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purchaseagreement.htm

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PURCHASE
      AGREEMENT

    FAIRWAY
      VILLAGE, ST. CHARLES

     

    THIS
      AGREEMENT, made this 4th day
      of  March, 2004, by and between ST. CHARLES COMMUNITY, LLC, a Delaware
      limited liability company (hereinafter referred to as “Seller”) and U.S. HOME
      CORPORATION, a Delaware corporation (hereinafter referred to a “U.S. HOME” or
“Purchaser”).

    

    WITNESSETH,
      that for and in
      consideration of the sum of ten dollars ($10.00) paid by the Purchaser to the
      Seller and other good and valuable consideration, the receipt of which is hereby
      acknowledged and in further consideration of the mutual promises and covenants
      herein contained, the parties agree as follows:

    

    1.           PURCHASE
      PROVISIONS

    

    1.01.          Property.  Seller
      hereby grants to U.S. HOME the right to purchase approximately 1,950 developed
      single family detached and single family attached home lots on the parcel of
      land in St. Charles, Charles County, Maryland (the “County”) as shown in Parcel
      C3, D2, Sheffield Neighborhood, Fairway Village, attached hereto as Exhibit
      A,
      and made a part hereof, (hereinafter referred to as the “Property”),
      individually a “Lot” or “Lots” collectively.  U.S. HOME may elect to
      purchase so many of such Lots as it deems appropriate in accordance with the
      schedules set forth in paragraph 1.03 below.

    

    1.02           Purchase
      Price.  The
      purchase price for the Lots to be acquired by the Purchaser from the Seller
      shall be equal to thirty percent (30%) of the "selling price" of the homes
      Purchaser intends to construct on the Lots being acquired at any given
      Closing.  For purposes of this paragraph, the “selling price” shall be
      the gross sales price of any Lot and the residence and structure constructed
      or
      to be constructed thereon in accordance with the Purchaser's published retail
      prices in effect at the time of the applicable Closing, and shall include the
      Lot and any Lot premium charged by the Purchaser, the structure or structures
      built or to be built on the Lot, all of the Purchaser’s standard features
      for the model of the home in question, and unfinished basement, garage, porch
      and all floor coverings and standard finishes for the model in question, but
      shall not include charges for any upgrades or optional features selected by
      the third party homebuyer which are not routinely included in or with
      residences built by the Purchaser at the time of the closing in
      question, including but not limited to sunrooms and finished
      basements.  Additionally, for purposes of this section, "upgrades or
      optional features" shall only include those items or things which are
      traditionally upgrades or optional features for new homes sold in the Charles
      County area as of the date of the closing in question. 
Sales incentives, commissions, closing help and closing costs paid by the
      Purchaser shall not be deducted.  In the event Purchaser substitutes
      house types on any Lot following Closing, then Purchaser shall so notify Seller,
      and at the time of closing from the Purchaser to the home purchaser, Purchaser
      shall pay to Seller, or Seller shall pay to Purchaser, as applicable, any
      difference in price of the affected Lot which results from the substitution
      of
      house types.  Purchaser shall keep the Seller informed of any price
      adjustments made from time to time during the term of this Agreement in the
      Purchaser's retail price of the homes to be constructed on the Lots by the
      Purchaser.

    

    1.03.           U.S.
      HOME's Pace. Subject to Paragraph 2.13 hereof, Seller may terminate the
      rights granted to U.S. HOME herein if U.S. HOME fails to purchase two hundred
      (200) Lots per calendar year (prorated for any partial calendar year) provided
      that the Lots have been developed in accordance with the terms of this
      Agreement. The first year will commence after U.S. HOME has received
      certification from the Seller that the lots are fully subdivided and ready
      for
      issuance of building permits.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Lots
      purchased in excess of the number
      required by U.S. HOME during any period of time shall be carried over to and
      credited against requirements applicable to subsequent periods of time, and
      such
      carrying over and crediting shall be cumulative.

    

    1.04.       
      Right of Entry. From and after the date of execution and delivery hereof,
      U. S. HOME and the agents and contractors of U. S. HOME, at the expense and
      risk
      of U. S. HOME, shall have the right to enter upon the Property for the purpose
      of surveying, the conduct of engineering studies and related engineering work,
      test borings and such other similar work as U. S. HOME shall consider reasonable
      and appropriate in connection with the development of the Property; provided,
      however, that from and after the date of this Agreement and until the date
      of
      settlement hereunder, neither of the parties hereto shall have any right to
      commit waste upon the Property without the prior written consent of the other
      party. U. S. HOME shall indemnify, defend and hold the Seller harmless from
      any
      and all costs, claims and liabilities arising out of the activities undertaken
      by U. S. HOME, its employees, agents or invitees pursuant to this
      Paragraph.

    

    II.            GENERAL
      PROVISIONS

    

    
      	
              2.01.  

            	
              Exercise
                of Rights. U. S. HOME's commitment to purchase specific lots shall
                be

            

    

    made
      by
      giving at least five (5) days notice to Seller in the manner and at the place
      prescribed hereinafter.  Notices under this paragraph may be sent by
      overnight courier service or regular first-class mail or be given by
      telephone.

    

    2.02.         Place
      of Settlement. Settlement shall be held at the place designated by U. S.
      HOME in the Baltimore-Washington Metropolitan Area during normal business
      hours.

    

    2.03.        Terms
      at Settlement. At settlement, for any lot purchased hereunder, U. S. HOME
      shall pay the full purchase price thereof in cash, by wire transfer or by a
      U.
      S. HOME check. All taxes, metropolitan, district charges, front foot or other
      benefit charges or assessments charged on an annual or other periodic basis
      by a
      State, County, District, Commission or any agency or subdivision thereof shall
      be adjusted and pro-rated to the date of settlement, except that "rezoning
      transfer tax", "agricultural transfer tax" or assessments for improvements,
      existing in or on the Property prior to the date of settlement, even if payable
      thereafter, shall be paid by Seller. The cost of all documentary stamps,
      transfer taxes, recordation taxes or other taxes on the act of transfer of
      conveyance required to be paid in connection with the transfer of any lot shall
      be divided paid in full by U. S. HOME.  Recording costs, title
      examination and title insurance premiums shall be paid by U. S. HOME. Seller
      shall pay for the preparation of the Deed of Conveyance and any release fees
      and
      recording costs incurred to release liens paid at settlement.

    

    2.04.       Purchaser’s
      Requirements.

    

    (a)           Purchaser
      agrees that it will pay to Seller, at closing, in addition to the agreed
      purchase price for the Lots, any charges then in effect for connection to the
      sewer and/or water system including any charges per dwelling unit for the
      purpose of providing a sewer connection to the Mattawoman Interceptor or other
      interceptor, which charge is currently $6,543.00 per Lot.  Seller and
      Purchaser acknowledge and agree that all refunds, rebates and/or credits
      resulting from such payments, and all rights to seek repayment and/or refund
      of
      or credit against such payments, are hereby assigned to and shall be the sole
      property of the Seller and shall inure to the benefit of and be repaid directly
      to the Seller.  Seller and Purchaser further acknowledge and agree
      that any difference between the sewer connection charge applicable to the
      development outside of St. Charles and the connection fee charged on each lot
      within St. Charles, which difference currently equals $1,608, shall be the
      sole
      and exclusive property of Seller.  This fee will be due at the time of
      each closing of the Lots.

