), Parent shall account for the Company and
its Subsidiaries separately from other assets held and businesses conducted by
Parent and its Affiliates during the applicable Performance Period. 
 
(b)  Escrow Shares shall become Forfeited Shares, in which case such Forfeited
Shares shall be taken from the Clark Trust and David Schwarz (pro rata among
them in accordance with the distribution of the Merger Consideration as set
forth on Schedule 1.6(a)) within fifteen (15) Business Days following the
delivery of the applicable Net Income Statement, as provided in Schedule 1.19
hereto.  For the 2007 Performance Period, the difference between 12,333,333
shares less the Forfeited Shares for the 2007 Performance Period shall become
Earned Shares pursuant to this Section 1.19.   For the 2008 Performance
Period, difference between 12,333,333 shares less the Forfeited Shares for the
2008 Performance Period shall become Earned Shares pursuant to this Section
1.19.
 
(c)  The Net Income targets set forth on Schedule 1.19 shall be appropriately
adjusted pro rata to reflect any stock issuances on a time-weighted basis (for
example, an issuance of shares of Parent Common Stock (excluding the Escrow
Shares and shares of Parent Common Stock issued upon exercise of options and
warrants) on January 1, 2008 representing 5% of the issued and outstanding
shares of capital stock of Parent on a fully-diluted basis shall increase
targeted Net Income by 5% and an issuance of shares of Parent Common
Stock (excluding the Escrow Shares and shares of Parent Common Stock issued upon
exercise of options and warrants) on July 1, 2008 representing 5% of the issued
and outstanding shares of capital stock of Parent on a fully-diluted basis shall
increase targeted Net Income by 2.5%). Similarly, the number of Escrow
Shares that become Forfeited Shares under this Section 1.19 and the target stock
prices used above shall be appropriately adjusted for any stock splits, stock
dividends, reorganizations and similar events.
 
1.20  Outstanding Company Derivative Securities. The Company shall, and shall
cause its Subsidiaries to, arrange that the holders of all outstanding options,
warrants and other derivative securities of the Company or any Subsidiary
exercise such securities prior to the Effective Time. Such exercise may be made
contingent upon the occurrence of the Closing and no Person shall have any right
to acquire any ownership or other equity interest in the Company or any
Subsidiary (other than Parent at Closing).
 
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ARTICLE II  
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
Except as set forth in the disclosure schedule provided by the Company to Parent
on the date hereof, which (without limiting Parent’s rights under Section 6.3(f)
hereof) may be supplemented from time to time after the date hereof should any
fact or condition require a change thereto (the “Company Disclosure Schedule”),
the Company represents and warrants to Parent that the statements contained in
this Article II are true, complete and correct as of the date hereof and as of
the Closing Date unless such representation or warranty is limited as to a
specified date. Unless otherwise noted, all references to the Company and its
Subsidiaries in this Article II shall mean the Company on an as reorganized
basis as such reorganization is set forth on Schedule 2.2(a) hereto. The Company
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II. As used in this
Agreement, a “Company Material Adverse Effect” (or a Material Adverse Effect
relating to the Company) means any change, event or effect that is materially
adverse to the business, assets (including, without limitation, intangible
assets), financial condition, results of operations of the Company or any of its
Subsidiaries, taken as a whole. A “Project Material Adverse Effect” shall mean
any change, event or effect that is materially adverse to the business, assets
(including without limitation intangible assets) financial condition or results
of operations of any individual Material Project. Notwithstanding the foregoing,
“Company Material Adverse Effect” and “Project Material Adverse Effect” shall
not include events caused by general economic conditions (but shall include
economic conditions applicable solely or principally to the hospitality or
resort industries or to locations in which the Company and its Subsidiaries
operate). The following projects shall constitute “Material Projects”: Orlando,
Sandpiper, Bayshore, Crested Butte, Boca Chica, Clearwater, Marathon, Las Vegas,
Sarasota, Tavernier and Islemorada. “Optioned Property Provider” shall mean the
entities set forth on Schedule 2.15(c) attached hereto. The following projects
shall constitute the “Optioned Property Projects”: (a) Bayshore, Clearwater,
Orlando, Islemorada, Marathon, Sombrero, Sarasota and Tavernier and (b) if the
Closing is consummated for an Optioned Property Provider, the owner of an
Optioned Property Provider or any affiliate thereof to acquire any of the
following properties then: Sandpiper and/or Crested Butte. If an exception is
adequately disclosed in any one section of the Company Disclosure Schedules, it
should be deemed disclosed for purposes of each other section of the Company
Disclosure Schedules where it is reasonably apparent that such exception is
applicable.
 
2.1  Organization and Qualification. (a) The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Florida, and is qualified to do business in Florida and all other
jurisdictions where the character of the properties and other assets owned,
leased or operated by it, or the nature of its activities, makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing, individually or in the aggregate, has
not had and would not be expected to have a Company Material Adverse Effect. The
Company is in possession of all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders (“Approvals”)
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to have such Approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. The
Company has delivered to Parent true, complete and correct copies of its
Certificate of Formation and operating agreement of the Company (the “Operating
Agreement”), each as amended to date. The Company is not in default under or in
violation of any provision of its Certificate of Formation or Operating
Agreement.
 
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(b)  The minute books of the Company contain true, complete and accurate records
of all meetings and consents in lieu of meetings of its Board of Directors or
Managers, if applicable (and any committees thereof), similar governing bodies
and Members (“Corporate Records”) since January 1, 2004. Copies of such
Corporate Records of the Company have been heretofore made available to Parent
or Parent’s counsel.
 
(c)  The transfer and ownership records of the Company contain true, complete
and accurate records of the securities ownership as of the date of such records
and the transfers involving the Company Membership Interests and other
securities of the Company since January 1, 2004. Copies of such records of the
Company have been heretofore made available to Parent or Parent’s counsel.
 
2.2  Subsidiaries.
 
(a)  Schedule 2.2(a) sets forth a complete and correct list of each Subsidiary
of the Company and of all jurisdictions in which the Company or any such
Subsidiary is qualified or licensed to do business. Attached to Schedule 2.2(a)
is an organizational chart of the Company and its Subsidiaries. For purposes of
this Agreement, the term “Subsidiary” means, with respect to any Person, any
corporation or other organization, whether incorporated or unincorporated, of
which: (i) such Person (or any other Subsidiary of such Person) is a general
partner (excluding partnerships, the general partnerships of which held by such
Person or Subsidiary of such Person do not have a majority of the voting
interest of such partnership); or (ii) at least a majority of the securities or
other equity interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization, is directly or indirectly
owned or controlled by such Person or by any one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries. Except for the Subsidiaries
set forth on Schedule 2.2(a), the Company does not own, directly or indirectly,
any ownership, equity, profits or voting interest in any Person or have any
agreement or commitment to purchase any such interest, and has not agreed and is
not obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any future
investment in or capital contribution to any other entity.
 
(b)  Each Subsidiary that is a corporation is duly incorporated, validly
existing and in good standing under the laws of its state of incorporation (as
listed on Schedule 2.2(a)) and has the requisite corporate power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being or currently planned by the Company to be conducted. Each
Subsidiary that is a limited liability company is duly organized or formed,
validly existing and in good standing under the laws of its state of
organization or formation (as listed on Schedule 2.2(a)) and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted by the Company. Each
Subsidiary is in possession of all Approvals necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being or currently planned by the Company to be conducted, except
where the failure to have such Approvals could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or such Subsidiary. Complete and correct copies of the certificate of
incorporation and by-laws (or other comparable governing instruments with
different names) (collectively referred to herein as “Charter Documents”) of
each Subsidiary, as amended and currently in effect, have been heretofore
delivered or made available to Parent or Parent’s counsel. No Subsidiary is in
violation of any of the provisions of its Charter Documents.
 
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(c)  Each Subsidiary is duly qualified or licensed to do business as a foreign
corporation or foreign limited liability company and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or such Subsidiary.
Each jurisdiction in which each Subsidiary is so qualified or licensed is listed
in Schedule 2.2(a).
 
(d)  The minute books of each Subsidiary contain true, complete and accurate
records of all meetings and consents in lieu of meetings of its Board of
Directors (and any committees thereof), similar governing bodies and
stockholders since January 1, 2004. Copies of the Corporate Records of each
Subsidiary have been heretofore made available to Parent or Parent’s counsel.
 
2.3  Capitalization. (a) All of the Company Membership Interests held by the
Members of the Company are as reflected on Schedule 1.6(a).
 
(b)  As of the date hereof, there are no shares of voting or non-voting capital
stock, equity interests, percentage interests or other securities of the Company
authorized, issued, reserved for issuance or otherwise outstanding. Schedule
1.6(a) sets forth a true, complete and correct list of all holders of Company
Membership Interests indicating the percentage of Company Membership Interests
held by each of them. The Company has entered into an agreement with an Optioned
Property Provider (the “Optioned Property Agreement”). A true, correct and
complete copy of the Optioned Property Agreement has been provided to Parent.
The Company may amend the Optioned Property Agreement provided that the amended
agreement preserves the economic substance of the original agreement prior to
the amendment.
 
(c)  Schedule 1.6(a) also sets forth a true, complete and correct list of the
holders of all Company Options and Company Warrants, including: (i) the number
and class of Company Membership Interests subject to each such Company Option or
Company Warrant; (ii) the date of grant; (iii) the exercise price; (iv) the date
of grant, the vesting schedule, as applicable, and expiration date; and (v) any
other material terms, including, without limitation, any terms regarding the
acceleration of vesting. At Closing, no such derivative securities will be
outstanding.
 
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(d)  All outstanding Company Membership Interests are, and all membership
interests which may be issued pursuant to the Company Options and Company
Warrants, will be, when issued against payment therefore in accordance with the
terms thereof, duly authorized, validly issued, fully paid and non-assessable,
and not subject to, or issued in violation of, any kind of preemptive,
subscription or of similar rights, and were or will be issued in compliance in
all material respects with all applicable federal and state securities laws.
 
(e)  There are no outstanding obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock (or options to acquire any such
shares), membership interests, percentage interests or other security or equity
interests of the Company or to cause the Company or its Subsidiaries to file a
registration statement under the Securities Act, or which otherwise relate to
the registration of any securities of the Company or its Subsidiaries.
 
(f)  Except as disclosed in Schedule 1.6(a), there are no bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into securities having the right to vote) on any matters on which
the Company’s members may vote. Except as described in subsection (c) above,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind (contingent or
otherwise) to which the Company is a party or bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, membership
interests, percentage interests or other voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any agreement to
issue, grant or extend any security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. The Company is not subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan or capital contribution) to or in any Person.
 
(g)  There are no voting trusts, proxies or other agreements, arrangements,
commitments or understandings of any character to which the Company or its
Subsidiaries or, to the Knowledge of the Company, any of the Company’s members,
is a party or by which any of them is bound with respect to the issuance,
holding, acquisition, voting or disposition of any shares of capital stock,
membership interests, percentage interests or other security or equity interests
of the Company.
 
(h)  The authorized and outstanding capital stock or membership interests of
each Subsidiary are set forth in Schedule 2.2(a) hereto. Except as set forth on
Schedule 2.2(a), all of the outstanding shares or membership interests of the
Company's wholly owned, direct or indirect, Subsidiaries (and all of the shares
or membership interests of non-wholly owned Subsidiaries owned, directly or
indirectly, by the Company) are owned, directly or indirectly, by the Company,
free and clear of any Liens, charges, pledges, security interests, mortgages,
claims, encumbrances, options or rights of first refusal. All of the outstanding
shares of capital stock or membership interests of each of such Subsidiaries
owned by the Company have been duly authorized and validly issued and are fully
paid, non-assessable and free of preemptive or similar rights. Except as
contemplated by the Merger, there are no warrants, options, agreements, call
rights, conversion rights, exchange rights, preemptive rights or other rights or
commitments or understandings relating to the issuance, sale, delivery, pledge,
transfer, redemption or other disposition by the Company or its Subsidiaries
(including any right of conversion or exchange under any outstanding security or
other instrument) of the capital stock or membership interests of any of the
Company's Subsidiaries. None of the Subsidiaries owns any stock or membership
interests of the Company.
 
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2.4  Authority Relative to this Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby (including the Merger). The execution and delivery of this
Agreement and the consummation by the Company of the transactions contemplated
hereby (including the Merger) have been duly and validly authorized by all
necessary action on the part of the Company (including the approval by its
Members, subject in all cases to the satisfaction of the terms and conditions of
this Agreement, including the conditions set forth in Article VI), and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby pursuant to the
Florida Act and the terms and conditions of this Agreement. The Merger and the
adoption of this Agreement have been approved by the affirmative vote of all of
the holders of the Company Membership Interests in accordance with the Florida
Act and the Operating Agreement (the “Requisite Member Approval”). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof by the other
parties hereto, constitutes the legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity.
 
2.5  No Conflict; Required Filings and Consents. (a) The execution and delivery
of this Agreement by the Company do not, and the performance of this Agreement
by the Company shall not, (i) conflict with or violate the Company’s Certificate
of Formation or Operating Agreement, (ii) conflict with or violate any Legal
Requirements (as defined in Section 10.2(a)), (iii) result in any breach of, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or materially impair the Company’s rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company pursuant to, any Material Company Contracts or (iv) result in the
triggering, acceleration or increase of any payment to any Person pursuant to
any Company Contract, including any “change in control” or similar provision of
any Company Contract, except, with respect to clauses (ii), (iii) or (iv), for
any such conflicts, violations, breaches, defaults, triggerings, accelerations,
increases or other occurrences that would not, individually and in the
aggregate, have a Material Adverse Effect on the Company.
 
(b)  The execution and delivery of this Agreement by the Company does not, and
the performance of its obligations hereunder will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except: (i) for the filing of any notifications required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
“HSR Act”) and the expiration of the required waiting period thereunder, and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or, after the Closing, the Parent, or prevent consummation of the Merger
or otherwise prevent the parties hereto from performing their obligations under
this Agreement.
 
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2.6  Compliance with Laws. To the Knowledge of the Company, the Company and its
Subsidiaries are in compliance in all respects with all Legal Requirements,
except for instances of possible noncompliance that individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect or a Project Material Adverse Effect. No written notice, charge, claim,
action or assertion has been received by the Company or any of its Subsidiaries
(and the Company has no Knowledge of any such written notice delivered to any
Person) and, to the Company's Knowledge, no written notice, charge, claim,
action has been filed, commenced or threatened against the Company or any of its
Subsidiaries or any portion of the Owned Real Property or any of the Optioned
Property Projects alleging any violation of any Legal Requirements, except for
instances of possible noncompliance that individually or in the aggregate would
not reasonably be expected to have a Company Material Adverse Effect or a
Project Material Adverse Effect. The parties hereto acknowledge that the Company
is or may be in the process of renovating various Owned Real Property and
Optioned Property Projects which will require compliance with respect to certain
Legal Requirements and the Company and/or the applicable Subsidiary agree to use
commercially reasonable best efforts from and after the date hereof to be in
compliance with such Legal Requirements, it being agreed by Company and any such
Subsidiary that any possible noncompliance with respect to such Legal
Requirements as of the Closing shall not individually or in the aggregate be
reasonably expected to have a Company Material Adverse Effect or a Project
Material Adverse Effect.
 
2.7  Material Permits.
 
(a)  To the Knowledge of the Company, the Company and its Subsidiaries as the
case may be, have all material federal, state, local and foreign governmental
licenses, permits, franchises, approvals and authorizations (the “Material
Permits”) necessary for the Company, or the Subsidiaries as the case may be, to
operate its business as presently conducted as of the date of this Agreement and
as presently planned to be conducted except for Material Permits that
individually or in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect or a Project Material Adverse Effect. The
parties hereto acknowledge that the Company is or may be in the process of
renovating various Owned Real Property and Optioned Property Projects which will
require obtaining and comply with certain Material Permits and the Company
and/or the applicable Subsidiary agree to use commercially reasonable best
efforts from and after the date hereof to obtain and complying with such
Material Permits as and when required by such Legal Requirements, it being
agreed by Company and any such Subsidiary that any failure to obtain any such
Material Permits as of the Closing shall not individually or in the aggregate be
reasonably expected to have a Company Material Adverse Effect or a Project
Material Adverse Effect.
 
(b)  To the Knowledge of the Company, neither the Company nor the Subsidiaries
have received any written notice from any governmental agency that they are not
in compliance in all material respects with the terms and conditions of the
Material Permits.
 
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(c)  Each Material Permit is in full force and effect and neither the Company
nor any Subsidiary have received written notification of any action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim that is
pending or, to the Knowledge of the Company, threatened, which seeks to revoke
or limit any Material Permit.
 
(d)  To the Knowledge of the Company, the rights and benefits of each Material
Permit will be available to the Company and the Subsidiaries immediately after
the Closing on terms substantially identical to those enjoyed by the Company and
the Subsidiaries immediately prior to the Closing.
 
2.8  Financial Statements. (a) The Company has provided to Parent a correct and
complete copy of the unaudited combined financial statements (including any
related notes thereto) of the Company and its Subsidiaries for the fiscal year
ended December 31, 2006 (the “Unaudited Financial Statements”) and audited
consolidated financial statements (including any related notes thereto) of the
Company and its Subsidiaries for the fiscal years ended December 31, 2005 and
December 31, 2004 (the “Audited Financial Statements”). The Audited Financial
Statements are currently being restated and will be delivered to the Parent
prior to April 1, 2007. Upon completion of the restatement, the Audited
Financial Statements will have been prepared in accordance with generally
accepted accounting principles of the United States (“U.S. GAAP”) applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto), and each will fairly present in all material respects the
financial position of the Company and its Subsidiaries at the respective dates
thereof and the results of their respective operations and cash flows for the
periods indicated. The Unaudited Financial Statements comply as to form in all
material respects, and were prepared in accordance with, U.S. GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto), and fairly present in all material respects the financial
position of the Company and its Subsidiaries at the date thereof and the results
of their respective operations and cash flows for the period indicated, except
that such statements do not contain notes and are subject to normal adjustments
that are not expected to have a Material Adverse Effect on the Company.
 
(b)  Since January 1, 2004, the books of account, minute books, stock
certificate books and stock transfer ledgers and other similar books and records
of the Company and its Subsidiaries have been maintained in accordance with good
business practice, are complete and correct in all material respects and there
have been no material transactions that are required to be set forth therein and
which are not so set forth.
 
(c)  Except as otherwise noted in the Audited Financial Statements or the
Unaudited Financial Statements, the accounts and notes receivable of the Company
and its Subsidiaries reflected on the balance sheets included in the Audited
Financial Statements and the Unaudited Financial Statements (i) arose from bona
fide transactions in the ordinary course of business and are payable on ordinary
trade terms, (ii) are legal, valid and binding obligations of the respective
debtors enforceable in accordance with their terms, except as such may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting creditors’ rights generally, and by general equitable principles,
(iii) are not subject to any valid set-off or counterclaim except to the extent
set forth in such balance sheet contained therein, and (iv) are not the subject
of any actions or proceedings brought by or on behalf of the Company or its
Subsidiaries.
 
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2.9  No Undisclosed Liabilities. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the Unaudited Financial Statements which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of the Company, except: (i) liabilities
provided for in or otherwise disclosed in the balance sheet included in the
Unaudited Financial Statements, and (ii) such liabilities arising in the
ordinary course of business and consistent with past practice since December 31,
2006.
 
2.10  Absence of Certain Changes or Events. Except as set forth on Schedule 2.10
or otherwise set forth in this Agreement, since December 31, 2006, the Company
and its Subsidiaries have conducted their respective businesses only in the
ordinary course of business consistent with past practice, and there has not
been: (i) any action, event or occurrence which has had, or to the Knowledge of
the Company could reasonably be expected to result in, a Company Material
Adverse Effect; or (ii) any action, event or occurrence which has had a loss or
liability to the Company or any of its Subsidiaries in excess of $250,000 or
where all such matters aggregate more than $1,000,000; or (iii) any other
action, event or occurrence that would have required the consent of Parent
pursuant to Section 4.1 had such action, event or occurrence taken place after
the execution and delivery of this Agreement.
 
2.11  Litigation. There are no claims, suits, actions or proceedings pending or,
to the Knowledge of the Company, threatened against the Company or any of its
Subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or which
could reasonably be expected, either singularly or in the aggregate with all
such claims, actions or proceedings, to have a Material Adverse Effect on the
Company, have a Project Material Adverse Effect or have a Material Adverse
Effect on the ability of the parties hereto to consummate the Merger.
 
2.12  Employee Benefit Plans and Compensation.
 
(a)  Definitions. With the exception of the definition of “Affiliate” set forth
in this Section 2.12(a) below (which definition shall apply only to this Section
2.12(a)), for purposes of this Agreement, the following terms shall have the
following respective meanings:
 
“Affiliate” shall mean any other person or entity under common control with the
Company within the meaning of Section 414(b), (c), (m) or (o) of the Code and
the regulations issued thereunder.
 
“Company Employee Plan” shall mean any plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written, unwritten or otherwise, funded or unfunded,
including without limitation, each “employee benefit plan,” within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by the Company or any Affiliate for the benefit
of any Employee, or with respect to which the Company or any Affiliate has or
may have any liability or obligation and any International Employee Plan.
 
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“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
 
“DOL” shall mean the United States Department of Labor.
 
“Employee” shall mean any current, former or rehired employee, consultant,
officer or director of the Company or any Affiliate.
 
“Employee Agreement” shall mean each employment, consulting or similar
agreement, each agreement providing for severance, relocation, repatriation,
expatriation or similar agreement (including, without limitation, any offer
letter) between the Company or any Affiliate and any Employee.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.
 
“FMLA” shall mean the Family Medical Leave Act of 1993, as amended.
 
“HIPAA” shall mean the Health Insurance Portability and Accountability Act of
1996, as amended.
 
“International Employee Plan” shall mean each Company Employee Plan or Employee
Agreement that has been adopted or maintained by the Company or any Affiliate,
whether formally or informally or with respect to which the Company or any
Affiliate will or may have any liability with respect to Employees who perform
services outside the United States.
 
“IRS” shall mean the United States Internal Revenue Service.
 
“PBGC” shall mean the United States Pension Benefit Guaranty Corporation.
 
“Pension Plan” shall mean each Company Employee Plan that is an “employee
pension benefit plan,” within the meaning of Section 3(2) of ERISA.
 
(b)  Schedule 2.12(b) of the Company Disclosure Schedules sets forth a complete
and accurate list of each Company Employee Plan and Employee Agreement. The
Company has not made any plan or commitment to establish any new Company
Employee Plan or Employee Agreement, to modify any Company Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, or as required by this Agreement), or to enter into any Company
Employee Plan or Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing. The Company has previously made available
to Parent a true and complete table setting forth the name, position and salary
of each employee of the Company.
 
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(c)  Documents. The Company has provided to Parent: (i) correct and complete
copies of all documents embodying each Company Employee Plan and each Employee
Agreement including, without limitation, all amendments thereto and written
interpretations thereof and all related trust documents; (ii) the three (3) most
recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, filed pursuant to ERISA or the Code in
connection with each Company Employee Plan; (iii) if the Company Employee Plan
is funded, the most recent annual and periodic accounting of Company Employee
Plan assets; (iv) the most recent summary plan description together with the
summary(ies) of material modifications thereto, if any, required under ERISA
with respect to each Company Employee Plan; (v) all material written agreements
and contracts relating to each Company Employee Plan, including, without
limitation, administrative service agreements and group insurance contracts;
(vi) all communications from the Company within the prior three (3) years
material to any Employee or Employees relating to any Company Employee Plan and
any proposed Company Employee Plan, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
liability to the Company; (vii) all correspondence to or from any governmental
agency relating to any Company Employee Plan within the prior three (3) years;
(viii) all material COBRA forms and related notices; (ix) all policies
pertaining to fiduciary liability insurance covering the fiduciaries for each
Company Employee Plan; (x) all discrimination tests for each Company Employee
Plan for the three (3) most recent plan years; and (xi) the most recent IRS
determination or opinion letter issued with respect to each Company Employee
Plan.
 
(d)  Employee Plan Compliance. The Company has performed all obligations
required to be performed by it under, is not in default or violation of, and has
no Knowledge of any default or violation by any other party to, any Company
Employee Plan, and each Company Employee Plan has been established and
maintained in accordance with its material terms and in compliance, in all
material respects, with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code. Any Company
Employee Plan intended to be qualified under Section 401(a) of the Code and any
trust intended to qualify under Section 501(a) of the Code has obtained a
favorable determination letter (or opinion letter, if applicable) as to its
qualified status under the Code or is entitled to rely on a prototype plan
sponsor’s determination letter pursuant to IRS pronouncements. No “prohibited
transaction,” within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Company Employee Plan. There are no actions, suits or claims
pending which have been served on the Company or, to the Knowledge of the
Company, otherwise pending or threatened or reasonably anticipated (other than
routine claims for benefits) against any Company Employee Plan or against the
assets of any Company Employee Plan. Each Company Employee Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without liability to Parent, the Company or any Affiliate (other than
accrued benefits and ordinary administration expenses). There are no audits,
inquiries or proceedings pending or, to the Knowledge of the Company or any
Affiliates, threatened by the IRS, DOL, or any other Governmental Entity with
respect to any Company Employee Plan. Neither the Company nor any Affiliate is
subject to any penalty or tax with respect to any Company Employee Plan under
Section 402(i) of ERISA or Sections 4975 through 4980 of the Code. The Company
has made all contributions and other payments required by and due under the
terms of each Company Employee Plan.
 
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(e)  No Pension Plan. Neither the Company nor any Affiliate has ever maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
that is subject to Title IV of ERISA or Section 412 of the Code.
 
(f)  No Self-Insured Plan. Neither the Company nor any Affiliate has ever
maintained, established sponsored, participated in or contributed to any
self-insured plan that provides healthcare, life, disability or other welfare
benefits to employees (including, without limitation, any such plan pursuant to
which a stop-loss policy or contract applies).
 
(g)  Collectively Bargained, Multiemployer and Multiple-Employer Plan. At no
time has the Company or any Affiliate contributed to or been obligated to
contribute to any multiemployer plan, as defined in Section 414(f) of the Code
and Section 3(37) of ERISA. Neither the Company nor any Affiliate has at any
time ever maintained, established, sponsored, participated in or contributed to
any multiple employer plan or to any plan described in Section 413 of the Code.
 
(h)  No Post-Employment Obligations. No Company Employee Plan or Employment
Arrangement provides, or reflects or represents any liability to provide,
retiree life insurance, retiree health or other retiree employee welfare
benefits to any person for any reason, except as may be required by COBRA or
other applicable statute, and the Company has not represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefits, except to the extent
required by statute.
 
(i)  COBRA; FMLA; HIPAA. The Company and each Affiliate has, prior to the
Effective Time, complied, in all material respects, with COBRA, FMLA, HIPAA, the
Women’s Health and Cancer Rights Act of 1998, the Newborns’ and Mothers’ Health
Protection Act of 1996, and any similar provisions of state law applicable to
its Employees. The Company does not have unsatisfied obligations to any
Employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state law
governing health care coverage or extension.
 
(j)  Effect of Transaction. The execution of this Agreement and the consummation
of the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, Employee Agreement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits or be deemed a “parachute payment” under Section
280G of the Code with respect to any Employee.
 
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(k)  Employment Matters. The Company: (i) to the Knowledge of the Company, it is
in compliance, in all material respects, with all applicable foreign, federal,
state and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment, termination of employment,
employee safety and wages and hours, and in each case, with respect to
Employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) to the Knowledge of the Company is not liable for
any arrears of wages, severance pay or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) to the Knowledge of the Company is
not liable for any payment to any trust or other fund governed by or maintained
by or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no action, suits, claims
or administrative matters pending which have been served on the Company, or to
the Company’s Knowledge, otherwise pending or threatened or reasonably
anticipated against the Company or any of its Employees relating to any
Employee, Employee Agreement or Company Employee Plan. There are no pending,
which have been served on the Company, or to the Company’s Knowledge, otherwise
pending or threatened or reasonably anticipated claims or actions against
Company, any Company trustee under any worker’s compensation policy. To the
Company’s Knowledge, no employee of the Company has violated any employment
contract, nondisclosure agreement, non-competition or non-solicitation agreement
by which such employee is bound due to such employee being employed by the
Company and disclosing to the Company or using trade secrets or proprietary
information of any other person or entity. The services provided by each of the
Company’s and its Affiliate’s Employees is terminable at the will of the Company
and its Affiliates and any such termination would result in no liability to the
Company or any Affiliate.  
 
(l)  No Interference or Conflict. To the Knowledge of the Company, no officer,
Employee or consultant of the Company is obligated under any contract or
agreement, subject to any judgment, decree, or order of any court or
administrative agency that would interfere with such person’s efforts to promote
the interests of the Company or that would interfere with the Company’s
business. Neither the execution nor delivery of this Agreement, nor the carrying
on of the Company’s business as presently conducted or proposed to be conducted
nor any activity of such officers, Employees or consultants in connection with
the carrying on of the Company’s business as presently conducted or currently
proposed to be conducted will, to the Knowledge of the Company, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, any contract or agreement under which any of such officers,
Employees, or consultants is now bound.
 
(m)  International Employee Plan. Neither the Company nor any Affiliate
currently or has it ever had the obligation to maintain, establish, sponsor,
participate in, be bound by or contribute to any International Employee Plan.
 
2.13  Labor Matters. Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by the Company or any of its Subsidiaries nor does the
Company have Knowledge of any activities or proceedings of any labor union to
organize any such employees.
 
2.14  Restrictions on Business Activities. To the Company’s Knowledge, there is
no agreement, commitment, judgment, injunction, order or decree binding upon the
Company or any of its Subsidiaries or their respective assets or to which the
Company or any of its Subsidiaries is a party which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its Subsidiaries, any acquisition of property
by the Company or any of its Subsidiaries or the conduct of business by the
Company or any of its Subsidiaries as currently conducted.
 
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2.15  Real Property.
 
(a)  “Owned Real Property” shall mean each piece of real property owned in fee
simple (or with respect to real property located outside the United States, such
other similar form of title as may be described in the title policy for such
parcel) by the Company or any of its Subsidiaries (including all land,
easements, development rights and other rights and interests appurtenant thereto
including interests in buildings, structures, improvements and fixtures located
thereon) which Owned Real Property is described on Schedule 2.15(a) attached
hereto and made a part hereof. The Owned Real Property constitutes all of the
real property owned by the Company or any of its Subsidiaries in connection with
the businesses of the Company and its Subsidiaries.
 
(b)  “Leased Real Property” shall mean each property leased, subleased,
licensed, or otherwise occupied by the Company or any of its Subsidiaries
pursuant to a lease, sublease, license, or other occupancy agreement and all
amendments, modifications, and supplements thereto, excluding leases for
individual condominium units at any Owned Real Property and leases of individual
condominium units within the Optioned Property Projects, all of which
condominium unit leases are with Persons not affiliated with the Company for
fair market value on reasonable and customary terms, (each, a “Lease”)
(including all rights included in any Lease for a Leased Real Property to use or
occupy any land, buildings, including sales kiosks, and improvements thereon),
which Leased Real Property is described on Schedule 2.15(b) attached hereto and
made a part hereof. A true, correct and complete copy of each Lease for each
Leased Real Property, except for all bay bottom/submerged land leases entered
into with the Board of Trustees of the Internal Improvement Fund under the
Florida Administrative Code, is described on Schedule 2.15(b) attached hereto
and made a part hereof, a copy of each of which has been delivered to Parent or
its representatives prior to the date hereof. The Leased Real Property
constitutes all of the real property leased, subleased, licensed, or otherwise
occupied by the Company and any of its Subsidiaries.
 
(c)  Each agreement (an “Optioned Property Redevelopment Agreement”) pursuant to
which the Company or a Subsidiary, as the case may be, has an option to purchase
all or part of an Optioned Property Project, has a management agreement and/or
ground lease for an Optioned Property Project, or is redeveloping an Optioned
Property Project and each fee or other mortgage encumbering or other financing
with respect to an Optioned Property Project (an “Optioned Property Mortgage”)
is listed on said Schedule 2.15(c). There are no other agreements pursuant to
which the Company or a Subsidiary has an option to purchase all or part of an
Optioned Property Project or is managing, leasing or redeveloping an Optioned
Property Project other than those listed on said Schedule 2.15(c). To Company’s
Knowledge, no party is in material default in respect of its respective
obligations under any Optioned Property Redevelopment Agreement or under any
Optioned Property Mortgage and no act or omission of a party, which, with the
passage of time or the giving of notice or both, would comprise a default,
except for such defaults as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or a Project
Material Adverse Effect. True, correct and complete copies of the Optioned
Property Provider Agreement and each Optioned Property Redevelopment Agreement
and Optioned Property Mortgage described on Schedule 2.15(c) hereto have
heretofore been delivered to Parent or its representatives prior to the date
hereof.
 
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(d)  Intentionally Left Blank
 
(e)  “Real Property” shall mean, collectively, the Owned Real Property, the
Leased Real Property, and the Optioned Property Projects.
 
(f)  Each Lease is binding, enforceable, in full force and effect and neither
the Company nor any of its Subsidiaries have received written notice or
otherwise have Knowledge that they are in default or in breach under such Lease
except for such defaults as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or a Project
Material Adverse Effect. Neither Company nor any of its Subsidiaries have
Knowledge of any event or omission, which, with the passage of time or the
giving of notice or both, would comprise a default, except for such defaults as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or a Project Material Adverse Effect. To
Company’s Knowledge, no landlord, sublandlord, licensor or other Person that is
a party to any Lease (other than Company or a Subsidiary) is in default in
respect of its obligations under such Lease and no event or omission has
occurred, which, with the passage of time or the giving of notice or both, would
cause any such Person to be in default in a material respect of its obligations
under such Lease. Neither the Company nor any of its Subsidiaries have received
written notice of any claimed abatements, offsets, defenses or other bases for
relief or adjustment under any of the Leases. The Merger does not require the
consent of any Person or party to any Lease or any consent the absence of which
would not cause a Company Material Adverse Effect), and will not result in a
breach of or default under such Lease, or otherwise cause such Lease to cease to
be legal, valid, binding, enforceable and in full force and effect following the
Closing. No security deposit or portion thereof deposited with respect to any
Lease has been applied in respect of a breach or default under which Lease which
has not been redeposited in full by Company or any Subsidiary. Except as may be
disclosed in a Lease, the Company and its Subsidiaries do not owe, nor will they
owe in the future, any brokerage commissions or finder’s fees with respect to
such Lease which is not paid. No party to any Lease (except where such party is
the Company or a Subsidiary) has an economic interest in the Company or a
Subsidiary. Neither the Company nor any Subsidiary has (i) assigned, subleased,
licensed or otherwise granted any Person (except where such Person is the
Company or a Subsidiary) the right to use or occupy such Leased Real Property or
any portion thereof, or (ii) collaterally assigned or granted any other security
interest in any Lease or any interest therein.
 
(g)  With respect to the Real Property, as applicable: (i) the Company, its
Subsidiaries or the Optioned Property Provider, as the case may be, have good
and marketable fee simple interest in the Real Property and a valid leasehold
interest in the Leased Real Property, free and clear of any use or occupancy
restrictions, Liens, encumbrances, and easements or title defects, except as set
forth on any existing title insurance policy, deed, or survey, that have had or
could have a Project Material Adverse Effect or a Material Adverse Effect on the
Company’s, or any of its Subsidiaries’, as the case may be, use and occupancy of
the Real Property or the Optioned Property Projects, as the case may be; and
(ii) neither the Company nor any of its Subsidiaries have received written
notice or otherwise have Knowledge (a) of any condemnation, eminent domain or
similar proceeding affecting any portion of the Real Property or any access
thereto or of any sale or other disposition of the Real Property or any part
thereof in lieu of condemnation or of any possible widening of streets abutting
all or any portion of the Real Property, and, to the Knowledge of the Company,
no such proceedings are contemplated, (b) of the imposition of any special taxes
or assessments by a governmental authority, or payments in lieu thereof, against
all or any portion of the Real Property, or any pending improvement liens to be
made by any governmental authority which may affect any Real Property, (c) from
or on behalf of any existing insurance carriers indicating that the insurance
rates for all or any portion of any of the Real Property will be substantially
increased or that alterations of any Real Property are required, and (d) the
curtailment of any utility service supplied to any Real Property.
 
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(h)  Prior to the date hereof, the Company has furnished or made available to
Parent or its representatives true and correct copies of all deeds, mortgages,
surveys, licenses, leases, title insurance policies and permanent certificates
of occupancy (or documents equivalent to certificates of occupancy in the
jurisdiction where the Real Property is located) with respect to the Real
Property that are in the possession of Company or its Subsidiaries.
 
(i)  Neither the Company nor its Subsidiaries have received written notice of,
and to the Knowledge of the Company and its Subsidiaries there are no,
outstanding claims made by or against the Company or any applicable Subsidiary
or Optioned Property Provider with respect to title or ownership of the Owned
Real Property or the Optioned Property Projects.
 
(j)  Neither the Company nor any of its Subsidiaries is obligated under or a
party to, and none of the Owned Real Property or the Optioned Property Projects
is subject to, any option, right of first refusal, right of first offer or other
obligation to sell, transfer, dispose of, grant any interest in or lease any of
the Owned Real Property or the Optioned Property Projects or any portion thereof
or interest therein to any Person other than (x) the Company and its
Subsidiaries or (y) such leases, subleases, licenses, concessions or other
agreements entered into by the Company or its Subsidiaries in the ordinary
course of business (the documents described in this clause (y), the “Owned Real
Property Leases”), which Owned Real Property Leases are described on Schedule
2.15(j) attached hereto and made a part hereof. The Owned Real Property Leases
are in full force and effect and neither the Company nor any of its Subsidiaries
have received written notice or otherwise have Knowledge that they are in
default or in breach under any such Lease except for such defaults as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither Company not any Subsidiary has Knowledge of any
event or omission under any Owned Real Property Lease, which, with the passage
of time or the giving of notice or both, would cause a default except for such
defaults as would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries have received written notice of, or have Knowledge of, any claimed
abatements, offsets, defenses or other bases for relief or adjustment under any
Owned Real Property Lease.
 