    

    (b)           Purchaser
      will pay to Seller a fee of $200.00 per dwelling unit for off-site construction
      of interceptors, pumping or treatment facilities. This fee will be due at the
      time of each closing of the Lots.

    

    (c)           Purchaser
      agrees that it will pay to the Seller (if such fees have previously been paid
      by
      Seller) or appropriate government unit at closing, any applicable school
      construction impact fees, any off-site road fees or the like then in effect
      and
      imposed by any appropriate governmental unit. Seller and Purchaser acknowledge
      and agree that all refunds, rebates and/or credits resulting from such payments,
      and all rights to seek repayment and/or refund of or credits against such
      payments, are hereby assigned to and shall be the property of the Seller and
      shall inure to the benefit of and be repaid directly to the Seller. The current
      charge per single family dwelling unit for the school construction impact fee
      is
      approximately $9,700.00, which is paid by the homebuyer as an excise tax and
      the
      current charge per dwelling unit for the off-site road fee is $750.00, which
      will be paid to Seller or appropriate governmental unit, as set forth above,
      at
      closing of each Lot.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.05           Title.

    

    (a)           Lots
      sold hereunder shall be conveyed by Seller with good and marketable, fee simple
      title, insurable at standard rates, free and clear of all liens and encumbrances
      of any kind, except:

    

    (1)           Zoning
      regulations of the County or city in which the lots lie;

    

    
      	
              (2)  

            	
              Ad
                valorem taxes and assessments not then due and
                payable;

            

    

    

    (3)  The
      matters set forth in Schedule B-2 of that title policy issued to Seller for
      the
      Property, a copy of which is attached hereto as Exhibit B and incorporated
      herein by reference;

    

    (4)           Covenants,
      conditions, easements and restrictions of record ordinarily recorded in the
      development of residential housing developments and uniformly applicable to
      all
      Lots in each group or section submitted to Purchaser, and typical and customary
      utility agreements and subdivision agreements, provided such agreements shall
      not prevent or materially affect Purchaser’s ability to construct, market and
      sell Purchaser’s standard single family homes thereon.

    

    (5)           Sewer
      and water facility charges (public and private).

    

    (6)           Zoning
      indentures and orders for the St. Charles PUD, being Docket 90 and all
      amendments thereto, public and private utility, stormwater management and
      drainage easements and agreements, and the covenants, conditions and
      restrictions of the St. Charles PUD, including, but not limited to the
      architectural approval requirements of the Planning Design Review
      Board.

    

    (b)           The
      Lots purchased hereunder shall be conveyed by Seller subject to the Declaration
      of Easements, Covenants, Conditions and Restrictions recorded for Fairway
      Village and Sheffield Neighborhoods and Fairway Village Architectural Covenants,
      as such Covenants may be amended from time to time.  At Closing,
      conveyance of the Property to the Purchaser shall be effected by a good and
      sufficient special warranty deed.

    

    (c)           Should
      Seller be unable to deliver title to any Lot in accordance with the provisions
      of this Agreement or any extension of time agreed upon by the parties, it is
      agreed that Purchaser's liability as to any such Lot shall terminate; provided,
      however, that if the defects of title are of such nature that they can readily
      be remedied by legal action, such action shall be promptly undertaken by Seller,
      at its expense, and the time of Closing extended for a period not to exceed
      sixty (60) days for such action.

    

    2.06           Development
      by Seller. Lots shall be deemed to be developed and available for closing
      hereunder when the following improvements have been installed and the following
      actions have been accomplished by Seller as to the Lot(s) to be
      settled:

    

    (a)           Operational
      public sanitary sewer with a sewer house connection installed from the sewer
      main to one foot inside the Lot line, and any and all off-site sewer extensions
      installed and operational and all fees paid in full.  Seller will
      install the sewer house connection at a depth of not more than eight feet (8’)
      at the property line.

    

    (b)           All
      storm drainage and storm drainage systems as required by the appropriate
      governmental authority for the Lot(s) in question, including payment of all
      off-site fees and charges in respect thereto.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Public
      water by way of governmentally approved system serving the Lot(s) in question,
      with a water house connection installed one foot inside the Lot line, and any
      and all off-site extensions installed and operational and all fees paid in
      full.  Seller will install the water house connection at a depth of
      not more than eight feet (8’) at the property line.

    

    (d)           Clearing,
      grubbing and grading of streets and rights of way, and the construction of
      concrete curbs and gutters, sidewalks other than those located on the Lots
      and
      base course paved streets and roads, including paved access to a public
      thoroughfare, as required by the appropriate governmental authority for the
      Property. Bonds shall be posted by Seller, as required by appropriate County
      authorities, to cover the cost of final paving, other roadway improvements
      and
      any other items which are required by the County to be bonded, and Seller shall
      remain obligated for the completion of the final course of paving following
      Closing. Construct public pathways required by the County, if any.

    

    (e)           Lots
      will be
      cleared, grubbed and graded to + or – 0.2’, based upon U. S. HOME’s grading
      plans, and balanced such that house construction can occur on each individual
      Lot without the need to import or export significant (i.e. in excess of six
      standard dump truck loads per Lot) material.  When part or all
      of the foundation, at the design elevation of a house sited on a given Lot,
      cannot be placed at natural grade, Seller will supply control-fill house pads
      with the following dimensions:  overall length and width of the
      dwelling unit and garage, plus five (5) feet on all sides.  Seller
      will utilize clean, controlled fill and provide compaction certifications (95%
      compaction) from a geotechnical engineer chosen by Seller and reasonably
      acceptable to U. S. HOME for all such fill Lots.  A copy of these
      certifications and daily inspection reports shall be provided by Seller to
      U. S.
      HOME no less than ten (10) days prior to Lot Inspection of any Lot
      hereunder.

    

    (f)           Such
      underground electric, telephone and cable television lines, and gas lines,
      as
      shall be necessary to service residential units, installed as required by the
      appropriate private or public utility, to each unit shown on the final approved
      plans of the Lot(s) in question, with connection stubs located at the property
      line of each Lot.  Gas stubs have been provided to the lots by
      Washington Gas Light with the intention to use natural gas for heating and
      hot
      water.

    

    (g)           Street
      signs, and street trees, if any, as required by appropriate governmental
      authority for the Property either paid for or bonded with bonds approved by
      the
      appropriate governmental authority.

    

    (h)           Sediment
      and erosion control measures on the Lot(s) in question for street and
utility
      construction and overlot grading as required by the appropriate governmental
      authority. Seller shall establish and maintain those facilities as required
      by
      appropriate governmental authorities.  Purchaser shall provide
      sediment and erosion control for house construction.