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(k)  All improvements upon or constituting a part of the Real Property
(including, but not limited to, the buildings, structures, fixtures, roofs and
structural elements thereof and the heating, ventilation, air conditioning,
plumbing, electrical, elevator mechanical, sewer, waste water, storm water,
paving and parking equipment, systems and facilities included therein) (the
“Improvements”) are adequate for the purposes for which they are being or shall
be put in the ordinary course of business, except for such Improvements that are
in the process of being developed or constructed, which, upon substantial
completion, shall be adequate for the purposes for which they are intended to be
used in the ordinary course of business. To the Knowledge of the Company, there
are no facts or conditions affecting any of the Improvements, except for such
Improvements that are in the process of being developed or constructed (which,
upon substantial completion, shall be adequate for the purposes for which they
are intended to be used in the ordinary course of business), which would
interfere in any material respect with the use or occupancy of the Improvements
or any portion thereof in the operation of the business of the Company and its
Subsidiaries or which would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or a Project Material Adverse
Effect.
 
(l)  There are no Construction Contracts with amounts payable as of December 31,
2006 that equal or exceed in the aggregate $1,000,000. As used herein, a
“Construction Contract” shall mean each development agreement, master
architectural contract or general contractor agreement to which the Company or
any of its Subsidiaries is a party with respect to any present or contemplated
construction by the Company or any Subsidiary for which no certificate of
occupancy has been obtained (each, a “Construction Project”). To the Company's
Knowledge, it has not received written notice that it or any other party
thereto, is presently in default and there are no facts or circumstances which,
with or without the passage of time or both, would result in a breach of any of
the terms thereof by it or any such other party, except for such defaults as
would not, individually or in the aggregate reasonably be expected to have a
Company Material Adverse Effect or a Project Material Adverse Effect.
 
(m)  Each condominium declaration related to Real Property in which dwelling
units have been or are being sold by the Company or any of its Subsidiaries that
is required to be filed in the real estate records of the county or other local
jurisdiction in which such Owned Real Property or such Optioned Property Project
is located has been properly filed and recorded with the appropriate county or
other local jurisdiction office in which the respective Owned Real Property or
Optioned Property Project is located, except for any failures to be so filed or
recorded which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect or a Project Material Adverse
Effect. All such condominium projects comply with Legal Requirements and all
filings and approvals required by Legal Requirements with respect to such
condominium projects have been obtained and all sales of condominium units have
been conducted in compliance with Legal Requirements.
 
(n)  Neither the Company nor any of its Subsidiaries have any direct or indirect
ownership in, or involvement with or liabilities of any type with respect to,
the shopping center known as the Richland Mall and located in Columbia, South
Carolina.
 
(o)  With respect to the parcel of Owned Real Property described on Schedule
2.15(a) hereto as Island Homes (also known as Vaca Cut Island) (“Island Homes”),
the Company represents that prior to the Closing (i) the Company shall transfer
ownership of Island Homes to the Clark Trust and/or David Schwarz or to an
entity that Dave Clark and/or David Schwarz directly or indirectly control (any
of the foregoing, the “Island Homes Owner”), (ii) any contract deposit posted or
other expenses incurred by the Company or any Subsidiary with respect to Island
Homes shall be reimbursed/returned by the Island Homes Owner to the Company or
such Subsidiary in connection with such transfer of ownership, and (iii) the
Company shall grant to Parent a right of first refusal to purchase or lease any
portion of Island Homes that the Island Homes Owner intends to sell, lease or
transfer directly or indirectly to any other Person and that the Island Homes
Owner does not intend to retain ownership of in order to construct single family
homes for Island Homes Owner and/or its immediate respective families, pursuant
to a document containing mutually agreeable terms and provisions, in recordable
form, to be executed by each of the Island Homes Owner and Parent (or to a
Parent Affiliate designated by Parent) and recorded prior to the Closing.
 
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2.16  Taxes.
 
Definition of Taxes. For the purposes of this Agreement, “Tax” or “Taxes” refers
to any and all federal, state, local and foreign taxes, including, without
limitation, gross receipts, income, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.
 
(a)  Tax Returns and Audits.
 
(i)  As of the Closing Date, the Company and each of its Subsidiaries has filed
all federal, state, local and foreign returns, estimates, information statements
and reports relating to Taxes (“Returns”) required to be filed by the Company
and each of its Subsidiaries with any Tax authority prior to the date hereof. To
the Company’s Knowledge, all such Returns are true, correct and complete in all
material respects. As of the Closing Date, the Company and each of its
Subsidiaries has paid all Taxes shown to be due on such Returns. The Company is
not a “United States real property holding corporation,” as defined in section
897 of the Internal Revenue Code of 1986, as amended, and Section 1.897-2(b) of
the regulations promulgated thereunder.
 
(ii)  As of the Closing Date, all material Taxes that the Company or any of its
Subsidiaries is required by law to withhold or collect have been duly withheld
or collected, and have been paid over to the proper governmental authorities to
the extent due and payable.
 
(iii)  As of the Closing Date, none of the Company or any of its Subsidiaries
will be delinquent in the payment of any material Tax nor is there any material
Tax deficiency outstanding, assessed or, to the Knowledge of the Company,
proposed against the Company or any of its Subsidiaries, nor will the Company or
any of its Subsidiaries have executed any unexpired waiver of any statute of
limitations extending or waiving the period for the assessment or collection of
any Tax.
 
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(iv)  To the Company’s Knowledge, no audit or other examination of any Return of
the Company or any of its Subsidiaries by any Tax authority is presently in
progress. Neither the Company nor any of its Subsidiaries has been notified in
writing of any request for such an audit or other examination.
 
(v)  No adjustment relating to any Returns filed by the Company or any of its
Subsidiaries has been proposed in writing, formally or informally, by any Tax
authority to the Company or any of its Subsidiaries or any of the officers and
directors thereof.
 
(vi)  As of the Closing Date, neither the Company nor any of its Subsidiaries
has any liability for any material unpaid Taxes which have not been accrued for
or reserved on the Company’s balance sheets included in the Audited Financial
Statements or the Unaudited Financial Statements, whether asserted or
unasserted, contingent or otherwise, would constitute a Company Material Adverse
Effect, other than any liability for unpaid Taxes that may have accrued since
the end of the most recent fiscal year in connection with the operation of the
business of the Company and its Subsidiaries in the ordinary course of business.
 
2.17  Environmental Matters.
 
(a)  To the Company’s Knowledge, no facts or circumstances exist with respect to
the Real Property which give rise to any liability based upon or related to the
Company’s, any Subsidiary’s or any other Person’s actions or omissions in the
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge or release into the environment of any
Hazardous Substance, except where such liability would not have a Material
Adverse Effect on the Company.
 
(b)  As used in this Agreement, the term “Hazardous Substance” means any
substance that is: (i) listed, classified or regulated pursuant to any
Environmental Law; (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls or
radioactive materials; or (iii) any other substance which is regulated under any
Environmental Law.
 
(c)  Except for such matters that, individually or in the aggregate are not
reasonably likely to have a Material Adverse Effect or a Project Material
Adverse Effect to the Company’s Knowledge: (i) the Company and each of its
Subsidiaries has complied at all times and is currently in compliance with all
Environmental Laws; (ii) there are no Hazardous Substances at, in, under or from
the Real Property; and (iii) there has been no release or threatened release of
Hazardous Substances at, in, under or from the Real Property.
 
(d)  Except for those items that individually or in the aggregate are not
reasonably likely to cause a Company Material Adverse Effect or a Project
Material Adverse Effect: (i) there are no pending or, to the Knowledge of the
Company, threatened claims, demands, actions, administrative proceedings,
lawsuits or inquiries relating to the Real Property under Environmental Law;
(ii) neither the Company nor any of its Subsidiaries has received any notice,
demand, letter, claim or request for information alleging that the Company or
any of its Subsidiaries may be in violation of or liable under any Environmental
Law; and (iii) neither the Company nor any of its Subsidiaries is subject to any
agreements, orders, decrees, injunctions or other arrangements with any
Governmental Entity or other Person relating to liability under any
Environmental Law or relating to Hazardous Substances.
 
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(e)  Except as disclosed in Schedule 2.17(e) hereto and to the Knowledge of the
Company, there are no underground storage tanks at any Real Property.
 
(f)  As used in this Agreement, the term “Environmental Law” means any federal,
state, local or foreign law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health and safety, or natural
resources; (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance; or (C) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
 
(g)  The parties hereto acknowledge that the Company and its Subsidiaries may be
in various stages of obtaining Material Permits, including, without limitation,
any Material Permits related to any Environmental Law, as of the date of this
Agreement and the Company and/or the applicable Subsidiary agree to use
commercially reasonable best efforts from and after the date hereof to obtain
and comply with such Material Permits, including, without limitation, any
Material Permit relating to Environmental Laws as and when required by any Legal
Requirements and Environmental Laws, it being agreed that any failure to obtain
such Material Permits as of the Closing shall not individually or in the
aggregate be reasonably expected to have a Company Material Adverse Effect or a
Project Material Adverse Effect.
 
(h)  Except for those items that have been delivered to the Parent, there are no
environmental investigations, studies or audits with respect to the Real
Property.
 

2.18  Brokers; Third Party Expenses. The Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage, finders’ fees,
agent’s commissions or any similar charges in connection with this Agreement or
any transactions contemplated hereby. Except pursuant to Sections 1.6 and 1.19,
no shares of common stock, options, warrants or other securities of either
Company or Parent are payable to any third party by Company as a result of the
Merger.
 
2.19  Intellectual Property. For the purposes of this Agreement, the following
terms have the following definitions:
 
“Intellectual Property” shall mean any or all of the following and all worldwide
common law and statutory rights in, arising out of, or associated therewith: (i)
patents and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof
(“Patents”); (ii) inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to any of the
foregoing; (iii) copyrights, copyrights registrations and applications therefor,
and all other rights corresponding thereto throughout the world; (iv) software
and software programs; (v) domain names, uniform resource locators and other
names and locators associated with the Internet; (vi) industrial designs and any
registrations and applications therefor; (vii) trade names, logos, common law
trademarks and service marks, trademark and service mark registrations and
applications therefor (collectively, “Trademarks”); (viii) all databases and
data collections and all rights therein; (ix) all moral and economic rights of
authors and inventors, however denominated, and (x) any similar or equivalent
rights to any of the foregoing (as applicable).
 
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“Company Intellectual Property” shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Company or any of its Subsidiaries,
including software and software programs developed by or exclusively licensed to
the Company or any of its Subsidiaries (specifically excluding any off the shelf
or shrink-wrap software).
 
“Registered Intellectual Property” means all Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any private, state, government or other legal
authority.
 
“Company Registered Intellectual Property” means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or any of its
Subsidiaries.
 
(a)  No Company Intellectual Property is subject to any material proceeding or
outstanding decree, order, judgment, contract, license, agreement or stipulation
restricting in any manner the use, transfer or licensing thereof by the Company
or any of its Subsidiaries, or which may affect the validity, use or
enforceability of such Company Intellectual Property, which in any such case
could reasonably be expected to have a Material Adverse Effect on the Company.
 
(b)  The Company and each of its Subsidiaries, as the case may be: own and has
good and exclusive title to, or in the case of exclusive licenses, has the right
to use, each material item of Company Intellectual Property, owned by, or
exclusively licensed to, either the Company or a Subsidiary, as the case may be,
free and clear of any liens and encumbrances (excluding non-exclusive licenses
and related restrictions granted by it in the ordinary course of business); and
the Company or its Subsidiaries is the exclusive owner of all material
registered Trademarks used in connection with the operation or conduct of its
business as currently conducted including the sale of any products or the
provision of any services by the Company or its Subsidiaries.
 
2.20  Infringement on Intellectual Property. To the Company’s Knowledge, the
operation of the business of the Company and its Subsidiaries as such business
currently is conducted has not and does not infringe or misappropriate the
Intellectual Property of any third party or constitute unfair competition or
trade practices under the laws of any jurisdiction. No written notice, charge,
claim, action or assertion of infringement, unfair competition, unfair trade
practices or misappropriation has been received by the Company or any of its
Subsidiaries and, to the Company’s Knowledge, no written notice, charge, claim,
action has been filed, commenced or threatened against the Company or any of its
Subsidiaries alleging any such violation that could be expected to have a
Company Material Adverse Effect.
 
2.21  Agreements, Contracts and Commitments.
 
(a)  Except for any items that are included in another schedule attached hereto
or excluded by virtue of another representation included in this Article II,
Schedule 2.21 hereto sets forth a complete and accurate list of all Material
Company Contracts (as hereinafter defined), specifying the parties thereto. For
purposes of this Agreement the term “Company Contracts” shall mean all
contracts, agreements, leases, mortgages, indentures, notes, bonds, Optioned
Property Redevelopment Agreements, licenses, permits, franchises, purchase
orders, sales orders, and other understandings, commitments and obligations of
any kind, whether written or oral, to which the Company or any of its
Subsidiaries is a party or by or to which any of the properties or assets of the
Company or any of its Subsidiaries may be bound, subject or affected (including
without limitation notes or other instruments payable to the Company or its
Subsidiaries). For purposes of this Agreement the term “Routine Operating
Contracts” shall mean contracts entered into by the Company or any of its
Subsidiaries with a Person that is not an Affiliate in the ordinary course of
business on terms and conditions and at rates that are reasonable and customary
based on the then applicable market conditions including the following contracts
(to the extent they meet the immediately foregoing condition):
 
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(i)  contracts related to the sale of individual residential condominium units
to unaffiliated purchasers who, together with their affiliates, are not
purchasing more than an aggregate of ten units in any individual project;
 
(ii)  brokerage commission agreements;
 
(iii)  contracts pursuant to which the Company or a Subsidiary, as the case may
be, has deposited funds which will be returned in full to the Company or such
Subsidiary in the event the Company or such Subsidiary terminates such contract
pursuant to a contingency or termination provision contained in such contract;
and
 
(iv)  any contract that by its terms can be terminated by the Company or any
Subsidiary on not more than 30 days of notice with resulting liability that is
less than $100,000.
 
(b)  For purposes of this Agreement the term “Material Company Contracts” shall
mean:
 
(i)   each Company Contract that is not a Routine Operating Contract and (I)
which provides for payments (present or future) to the Company or any of its
Subsidiaries in excess of $500,000 in the aggregate or (II) under which or in
respect of which the Company or any of its Subsidiaries presently has any
liability or obligation of any nature whatsoever (absolute, contingent or
otherwise) in excess of $1,500,000,
 
(ii)  each Company Contract that is not a Routine Operating Contract and that
otherwise is or may be material to the businesses, operations, assets or
condition (financial or otherwise) of the Company and its Subsidiaries and
 
(iii)  without limitation of subclause (i) or subclause (ii), each of the
following Company Contracts, the relevant terms of which remain executory:
 
1)  any mortgage, indenture, note, installment obligation or other instrument,
agreement or arrangement for or relating to any borrowing of money by or from
the Company or any of its Subsidiaries, or any officer, director, stockholder or
Member (“Insider”) of the Company or any of its Subsidiaries;
 
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2)  any guaranty, direct or indirect, by the Company, any of its Subsidiaries or
any Insider of any obligation for borrowings, or otherwise, excluding
endorsements made for collection in the ordinary course of business and
guarantees by Subsidiaries of Company obligations;
 
3)  any Company Contract of employment;
 
4)  any Company Contract made other than in the ordinary course of business or
(x) providing for the grant of any preferential rights to purchase or lease any
asset of the Company or any of its Subsidiaries or (y) providing for any right
(exclusive or non-exclusive) to sell or distribute, or otherwise relating to the
sale or distribution of, any product or service of the Company and its
Subsidiaries;
 
5)  any obligation to register any shares of the capital stock or other
securities of the Company or any of its Subsidiaries with any Governmental
Entity;
 
6)  any obligation to make payments, contingent or otherwise, arising out of the
prior acquisition of the business, assets or stock of other Persons;
 
7)  any collective bargaining agreement with any labor union;
 
8)  any lease or similar arrangement for the use by the Company or any of its
Subsidiaries of personal property (other than leases of vehicles, office
equipment or operating equipment where the annual lease payments are less than
$100,000 in the aggregate); and
 
9)  any Company Contract to which any Insider is a party.
 
(c)  To the Knowledge of the Company, each Company Contract was entered into at
arms’ length and in the ordinary course, is in full force and effect and is
valid and binding upon and enforceable against each of the parties thereto.
True, correct and complete copies of all Material Company Contracts (or written
summaries in the case of oral Material Company Contracts) have been heretofore
made available to Parent or Parent’s counsel.
 
(d)  Neither the Company nor any of its Subsidiaries nor, to the best of
Company’s Knowledge, any other party thereto, has received written notice that
it is in breach of or in default under, and no event has occurred which with
notice or lapse of time or both would become a breach of or default under, any
Material Company Contract. No party to any Company Contract has given any
written notice of any claim of any breach, default or event, which, individually
or in the aggregate, are reasonably likely to have a Material Adverse Effect on
the Company or any of its Subsidiaries or a Project Material Adverse Effect.
Each Material Company Contract to which the Company or any of its Subsidiaries
is a party or by which it is bound that has not expired by its terms is in full
force and effect.
 
2.22  Employees.
 
(a)  Schedule 2.22(a) sets forth a true, complete and correct list of all
directors and executive officers of the Company and its Subsidiaries along with
their position and actual annual rate of compensation. To the Knowledge of the
Company, no key employee or group of employees has threatened to terminate
employment with the Company or any of its Subsidiaries or, to the Knowledge of
the Company, has plans to terminate such employment.
 
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(b)  Neither the Company nor any of its Subsidiaries is a party to or bound by
any union or collective bargaining agreement, nor has any of them experienced
any strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes.
 
(c)  Neither the Company nor any of its Subsidiaries is a party to any written
or oral: (i) agreement with any current or former employee the benefits of which
are contingent upon, or the terms of which will be materially altered by, the
consummation of the transactions contemplated by this Agreement; (ii) agreement
with any current or former employee of the Company or any of its Subsidiaries
providing any term of employment or compensation guarantee extending for a
period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum; or (iii) agreement or plan the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, upon the consummation of the transactions contemplated by
this Agreement.
 
2.23  Insurance. Schedule 2.23 sets forth a list of all material insurance
policies covering the properties and activities of the Company, its Subsidiaries
and their respective businesses. All such policies are in full force and effect
and shall be kept in full force and effect in the ordinary course of business.
Neither the Company nor any Subsidiary of the Company have received any written
notice of cancellation or non-renewal with respect to such policies. Neither the
Company nor any Subsidiary of the Company have received written notice, nor does
the Company have Knowledge that it is in default with respect to its obligations
under such insurance policies. Except as set forth on Schedule 2.23, neither the
Company nor any Subsidiary of the Company has been refused any insurance
coverage obtained for the purpose of protecting and insuring against any
material loss or exposure, nor has any such coverage been limited or cancelled
by any insurance carrier to which the Company or any such Subsidiary has applied
for any such insurance or with which the Company or any such Subsidiary has
carried insurance, nor has there been any significant increase in the premiums
paid under any such policy during the past five (5) years. All such insurance
policies provide adequate coverage for all normal risks incident to the business
of the Company and its Subsidiaries and their respective properties and assets,
including construction projects. Schedule 2.23 identifies those pending (or
threatened) Actions with respect to which an insurance carrier has denied
coverage or has advised the Company or the relevant Subsidiary that it is
defending such claim under reservation of rights and which, if determined or
resolved adversely to the Company or its Subsidiaries, could, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect to the
Company and its Subsidiaries or a Project Material Adverse Effect.
 
2.24  Interested Party Transactions. As of the Closing Date, except for
compensation and benefits arrangements in the ordinary course of business or any
matter pursuant to this Agreement, and to the Company’s Knowledge, no holder of
more than five percent (5%) of the Company Membership Interests, officer or
director of the Company or any Subsidiary of the Company, or any affiliate of
any of the foregoing (other than the Company and its Subsidiaries) (i) has
borrowed or loaned money or other property to the Company or any Subsidiary of
the Company in an amount exceeding $50,000, which has not been repaid or
returned; (ii) has any direct or indirect material interest in any Person which
is a customer of goods or services provided by or supplier of goods or services
provided to the Company, any Subsidiary of the Company, which Person's purchases
or sales of such goods and services in any of the past two (2) fiscal years
exceeded or whose business in fiscal 2007 is expected to exceed $120,000 per
year; or (iii) is party to any other agreement, transaction or business
relationship with the Company (other than this Agreement) or any of its
Subsidiaries.
 
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2.25  Board Approval; Required Vote.
 
(a)  The Board of Directors of the Company has, as of the date of this
Agreement, determined (i) that the Merger is fair to, and in the best interests
of the Company and its Members, and (ii) to, subject to Section 5.16, recommend
that the Members of the Company approve this Agreement.
 
(b)  The Requisite Member Approval is the only vote of the holders of any class
or series of the Company Membership Interests necessary to approve and adopt
this Agreement or the other transactions contemplated hereby.
 
2.26  Proxy Statement. The information to be supplied by the Company for
inclusion in Parent’s proxy statement (such proxy statement as amended or
supplemented is referred to herein as the “Proxy Statement”) shall not at the
time the Proxy Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. The
information to be supplied by the Company for inclusion in the proxy statement
to be sent in connection with the meeting of Parent’s stockholders to consider
the approval of this Agreement (the “Parent Stockholders’ Meeting”) shall not,
on the date the Proxy Statement is first mailed to Parent’s stockholders, and at
the time of the Parent Stockholders’ Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement provided by the
Company in any earlier communication with respect to the solicitation of proxies
for the Parent Stockholders’ Meeting which has become false or misleading. If at
any time prior to the Effective Time, any event relating to the Company or any
of its affiliates, officers or directors should be discovered by the Company
which should be set forth in a supplement to the Proxy Statement, the Company
shall promptly inform Parent; provided, however, that if Parents fails to timely
file such supplement or fails to adequately disclose such additional
information, that the Company shall have no liability whatsoever to Parent,
Merger Sub or any of Parent’s or Merger Sub’s shareholders, Members, directors
or officers. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent or any Person
other than the Company which is contained in any of the foregoing documents.
 
2.27  Representations and Warranties Complete. The representations and
warranties of the Company included in this Agreement, as modified by the Company
Disclosure Schedule, are true and complete in all material respects and do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading, under the circumstance under which they were made.
Except for the representations and warranties made by the Company in this
Agreement, neither the Company nor any other Person makes any representation or
warranty with respect to the Company or its Subsidiaries or their respective
business, operations, assets, liabilities, condition (financial or otherwise) or
prospects, notwithstanding the delivery or disclosure to Parent or any of its
Affiliates or representatives of any documentation, forecasts, projections or
other information with respect to any one or more of the foregoing.

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2.28  Survival of Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall survive the Closing
for a period of 12 months from the Closing Date.
 
ARTICLE III  
REPRESENTATIONS AND WARRANTIES OF PARENT
 
Parent, on behalf of itself and its Subsidiaries, represents and warrants to the
Company that the statements contained in this Article III are true, complete and
correct. As used in this Agreement, a “Parent Material Adverse Effect” means any
change, event or effect that is materially adverse to the business, assets
(including, without limitation, intangible assets), financial condition, results
of operations or reasonably foreseeable prospects of Parent and its
Subsidiaries, taken as a whole.
 
3.1  Organization and Qualification.
 
(a)  Parent is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being or currently planned by Parent to be
conducted. Parent is in possession of all Approvals necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being or currently planned by Parent to be conducted,
except where the failure to have such Approvals could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. Parent is not in violation of any of the provisions of the Parent’s
Charter Documents.
 
(b)  Parent is duly qualified or licensed to do business as a foreign
corporation and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
 
(c)  Merger Sub is a limited liability company, duly formed, validly existing
and in good standing under the laws of the State of Florida and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being or currently planned
by Parent to be conducted. Merger Sub is not in violation of any of the
provisions of the Merger Sub’s Charter Documents.
 
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3.2  Subsidiaries. Except for Merger Sub, Parent has no Subsidiaries and does
not own, directly or indirectly, any ownership, equity, profits or voting
interest in any Person or has any agreement or commitment to purchase any such
interest, and Parent has not agreed and is not obligated to make nor is bound by
any written, oral or other agreement, contract, subcontract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, commitment or undertaking of any
nature, as of the date hereof or as may hereafter be in effect under which it
may become obligated to make, any future investment in or capital contribution
to any other entity.
 
3.3  Capitalization.
 
(a)  As of the date of this Agreement, the authorized capital stock of Parent
consists of 50,000,000 shares of common stock, par value $0.001 per share
(“Parent Common Stock”) and 1,000,000 shares of preferred stock, par value
$0.001 per share (“Parent Preferred Stock”), of which 7,949,995 shares of Parent
Common Stock and no shares of Parent Preferred Stock are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. Except as set
forth in Schedule 3.3(a), (i) no shares of Parent Common Stock or Parent
Preferred Stock are reserved for issuance upon the exercise of outstanding
options to purchase Parent Common Stock or Parent Preferred Stock granted to
employees of Parent or other parties (“Parent Stock Options”) and there are no
outstanding Parent Stock Options; (ii) no shares of Parent Common Stock or
Parent Preferred Stock are reserved for issuance upon the exercise of
outstanding warrants to purchase Parent Common Stock or Parent Preferred Stock
(“Parent Warrants”) and there are no outstanding Parent Warrants; and (iii) no
shares of Parent Common Stock or Parent Preferred Stock are reserved for
issuance upon the conversion of the Parent Preferred Stock or any outstanding
convertible notes, debentures or securities (“Parent Convertible Securities”).
All shares of Parent Common Stock and Parent Preferred Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instrument pursuant to which they are issuable, will be duly authorized, validly
issued, fully paid and nonassessable. All outstanding shares of Parent Common
Stock and all outstanding Parent Warrants have been issued and granted in
compliance with (x) all applicable federal and state securities laws and (in all
material respects) other applicable laws and regulations, and (y) all
requirements set forth in any applicable Parent Contracts (as defined in Section
3.14(a)). Parent has heretofore delivered to the Company true, complete and
accurate copies of the Parent Warrants, including any and all documents and
agreements relating thereto.
 
(b)  The shares of Parent Common Stock to be issued by Parent in connection with
the Merger, upon issuance in accordance with the terms of this Agreement, will
be duly authorized and validly issued and such shares of Parent Common Stock
will be fully paid and nonassessable.
 
(c)  Except as set forth in Schedule 3.3(c) or as contemplated by this Agreement
or the Parent SEC Reports (as defined in Section 3.7), there are no
registrations rights, and there is no voting trust, proxy, rights plan,
antitakeover plan or other agreements or understandings to which the Parent is a
party or by which the Parent is bound with respect to any equity security of any
class of the Parent.
 
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3.4  Authority Relative to this Agreement. Each of Parent and Merger Sub have
full corporate power and authority to: (i) execute, deliver and perform this
Agreement, and each ancillary document which Parent or Merger Sub have executed
or delivered or is to execute or deliver pursuant to this Agreement, and (ii)
carry out Parent’s and Merger Sub’s obligations hereunder and thereunder and, to
consummate the transactions contemplated hereby (including the Merger). The
execution and delivery of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby (including the Merger) have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Merger Sub (including the approval by its Board of Directors), and
no other corporate proceedings on the part of Parent or Merger Sub are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby, other than the Parent Stockholder Approval (as defined in Section
5.1(a)). This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery thereof by the other parties hereto, constitutes the legal and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.
 
3.5  No Conflict; Required Filings and Consents. (a) The execution and delivery
of this Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub shall not: (i) conflict with or violate
Parent’s or Merger Sub’s Charter Documents, (ii) conflict with or violate any
Legal Requirements, or (iii) result in any breach of or constitute a default (or
any event that with notice or lapse of time or both would become a default)
under, or materially impair Parent’s rights or alter the rights or obligations
of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Parent pursuant to, any
Parent Contracts, except, with respect to clauses (ii) or (iii), for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
individually and in the aggregate, have a Material Adverse Effect on Parent.
 
(b)  The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of their respective obligations hereunder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) as set forth in this
Agreement, (ii) for applicable requirements, if any, of the Securities Act, the
Exchange Act, Blue Sky Laws, and the rules and regulations thereunder, and
appropriate documents with the relevant authorities of other jurisdictions in
which Parent is qualified to do business, (iii) for the filing of any
notifications required under the HSR Act and the expiration of the required
waiting period thereunder, (iv) the qualification of Parent as a foreign
corporation in those jurisdictions in which the business of the Company makes
such qualification necessary, and (v) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent, or prevent consummation of the Merger or
otherwise prevent the parties hereto from performing their obligations under
this Agreement.
 
3.6  Compliance. Parent has complied with, is not in violation of, any Legal
Requirements with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect on Parent. The business and activities of Parent
have not been and are not being conducted in violation of any Legal
Requirements. Parent is not in default or violation of any term, condition or
provision of its Charter Documents. No written notice of non-compliance with any
Legal Requirements has been received by Parent.
 
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3.7  SEC Filings; Financial Statements.
 
(a)  Parent has made available to the Company and the Members a correct and
complete copy of each report, registration statement and definitive proxy
statement filed by Parent with the SEC (the “Parent SEC Reports”), which are all
the forms, reports and documents required to be filed by Parent with the SEC
prior to the date of this Agreement and which were filed on a timely basis. As
of their respective dates the Parent SEC Reports: (i) were prepared in
accordance and complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Parent SEC Reports, and
(ii) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing and
as so amended or superseded) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent set forth in the preceding
sentence, Parent makes no representation or warranty whatsoever concerning the
Parent SEC Reports as of any time other than the time they were filed.
 
(b)  Each set of financial statements (including, in each case, any related
notes thereto) contained in Parent SEC Reports, including each Parent SEC Report
filed after the date hereof until the Closing, complied or will comply as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, was or will be prepared in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited statements, do not
contain footnotes as permitted by Form 10-QSB of the Exchange Act) and each
fairly presents or will fairly present in all material respects the financial
position of Parent at the respective dates thereof and the results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were, are or will be subject to normal adjustments
which were not or are not expected to have a Material Adverse Effect on Parent
taken as a whole.
 
3.8  No Undisclosed Liabilities. Parent has no liabilities (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the financial statements included in Parent SEC
Reports which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Parent, except (i) liabilities
provided for in or otherwise disclosed in Parent SEC Reports filed prior to the
date hereof, and (ii) liabilities incurred since September 30, 2006 in the
ordinary course of business, none of which would have a Material Adverse Effect
on Parent. Merger Sub has no assets or properties of any kind, does not now
conduct and has never conducted any business, and has and will have at the
Closing no obligations or liabilities of any nature whatsoever except such
obligations and liabilities as are imposed under this Agreement.
 
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3.9  Absence of Certain Changes or Events. Except as set forth in Parent SEC
Reports filed prior to the date of this Agreement, and except as contemplated by
this Agreement, since September 30, 2006, there has not been: (a) any Material
Adverse Effect on Parent, (b) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent’s capital stock, or any purchase, redemption or other
acquisition by Parent of any of Parent’s capital stock or any other securities
of Parent or any options, warrants, calls or rights to acquire any such shares
or other securities, (c) any split, combination or reclassification of any of
Parent’s capital stock, (d) any granting by Parent of any increase in
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by Parent of any bonus, except for bonuses made in the ordinary
course of business consistent with past practice, or any granting by Parent of
any increase in severance or termination pay or any entry by Parent into any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction involving
Parent of the nature contemplated hereby, (e) entry by Parent into any licensing
or other agreement with regard to the acquisition or disposition of any
Intellectual Property other than licenses in the ordinary course of business
consistent with past practice or any amendment or consent with respect to any
licensing agreement filed or required to be filed by Parent with respect to any
Governmental Entity, (f) any material change by Parent in its accounting
methods, principles or practices, except as required by concurrent changes in
U.S. GAAP, (g) any change in the auditors of Parent, (h) any issuance of capital
stock of Parent, or (i) any revaluation by Parent of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable or any sale of assets of Parent
other than in the ordinary course of business.
 
3.10  Litigation. There are no claims, suits, actions or proceedings pending or
to Parent’s Knowledge, threatened against Parent, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or which could reasonably be expected, either
singularly or in the aggregate with all such claims, actions or proceedings, to
have a Material Adverse Effect on Parent or have a Material Adverse Effect on
the ability of the parties hereto to consummate the Merger. There has not been,
and to the Knowledge of the Parent, there is not pending or contemplated, any
investigation by the SEC or any state or other regulatory body involving the
Parent or any current or former director or officer of the Parent. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Parent under the Exchange Act or the
Securities Act.
 
3.11  Restrictions on Business Activities. Except as set forth in the Parent
Charter Documents, there is no agreement, commitment, judgment, injunction,
order or decree binding upon Parent or to which Parent is a party which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Parent, any acquisition of property by Parent
or the conduct of business by Parent as currently conducted other than such
effects, individually or in the aggregate, which have not had and could not
reasonably be expected to have, a Material Adverse Effect on Parent.
 
3.12  Taxes.
 
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(a)  Parent has timely filed all Returns required to be filed by Parent with any
Tax authority prior to the date hereof, except such Returns which are not
material to Parent. All such Returns are true, correct and complete in all
material respects. All Taxes due and owing by the Parent (whether or not shown
on any Return) have been paid. The Parent is not the beneficiary of any
extension of time within which to file any Return. There are no Liens for Taxes
(other than Taxes not yet due and payable) upon any of the assets of the Parent
or any of its Subsidiaries.
 
(b)  All Taxes that Parent is required by law to withhold or collect have been
duly withheld or collected, and have been timely paid over to the proper
governmental authorities to the extent due and payable.
 
(c)  Parent has not been delinquent in the payment of any material Tax nor is
there any material Tax deficiency outstanding, assessed, or proposed by any Tax
authority based on personal contact by the Parent or any officers or directors
of the Parent with any agent of any such Authority, nor has Parent executed any
unexpired waiver of any statute of limitations extending or waiving the period
for the assessment or collection of any Tax.
 
(d)  No audit or other examination of any Return of Parent by any Tax authority
is presently in progress, nor has Parent, including through notice to its
officers and directors, been notified of any request or proposal for any such an
audit or other examination.
 
(e)  No claim dispute or adjustment relating to any Tax liability of Parent has
been raised or proposed, formally or informally, by any Tax authority to Parent
or any director or officer of Parent.
 
(f)  Parent has no liability for any material unpaid Taxes which have not been
accrued for or reserved on Parent’s balance sheets included in the audited
financial statements for the most recent fiscal year ended, whether asserted or
unasserted, contingent or otherwise, which would constitute a Parent Material
Adverse Effect, other than any liability for unpaid Taxes that may have accrued
since the end of the most recent fiscal year in connection with the operation of
the business of Parent in the ordinary course of business.
 
(g)  Parent, the directors and officers of Parent, or any of its Affiliates do
not have Knowledge of any fact and have not taken or agreed to take any action,
failed to take any action or is aware of any fact or circumstance, that could
prevent the transactions contemplated hereby from qualifying as a tax-free
contribution governed by Section 351(a) of the Code.
 
(h)  Parent is not a party or bound to any tax allocation or sharing agreement.
Parent (i) has not been a member of an Affiliated Group filing a consolidated
federal Income Tax Return (other than a group the common parent of which was the
Parent), or (ii) has no liability for the Taxes of any Person (other than the
Parent or any of its Subsidiaries) under Treas. Reg. 1.1502-6 (or any similar
provision of local, state or foreign law), as a transferee or successor, by
contract or otherwise.
 
(i)  Parent has not distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that was purported or intended
to be governed in whole or in part by Sections 355 or 361 of the Code.
 
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3.13  Brokers. Except as set forth on Schedule 3.13, Parent has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders’ fees or agent’s commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
 
3.14  Agreements, Contracts and Commitments.
 
(a)  Except as set forth in the Parent SEC Reports filed prior to the date of
this Agreement, there are no contracts, agreements, leases, mortgages,
indentures, notes, bonds, liens, licenses, permits, franchises, purchase orders,
sales orders or other understandings, commitments or obligations (including
without limitation outstanding offers or proposals) of any kind, whether written
or oral, to which Parent is a party or by or to which any of the properties or
assets of Parent may be bound, subject or affected, which either (i) creates or
imposes a liability greater than $25,000, or (ii) may not be cancelled by Parent
on less than 30 days’ or less prior notice (“Parent Contracts”). All Parent
Contracts are set forth in Schedule 3.14 other than those that are exhibits to
the Parent SEC Reports.
 
(b)  Each Parent Contract was entered into at arms’ length and in the ordinary
course, is in full force and effect and is valid and binding upon and
enforceable against each of the parties thereto. True, correct and complete
copies of all Parent Contracts (or written summaries in the case of oral Parent
Contracts) and of all outstanding offers or proposals of Parent have been
heretofore delivered to the Company.
 
(c)  Neither Parent nor, to the Knowledge of Parent, any other party thereto is
in breach of or in default under, and no event has occurred which with notice or
lapse of time or both would become a breach of or default under, any Parent
Contract, and no party to any Parent Contract has given any written notice of
any claim of any such breach, default or event, which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on Parent.
Each agreement, contract or commitment to which Parent is a party or by which it
is bound that has not expired by its terms is in full force and effect, except
where such failure to be in full force and effect is not reasonably likely to
have a Material Adverse Effect on Parent.
 
3.15  Insurance. Except for directors’ and officers’ liability insurance, Parent
does not maintain any insurance policies.
 
3.16  Interested Party Transactions. Except as set forth in the Parent SEC
Reports filed prior to the date of this Agreement, no employee, officer,
director or stockholder of Parent or a member of his or her immediate family is
indebted to Parent nor is Parent indebted (or committed to make loans or extend
or guarantee credit) to any of them, other than reimbursement for reasonable
expenses incurred on behalf of Parent. To Parent’s knowledge, none of such
individuals has any direct or indirect ownership interest in any Person with
whom Parent is affiliated or with whom Parent has a material contractual
relationship, or any Person that competes with Parent, except that each
employee, stockholder, officer or director of Parent and members of their
respective immediate families may own less than 5% of the outstanding stock in
publicly traded companies that may compete with Parent. To Parent’s knowledge,
no officer, director or stockholder or any member of their immediate families
is, directly or indirectly, interested in any material contract with Parent
(other than such contracts as relate to any such individual ownership of capital
stock or other securities of Parent).
 
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3.17  Indebtedness. Parent has no indebtedness for borrowed money.
 
3.18  Over-the-Counter Bulletin Board Quotation. Parent Common Stock is quoted
on the Over-the-Counter Bulletin Board (“OTC BB”). There is no action or
proceeding pending or, to Parent’s Knowledge, threatened against Parent by
NASDAQ or NASD, Inc. (“NASD”) with respect to any intention by such entities to
prohibit or terminate the quotation of Parent Common Stock on the OTC BB.
 
3.19  Board Approval. The Board of Directors of Parent (including any required
committee or subgroup of the Board of Directors of Parent) has, as of the date
of this Agreement, unanimously (i) declared the advisability of the Merger and
approved this Agreement and the transactions contemplated hereby, (ii)
determined that the Merger is in the best interests of the stockholders of
Parent, and (iii) determined that the fair market value of the Company is equal
to at least 80% of Parent’s net assets.
 