    

    (i)           Seller
      shall install all recreational areas, trees and shrubbery, if any, as shown
      on
      the public areas of Seller's final approved plans, as soon as practical, but
      not
      as a condition precedent to any closing hereunder; provided, however that such
      recreation areas, trees and shrubbery shall be completed in a timely manner
      so
      as not to delay or impede Purchaser's ability to obtain building and/or
      occupancy permits for the homes to be constructed on the Lots by
      Purchaser.

    

    (j)           Delivery
      by Seller to Purchaser of an engineer's certificate from Whitman, Requardt
      and
      Associates, project engineer, certifying in writing that the improvements in
      Subparagraphs 2.06 (a) through 2.06 (f) and 2.06(h) above have been
      completed in compliance with the governmentally approved plans and local
      subdivision and development standards as to the Lot(s) to be
      settled.

    

    (k)           Purchaser
      is able to obtain a building permit from appropriate County authorities, and
      upon completion of construction in accordance with the approved plans, Purchaser
      is able to obtain an occupancy permit, for a typical Purchaser single-family
      home of the type which Purchaser wishes to build in the
      subdivision.

    

    (l)           If
      VA or FHA require a bond or letter of credit, the Seller shall bond any
      improvements that are Seller's responsibility and Purchaser will bond any
      improvements that are Purchaser's responsibility.

    

    (m)           Seller
      shall have prepared and recorded appropriate documents to subject the Lots
      to
      the Declaration of Easements, Covenants, Conditions and Restrictions for Fairway
      Village and Sheffield Neighborhoods, which will, upon submission, be approved
      for FHA/VA financing.

    

    (n)           Provide
      survey controls necessary for construction stakeout and any permanent monuments
      required by law. The Seller shall install all property markers at the earliest
      practical time in accordance with governmental regulations or post a bond as
      required. The Seller will assign to Purchaser whatever warranties the Seller
      obtains from its engineers.

    

    (o)           These
      development obligations shall survive the settlement on any or all of the
      Lots.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (p)           Seller
      represents and warrants that water and sewer services shall be furnished by
      the
      Charles County Department of Utilities or such other legal entity
      responsible for furnishing water and sewer services and such services shall
      be
      available to Purchaser for each dwelling unit, as and when required by
      Purchaser, in accordance with the rates, rules and regulations then in
      effect.

    

    (q)           (i)    Seller
      is including in the sale price of the Lots as set forth herein all amenities,
      including but not limited to parks, playgrounds, school sites and neighborhood
      centers with swimming pool.  The Seller will keep the Purchaser
      informed as to the projected start date of any such center. In the interim,
      the
      Seller will arrange for all of the Purchaser’s homebuyers to have access and
      full use of a neighborhood facility until the Sheffield Neighborhood Center
      is
      completed. A fee for maintenance of community facilities and the use of the
      interim facility will be applicable in accordance with any assessments applied
      as specified herein, i.e. no more than 75 cents per hundred dollars of tax
      valuation of property annually.

    

    (ii)           Seller
      will sell, donate or dedicate to the appropriate County authority all school
      sites, i.e. one elementary and one high school site required for Fairway
      Village, as soon as practical, but not as a condition precedent to any Closing
      hereunder; provided, however, that such school sites shall be sold, donated
      or
      dedicated in a timely manner so as not to delay or impede Purchaser's ability
      to
      obtain building and/or occupancy permits for the homes to be constructed on
      the
      Lots by Purchaser.  

        When
      the
      foregoing have been accomplished by Seller as to any Lot or group of Lots,
      which
      Seller intended to sell as a part of the Lots hereunder to the Purchaser, Seller
      shall provide written notice thereof to Purchaser, and closing shall occur
      in
      the manner and time periods required by this Agreement.

    

    2.07           Purchaser's
      Responsibilities.  Purchaser will be responsible for the
      following:

    

    (a)           Construct
      and pay all costs for water, sewer, gas, telephone, cable TV, and electric
      installation from the Seller improvements, as shown on the final plans approved
      by the County, required by Section 2.06(f) to the dwelling and all charges
      of
      tap-in connection to the sewer and water systems as described in Section 2.06(a)
      and (c).  Purchaser will use its best efforts to provide gas to each
      house to the fullest extent possible.

    

    (b)           Perform
      final grading for dwelling. Provide sediment control measures as may be required
      by the County for home construction on the lots only.

    

    (c)           Construct
      sidewalks (on lot only) as may be required by the County, adjacent to the
      dwelling unit or as required by the final plans for the Property, including
      those sidewalks within street rights-of way adjacent to the Lots.

    

    (d)           Provide
      and install all mailboxes onto provided mailbox structures as required by local
      Post Office and the Fairway Village Planning and Design Review
      Board.  Purchaser will contact St. Charles Community, LLC, Land
      Development Division, at least two weeks prior to a move-in where a mailbox
      stand is needed.  Provide a light fixture in the front yard of each
      unit, such fixture as approved by the Design Review Board, or at the option
      of
      the Seller pay Two Hundred Dollars ($200.00) per unit towards a street light
      program.

    

    (e)           Keep
      the Lots clean of paper and construction debris on a continuing basis and do
      not
      store construction materials behind the curb in the road right of
      way.

    

    (f)           Sediment
      and erosion controls on individual building Lots as required for construction
      of
      a dwelling on that Lot. Sediment control measures must be installed on the
      Lot
      only and not within the road right of way.

    

    (g)           Enter
      the Lots through the construction entrance only, provided a construction
      entrance is maintained by Seller.

    

    (h)           Repair
      any damage to the curb and gutter or street which results from Purchaser's
      construction activity pursuant to Subparagraph (k) below and clean the street
      of
      dirt or other materials which results from Purchaser's activity.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)           Purchaser
      shall pay all fines imposed by Maryland Department of the Environment due to
      failure of Purchaser to comply with Erosion and Sediment Control Ordinances
      caused by Purchaser's construction activities, whether such fines are assessed
      against Purchaser and/or Seller. Purchaser will defend and indemnify Seller
      for
      any and all costs and expenses (including reasonable legal fees and court costs)
      in any action arising from actions taken by the Maryland Department of the
      Environment due to failure of Purchaser to comply with Erosion and Sediment
      Control Ordinances

    

    (j)           Purchaser
      will preserve trees designated to be saved as shown on the Final Development
      Plan.