3.20  Trust Fund. As of the date hereof and at the Closing Date, Parent has and
will have no less than $48,700,000 invested in United States Government
securities or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act of 1940 in a trust account
administered by Continental Stock Transfer and Trust Company (the “Trust Fund”),
less such amounts, if any, as Parent is required to pay to stockholders who
elect to have their shares converted to cash in accordance with the provisions
of Parent’s Charter Documents.
 
3.21  Governmental Filings. Except as set forth in Schedule 3.21, Parent has
been granted and holds, and has made, all filings necessary with Governmental
Entities to the conduct by Parent of its business (as presently conducted) or
used or held for use by Parent, and true, complete and correct copies of which
have heretofore been delivered to the Company. Each such filing is in full force
and effect and will not expire prior to December 31, 2007, and Parent is
in compliance with all of its obligations with respect thereto. No event has
occurred and is continuing which requires or permits, or after notice or lapse
of time or both would require or permit, and consummation of the transactions
contemplated by this Agreement or any ancillary documents will not require or
permit (with or without notice or lapse of time, or both), any modification or
termination of any such filings except such events which, either individually or
in the aggregate, would not have a Material Adverse Effect upon Parent.
 
3.22  Sarbanes-Oxley; Internal Accounting Controls. The Parent is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as of the Closing Date. The Parent’s certifying officers have
evaluated the effectiveness of the Parent’s disclosure controls and procedures
as of the end of the period covered by the Parent’s most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”). The Parent
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date. 
 
3.23  Private Placement. Assuming the accuracy of the Members’ representations
and warranties set forth in Section 1.17, no registration under the Securities
Act is required for the offer and sale of the Parent Common Stock by the Parent
to the Members as contemplated hereby. The issuance and sale of the Parent
Common Stock hereunder does not contravene the rules and regulations of the OTC
BB.
 
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3.24  Investment Company. The Parent is not, and is not an Affiliate of, and
immediately after receipt of payment for the Parent Common Stock, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
 
3.25  Listing and Maintenance Requirements. The Parent’s Common Stock is
registered pursuant to Section 15(d) of the Exchange Act, and the Parent has
taken no action designed to, or which is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Parent received any notification that the SEC is contemplating terminating
such registration. The Parent has not, in the 12 months preceding the date
hereof, received notice from the OTC BB to the effect that the Parent is not in
compliance with the listing or maintenance requirements of the OTC BB. The
Parent is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.
 
3.26  Application of Takeover Protections. The Parent and its Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Parent’s Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Members as a result of the Merger, including without limitation as a result
of the Parent’s issuance of the Parent Common Stock and the Members’ ownership
of the Parent Common Stock.
 
3.27  No Integrated Offering. Assuming the accuracy of the Members’
representations and warranties set forth in Section 1.17, neither the Parent,
nor any of its affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Parent Common Stock to be integrated with prior offerings by the
Parent for purposes of the Securities Act or any applicable shareholder approval
provisions of the OTC BB on which any of the securities of the Parent are listed
or designated.
 
3.28  Manipulation of Price.  The Parent has not, and to its Knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Parent to facilitate the sale or resale of any of its Common
Stock, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the securities of the Parent, or (iii) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Parent.
 
3.29  Representations and Warranties Complete. The representations and
warranties of Parent included in this Agreement, as modified by the Parent
Schedules, are true and complete in all material respects and do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading, under the circumstance under which they were made. Except for the
representations and warranties made by the Parent and the Merger Sub in this
Agreement, neither the Parent nor any other Person makes any representation or
warranty with respect to the Parent or the Merger Sub or their respective
business, operations, assets, liabilities, condition (financial or otherwise) or
prospects, notwithstanding the delivery or disclosure to the Company or any of
its Affiliates or representatives of any documentation, forecasts, projections
or other information with respect to any one or more of the foregoing.
 
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3.30  Survival of Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall not survive the Closing.
 
ARTICLE IV  
CONDUCT PRIOR TO THE EFFECTIVE TIME
 
4.1  Conduct of Business by Company and Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Closing, each of the Company (including
its Subsidiaries), Parent and Merger Sub shall, except to the extent that the
other party (either the Company or Parent, as applicable) shall otherwise
consent in writing, which consent shall not be unreasonably withheld, carry on
its business in the usual, regular and ordinary course consistent with past
practices, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations (except where noncompliance
would not have a Company Material Adverse Effect or a Project Material Adverse
Effect), pay its debts and taxes when due subject to good faith disputes over
such debts or taxes, pay or perform other material obligations when due, and use
its commercially reasonable efforts consistent with past practices and policies
to (A) preserve substantially intact its present business organization, (B) keep
available the services of its present officers and employees and (C) preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others with which it has significant business dealings. Unless otherwise
noted, all references to the Company and its Subsidiaries in this Article IV
shall mean the Company on an as reorganized basis as such reorganization is set
forth on Schedule 2.2(a) hereto. In addition, except as required or permitted by
the terms of this Agreement or set forth in Schedule 4.1 hereto, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Closing, each of the Company, Parent and Merger Sub shall not
do any of the following:
 
(a)  Waive any stock repurchase or similar rights, accelerate, amend or (except
as specifically provided for herein) change the period of exercisability of
options or restricted stock, or reprice options granted under any employee,
consultant, director or other stock (or similar) plans or authorize cash
payments in exchange for any options granted under any of such plans;
 
(b)  Grant any severance or termination pay to any officer or employee except
pursuant to applicable law, written agreements outstanding, or policies existing
on the date hereof and as previously or concurrently disclosed in writing or
made available to the other party, or adopt any new severance plan, or amend or
modify or alter in any manner any severance plan, agreement or arrangement
existing on the date hereof;
 
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(c)  Transfer or license to any person or otherwise extend, amend or modify any
material rights to any Intellectual Property of the Company (or its
Subsidiaries) or Parent, as applicable, or enter into grants to transfer or
license to any person future patent rights, other than in the ordinary course of
business consistent with past practices provided that in no event shall the
Company or Parent license on an exclusive basis or sell any Intellectual
Property of the Company (or its Subsidiaries), or Parent as applicable;
 
(d)  Declare, set aside or pay any dividends on or make any other distributions
(whether in cash, stock, equity securities or property) in respect of any
capital stock or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock except, after notice to Parent, for: (i)
distributions made to the Members for payment of taxes with respect to income of
the Company (or its Subsidiaries), which shall include reserves for the payment
of taxes due after Closing with respect to income of the Company earned prior to
Closing subject to post-Closing adjustments based on actual tax liability
incurred; and (ii) distributions of $20,000,000 to pay back loans from Members;
 
(e)  Purchase, redeem or otherwise acquire, directly or indirectly, any shares
of capital stock or membership interests, as applicable, of the Company (or its
Subsidiaries) and Parent, as applicable, including repurchases of unvested
shares or membership interests, as applicable, at cost in connection with the
termination of the relationship with any employee or consultant pursuant to
stock or purchase agreements in effect on the date hereof;
 
(f)  Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to
any of the foregoing with respect to, any shares of capital stock or membership
interests, as applicable, or any securities convertible into or exchangeable for
shares of capital stock or membership interests, as applicable, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or membership interests, as applicable, or any securities convertible into
or exchangeable for shares of capital stock or membership interests, as
applicable, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible or exchangeable
securities. In the event that the Company issues any membership or similar
ownership interests prior to Closing, the transferee will agree to be bound by
the terms and conditions of this Agreement, such agreement to be in form and
substance reasonably satisfactory to Parent;
 
(g)  Amend its charter documents unless required to do so hereunder;
 
(h)  Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of Parent or the Company (or any of its Subsidiaries) as applicable, or
enter into any joint ventures, strategic partnerships or alliances or other
arrangements that provide for exclusivity of territory or otherwise restrict
such party’s ability to compete or to offer or sell any products or services
except as otherwise contemplated by this Agreement;
 
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(i)  Sell, lease, license, encumber or otherwise dispose of any properties or
assets, except (A) sales of individual condominium units in the ordinary course
of business consistent with past practice at fair market value to unaffiliated
purchasers who, together with their affiliates, are not purchasing more than an
aggregate of ten units in any individual project; and (B) and the sale, lease or
disposition (other than through licensing) of property or assets that are not
material, individually or in the aggregate, to the business of such party;
 
(j)  Incur any indebtedness for borrowed money in excess of $1,000,000 in the
aggregate (other than purchase money debt in connection with the acquisition by
the Company of vehicles, office equipment and operating equipment not exceeding
$1,000,000 in the aggregate) or in connection with the purchase of real property
(including any personal property directly or indirectly related to such real
property) or guarantee any such indebtedness of another person, issue or sell
any debt securities or options, warrants, calls or other rights to acquire any
debt securities of Parent or the Company (or its Subsidiaries), as applicable,
enter into any “keep well” or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing; provided that notwithstanding the foregoing, the Company
may without Parent’s consent (i) obtain a line of credit of up to $100,000,000
with a commercial bank on customary terms, and (ii) enter into the Bridge Loan
as described on Schedule 6.2(n) hereto;
 
(k)  Adopt or amend any employee compensation or benefit plan, policy or
arrangement, any employee stock or membership interest purchase or employee
stock or membership interest option plan, or enter into any employment contract
or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with past
practice with employees who are terminable “at will”), grant or pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants, except in
the ordinary course of business consistent with past practices and as otherwise
contemplated by this Agreement;
 
(l)  Except in the ordinary course of business consistent with past practices,
pay, discharge, settle or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), or
litigation (whether or not commenced prior to the date of this Agreement) other
than the payment, discharge, settlement or satisfaction, in the ordinary course
of business consistent with past practices or in accordance with their terms, or
liabilities recognized or disclosed in the Unaudited Financial Statements or in
the most recent financial statements included in the Parent SEC Reports filed
prior to the date of this Agreement, as applicable, or incurred since the date
of such financial statements, or waive the benefits of, agree to modify in any
manner, terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which the Company (or its Subsidiaries)
is a party or of which the Company (or its Subsidiaries) is a beneficiary or to
which Parent is a party or of which Parent is a beneficiary, as applicable;
 
(m)  Except in the ordinary course of business consistent with past practices,
modify, amend or terminate any Material Company Contract or Parent Contract, as
applicable, or waive, delay the exercise of, release or assign any material
rights or claims thereunder;
 
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(n)  Except as required by U.S. GAAP, revalue any of its assets or make any
change in accounting methods, principles or practices;
 
(o)  Except in the ordinary course of business consistent with past practices or
as set forth below in this Section 4.1(o), incur or enter into any agreement,
contract or commitment requiring such party to pay in excess of $1,000,000 in
any 12 month period, other than the Company under a Routine Operating Contract;
provided, that, notwithstanding the foregoing the Company may (i) without
Parent’s consent enter into any agreement, contract or commitment requiring such
party to pay in excess of $2,000,000 in any 12 month period if such agreement
provides for a refundable deposit in favor of the Company and the Company
provides written notice to the Parent of the material terms and conditions of
such agreement, contract or commitment within one week after such agreement,
contract or commitment becomes effective, (ii) without Parent’s consent enter
into any agreement, contract or commitment requiring such party to pay in excess
of $2,000,000 in any 12 month period if such agreement provides for a refundable
deposit in favor of the Company and the Company provides prior written notice to
the Parent of the material terms and conditions of such agreement, contract or
commitment, (iii) without Parent’s consent enter into any agreement, contract or
commitment requiring such party to pay up to $1,000,000 in any 12 month period
if such agreement provides for a non-refundable deposit payable by the Company
and the Company provides written notice to Parent of the material terms and
conditions of such agreement, contract or commitment within one week after such
agreement, contract or commitment becomes effective, (iv) with prior written
consent of Parent consent enter into any agreement, contract or commitment
requiring such party to pay in excess of $1,000,000 in any 12 month period if
such agreement provides for a non-refundable deposit payable by the Company, or
(v) without Parent’s consent, enter into an agreement with an Optioned Property
Provider that does not create any liability to the Company in excess of
$1,000,000 provided that the Company notifies Parent of such agreement within
five business days of the date of entering into such agreement.
 
(p)  Take any action that (without regard to any action taken, or agreed to be
taken, by Parent or any of its Affiliates) could prevent the transactions
contemplated by this Agreement from qualifying as a tax-free contribution within
the meaning of Section 351(a) of the Code;
 
(q)  Make or rescind any Tax elections that, individually or in the aggregate,
could be reasonably likely to adversely affect in any material respect the Tax
liability or Tax attributes of such party, settle or compromise any material
income tax liability or, except as required by applicable law, materially change
any method of accounting for Tax purposes or prepare or file any Return in a
manner inconsistent with past practice;
 
(r)  Form, establish or acquire any Subsidiary except as contemplated by this
Agreement;
 
(s)  Permit any Person to exercise any of its discretionary rights under any
Plan to provide for the automatic acceleration of any outstanding options, the
termination of any outstanding repurchase rights or the termination of any
cancellation rights issued pursuant to such plans;
 
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(t)  Make capital expenditures except in accordance with prudent business and
operational practices consistent with prior practice;
 
(u)  Take or omit to take any action, the taking or omission of which would be
reasonably anticipated to have a Material Adverse Effect;
 
(v)  Enter into any transaction with or distribute or advance any assets or
property to any of its officers, directors, partners, stockholders or other
affiliates (other than payment of salary and benefits in the ordinary course of
business consistent with past practice);
 
(w)  Amend, modify, waive, terminate or otherwise change any of the terms or
conditions of the Optioned Property Provider Agreement; or
 
(x)  Agree in writing or otherwise agree, commit or resolve to take any of the
actions described in Section 4.1 (a) through (w) above.
 
In the event that Parent does not consent to any action proposed to be taken by
the Company pursuant to this Section 4.1, nothing shall prevent the Members from
taking such action by the way of another entity or individually.

ARTICLE V  
ADDITIONAL AGREEMENTS
 
5.1  Proxy Statement; Parent Stockholders’ Meeting. (a) As soon as practicable
after receipt by Parent from the Company of all financial and other information
relating to the Company as Parent may reasonably request for its preparation,
the execution of this Agreement, Parent shall prepare and file with the SEC
under the Exchange Act, and with all other applicable regulatory bodies, proxy
materials for the purpose of soliciting proxies from holders of Parent Common
Stock to vote in favor of: (i) the adoption of this Agreement and the approval
of the Merger (“Parent Stockholder Approval”); (ii) the change of the name of
Parent to a name selected by the Company (the “Name Change Amendment”); (iii) an
increase in the number of authorized shares of Parent Common Stock to
150,000,000 (the “Capitalization Amendment”); (iv) an amendment to remove the
preamble and Sections A through D, inclusive, of Article Sixth from Parent’s
Certificate of Incorporation from and after the Closing and to redesignate
section E of Article Sixth as Article Sixth; and (vi) the adoption of a Stock
Incentive Plan in a form reasonably acceptable to Parent and the Company (the
“Parent Plan”), at a meeting of holders of Parent Common Stock to be called and
held for such purpose (the “Parent Stockholders’ Meeting”). The Parent Plan
shall provide that an aggregate of 3,000,000 shares of Parent Common Stock shall
be reserved for issuance pursuant to the Parent Plan. Such proxy materials shall
be in the form of the Proxy Statement to be used for the purpose of soliciting
such proxies from holders of Parent Common Stock and the Proxy Statement shall
comply in all material respects with all applicable requirements of law and the
rules and regulations promulgated thereunder. The Company shall furnish to
Parent all information concerning the Company as Parent may reasonably request
in connection with the preparation of the Proxy Statement. Each of Parent and
the Company will notify the other promptly upon the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff or any other
governmental officials for amendments or supplements to the Proxy Statement and
it will supply the other with copies of all correspondence between the SEC or
its staff or other governmental officials with respect to the Proxy Statement or
the Merger. The Company and its counsel shall be given an opportunity to review
and comment on the Proxy Statement prior to its filing with the SEC. Parent,
with the assistance of the Company, shall promptly respond to any SEC comments
on the Proxy Statement and shall otherwise use reasonable best efforts to cause
the Proxy Statement to be approved for issuance by the SEC as promptly as
practicable. Parent shall also take any and all such actions to satisfy the
requirements of the Securities Act and the Exchange Act. Prior to the Closing
Date, Parent shall use its reasonable best efforts to cause the shares of Parent
Common Stock to be issued pursuant to the Merger to be registered or qualified
under all applicable Blue Sky Laws of each of the states and territories of the
United States in which it is believed, based on information furnished by the
Company, holders of the Company membership interests reside and to take any
other such actions that may be necessary to enable the Parent Common Stock
Interests to be issued pursuant to the Merger in each such jurisdiction.
 
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(b)  As soon as practicable following its approval by the SEC, Parent shall
distribute the Proxy Statement to the holders of Parent Common Stock and,
pursuant thereto, shall call the Parent Stockholders’ Meeting in accordance with
the Delaware General Corporation Law (“DGCL”) and, subject to the other
provisions of this Agreement, solicit proxies from such holders to vote in favor
of the adoption of this Agreement and the approval of the Merger and the other
matters presented to the stockholders of Parent for approval or adoption at the
Parent Stockholders’ Meeting, including, without limitation, the matters
described in Section 5.1(a).
 
(c)  Parent shall comply with all applicable provisions of and rules under the
Exchange Act and all applicable provisions of the DGCL in the preparation,
filing and distribution of the Proxy Statement, the solicitation of proxies
thereunder, and the calling and holding of the Parent Stockholders’ Meeting.
Without limiting the foregoing, Parent shall ensure that the Proxy Statement
does not, as of the date on which it is distributed to the holders of Parent
Common Stock, and as of the date of the Parent Stockholders’ Meeting, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading (provided that Parent shall not be
responsible for the accuracy or completeness of any information relating to the
Company or any other information furnished by the Company for inclusion in the
Proxy Statement). The Company represents and warrants that the information
relating to the Company supplied by the Company for inclusion in the Proxy
Statement will not as of the date of its distribution to the holders of Parent
Common Stock (or any amendment or supplement thereto) or at the time of the
Parent Stockholders’ Meeting contain any statement which, at such time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact required to be
stated therein or necessary in order to make the statement therein not false or
misleading.
 
(d)  Parent, acting through its board of directors, shall include in the Proxy
Statement the recommendation of its board of directors that the holders of
Parent Common Stock vote in favor of the adoption of this Agreement and the
approval of the Merger, and shall otherwise use reasonable best efforts to
obtain the Parent Stockholder Approval.
 
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5.2  Directors and Officers of Parent and the Surviving Entity. Parent and the
Company shall take all necessary action so that the board of directors of the
Parent shall consist of two members designated by Parent, two members designated
by the Company and between one and five independent members designated by the
Members, and that the persons listed on Schedule 5.2 are appointed to the
positions of officers of Parent and the Surviving Entity, as set forth therein,
to serve in such positions effective immediately after the Closing. The Members,
on one hand, and Jeffrey Davidson and Udi Toledano of Parent, on the other hand,
shall enter into a voting agreement pursuant to which (i) they agree to vote for
the other’s designees to the board of directors of Parent through the annual
meeting of the stockholders of Parent to be held in 2010 and (ii) they agree to
vote for one designee of Parent, to be determined by Jeffrey Davidson and Udi
Toledano, to the board of directors of Parent through the annual meeting of the
stockholders of Parent to be held in 2012.
 
5.3  HSR Act. If required pursuant to the HSR Act, as promptly as practicable
after the date of this Agreement, Parent and the Company shall each prepare and
file the notification required of it thereunder in connection with the
transactions contemplated by this Agreement and shall promptly and in good faith
respond to all information requested of it by the Federal Trade Commission and
Department of Justice in connection with such notification and otherwise
cooperate in good faith with each other and such Governmental Entities. Parent
and the Company shall (a) promptly inform the other of any communication to or
from the Federal Trade Commission, the Department of Justice or any other
Governmental Entity regarding the transactions contemplated by this Agreement,
(b) give the other prompt notice of the commencement of any action, suit,
litigation, arbitration, proceeding or investigation by or before any
Governmental Entity with respect to such transactions, and (c) keep the other
reasonably informed as to the status of any such action, suit, litigation,
arbitration, proceeding or investigation. Filing fees with respect to the
notifications required under the HSR Act shall be shared equally by Parent and
the Company.
 
5.4  Other Actions. (a) Parent shall continue to file all reports required to be
filed by the SEC in a timely manner which (i) will be prepared in accordance and
comply in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports, and (ii) will not at the time
they are filed (and if amended or superseded by a filing prior to the date of
this Agreement then on the date of such filing or as so amended or superseded)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent set forth in the preceding sentence, Parent
makes no representation or warranty whatsoever concerning the Parent SEC Reports
as of any time other than the time they were filed. At least five (5) days prior
to Closing, Parent shall prepare a draft Form 8-K announcing the Closing,
together with, or incorporating by reference, the financial statements prepared
by the Company and its accountant, and such other information that may be
required to be disclosed with respect to the Merger in any report or form to be
filed with the SEC (“Merger Form 8-K”), which shall be in a form reasonably
acceptable to the Company and in a format acceptable for EDGAR filing. Prior to
Closing, Parent and the Company shall prepare the press release announcing the
consummation of the Merger hereunder (“Press Release”). Simultaneously with the
Closing, Parent shall file the Merger Form 8-K with the SEC and distribute the
Press Release.
 
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(b) The Company and Parent shall further cooperate with each other and use their
respective reasonable best efforts to take or cause to be taken all actions, and
do or cause to be done all things, necessary, proper or advisable on its part
under this Agreement and applicable laws to consummate the Merger and the other
transactions contemplated hereby as soon as practicable, including preparing and
filing as soon as practicable all documentation to effect all necessary notices,
reports and other filings and to obtain as soon as practicable all consents,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party (including the respective independent
accountants of the Company and Parent) and/or any Governmental Entity in order
to consummate the Merger or any of the other transactions contemplated hereby.
This obligation shall include, on the part of Parent, sending a termination
letter to Continental in substantially the form of Exhibit A attached to the
Investment Management Trust Agreement by and between Parent and Continental.
Subject to applicable laws relating to the exchange of information and the
preservation of any applicable attorney-client privilege, work-product doctrine,
self-audit privilege or other similar privilege, each of the Company and Parent
shall have the right to review and comment on in advance, and to the extent
practicable each will consult the other on, all the information relating to such
party that appears in any filing made with, or written materials submitted to,
any third party and/or any Governmental Entity in connection with the Merger and
the other transactions contemplated hereby. In exercising the foregoing right,
each of the Company and Parent shall act reasonably and as promptly as
practicable.
 
5.5  Required Information. In connection with the preparation of the Merger Form
8-K and Press Release, and for such other reasonable purposes, the Company and
Parent each shall, upon request by the other, furnish the other with all
information concerning themselves, their respective directors, officers
and stockholders (including the directors of Parent and the Company to be
elected effective as of the Closing pursuant to Section 5.2 hereof) and such
other matters as may be reasonably necessary or advisable in connection with the
Merger, or any other statement, filing, notice or application made by or on
behalf of the Company and Parent to any third party and/or any Governmental
Entity in connection with the Merger and the other transactions contemplated
hereby. Each party warrants and represents to the other party that all such
information shall be true and correct in all material respects and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
 
5.6  Confidentiality; Access to Information.
 
(a)  Confidentiality. Any confidentiality agreement previously executed by the
parties shall be superseded in its entirety by the provisions of this Agreement.
Each party agrees to maintain in confidence any non-public information received
from the other party, and to use such non-public information only for purposes
of consummating the transactions contemplated by this Agreement. Such
confidentiality obligations will not apply to (i) information which was known to
the one party or their respective agents prior to receipt from the other party;
(ii) information which is or becomes generally known; (iii) information acquired
by a party or their respective agents from a third party who was not bound to an
obligation of confidentiality; and (iv) disclosure required by law. In the event
this Agreement is terminated as provided in Article VIII hereof, each party (x)
will return or cause to be returned to the other all documents and other
material obtained from the other in connection with the Merger contemplated
hereby, and (y) will use its reasonable best efforts to delete from its computer
systems all documents and other material obtained from the other in connection
with the Merger contemplated hereby.
 
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(b)  Access to Information. (i) Company will afford Parent and its financial
advisors, accountants, counsel and other representatives reasonable access
during normal business hours, upon reasonable notice, to the properties, books,
records and personnel of the Company during the period prior to the Closing to
obtain all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of the
Company, as Parent may reasonably request. No information or knowledge obtained
by Parent in any investigation pursuant to this Section 5.6 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
 
(ii)  Parent will afford the Company and its financial advisors, underwriters,
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of Parent during the period prior to the Closing to obtain all
information concerning the business, including the status of product development
efforts, properties, results of operations and personnel of Parent, as the
Company may reasonably request. No information or knowledge obtained by Parent
in any investigation pursuant to this Section 5.6 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
 
(iii)  Notwithstanding anything to the contrary contained herein, each party
(“Subject Party”) hereby agrees that by proceeding with the Closing, it shall be
conclusively deemed to have waived for all purposes hereunder any inaccuracy of
representation or breach of warranty by another party which is actually known by
the Subject Party prior to the Closing.
 
5.7  Charter Protections; Directors’ and Officers’ Liability Insurance.
 
(a)  All rights to indemnification for acts or omissions occurring through the
Closing Date now existing in favor of the current directors and officers of
Parent as provided in the Charter Documents of Parent or in any indemnification
agreements shall survive the Merger and shall continue in full force and effect
in accordance with their terms.
 
(b)  For a period of six (6) years after the Closing Date, Parent shall cause to
be maintained in effect the current policies of directors’ and officers’
liability insurance maintained by Parent (or policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous) with respect to claims arising from facts and events that occurred
prior to the Closing Date.
 
(c)  If Parent or any of its successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving entity
of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, in each such
case, to the extent necessary, proper provisions shall be made so that the
successors and assigns of Parent assume the obligations set forth in this
Section 5.7.
 
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(d)  The provisions of this Section 5.7 are intended to be for the benefit of,
and shall be enforceable by, each Person who will have been a director or
officer of Parent for all periods ending on or before the Closing Date and may
not be changed without the consent of Committee referred to in Section 1.18.
 
5.8  Public Disclosure. From the date of this Agreement until Closing or
termination, the parties shall cooperate in good faith to jointly prepare all
press releases and public announcements pertaining to this Agreement and the
transactions governed by it, and no party shall issue or otherwise make any
public announcement or communication pertaining to this Agreement or the
transaction without the prior consent of Parent (in the case of the Company and
the Members) or the Company (in the case of Parent), except as required by any
legal requirement or by the rules and regulations of, or pursuant to any
agreement of a stock exchange or trading system. Each party will not
unreasonably withhold approval from the others with respect to any press release
or public announcement. If any party determines with the advice of counsel that
it is required to make this Agreement and the terms of the transaction public or
otherwise issue a press release or make public disclosure with respect thereto,
it shall, at a reasonable time before making any public disclosure, consult with
the other party regarding such disclosure, seek such confidential treatment for
such terms or portions of this Agreement or the transaction as may be reasonably
requested by the other party and disclose only such information as is legally
compelled to be disclosed. This provision will not apply to communications by
any party to its counsel, accountants and other professional advisors.
Notwithstanding the foregoing, the parties hereto agree that promptly as
practicable after the execution of this Agreement, Parent will file with the SEC
a Current Report on Form 8-K pursuant to the Exchange Act to report the
execution of this Agreement, with respect to which Parent shall consult with the
Company. Parent shall provide to Company for review and comment a draft of the
Current Report on Form 8-K prior to filing with the SEC; provided that unless
objected to by the Company by written notice given to Parent within two (2) days
after delivery to the Company specifying the language to which reasonable
objection is taken, any language included in such Current Report shall be deemed
to have been approved by the Company and may be filed with the SEC and used in
other filings made by Parent with the SEC.
 
5.9  Reasonable Efforts. Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties agrees to use its commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using commercially reasonable efforts
to accomplish the following: (i) the taking of all reasonable acts necessary to
cause the conditions precedent set forth in Article VI to be satisfied, (ii) the
obtaining of all necessary actions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all consents,
approvals or waivers from third parties required as a result of the transactions
contemplated in this Agreement, (iv) the defending of any suits, claims,
actions, investigations or proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed and (v)
the execution or delivery of any additional instruments reasonably necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement. In connection with and without limiting the foregoing,
Parent and its board of directors and the Company and its board of directors
shall, if any state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use its commercially reasonable efforts to
enable the Merger and the other transactions contemplated by this Agreement to
be consummated as promptly as practicable on the terms contemplated by this
Agreement. Notwithstanding anything herein to the contrary, nothing in this
Agreement shall be deemed to require Parent or the Company to agree to any
divestiture by itself or any of its affiliates of shares of capital stock or of
any business, assets or property, or the imposition of any material limitation
on the ability of any of them to conduct their business or to own or exercise
control of such assets, properties and stock.
 
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5.10  Treatment as a Reorganization.
 
(a)  The Company shall not take, and shall use its best efforts not to permit
any Affiliate of the Company to take, any actions that could impact the Members
to fail to qualify for nonrecognition of gain or loss under Section 351(a) of
the Code.
 
(b)  Parent shall not take, and shall use its best efforts not to permit any
Affiliate, including any employee, officer or director of Parent to take, any
actions that could impact the Members to fail to qualify for nonrecognition of
gain or loss under Section 351(a) of the Code.
 
(c)  Parent shall use its best efforts, and shall cause its Affiliates to use
their best efforts, to cause the Members to qualify for nonrecognition of gain
or loss with respect to the transactions contemplated by this Agreement pursuant
to Section 351(a) of the Code.
 
(d)  The Company shall use its best efforts, and shall cause its Affiliates to
use their best efforts, to cause the Members to qualify for nonrecognition of
gain or loss with respect to the transactions contemplated by this Agreement
pursuant to Section 351(a) of the Code.
 
5.11  No Parent Common Stock Transactions. Each of (a) Udi Toledano, Jeffrey
Davidson, the Clark Trust and David Schwarz (and their affiliates) shall agree
that he, she or it shall not, prior to January 1, 2009, and (b) all other
Members of the Company (and their affiliates) shall agree that he, she or it
shall not, prior to the day that is six (6) months after the Closing, sell,
transfer or otherwise dispose of an interest in any of the shares of Parent
Common Stock he, she or it receives as a result of the Merger other than as
permitted pursuant to the Lock-Up Agreement in substantially the form of Exhibit
F hereto executed by such Person prior to the Closing Date. Notwithstanding the
foregoing, Dave Clark (and the Clark Trust) and David Schwarz may pledge (or
engage in any hedging, straddling or other strategies with respect to) up to a
maximum of 15,000,000 shares of Parent Common Stock to a financial institution
as collateral for personal loans and such exception to restrictions on transfer
will be set forth in their individual Lock-Up Agreements.
 
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5.12  Certain Claims. As additional consideration for the issuance of Parent
Common Stock pursuant to this Agreement, each of the Members hereby releases and
forever discharges, effective as of the Closing Date, the Company and its
directors, officers, employees and agents, from any and all rights, claims,
demands, judgments, obligations, liabilities and damages, whether accrued or
unaccrued, asserted or unasserted, and whether known or unknown arising out of
or resulting from such Member’s (i) status as a holder of an equity interest in
the Company; and (ii) employment, service, consulting or other similar agreement
entered into with the Company prior to Closing, to the extent that the bases for
claims under any such agreement that survives the Closing arise prior to the
Closing, provided, however, the foregoing shall not release any obligations of
Parent set forth in this Agreement or the Escrow Agreement.
 
5.13  No Securities Transactions. Neither the Company nor any Member or any of
their affiliates, directly or indirectly, shall engage in any transactions
involving the securities of Parent prior to the time of the making of a public
announcement of the transactions contemplated by this Agreement. The Company
shall use its best efforts to require each of its officers, directors,
employees, agents and representatives to comply with the foregoing requirement.
Neither the Parent nor its officers or directors, nor any of their respective
affiliates, directly or indirectly, shall take any action described in Section
3.28 prior to the Closing Date.
 
5.14  No Claim Against Trust Fund. The Company and the Members acknowledge that,
if the transactions contemplated by this Agreement are not consummated by Parent
by October 20, 2007, Parent will be obligated to return to its stockholders the
amounts being held in the Trust Fund. Accordingly, the Company and the Members
hereby waive all rights against Parent to collect from the Trust Fund any monies
that may be owed to them by Parent for any reason whatsoever, including but not
limited to a breach of this Agreement by Parent or any negotiations, agreements
or understandings with Parent (other than as a result of the Merger, pursuant to
which the Company would have the right to collect the monies in the Trust Fund),
and will not seek recourse against the Trust Fund for any reason whatsoever.
 
5.15  Disclosure of Certain Matters. Each of Parent and the Company will provide
the other with prompt written notice of any event, development or condition that
(a) would cause any of such party’s representations and warranties to become
untrue or misleading or which may affect its ability to consummate the
transactions contemplated by this Agreement, (b) had it existed or been known on
the date hereof would have been required to be disclosed under this Agreement,
(c) gives such party any reason to believe that any of the conditions set forth
in Article VI will not be satisfied, (d) is of a nature that is or may be
materially adverse to the operations, prospects or condition (financial or
otherwise) of Parent or the Company, or (e) would require any amendment or
supplement to the Proxy Statement. The parties shall have the obligation to
supplement or amend the Company Schedules and Parent Schedules (the “Disclosure
Schedules”) being delivered concurrently with the execution of this Agreement
and annexed hereto with respect to any matter hereafter arising or discovered
after delivery hereof which, if existing or known at the date of this Agreement,
would have been required to be set forth or described in the Disclosure
Schedules. The obligations of the parties to amend or supplement the Disclosure
Schedules being delivered herewith shall terminate on the Closing Date.
Notwithstanding any such amendment or supplementation, for purposes of Sections
6.2(a), 6.3(a), 7.1(a)(i), 8.1(d) and 8.1(e), the representations and warranties
of the parties shall be made with reference to the Disclosure Schedules as they
exist at the time of execution of this Agreement, subject to such anticipated
changes as are set forth in Schedule 4.1 or otherwise expressly contemplated by
this Agreement or which are set forth in the Disclosure Schedules as they exist
on the date of this Agreement.
 
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5.16  No Solicitation.
 
(a)  Until this Agreement is terminated pursuant to Section 8.1, the Company
will not, and will cause its Affiliates, employees, agents and representatives
not to, directly or indirectly, solicit or enter into discussions or
transactions with, or encourage, or provide any information to, any corporation,
partnership or other entity or group (other than Parent and its designees)
concerning any merger, sale of ownership interests and/or assets of the Company,
recapitalization or similar transaction.
 
(b)  Parent will not, and will cause its employees, agents and representatives
not to, directly or indirectly, solicit or enter into discussions or
transactions with, or encourage, or provide any information to, any corporation,
partnership or other entity or group (other than the Company and its designees)
concerning any merger, purchase of ownership interests and/or assets,
recapitalization or similar transaction.
 
(c)  The Company shall promptly advise Parent of the nature of any written
offer, proposal or indication of interest that is submitted to the Company and
the identity of the Person making such written offer, proposal or indication of
interest.
 
5.17  Company Actions.
 
(a)  The Company shall use its best efforts to take such actions as are
necessary to fulfill its obligations under this Agreement and to enable Parent
and Merger Sub to fulfill its obligations hereunder.
 
(b)  The Parent and the Merger Sub shall use their best efforts to take such
actions as are necessary to fulfill their obligations under this Agreement and
to enable the Company to fulfill its obligations hereunder.
 
5.18  Short Sales. The Parent covenants that it will not, nor will it instruct
any officer or director to, execute any Short Sales during the period commencing
at the execution of this Agreement and ending at the Closing Date. Each of Udi
Toledano and Jeffrey Davidson shall agree to execute a commitment not to execute
any Short Sale as provided in this Section 5.18. “Short Sales” shall include all
“short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.
 
5.19  Integration. The Parent shall not sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Parent Common Stock as contemplated pursuant to this Agreement in a manner that
would require the registration under the Securities Act of the sale of the
Parent Common Stock to the Members as contemplated by this Agreement or that
would be integrated with the offer or sale of the Parent Common Stock.
 
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ARTICLE VI 
CONDITIONS TO THE MERGER
 
6.1  Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
 
(a)  HSR Act; No Order. All specified waiting periods under the HSR Act shall
have expired and no Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger, substantially on the terms contemplated
by this Agreement.
 
(b)  Stockholder Approval. The Parent Stockholder Approval shall have been duly
approved and adopted by the stockholders of Parent by the requisite vote under
the laws of the State of Delaware and the Parent Charter Documents and an
executed copy of an amendment to Parent’s Certificate of Incorporation shall
have been filed with the Secretary of State of the State of Delaware to be
effective as of the Closing.
 
(c)  Parent Common Stock. Holders of twenty percent (20%) or more of the shares
of Parent Common Stock issued in Parent’s initial public offering of securities
and outstanding immediately before the Closing shall not have exercised their
rights to convert their shares into a pro rata share of the Trust Fund in
accordance with Parent’s Charter Documents.
 
(d)  Escrow Agreement. Parent, the Company, the Escrow Agent and the Members
shall have executed and delivered the Escrow Agreement.
 
6.2  Additional Conditions to Obligations of Company. The obligations of the
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by the Company:
 
(a)  Representations and Warranties. Each representation and warranty of Parent
contained in this Agreement that is qualified as to materiality shall have been
true and correct (i) as of the date of this Agreement, and (ii) on and as of the
Closing Date with the same force and effect as if made on the Closing Date. Each
representation and warranty of Parent contained in this Agreement that is not
qualified as to materiality shall have been true and correct (x) in all material
respects as of the date of this Agreement and (y) in all material respects on
and as of the Closing Date with the same force and effect as if made on the
Closing Date. The Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent by an authorized officer of Parent (“Parent
Closing Certificate”).
 
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(b)  Agreements and Covenants. Parent shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing Date, except
to the extent that any failure to perform or comply (other than a willful
failure to perform or comply or failure to perform or comply with an agreement
or covenant reasonably within the control of Parent) does not, or will not,
constitute a Material Adverse Effect with respect to Parent, and the Parent
Closing Certificate shall include a provision to such effect.
 
(c)  No Litigation. No action, suit or proceeding shall be pending or threatened
before any Governmental Entity which is reasonably likely to (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation or (iii) affect materially and adversely or otherwise
encumber the title of the shares of Parent Common Stock to be issued by Parent
in connection with the Merger and no order, judgment, decree, stipulation or
injunction to any such effect shall be in effect.
 