    

    (k)           Prior
      to each settlement hereunder, representatives of Seller and Purchaser shall
      inspect the Seller's improvements relating to that Lot or Lots and agree on
      a
      list of damage deficiencies (Lot Inspection Report) a copy of which is attached
      as Exhibit C, for correction or completion by Seller. Seller shall complete
      or
      correct all items listed on the Lot Inspection Report within 30 days following
      the date thereof.  Responsibility for any damage to said improvements
      beyond the Lot Inspection Report, not caused by Purchaser's agents or employees,
      that occurs after said inspection shall be borne by Seller.  Any
      damage caused by Purchaser’s agents or employees shall be repaired by Purchaser,
      on terms as follows:  Said responsibility shall include, but not be
      limited to, repair or replacement of such damage to the satisfaction of the
      appropriate governmental authority. Purchaser shall commence said repairs within
      twenty (20) days of written request by Seller. Notwithstanding the above, Seller
      shall remain responsible for faulty workmanship or defects in any of Seller’s
      construction work, including but not limited to road subgrade, pavement and
      utility construction. After Purchaser has obtained a final inspection for all
      houses built on Lots purchased by Purchaser under this Agreement, at Purchaser's
      request, representatives of Seller and Purchaser shall again inspect the total
      improvements relating to those lots and agree on a list of repairs or
      replacements (using the Lot Inspection Report attached hereto as Exhibit C)
      to
      be accomplished by Purchaser at its expense. Responsibility for any damage
      to
      said improvements beyond the Lot Inspection Report shall be borne by the party
      causing such damage, upon a specific showing that said party, by its employees,
      agents or contractors caused such damage. All repairs required of Purchaser
      hereunder shall be to the reasonable satisfaction of the Seller, provided,
      however that if Seller fails to notify Purchaser in writing of any deficiencies
      in Purchaser’s repair work within thirty (30) days following Purchaser’s notice
      to Seller that Purchaser has completed all such repairs, then Purchaser's
      responsibility for repairs shall be deemed satisfied and Seller shall be
      completely and solely responsible for satisfying the appropriate County
      authorities and obtaining a release of Seller's bonds.

    

    In
      the event that Seller and Purchaser
      are unable to agree as to the cause of and/or the responsibility for any such
      damages, the dispute shall be submitted to an engineering firm mutually agreed
      upon by both parties to act as arbitrator. The decision of the arbitrator shall
      be binding upon both Seller and Purchaser and shall be enforceable by any
      Maryland court having jurisdiction.

    

    (l)           Purchaser
      will maintain a furnished model in the subdivision.  The model will be
      open at published hours to be determined by Purchaser.  Purchaser has
      the option to maintain additional models if desired.

    

    (m)           Purchaser
      represents and warrants that its intention in acquiring the Property is for
      the
      purpose of building and selling single-family units.

    

    (n)           The
      Seller advises Purchaser and Purchaser agrees to and shall advise all purchasers
      of lots from the builder, that the County has the right and authority to subject
      said lots to uniform front-foot benefit charges, in accordance with Charles
      County policies and regulations.  In addition, Purchaser shall provide
      all homebuyers with the Charles County required notice of the now applicable
      School Construction Excise Tax.

    

    (o)           Purchaser
      agrees that any dwelling units constructed by it on the aforesaid Lots shall
      be
      in accord with the standards, specifications, rules and regulations of all
      applicable governmental agencies.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (p)           Architectural
      Approval.

    

    (i)           Purchaser
      shall submit to the Fairway Village Planning Design and Review Board for its
      written approval, floor plans, elevations, plans for styles and exteriors,
      for
      all new dwelling units proposed to be constructed by the Purchaser on the Lots
      and for any other structures from which sales of dwelling units will be made.
      The Purchaser acknowledges that the Fairway Village Planning and Design Review
      Board or other committee designated by that Board, has the absolute right to
      approve or disapprove in its sole but reasonable discretion any and all site
      plans and architectural plans for structures to be constructed in the Fairway
      Village.

    

    (ii)           Written
      approval or disapproval of plans, elevations and other materials submitted
      by
      the Purchaser to the Planning and Design Review Board shall be delivered to
      the
      Purchaser within thirty (30) days after submission of such plans by the
      Purchaser. In the event that the Fairway Village Planning and Design Review
      Board or any committee designated by that Board shall fail to deliver written
      approval or disapproval of the Purchaser's plans within thirty (30) days after
      submission of such plans to the Board, it shall be conclusively presumed that
      the plans submitted have been approved.  

    
 

    (q)           Purchaser
      agrees that in its sales program, advertising, publicity and public relations
      campaign, copy for newspapers, radio, television, billboard and other
      advertising media and in brochures, circulars and the like, the name and logo
      “St. Charles” shall be publicized in a prominent manner, and that all
      advertising copy shall be submitted to and approved by Seller prior to being
      used by Purchaser. Provided, however, that Purchaser reserves the right to
      place
      advertisements which feature more than one Purchaser community and this
      paragraph shall not apply to such type of advertising.

    

    (i)           Purchaser
      agrees that any advertisement for the sale of housing constructed by it at
      St.
      Charles will adhere to the following restrictions:

    

                    (ii)          All
      advertising in any communications medium or any printed matter made available
      to
      the public shall contain the equal housing opportunity logo, statement or slogan
      of the Department of Housing and Urban Development (37 F.R. 6702, Table
      II).

    

                    (iii)       
       Seller shall provide the necessary signs from the road to the model home
      site.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (r)           Purchaser
      agrees that all of the Lots conveyed under this Agreement are subject to all
      restrictive covenants referred to herein, as such covenants may be amended
      from
      time to time; provided that no such amendment shall have a material adverse
      effect on Purchasr’s ability to construct, market and sell its proposed homes on
      the Lots. The covenants will contain the power of assessment in the Sheffield
      Neighborhood Association, Inc., its successors and assigns. Such assessment
      shall be prorated between the Purchaser and Seller as of the date of settlement.
      The assessment shall not be more than 75 cents per hundred dollars of tax
      valuation of the Property annually.

    

    (s)           Purchaser
      agrees that prior to and during the period in which a home or homes on the
      Property are being constructed, Purchaser shall permit Comcast, or its purchaser
      or assignee, and its agents, employees and contractors, to lay CATV cable in
      the
      same trenches opened for the running of electric lines and, at reasonable times
      and upon reasonable notice, to enter the premises and pre-wire the premises
      for
      cable television service. The right of access granted hereby shall be for the
      benefit of and exercisable by Comcast, or any successor or assignee thereto
      succeeding to the ownership or operation of its cable television system in
      St.
      Charles. Seller agrees to indemnify Purchaser for any claims filed against
      Purchaser by Comcast.

    

    (t)           Purchaser
      agrees that neither it nor anyone authorized to act for it will refuse to sell,
      after the making of a bona fide offer, or refuse to negotiate for the sale
      of or
      to otherwise make unavailable or deny a Lot covered by this Agreement to any
      person because of race, color, religion, sex, national origin, family status,
      handicap, age, or other discriminatory basis.

    

    (i)           Seller
      and Purchaser agree that any restrictive covenant on the Property relating
      to
      race, color, religion, sex, or national origin, or other discriminatory basis
      is
      recognized as being illegal and void and is specifically
      disclaimed.