(d)  Consents. Parent shall have obtained all consents, waivers and approvals
required to be obtained by Parent in connection with the consummation of the
transactions contemplated hereby, other than consents, waivers and approvals the
absence of which, either alone or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Parent and the Parent Closing
Certificate shall include a provision to such effect.
 
(e)  Material Adverse Effect. No Material Adverse Effect with respect to Parent
shall have occurred since the date of this Agreement.
 
(f)  Opinion of Counsel. The Company shall have received from Mintz Levin Cohn
Ferris Glovsky and Popeo, P.C. counsel to Parent, an opinion of counsel
reasonably acceptable to the Company.
 
(g)  Other Deliveries. At or prior to Closing, Parent shall have delivered to
the Company (i) copies of resolutions and actions taken by Parent’s board of
directors in connection with the approval of this Agreement and the transactions
contemplated hereunder, and (ii) such other documents or certificates as shall
reasonably be required by the Company and its counsel in order to consummate the
transactions contemplated hereunder.
 
(h)  Press Release. Parent shall have delivered the Press Release to the
Company, in a form reasonably acceptable to the Company.
 
(i)  Resignations. The persons listed on Schedule 6.2(i) shall have resigned
from all of their positions and offices with Parent.
 
(j)  Trust Fund. Parent shall have made appropriate arrangements with
Continental to have the Trust Fund disbursed to Parent immediately upon the
Closing.
 
(k)  Registration Rights Agreement. The Registration Rights Agreement among
Parent and the Members, in substantially the form of Exhibit D, shall be in full
force and effect.
 
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(l)  Warrant Lock-Up Agreements. Those Persons set forth on Schedule 6.2(l)
shall have entered into lock-up agreements with Parent with respect to their
warrants and shares of Parent Common Stock underlying such warrants, in form and
substance reasonably satisfactory to the Company.
 
(m)  Short Sales. Those Persons discussed in Section 5.18 above shall have
delivered a commitment not to engage in Short Sales.
 
(n)  Assumption of Bridge Loan. Parent shall have assumed the Company’s
obligations under that certain bridge loan described on Schedule 6.2(n) attached
hereto (the “Bridge Loan”).
 
6.3  Additional Conditions to the Obligations of Parent. The obligations of
Parent to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Parent:
 
(a)  Representations and Warranties. Each representation and warranty of the
Company contained in this Agreement that is qualified as to materiality shall
have been true and correct (i) as of the date of this Agreement and (ii) on and
as of the Closing Date with the same force and effect as if made on the Closing
Date. Each representation and warranty of the Company contained in this
Agreement that is not qualified as to materiality shall have been true and
correct (x) in all material respects as of the date of this Agreement and (y) in
all material respects on and as of the Closing Date with the same force and
effect as if made on the Closing Date. Parent shall have received a certificate
with respect to the foregoing signed on behalf of the Company by an authorized
officer of the Company (“Company Closing Certificate”).
 
(b)  Agreements and Covenants. The Company and the Members shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them at or prior to the
Closing Date except to the extent that any failure to perform or comply (other
than a willful failure to perform or comply or failure to perform or comply with
an agreement or covenant reasonably within the control of Company) does not, or
will not, constitute a Material Adverse Effect on the Company, and the Company
Closing Certificate shall include a provision to such effect.
 
(c)  No Litigation. No action, suit or proceeding shall be pending or threatened
before any Governmental Entity which is reasonably likely to (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation or (iii) affect materially and adversely the right of
Parent to own, operate or control any of the assets and operations of the
Surviving Entity following the Merger and no order, judgment, decree,
stipulation or injunction to any such effect shall be in effect.
 
(d)  Consents. The Company shall have obtained all consents, waivers, permits
and approvals required to be obtained by the Company in connection with the
consummation of the transactions contemplated hereby, other than consents,
waivers and approvals the absence of which, either alone or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Company and the Company Closing Certificate shall include a provision to such
effect.
 
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(e)  Reorganization. The reorganization of the Company and its Subsidiaries as
set forth on Schedule 2.2(a) hereto has been completed.
 
(f)  Material Adverse Effect. No Material Adverse Effect with respect to the
Company shall have occurred since the date of this Agreement.
 
(g)  Employment Agreements. Employment Agreements (including non-competition
covenants) between the Company and each of Dave Clark and David Schwarz,
substantially in the forms of Exhibit E, shall be in full force and effect.
 
(h)  Opinion of Counsel. Parent shall have received from Greenberg Traurig,
P.A., counsel to the Company, an opinion of counsel reasonably acceptable to
Parent.
 
(i)  Comfort Letters. Parent shall have received “comfort” letters in the
customary form from Moore, Stephens, Lovelace, P.A., dated the date of
distribution of the Proxy Statement and the Closing Date (or such other date or
dates reasonably acceptable to Parent) with respect to certain financial
statements and other financial information included in the Proxy Statement.
 
(j)  Lock-Up Agreements. Lock-Up Agreements between Parent and each of the
Persons identified in Section 5.11, substantially in the form of Exhibit F,
shall be in full force and effect.
 
(k)  Other Deliveries. At or prior to Closing, the Company shall have delivered
to Parent: (i) copies of resolutions and actions taken by the Company’s board of
directors and stockholders in connection with the approval of this Agreement and
the transactions contemplated hereunder, and (ii) such other documents or
certificates as shall reasonably be required by Parent and its counsel in order
to consummate the transactions contemplated hereunder.
 
(l)  Derivative Securities. There shall be outstanding no options, warrants or
other derivative securities entitling the holders thereof to acquire shares of
Company membership interests or other securities of the Company or any of its
Subsidiaries.
 
(m)  Interested Party Transactions. All interested party transactions, as
described in Section 2.24, including any loans or other advances to or between
the Company and any Subsidiary and any Member, officer or director (or any
affiliate of any of the foregoing) shall have been terminated or repaid in full
as applicable.
 
(n)  Right of First Refusal. The Company (or appropriate Subsidiary) shall have
been granted a right of first refusal with respect to the commercial development
of the Island Homes property and to purchase a portion of such property
commercially developed at cost (all costs, including development costs, carrying
costs and transfer costs) which right of first refusal will be in form and
substance reasonably satisfactory to Parent.
 
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ARTICLE VII
INDEMNIFICATION
 
7.1  Indemnification of Parent and Company. (a) Subject to the terms and
conditions of this Article VII (including without limitation the limitations set
forth in Section 7.4), Parent and the Company and their respective
representatives, successors and permitted assigns (the “Parent Indemnitees”)
shall be indemnified, defended and held harmless, severally by the Clark Trust
and David Schwarz pro rata in accordance with the distribution of the Merger
Consideration issued to them, from and against all Losses asserted against,
resulting to, imposed upon, or incurred by any Parent Indemnitee by reason of,
arising out of or resulting from:
 
(i)  the inaccuracy or breach of any representation or warranty of the Company
contained in this Agreement, or any certificate delivered by the Company to
Parent pursuant to this Agreement with respect hereto or thereto in connection
with the Closing; and
 
(ii)  the non-fulfillment or breach of any covenant or agreement of the Company
contained in this Agreement.
 
(b)  As used in this Article VII, the term “Losses” shall include all losses,
liabilities, damages, judgments, awards, orders, penalties, settlements, costs
and expenses (including, without limitation, interest, penalties, court costs
and reasonable legal fees and expenses) including those arising from any
demands, claims, suits, actions, costs of investigation, notices of violation or
noncompliance, causes of action, proceedings and assessments whether or not made
by third parties or whether or not ultimately determined to be valid. Solely for
the purpose of determining the amount of any Losses (and not for determining any
breach) for which any party may be entitled to indemnification pursuant to
Article VII, any representation or warranty contained in this Agreement that is
qualified by a term or terms such as “material,” “materially,” or “Material
Adverse Effect” shall be deemed made or given without such qualification and
without giving effect to such words.
 
7.2  Indemnification of Third Party Claims. The indemnification obligations and
liabilities under this Article VII with respect to actions, proceedings,
lawsuits, investigations, demands or other claims brought against Parent by a
Person other than the Company (a “Third Party Claim”) shall be subject to the
following terms and conditions:
 
(a)  Notice of Claim. Parent, acting through the Committee, will give the
Members prompt written notice after receiving written notice of any Third Party
Claim or discovering the liability, obligation or facts giving rise to such
Third Party Claim (a “Notice of Claim”) which Notice of Third Party Claim shall
set forth (i) a brief description of the nature of the Third Party Claim, (ii)
the total amount of the actual out-of-pocket Loss or the anticipated potential
Loss (including any costs or expenses which have been or may be reasonably
incurred in connection therewith), and (iii) whether such Loss may be covered
(in whole or in part) under any insurance and the estimated amount of such Loss
which may be covered under such insurance, and the Representative shall be
entitled to participate in the defense of Third Party Claim at its expense.
 
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(b)  Defense. The Members shall have the right, at their option (subject to the
limitations set forth in subsection 7.2(c) below) at their own expense, by
written notice to Parent, to assume the entire control of, subject to the right
of Parent to participate (at its expense and with counsel of its choice) in, the
defense, compromise or settlement of the Third Party Claim as to which such
Notice of Claim has been given, and shall be entitled to appoint a recognized
and reputable counsel reasonably acceptable to Parent to be the lead counsel in
connection with such defense. If the Members are permitted and elect to assume
the defense of a Third Party Claim:
 
(i)  the Members shall diligently and in good faith defend such Third Party
Claim and shall keep Parent reasonably informed of the status of such defense;
provided, however, that in the case of any settlement providing for remedies
other than monetary damages for which indemnification is provided, Parent shall
have the right to approve the settlement, which approval will not be
unreasonably withheld; and
 
(ii)  Parent shall cooperate fully in all respects with the Members in any such
defense, compromise or settlement thereof, including, without limitation, the
selection of counsel, and Parent shall make available to the Members all
pertinent information and documents under its control.
 
(c)  Limitations of Right to Assume Defense. The Members shall not be entitled
to assume control of such defense if (i) the Third Party Claim relates to or
arises in connection with any criminal proceeding, action, indictment,
allegation or investigation; (ii) the Third Party Claim seeks an injunction or
equitable relief against Parent; or (iii) there is a reasonable probability that
a Third Party Claim may materially and adversely affect Parent other than as a
result of money damages or other money payments.
 
(d)  Other Limitations. Failure to give prompt Notice of Claim or to provide
copies of relevant available documents or to furnish relevant available data
shall not affect the Members’ duty or obligations under this Article VII, except
to the extent (and only to the extent that) such failure shall have adversely
affected the ability of the Members to defend against or reduce the Members’
liability or caused or increased such liability or otherwise caused the damages
for which the Members are obligated to be greater than such damages would have
been had Parent given the Members prompt notice hereunder. So long as the
Members are defending any such action actively and in good faith, Parent shall
not settle such action. Parent shall make available to the Members all relevant
records and other relevant materials required by them and in the possession or
under the control of Parent, for the use of the Members in defending any such
action, and shall in other respects give reasonable cooperation in such defense.
 
(e)  Failure to Defend. If the Members, promptly after receiving a Notice of
Claim, fail to defend such Third Party Claim actively and in good faith, Parent
will (upon further written notice) have the right to undertake the defense,
compromise or settlement of such Third Party Claim as it may determine in its
reasonable discretion, provided that the Members shall have the right to approve
any settlement, which approval will not be unreasonably withheld or delayed.
 
(f)  Parent’s Rights. Anything in this Section 7.2 to the contrary
notwithstanding, the Members shall not, without the written consent of Parent,
settle or compromise any action or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the claimant or
the plaintiff to Parent of a full and unconditional release from all liability
and obligation in respect of such action without any payment by Parent.
 
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(g)  Members Consent. Unless the Members have consented to a settlement of a
Third Party Claim, the amount of the settlement shall not be a binding
determination of the amount of the Loss and, if applicable, such amount shall be
determined in accordance with the provisions of the Escrow Agreement.
 
7.3  Insurance Effect. To the extent that any Losses that are subject to
indemnification pursuant to this Article VII are covered by insurance, Parent
shall use commercially reasonable efforts to obtain the maximum recovery
under such insurance; provided that Parent shall nevertheless be entitled to
bring a claim for indemnification under this Article VII in respect of such
Losses and the time limitations set forth in Section 7.4 hereof for bringing a
claim of indemnification under this Agreement shall be tolled during the
pendency of such insurance claim. The existence of a claim by Parent for monies
from an insurer or against a third party in respect of any Loss shall not,
however, delay any payment pursuant to the indemnification provisions contained
herein and otherwise determined to be due and owing. If Parent has received the
payment required by this Agreement from the Members in respect of any Loss and
later receives proceeds from insurance or other amounts in respect of such Loss,
then it shall hold such proceeds or other amounts in trust for the benefit of
the Members and shall pay to the Members, as promptly as practicable after
receipt, a sum equal to the amount of such proceeds or other amount received, up
to the aggregate amount of any payments received hereunder or from the Escrow
Account, as applicable, pursuant to this Agreement in respect of such Loss.
Notwithstanding any other provisions of this Agreement, it is the intention of
the parties that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, or (ii) relieved of the responsibility to pay any
claims for which it is obligated.
 
7.4  Limitations on Indemnification.
 
(a)  Survival: Time Limitation. The representations, warranties, covenants and
agreements in this Agreement or in any writing delivered by the Company to
Parent in connection with this Agreement (including the certificate required to
be delivered by the Company pursuant to Section 6.3(a)) shall survive the
Closing until 18 months after the Closing Date (the “Survival Period”). The
indemnification and other obligations under this Article VII shall survive for
the same Survival Period and shall terminate with the expiration of such
Survival Period, except that: (i) any claims for breach of representation or
warranty made by a party hereunder by filing a demand for arbitration under
Section 10.12 shall be preserved until final resolution thereof despite the
subsequent expiration of the Survival Period and (ii) any claims set forth in a
Notice of Claim sent prior to the expiration of such Survival Period shall
survive until final resolution thereof. Except as set forth in clause (ii)
above, no claim for indemnification under this Article VII shall be brought
after the end of the applicable Survival Period.
 
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(b)  Deductible. No amount shall be payable under Article VII unless and until
the aggregate amount of all indemnifiable Losses otherwise payable exceeds
$500,000 in the aggregate (the “Deductible”), and no claim shall be made
pursuant to this Article VII until such time as the aggregate of such Losses
exceeds $500,000. For the avoidance of doubt, Losses in the amount of $500,000
shall function as a “deductible,” and only those amounts in excess of $500,000
shall be recoverable pursuant to this Article VII. Notwithstanding anything
contained herein to the contrary, the Deductible will not be applicable to
claims arising from fraud, willful misrepresentation or willful misconduct.
 
(c) Aggregate Amount Limitation.
 
(i) The aggregate liability for Losses pursuant to Section 7.1 during the first
12 months from the Closing Date (the “First Indemnity Period”), shall not in any
event exceed the greater of (A) $10,000,000 in cash if 10,000,0000 shares of
Parent Common Stock (the “Tranche One Escrow Shares”) are not deposited by the
Escrow Agent in the Earned Shares Indemnity Escrow Account pursuant to the
provisions of Section 1.15 hereof, or, (B) if applicable, the Tranche One Escrow
Shares. If at any time during the First Indemnity Period, the number of Tranche
One Escrow Shares in the Earned Shares Indemnity Escrow Account is equal to
10,000,000 shares, then the $10,000,000 cash indemnity obligation of the Clark
Trust and David W. Schwarz (the “Indemnifying Parties”) shall terminate and the
sole liability for indemnification shall be against the Tranche One Escrow
Shares.
 
(ii) The aggregate liability for Losses pursuant to Section 7.1 during the
period beginning 12 months and one day from the Closing Date until 18 months
from the Closing Date (the “Second Indemnity Period”), shall not in any event
exceed the greater of (A) $10,000,000 in cash if less than 5,000,0000 shares of
Parent Common Stock (the “Tranche Two Escrow Shares”) are in the Earned Shares
Indemnity Escrow Account pursuant to the provisions of Section 1.15 hereof at
the beginning of the Second Indemnity Period (to the extent not exhausted or
terminated during the First Indemnity Period), or, (B) if applicable, the
Tranche Two Escrow Shares. If at any time during the Second Indemnity Period,
the number of Tranche Two Escrow Shares in the Earned Shares Indemnity Escrow
Account is equal to 5,000,000 shares, then the $10,000,000 cash indemnity
obligation of the Indemnifying Parties, if not already exhausted, shall
terminate and the sole liability for indemnification shall be against the
Tranche Two Escrow Shares.
 
(iii) Notwithstanding the terms of Section 7.4(c), in no event shall the cash
portion of any liability for Losses during the First Indemnity Period and the
Second Indemnity Period, collectively, exceed a total aggregate amount equal to
$10,000,000 and in no event shall the total aggregate liability of the
Indemnified Parties ever exceed a total value of $75,000,000.
 
(iv) Notwithstanding the foregoing, the Aggregate Amount Limitation shall not
apply in the case of claims arising from fraud, willful misrepresentation or
willful misconduct but in no event shall the total liability for Losses to any
Indemnifying Party exceed the Merger Consideration received by the Clark Trust
and David W. Schwarz less any taxes paid by them.
 
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(v) To the extent that there is an indemnifiable Claim, the Claim shall be
satisfied in the following order of priority: (A) during the First Indemnity
Period, first, from the Tranche One Escrow Shares until such time as the Earned
Shares Indemnity Escrow Account is reduced to zero and second, if less than
10,000,000 shares of Parent Common Stock were in the Earned Shares Indemnity
Escrow Account, from the $10,000,000 by the Indemnifying Members and (B) during
the Second Indemnity Period, first, from the Tranche Two Escrow Shares until
such time as the Earned Shares Indemnity Escrow Account is reduced to zero and
second, if less than 5,000,000 shares of Parent Common Stock were in the Earned
Shares Indemnity Escrow Account, from the $10,000,000 by the Indemnifying
Members.
 
(vi) For purposes of this Article VII, each share of Parent Common Stock
included as Tranche One Escrow Shares and Tranche Two Escrow Shares shall at all
times have a value equal to $7.50 notwithstanding the market price for the
Parent Common Stock as reported on the OTC BB or any other applicable exchange
or automated quotation system at the time any Claim is made hereunder.
 
(vii)  If additional shares are required to be deposited in the Earned Shares
Indemnity Escrow Account in accordance with Section 1.15 during either the First
Indemnity Period or the Second Indemnity Period, and any amount of the Uncovered
Claim continues to be unsatisfied, then the first shares of Parent Common Stock
scheduled to be placed in the Earned Shares Indemnity Escrow Account shall be
applied to the unsatisfied portion of the Uncovered Claim and the remaining
shares to be deposited in the Earned Shares Indemnity Escrow Account shall be
reduced by the quotient of: (1) the amount of cash paid by the Indemnifying
Parties in connection with the Uncovered Claim divided by (2) $7.50. For the
purposes of this Agreement, “Uncovered Claim” shall mean a Claim where the total
value of such Claim exceeds the value of the Parent Common Stock then contained
in the Earned Shares Indemnity Escrow Account during the relevant indemnity
period.