    

    2.08           Removal
      of Debris. Each party shall remove all of its equipment, material and all
      debris resulting from their respective development.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.09           Common
      and Recreational Areas and Open Space. The parties hereto recognize that
      provisions may have to be made for the maintenance and management of common
      areas, open space, and recreation facilities and areas. It will be Seller's
      responsibility to establish such provision through an overall community
      association and such other appropriate means as Seller may elect. Purchaser
      agrees to be a member of any such association while Purchaser owns Lots within
      such association's jurisdiction, and to otherwise cooperate fully with the
      establishment and observance of such provisions for the maintenance and
      management of the common and recreational areas and open space. Purchaser also
      agrees to make all sales subject to such approved provisions as may be
      applicable thereto.

    

    2.10           Seller's
      Representations and Warranties. The Seller represents and warrants to
      Purchaser that, as of the date of execution and delivery of the Agreement and
      as
      of the date of each closing:

    

    (a)           The
      Seller (i) has the full right, power and authority to enter into this Agreement;
      (ii) has the full power and authority to bind all persons having any interest
      in
      the Property (excluding any mortgagee of the Property and any party secured
      by
      any deed of trust encumbering the Property) to the obligations of the Seller
      set
      forth in this Agreement; (iii) has obtained all consents and approvals necessary
      to make this Agreement binding upon the Seller and to permit performance by
      the
      Seller of the terms and provisions of this Agreement.

    

    (b)           This
      Agreement does not violate the terms of any other agreement to which the Seller
      is a party or by which the Seller or the Property is bound.

    

    (c)           The
      Seller is not a "foreign person" within the meaning of the Internal Revenue
      Code
      and the transaction contemplated hereby does not constitute a disposition of
      a
      U.S. real property interest by a foreign person, and Seller will sign an
      affidavit to this effect at each Closing.

    

    (d)  Seller
      has good and marketable title to the Property subject only to the matters
      described in Sections 2.05(a)(1)-(6).

    

    (e)  There
      is no pending, nor, to the best of Seller’s knowledge, threatened condemnation
      affecting the Property or any portion thereof.

    

    (f)  Seller
      has not received notice of violation of any laws, ordinances, regulations,
      statutes, rules or restrictions pertaining to and affecting the
      Property.

    

    (g)  There
      are no legal actions, suits or other legal or administrative proceedings,
      pending, that affect the Property or any portion thereof.

    

    (h)  Except
      as disclosed (i) elsewhere in this Agreement or (ii) in the public records
      (including but not limited to zoning records), no written or verbal commitments
      have been made to any governmental authority, utility company, school board,
      church or other religious body, or any homeowners association, or to any other
      organization, group, or individual, relating to the Property which would impose
      an obligation upon Purchaser or their successors or assigns to make any
      contribution or dedications of money or land or to construct, install, or
      maintain any improvements of a public or private nature on or off the
      Property.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)  There
      has been no excavation, dumping or burial of any refuse materials or debris
      of
      any nature whatsoever on the Property and to the best of Seller’s knowledge,
      there are no Hazardous Materials (as defined below) on the Property that would
      subject Purchaser to any liability under either Federal or state laws,
      including, but not limited to, the disposal of any foreign objects or materials
      upon or in the Property, lawful or otherwise, and without limiting the
      generality of the foregoing, to the best of Seller’s knowledge:  (1)
      the Property is not now and has never been used to generate, manufacture,
      refine, transport, treat, store, handle, dispose, transfer, produce, process
      or
      in any manner deal with Hazardous Materials (as that term is hereinafter
      defined);  (2) no Hazardous Materials have ever been installed,
      placed, or in any manner dealt with on the Property; and (3) no owner of the
      Property or any tenant, subtenant, occupant, prior tenant, prior subtenant,
      prior occupant or person (collectively, “Occupant”) has received any notice or
      advice from any governmental agency or any Occupant with regard to Hazardous
      Materials on, from or affecting the Property.  The term “Hazardous
      Materials” as used herein includes, without limitation, gasoline, petroleum
      products, explosives, radioactive materials, hazardous materials, hazardous
      wastes, hazardous or toxic substances, polychlorinated biphenyls or related
      or
      similar materials, asbestos or any material containing asbestos, or any other
      substance or material as may be defined as a hazardous or toxic substance by
      any
      Federal, state or local environmental law, ordinance, rule, or regulation
      including, without limitation, the Comprehensive Environmental Response,
      Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601,
      et
      seq.), the Hazardous Materials Transportation Act, as amended (42 U.S.C. Section
      1801, et seq.) the Resource Conservation and Recovery Act, as amended (42 U.S.C.
      Section 1251, et seq.), the Clean Air Act, as amended (42 U.S.C. Section 7401,
      et seq.) and in the regulations adopted and publications promulgated pursuant
      thereto.

    

    (j)  To
      the best of Seller’s
      knowledge, no part of the Property has been designated as inhabited by any
      endangered species by any governmental agency having jurisdiction.

    

    (k)  Seller
      has not filed, voluntarily or involuntary, for bankruptcy relief within the
      last
      year under the laws of the United States Bankruptcy Code, nor has any petition
      for bankruptcy or receivership been filed against Seller within the last
      year.

    

    (l)  Purchaser
      is the sole contract purchaser of the Property, including all surface and
      mineral estates.

    

    (m)  Seller
      has not received notice, either oral or written, and has no knowledge that
      any
      governmental or quasi-governmental agency or authority intends to commence
      construction of any special or off-site improvements or impose any special
      or
      other assessment against the Property or any part thereof.

    

    (n)  There
      are no oral or written service, maintenance, landscaping, security, management
      or other similar contracts which affect the operation or maintenance of the
      Property.

    

    (o)  There
      are no leases, oral or written, affecting the Property or any part
      thereof.

    

    (p)  To
      the best of Seller’s knowledge, there is no annexation of the Property into any
      city or town currently in process and contemplated.

    

    (q)  There
      are no adverse or other parties in possession of the Property, or any part
      thereof.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (r)  The
      mineral or other subsurface estates have not been severed from the surface
      estate.

    

    

    2.11           Purchaser's
      Representations and Warranties.  Purchaser represents and warrants
      to the Seller that, as of the date of execution and delivery of this Agreement
      and as of the date of each Closing:

    

    (a)           Purchaser
      (i) has the full right, power and authority to enter into this Agreement; and
      (ii) has obtained all consents and approvals necessary to make this Agreement
      binding upon Purchaser and to permit performance by Purchaser of the terms
      and
      provisions of this Agreement.

    

    (b)           This
      Agreement does not violate the terms of any other agreement to which
      Purchaser is a party or by which Purchaser or its property is
      bound.

    

    (c)           Purchaser
      will promptly apply for and diligently pursue its application for building
      and
      other permits.

    

    2.12           Real
      Estate Commissions.  Each party represents and warrants to the
      other that it has not used the services of any real estate agent, broker or
      finder with respect to the transaction contemplated herein, and each party
      agrees to defend, indemnify and hold the other party harmless from any claims
      for brokerage commissions resulting from any agreement between any broker and
      the indemnifying party.

    

    2.13.         Default.

    

    (a)           U.
      S. HOME's Default. If U. S. HOME is the defaulting party, after notice given
      and
      after a ten (10) day cure period, because of the difficulty in calculating
      damages, the parties agree that Seller's sole and exclusive remedy at law if
      the
      Purchaser fails to meet the pace of take downs as described in Section 1.03,
      or
      any other default covered in this contract, the Seller shall have the right
      to
      terminate this Agreement and retain the Deposit as full liquidated damages
      as
      Seller’s sole remedy.  Upon any such termination, neither party shall
      have any further rights or obligations under this Agreement, except with respect
      to Lots previously purchased by U.S. HOME hereunder.  Without
      limitation to the foregoing, upon such termination, Seller shall have the right
      to sell and convey any one or more Lots not previously purchased by U.S. HOME
      to
      any third party home builder or developer of Seller’s selection.

    

              (b)             Upon
      any default hereunder by Seller, after notice given and after a ten (10) day
      cure period, if Seller fails to cure or correct the default, U.S. HOME shall
      have available all remedies at law or in equity, including, without limitation,
      the right to specific performance of this Agreement.

    

    In
      any action or proceeding brought to
      enforce the provisions of this Agreement by either party, in addition to all
      other rights and remedies set forth above, the prevailing party shall be
      entitled to an award of its costs incurred in connection with such action or
      proceeding, including, without limitation, all of its reasonable attorney’s
      fees.

            

             
 For
      purposes of this Agreement, a default under this Agreement by Seller shall
      also
      constitute a default by Seller under that Development Agreement, dated March
      4,
      2004, between Seller, as "Developer" thereunder, and Purchaser, as "Builder"
      thereunder (the "Development Agreement"), and a default under the Development
      Agreement by either party shall also constitute a default under this Agreement
      by that party; however, a default under this agreement by Purchaser shall not
      constitute a default by Purchaser under the Development Agreement.

         

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        2.14           Notices.
      All notices authorized or required herein shall be in writing and shall be
      considered given when delivered if hand delivered, one (1) business day
      following deposit with a national overnight courier service, or three (3)
      business days following deposit, postage prepaid, with the U.S. Postal Service,
      by registered or certified mail, return receipt requested, to Seller or U.
      S.
      HOME at their respective addresses as set forth below (or any substitute address
      if notice of substitution is given in accordance with this
      section):

    

    

    SELLER:                           
       St. Charles Community, LLC

                                                               
      222 Smallwood Village Center

                                                               
      St.
      Charles, Maryland 20602

                                                               
      Attention:  Edwin L. Kelly

    

    With
      copy
      to:                 
Chapman, Bowling & Scott, P.A.

                                                              
      P.O. Box 610

                                                              
      La
      Plata, MD 20646

                                                              
      Telecopy
      No.  301-870-6471

                                                              
      Attention:  Stephen
      H. Scott, Esq.

    

    

    PURCHASER:                  U.
      S. HOME CORPORATION

                                                               10230
      New
      Hampshire Avenue

                                                               Suite
      300

                                                               Silver
      Spring, MD 20903

                                                              
      Attention:  Philip
      F. Barber, Division President

    

    With
      a copy
      to:             
U.S. Home Corporation

                                                              Legal
      Department

                                                              10707
      Clay Road

                                                              Houston,
      TX 77041

                                                             
      Telecopy
      No.: 713-877-2471

    

    And
      to:                            Walsh,
      Colucci, Lubeley, Emrich & Terpak, P.C.

                 13663
      Office Place, Suite 201

                 Woodbridge,
      VA 22192

                 Telecopy
      No.:  703-690-2412

                 Attention:  David
      J. Bomgardner, Esq.

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.15           Headings.
      The headings of the paragraphs herein are for convenience only and shall not
      affect the meanings or interpretations of the contents thereof.

    

    2.16           Complete
      Agreement. This Agreement represents the complete understanding between the
      parties hereto and supersedes all prior negotiations, representations or
      agreements, whether written or oral, as to the matters described herein. This
      Agreement may be amended only by written instrument signed by both parties.
      No
      requirement, obligations, remedy or provision of this Agreement shall be deemed
      to have been waived, unless so waived expressly in writing, and any such waiver
      of any provision shall not be considered a waiver of any right to enforce such
      provision thereafter. This Agreement may be executed simultaneously in one
      or
      more counterparts, each of which shall be deemed to be an original, but all
      of
      which together shall constitute one and the same instrument. This Agreement
      shall be construed according to the laws of the State of Maryland and
      uncertainties shall not be construed against the drafter.

    

    2.17           Severabilitv.
      If any provision of this Agreement shall be held violative of any applicable
      law
      or unenforceable for any reasons, the invalidity of unenforceability of any
      such
      provision shall not invalidate or render unenforceable any other provision
      hereof, which shall remain in full force and effect.

    

    2.18           Survival.
      The covenants, agreements and conditions herein contained shall survive
      recordation of the Deeds of Conveyance and shall inure to the benefit of and
      bind the successors and assigns of the parties hereto.

    

    2.19           Assignment
      of Agreement. U. S. HOME and Seller shall not have the right to assign this
      Agreement without the prior written consent of the other party, which shall
      not
      be unreasonably withheld. In considering an assignee, each party shall be
      entitled to adequate assurances of the assignee's financial capability to
      perform under this Agreement and the assignee's ability to physically perform
      under this Agreement. And purported assignment of this Agreement in violation
      hereof shall be voidable at the option of the other
      party.  Notwithstanding the above, Purchaser shall have the right to
      assign this Agreement, without the Seller’s approval, to Lennar Corporation
      (Purchaser’s corporate parent) or to any affiliate of Lennar Corporation or
      Purchaser.  Upon any such assignment, the assignee shall become the
      Purchaser for all purposes of this Agreement.

    

    2.20           Authority.
      Each signer of this Agreement warrants to the other party that he or she has
      full authority to execute this Agreement.

    

    2.21           Time.  Time
      is of the essence with respect to each and every provision of this
      Agreement.

    

    

    (SIGNATURES
      APPEAR ON FOLLOWING PAGE)

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Parties by their respective duly authorized officers,
      have
      executed this agreement and affixed their respective corporate seals hereto,
      the
      day and year first above written.

    

                                                                       PURCHASER:

      U.
      S. HOME
      CORPORATION

                                                        

                                     
       By: /s/ Philip F.
      Barber

                       Name:
      Philip F.
      Barber

                                   Its:
      Division
      President

      
Date:
      March 4, 2004

    
 

                                                                                 SELLER:

       ST.
      CHARLES
      COMMUNITY, LLC

    

                                                                          
        By: /s/ Edwin L. Kelly

                             
Edwin
      L. Kelly, Chairman of the
      Management Committee

                         
      Date: March 4, 2004developmentagreement.htm

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    DEVELOPMENT
      AGREEMENT

    

    THIS
      DEVELOPMENT
      AGREEMENT (this “Agreement”) is made this 4th day of
      March, 2004 (the “Effective Date”), by and between ST.
      CHARLES COMMUNITY, LLC, a Maryland limited liability company (the
“Developer”) and U.S. HOME CORPORATION, a
      Delaware corporation (the “Builder”).