For example:

During the First Indemnity Period, if there are 3,000,000 shares of Parent
Common Stock in the Earned Shares Indemnity Escrow Account and an Uncovered
Claim for an amount equal to $40,000,000 is made, then, those 3,000,000 shares
are applied to that Uncovered Claim on a $7.50 valuation. The Indemnifying
Parties still have a $10 million cash obligation because there are less than the
total Tranche One Escrow Shares in the Earned Shares Indemnity Escrow Account.
Thus, because the shares in the Earned Shares Indemnity Escrow Account are worth
only $22,500,000 (3,000,000 x $7.50), then the Indemnifying Parties would have
to pay up to $10 million in cash during the First Indemnity Period for a total
indemnification payment of $32,500,000. If 5,000,000 shares of Parent Common
Stock are subsequently scheduled to be placed in the Earned Shares Indemnity
Escrow Account, then the first shares of Parent Common Stock scheduled to be
placed in the Earned Shares Indemnity Escrow Account shall be applied to the
remaining $7,500,000 of outstanding liability from the Uncovered Claim and the
remaining shares to be deposited in the Earned Shares Indemnity Escrow Account
shall be reduced by 1,333,000 shares of Parent Common Stock ($10,000,000 divided
by $7.50).

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7.5  Exclusive Remedy. Parent hereby acknowledges and agrees that, from and
after the Closing, its sole and exclusive remedy with respect to any and all
claims, whether direct, third party or otherwise, for money damages arising out
of or relating to this Agreement shall be pursuant and subject to the
requirements of the indemnification provisions set forth in this Article VII.
Notwithstanding any of the foregoing, nothing contained in this Article VII
shall in any way impair, modify or otherwise limit Parent’s or Company’s right
to bring any claim, demand or suit against the other party based upon such other
party’s actual fraud or intentional or willful misrepresentation or omission, it
being understood that a mere breach of a representation and warranty, without
intentional or willful misrepresentation or omission, does not constitute fraud.
 
7.6  Damages; No Adjustment to Merger Consideration. Amounts paid for
indemnification under Article VII shall constitute damages paid by the Members
for breach of contract and not as an adjustment to the value of the shares of
Parent Common Stock issued by Parent as a result of the Merger.
 
7.7  Application of Escrow Shares. The parties acknowledge that all actions to
be taken by Parent pursuant to this Article VII shall be taken on its behalf by
the Committee in accordance with the provisions of the Escrow Agreement. The
Escrow Agent, pursuant to the Escrow Agreement after the Closing, may apply all
or a portion of the Escrow Shares to satisfy any claim for indemnification
pursuant to this Article VII. The Escrow Agent will hold the remaining portion
of the Escrow Shares until final resolution of all claims for indemnification or
disputes relating thereto.
 
ARTICLE VIII
TERMINATION
 
8.1  Termination. This Agreement may be terminated at any time prior to the
Closing:
 
(a)  by mutual written agreement of Parent and the Company at any time;
 
(b)  by either Parent or the Company if the Proxy Statement shall not have been
mailed to the record owners of Parent Common Stock on or before October 1, 2007;
 
(c)  by either Parent or the Company if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
 
(d)  by the Company, upon a material breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Article VI would not be satisfied as
of the time of such breach or as of the time such representation or warranty
shall have become untrue, provided, that if such breach by Parent is curable by
Parent prior to the Closing Date, then the Company may not terminate this
Agreement under this Section 8.1(d) for thirty (30) days after delivery of
written notice from the Company to Parent of such breach, provided Parent
continues to exercise commercially reasonable efforts to cure such breach (it
being understood that the Company may not terminate this Agreement pursuant to
this Section 8.1(d) if it shall have materially breached this Agreement or if
such breach by Parent is cured during such thirty (30)-day period);
 
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(e)  by Parent, upon a material breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Article VI would not be satisfied as
of the time of such breach or as of the time such representation or warranty
shall have become untrue, provided, that if such breach is curable by the
Company prior to the Closing Date, then Parent may not terminate this Agreement
under this Section 8.1(e) for thirty (30) days after delivery of written notice
from Parent to the Company of such breach, provided the Company continues to
exercise commercially reasonable efforts to cure such breach (it being
understood that Parent may not terminate this Agreement pursuant to this Section
8.1(e) if it shall have materially breached this Agreement or if such breach by
the Company is cured during such thirty (30)-day period);
 
(f)  by either Parent or the Company, if, at the Parent Stockholders’ Meeting
(including any adjournments thereof), this Agreement and the transactions
contemplated thereby shall fail to be approved and adopted by the affirmative
vote of the holders of Parent Common Stock required under Parent’s certificate
of incorporation, or the holders of 20% or more of the number of shares of
Parent Common Stock issued in Parent’s initial public offering and outstanding
as of the date of the record date of the Parent Stockholders’ Meeting exercise
their rights to convert the shares of Parent Common Stock held by them into cash
in accordance with Parent’s certificate of incorporation;
 
(g)  by either Parent or the Company if the Closing Date shall not have occurred
by October 20, 2007.
 
8.2  Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 8.1 above will be effective immediately upon (or, if the
termination is pursuant to Section 8.1(d) or Section 8.1(e) and the proviso
therein is applicable, thirty (30) days after) the delivery of written notice of
the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 8.1, this Agreement shall
be of no further force or effect and the Merger shall be abandoned, except for
and subject to the following: (i) Sections 5.6, 5.14, 8.2 and 8.3 and Article X
(General Provisions) shall survive the termination of this Agreement. The sole
remedy of any party hereto for breach of this Agreement occurring prior to
Closing by any other party hereto shall be limited to termination of this
Agreement, and no party shall have any claim against the other for damages of
equitable relief for breach of this Agreement occurring prior to the Closing.
 
8.3  Fees and Expenses. Whether or not the Merger is consummated and except as
otherwise provided herein, all fees and expenses incurred in connection with the
Merger including, without limitation, all legal, accounting, financial advisory,
consulting and all other fees and expenses of third parties incurred by a party
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby shall be the
obligation of the respective party incurring such fees and expenses.
 
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ARTICLE IX
DEFINED TERMS
 
Terms defined in this Agreement are organized alphabetically as follows,
together with the Section and, where applicable, paragraph, number in which
definition of each such term is located:
 
“Affiliate” Section 10.2(e)
 
“Agreement” Heading
 
“Approvals” Section 2.1(a)
 
“Audited Financial Statements” Section 2.8 (a)
 
“Blue Sky Laws” Section 1.17(b)
 
“Bridge Loan” Section 6.2(n)
 
“Business Day” Section 1.2
 
“Capitalization Amendment” Section 5.1(a)
 
“Certificate of Merger” Section 1.3
 
“Charter Documents” Section 2.2(b)
 
“Closing” Section 1.2
 
“Closing Date” Section 1.2
 
“COBRA” Section 2.12(a)
 
“Code” Recital C
 
“Committee” Section 1.18
 
“Company” Heading
 
“Company Closing Certificate” Section 6.3(a)
 
“Company Contracts” Section 2.21(a)
 
“Company Employee Plan” Section 2.12(a)
 
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“Company Intellectual Property” Section 2.19
 
“Company Registered Intellectual Property” Section 2.19
 
“Company Disclosure Schedule” Article II Preamble
 
“Company Material Adverse Effect” Article II Preamble
 
“Company Membership Interests” Section 1.6(b)
 
“Construction Contracts” Section 2.15(l)
 
“Construction Project” Section 2.15(l)
 
“Corporate Records” Section 2.1(b)
 
“Continental” Section 1.15
 
“Deductible” Section 7.4(b)
 
“Disclosure Schedules” Section 5.15
 
“Florida Act” Recital B
 
“DOL” Section 2.12(a)
 
“Earn-Out Period” Section 1.19(a)
 
“Effective Time” Section 1.3
 
“Employee” Section 2.12(a)
 
“Employee Agreement” Section 2.12(a)
 
“Environmental Law” Section 2.17(f)
 
“ERISA” Section 2.12(a)
 
“Escrow Agreement” Section 1.15
 
“Escrow Shares” Section 1.15
 
“Evaluation Date” Section 3.22
 
“Exchange Act” Section 1.17(b)
 
“Florida Act” Recital B
 
“FMLA” Section 2.12(a)
 
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“Governmental Entity” Section 1.17(b)
 
“Hazardous Substance” Section 2.17(b)
 
“HIPAA” Section 2.12(a)
 
“HSR Act” Section 2.5(b)
 
“Insider” Section 2.21 (b)(iiii)(1)
 
“Intellectual Property” Section 2.19
 
“International Employee Plan” Section 2.12(a)
 
“IRS” Section 2.12(a)
 
“Island Homes” Section 2.15(o)
 
“Island Homes Owner” Section 2.15(o)
 
“Knowledge” Section 10.2(c)
 
“Lease” Section 2.15(b)
 
“Leased Real Property” Section 2.15(b)
 
“Legal Requirements” Section 10.2(a)
 
“Lien” Section 10.2(d)
 
“Losses” Section 7.1(b)
 
“Material Company Contracts” Section 2.21(b)
 
“Material Permits” Section 2.7(a)
 
“Material Projects” Article II Preamble
 
“Member/Members” Heading
 
“Merger” Recital B
 
“Merger Consideration” Section 1.6(a)
 
“Merger Form 8-K Section 5.4(a)
 
“Merger Sub” Heading
 
“Merger Sub Membership Interest” Section 1.9
 
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“Name Change Amendment” Section 5.1(a)
 
“NASD” Section 3.18
 
“Net Income Statement” Section 1.19(a)
 
“Notice of Claim” Section 7.2(a)
 
“Operating Agreement” Section 2.1(a)
 
“Optioned Property Agreement” Section 2.3(b)
 
“Optioned Property Redevelopment Agreement” Section 2.15(c)
 
“Optioned Property Mortgage” Section 2.15(c)
 
“Optioned Property Projects” Article II Preamble
 
“Optioned Property Provider” Article II Preamble
 
“OTC BB” Section 3.18
 
“Owned Real Property” Section 2.15(a)
 
“Owned Real Property Leases” Section 2.15 (j)
 
“PBGC” Section 2.12(a)
 
“Parent” Heading
 
“Parent Closing Certificate” Section 6.2(a)
 
“Parent Common Stock” Section 1.6(a)
 
“Parent Contracts” Section 3.14(b)
 
“Parent Convertible Securities” Section 3.3(a)
 
“Parent Indemnitees” Section 7.1(a)
 
“Parent Material Adverse Effect” Article III Preamble
 
“Parent Plan” Section 5.1(a)
 
“Parent Preferred Stock” Section 3.3(a)
 
“Parent SEC Reports” Section 3.7(a)
 
“Parent Stockholder Approval” Section 5.1(a)
 
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“Parent Stockholders’ Meeting” Section 2.26
 
“Parent Stock Options” Section 3.3(a)
 
“Parent Warrants” Section 3.3(a)
 
“Patents” Section 2.19
 
“Pension Plan” Section 2.12(a)
 
“Person” Section 10.2(b)
 
“Press Release” Section 5.4(a)
 
“Project Material Adverse Effect” Article II Preamble
 
“Proxy Statement” Section 2.26
 
“Real Property” Section 2.15(e)
 
“Registered Intellectual Property” Section 2.19
 
“Registration Rights Agreement” Section 1.16
 
“Requisite Member Approval” Section 2.4
 
“Returns” Section 2.16(a)(i)
 
“Routine Operating Contracts” Section 2.21(a)
 
“Securities Act” Section 1.16
 
“Short Sales” Section 5.18
 
“Subject Party” Section 5.6(b)(iii)
 
“Subsidiary/Subsidiaries” Section 2.2(a)
 
“Survival Period” Section 7.4(a)
 
“Surviving Entity” Section 1.1
 
“Tax/Taxes” Section 2.16
 
“Third Party Claim” Section 7.2
 
“Trademarks” Section 2.19
 
“Trust Fund” Section 3.20
 
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“U.S. GAAP” Section 2.8(a)
 
“Unaudited Financial Statements” Section 2.8(a)
 
ARTICLE X
GENERAL PROVISIONS
 
10.1  Notices. All notices, requests and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
 
if to Parent, to:
 
Key Hospitality Acquisition Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
Attention: Udi Toledano
Telephone: 973-992-3200
Facsimile: 973-992-6336
 
with a copy to:
 
Kenneth R. Koch, Esq.
Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.
666 Third Avenue
New York, New York 10017
Telephone: 212-935-3000
Facsimile: 212-983-3115
 
if to the Company or Members, to:
 
Cay Clubs LLC
12800 University Drive, Suite 260
Fort Myers, Florida 33957
Attention: Charles PT Phoenix, Esq.
Telephone: 239-461-0101
Facsimile: 239-333-2244
 
with a copy to:
 
Frank S. Ioppolo
Greenberg Traurig, P.A.
450 S. Orange Avenue, Suite 650
Orlando, Florida 32801
Telephone: 407-420-1000
Facsimile: 407-420-5909
 
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10.2  Interpretation. When a reference is made in this Agreement to an Exhibit
or Schedule, such reference shall be to an Exhibit or Schedule to this Agreement
unless otherwise indicated. When a reference is made in this Agreement to
Sections or subsections, such reference shall be to a Section or subsection of
this Agreement. Unless otherwise indicated the words “include,” “includes” and
“including” when used herein shall be deemed in each case to be followed by the
words “without limitation.” The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
“the business of” an entity, such reference shall be deemed to include the
business of all direct and indirect Subsidiaries of such entity. Reference to
the Subsidiaries of an entity shall be deemed to include all direct and indirect
Subsidiaries of such entity. For purposes of this Agreement:
 
(a)  the term “Legal Requirements” means any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity and all
requirements set forth in applicable Company Contracts or Parent Contracts;
 
(b)  the term “Person” shall mean any individual, corporation (including any
non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity;
 
(c)  the term “Knowledge” means (i) with respect to the Company and any of its
Subsidiaries, actual knowledge, of Dave Clark, David Schwarz, Michael Matte,
Gary Schwarz, Barry Graham, Derek Taylor, Dennis Zecca, Craig Holt and William
Lee, (ii) with respect to the Company and any of its Subsidiaries, actual
knowledge, as to any matter described in Sections 2.6, 2.7, 2.17 or 2.21(c), of
any written notice actually received, as evidenced by written proof of delivery,
by any member of the Company’s Legal Department, and (iii) with respect to the
Parent and Merger Sub, actual knowledge, without any duty to investigate, of Udi
Toledano or Jeffrey Davidson.
 
(d)  the term “Lien” means any mortgage, pledge, security interest, lien, charge
or encumbrance of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof, any sale with
recourse against the seller or any Affiliate of the seller, or any agreement to
give any security interest);
 
(e)  the term “Affiliate” means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with, such Person. For purposes of this definition, “control”
(including with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of 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; and
 
(f)  all monetary amounts set forth herein are referenced in United States
dollars, unless otherwise noted.
 
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10.3  Counterparts; Facsimile Signatures. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. Delivery by
facsimile or by email delivery of a “.pdf” format data file to counsel for the
other party of a counterpart executed by a party shall be deemed to meet the
requirements of the previous sentence.
 
10.4  Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Exhibits and Schedules
hereto (a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, it being understood that the proposed summary of terms between Parent
and the Company dated February 23, 2007 is hereby terminated in its entirety and
shall be of no further force and effect; and (b) are not intended to confer upon
any other Person any rights or remedies hereunder (except as specifically
provided in this Agreement). The representations and warranties contained in
this Agreement and made by the parties hereto were made to and solely for the
benefit of each other.

10.5  Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
Persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
 
10.6  Other Remedies; Specific Performance. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
 
10.7  Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware regardless of the law that
might otherwise govern under applicable principles of conflicts of law thereof.
 
10.8  Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
 
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10.9  Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the first sentence of this Section 10.9, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
 
10.10  Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties.
 
10.11  Extension; Waiver. At any time prior to the Closing, any party hereto
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Delay in exercising any right under this Agreement shall
not constitute a waiver of such right.
 
10.12  Jurisdiction and Venue. Any civil action or legal proceeding arising out
of or relating to this Agreement shall be brought in the federal and state
courts located in the State of Delaware. Each party consents to the jurisdiction
of such Delaware court in any such civil action or legal proceeding and waives
any objection to the laying of venue of any such civil action or legal
proceeding in such Delaware court. Service of any court paper may be effected on
such party by mail, as provided in this Agreement, or in such other manner as
may be provided under applicable laws, rules of procedure or local rules.
 
10.13  JURY WAIVER. IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING, WHETHER AT
LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS AGREEMENT,
ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE PERFORMANCE OF THIS
AGREEMENT, OR THE RELATIONSHIP CREATED BY THIS AGREEMENT, WHETHER SOUNDING IN
CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF
COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES TO THIS AGREEMENT OF THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS TO
OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION. EACH PARTY
HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION. EACH PARTY
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE
TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE
TERMS OF THIS SECTION.
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
 

        KEY HOSPITALITY ACQUISITION CORPORATION  
   
   
    By:   /s/ Jeffrey Davidson  

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        Key Merger Sub, LLC  
   
   
    By:   /s/ Jeffrey Davidson  

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        Cay Clubs LLC  
   
   
    By:   /s/ Dave Clark  

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        MEMBERS:  
   
   
    By:   /s/ David Schwarz  

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David Schwarz

 

        F. Dave Clark Irrevocable Trust under Agreement dated August 31, 2004  
   
   
    By:   /s/ Dave Clark  

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F. Dave Clark, as Trustee

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INDEX OF EXHIBITS AND SCHEDULES

 
EXHIBITS
 
EXHIBIT A
—
CERTIFICATE OF MERGER

 
EXHIBIT B
—
OPERATING AGREEMENT OF COMPANY POST-CLOSING

 
EXHIBIT C
—
FORM OF ESCROW AGREEMENT

 
EXHIBIT D
—
FORM OF REGISTRATION RIGHTS AGREEMENT

 
EXHIBIT E
—
FORM OF EMPLOYMENT AGREEMENTS

 
EXHIBIT F
—
FORM OF LOCK-UP AGREEMENT

 
SCHEDULES
 

SCHEDULE 1.19 — CALCULATION OF FORFEITED SHARES       PARENT SCHEDULES      
SCHEDULE 3.3 — CAPITALIZATION       SCHEDULE 3.13 — BROKERS       SCHEDULE 3.21
— GOVERNMENTAL FILINGS       SCHEDULE 5.2 — OFFICERS OF PARENT AND SURVIVING
ENTITY       SCHEDULE 6.2(j) — RESIGNATIONS FROM PARENT       SCHEDULE 6.2(l) —
LOCK-UP AGREEMENTS WITH PARENT       SCHEDULE 6.2(n) — BRIDGE LOAN DESCRIPTION  
    COMPANY SCHEDULES       SCHEDULE 1.6(a) — MEMBERSHIP INTERESTS AND
CAPITALIZATION       SCHEDULE 2.2(a) — SUBSIDIARIES AND ORGANIZATIONAL CHART    
  SCHEDULE 2.10 — ABSENCE OF CERTAIN CHANGES OR EVENTS       SCHEDULE 2.12(b) —
EMPLOYEE BENEFIT PLANS AND COMPENSATION       SCHEDULE 2.15(a) — REAL PROPERTY

 
 
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      SCHEDULE 2.15(b) — REAL PROPERTY LEASES       SCHEDULE 2.15(c) — OPTION
AND LEASE AGREEMENTS       SCHEDULE 2.15(j) — OWNED REAL PROPERTY LEASES      
SCHEDULE 2.17(c) — UNDERGROUND STORAGE TANKS / ENVIRONMENTAL       SCHEDULE 2.21
— MATERIAL CONTRACTS       SCHEDULE 2.22(a) — DIRECTORS       SCHEDULE 2.23 —
INSURANCE COVERAGE       SCHEDULE 4.1 — PROPERTIES OF INTEREST

 
 
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