    

    RECITALS:

    

    A.           The
      Developer is engaged in the subdivision and development of a residential planned
      unit development community located in Charles County, Maryland and known as
      St.
      Charles (“St. Charles”).

    

    B.           A
      portion of the St. Charles community identified by cross-hatching on the drawing
      attached hereto as Exhibit A is being developed by the Developer as a
      residential community known as Fairway Village (“Fairway
      Village”).  The development plans for Fairway Village
      contemplate that from and after the Effective Date, Fairway Village will be
      developed with an additional approximately 1,950 residential lots (each, a
      “Lot” and collectively, the “Lots”), such Lots
      to be for the construction of attached and detached single family homes (and
      not
      condominiums or multifamily units) (each, a “Unit” and
      collectively, the “Units”).

    

    C.           The
      Developer and the County Commissioners of Charles County, Maryland, a body
      corporate (the “County”) are parties to an Order dated as of
      December 13, 1989, as amended on August 15, 1994, as further amended on July
      22,
      2002 (collectively, the “Order”), pursuant to which the
      Developer has agreed, inter alia, to make certain public facility
      improvements as more fully described in the Order (the “Public Facility
      Improvements”) to facilitate the development of Fairway
      Village.

    

    D.           The
      Developer and the County have further agreed, on terms and conditions more
      fully
      set forth in the Order, that the cost of the Public Facility Improvements will
      be financed through the issuance by the County of its general obligation bonds
      (the “Bond Financing”).

    

    E.           The
      County has required that the Developer secure its obligations with respect
      to
      the Bond Financing with the posting of one or more letters of credit (each,
      an
“LOC” and collectively, the “LOC’s”), from
      time to time with the County.

    

    F.           To
      facilitate the development of Fairway Village, the Builder has agreed to post
      one or more of the LOC’s required in connection with the Bond Financing, on the
      terms and conditions set forth in this Agreement, and in return therefor, the
      Builder will have the right to purchase Lots in Fairway Village on a
      preferential basis, also on the terms and conditions set forth in this
      Agreement.

    

    NOW,
      THEREFORE, for
      good and valuable consideration, the receipt and adequacy of which is
      acknowledged, the Developer and the Builder agree as follows:

    

    1.           Letters
      of Credit.  The Builder agrees that at any time, and from time to
      time, upon not less than thirty (30) days written notice from the Developer,
      the
      Builder will provide one or more LOC’s in form substantially similar to the form
      attached hereto as Exhibit B, to secure the obligations of the Developer
      to the County pursuant to the Bond Financing.  In no event shall the
      aggregate face amount of LOC’s posted by the Builder from time to time be
      required to exceed a sum equal to Twenty Million Dollars
      ($20,000,000.00).  Each LOC shall be issued by a financial institution
      acceptable to the County in its sole discretion, shall be irrevocable for a
      period of one year, and shall contain an “evergreen” provision, which provides
      for automatic renewal of the LOC unless prior written notice of non-renewal
      is
      given by the issuer of the LOC not less than thirty (30) days prior to the
      expiration thereof, in which event the County shall have the right to draw
      upon
      the full amount thereof and hold such proceeds as cash collateral hereunder
      in
      lieu thereof, unless a substitute LOC acceptable to the County is posted by
      the
      Builder at least fifteen (15) days prior to such expiration date.  The
      Developer agrees that Bank One will be an acceptable issuer of the
      LOC.  The Builder shall pay all costs and expenses associated with
      providing the LOC’s from time to time, including, without limitation, all
      issuance fees, and such LOC’s shall be issued solely on the credit of the
      Builder.  The Builder acknowledges that the aggregate face amount of
      the LOC’s required to be provided by the Builder may both increase and decrease
      from time to time, provided that the maximum amount secured by the LOC’s at any
      time shall not exceed $20,000,000.00.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.           Right
      to Purchase Lots.  (a)  In consideration of the
      Builder’s fulfillment of its obligations pursuant to this Agreement, the
      Developer grants to the Builder the right to purchase, on an exclusive basis,
      all of the Lots as such Lots are subdivided and developed from time to
      time.  The purchase of the Lots by Builder shall be on the terms and
      conditions set forth in this Agreement, and otherwise on the terms and
      conditions of the form purchase and sale agreement attached hereto as Exhibit
      C.  The mix of the lots between townhouse lots, large single
      family lots and small single family lots shall be in accordance with
      the existing approvals for the Fairway Village Project, which
      currently include approximately 591 townhouse lots, approximately 752 large
      single family detached lots and approximately 599 small single family detached
      lots.    At the request of the Builder, the Developer shall
      make reasonable efforts to change the Lot mix, so long as the change will not
      result in a material delay in any of the subdivision and development efforts
      for
      the Fairway Village Project.  The
      purchase price for the Lots to be acquired by the Builder from the Developer
      shall be equal to thirty percent (30%) of the "selling price" of the homes
      Builder intends to construct on the Lots being acquired at any given
      Closing.  For purposes of this paragraph, the “selling price” shall
      mean the gross sales price of any Lot and the residence and structure
      constructed or to be constructed thereon in accordance with the Builder's
      published retail prices in effect at the time of the applicable Closing, and
      shall include the Lot and any Lot premium charged by the Builder, the structure
      or structures built or to be built on the Lot, all of the Builder's standard
      features for the model of home in question, and unfinished basement, garage,
      porch, and all floor coverings and standard finishes for the model in question,
      but shall not include charges for any upgrades or optional features selected
      by
      the third party homebuyer which are not routinely included in or with residences
      built by the Builder at the time of the Closing in question, including but
      not
      limited to sunrooms and finished basements.  Additionally, for purposes of
      this section "upgrades or optional features" shall only include those items
      or
      things which are traditionally upgrades or optional features for new homes
      sold
      in the Charles County area as of the date of the Closing in question. 
Sales incentives, commissions, closing help and closing costs paid by the
      Builder shall not be deducted.   In
      the event Builder substitutes house types on any Lot following Closing, then
      Builder shall so notify Developer, and at the time of closing from the Builder
      to the home purchaser, Builder shall pay to Developer, or Developer shall pay
      to
      Builder, as applicable, any difference in price of the affected lot which
      results from the substitution of house types.  Builder shall keep the
      Developer informed of any price adjustments made from time to time during the
      term of this Agreement in the Builder's retail price of the homes to be
      constructed on the lots by the Builder. 

     

        (b)
       The
      parties anticipate that Developer will develop Lots at the rate of two hundred
      (200) Lots per year.  The Builder covenants and agrees to purchase not
      less than two hundred (200) Lots per calendar year (pro rated for any partial
      calendar year) from the Developer to the extent that the same are available
      pursuant to this Agreement.  Developer shall develop the Lots timely
      so as to have sufficient Lots available for Builder to purchase one-twelfth
      of
      its required annual number of Lots each month.  If Developer does not
      maintain its development pace to allow Builder to purchase one-twelfth of its
      required annual number of Lots each month, then Builder’s annual purchase
      requirement shall be reduced by the shortfall in available Lots.  If
      at any time Builder fails to purchase any Lots made available to the Builder
      pursuant to this Agreement, the Developer shall be free to sell such Lots to
      any
      other party and on any other terms, in the Developer’s sole discretion, and such
      Lots shall count against the number of Lots which the Builder is entitled to
      purchase on a preferential basis pursuant to this Agreement or call the Builder
      in default of the Agreement and exercise the remedies as set forth in Section
      4.

    

    (c)           The
      Builder acknowledges that the Developer cannot guarantee that a certain number
      of Lots will be offered to the Builder pursuant to this Agreement, and that
      the
      Developer cannot guarantee the timing when Lots will be made available or the
      exact mix of types of Lots.  The Builder further acknowledges that the
      Lots will be subject to the lien, operation and effect of all covenants,
      conditions and restrictions, and reservations of easements, which exist from
      time to time for the portions of St. Charles community and Fairway Village
      in
      which such Lots are located.

    

    (d)           The
      Builder shall have the right to assign its right to purchase the Lots which
      it
      is entitled to purchase hereunder to third parties reasonably acceptable to
      the
      Developer, provided, however, such ultimate purchasers shall purchase the Lots
      on the terms and conditions of and subject to this Agreement, and such
      assignment shall in no way relieve the Builder of any of its duties or
      obligations pursuant to this Agreement.  Developer agrees that
      Washington Homes, Ryan Homes, Pulte and Centex are all acceptable third parties
      to which Builder may assign its right to purchase Lots hereunder.  In
      addition, the Builder shall have the right to assign its right to purchase
      any
      or all of the Lots which it is entitled to purchase hereunder to any affiliate
      of Builder, however, upon such assignment such Lots shall remain subject to
      the
      restrictions on transfers set forth in this Agreement.  For purposes
      of this Agreement, an “affiliate” of Builder shall mean any other person or
      entity who directly or indirectly through one or more intermediaries, controls,
      or is controlled by, or is under common control with Builder.  As used
      in this paragraph, the term “control” (including the terms “controlling”,
“controlled by”, or “under common control with”) means the possession, direct or
      indirect, of the power to direct or cause the direction of the management and
      policies of such party, whether through ownership of voting securities or
      otherwise.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.           Security
      for Developer’s Obligations.  (a)   The parties
      acknowledge and agree that from time to time all or part of the property which
      constitutes Fairway Village may be subject to one or more land loans or
      development loans, which loans will be secured by a first priority lien against
      all or such parts of Fairway Village (collectively, the “Senior
      Liens”).  To secure the obligation of the Developer to
      reimburse the Builder for any Developer’s Reimbursement Obligation (as defined
      below), the Developer will grant to the Builder a recorded subordinate lien
      on
      the Lots owned by the Developer from time to time (the “Junior
      Lien”), which Junior Lien shall also encumber any portion of Fairway
      Village owned by the Developer from time to time which the Developer's
      development plans indicate as being intended to be, but which have not yet
      been,
      developed into Lots.  The Junior Lien shall at all times be junior and
      subordinate to the Senior Liens, as the same may be amended, extended, modified,
      replaced or refinanced from time to time; provided, however, that in no event
      shall the amount of the Senior Liens to which Builder’s Junior Lien is
      subordinate exceed a sum equal to Ten Thousand Dollars ($10,000.00) times the
      number of single-family detached and single-family attached Lots owned by
      Developer, which amount shall be increased on an annual basis by a percentage
      amount equal to the increase, if any, in the Consumer Price Index (Urban Wage
      Earners and Clerical Workers for All Items – U.S. City Average) for the
      preceding year.  The Builder covenants and agrees from time to time to
      provide written evidence of such subordination in form and substance reasonably
      satisfactory to the Developer and any lenders extending loans to the Developer
      secured in whole or in part by liens on all or parts of Fairway
      Village.  Developer agrees to use its best efforts to obtain an
      intercreditor agreement between the holder of any Senior Liens which affect
      the
      Lots as of the date hereof and Builder, and to obtain such an agreement from
      any
      person or entity who acquires a Senior Lien subsequent to the date hereof,
      substantially in the form attached hereto as Exhibit
      D.  Developer’s procurement of such an agreement from the holder
      of any Senior Liens (whether of record now or in the future) shall be a
      condition precedent to Builder’s obligations hereunder.

    

    (b)           As
      the Developer sells each Lot in Fairway Village, the Builder shall release
      such
      lot from the Junior Lien provided that, in each instance, the Developer shall
      take Ten Thousand Two Hundred Fifty Six Dollars ($10,256.00) of the proceeds
      of
      the purchase price for such Lot and escrow the same with an escrow agent
      mutually acceptable to Developer and the Builder, for the sole purpose of paying
      Developer’s obligations with respect to the Bond Financing as and when the same
      come due.  At the time the last section of Lots in Fairway Village is
      platted, the partial release escrow amount for the Lots in such section shall
      be
      adjusted as necessary so that, once all of the Lots have been sold, sufficient
      funds are contained in the said escrow account to pay off the Bond Financing
      in
      full and permit Builder to obtain the full and complete release of its
      LOC’s.  As the escrowed proceeds are used to pay the Developer’s
      obligations with respect to the Bond Financing (which shall occur on a not
      less
      frequently than annual basis), the Builder shall be entitled to reduce its
      LOC’s
      on a pro rata basis.  Developer agrees to procure from the applicable
      governmental authorities, in form and content reasonably acceptable to Builder,
      written confirmation that such authorities will permit Builder to reduce its
      LOC’s as set forth above.

    

    (c)           Provided
      that the Builder is not in default under Section 2 of this Agreement and a
      draw
      is made by the County on one or more LOC’s posted by the Builder pursuant to
      this Agreement (a “Draw”), the Developer shall reimburse the
      Builder for the amount of such Draw, together with interest at the rate of
      ten
      percent (10%) per annum on all amounts of such LOC’s drawn and outstanding from
      time to time, prorated on a daily basis from the date of the Draw to the date
      on
      which such reimbursement is made, within thirty (30) days of written notice
      from
      the Builder of the occurrence of such Draw (such reimbursement obligation,
      including all principal and interest accrued thereon, hereinafter being referred
      to collectively as “Developer’s Reimbursement
      Obligation”).

    

    (d)           From
      and after any time when the Developer fails to timely satisfy a Developer’s
      Reimbursement Obligation, the Builder shall have the following
      remedies:

    

    (i)           if
      (A) the value of all remaining Lots owned by the Developer is reasonably
      estimated to exceed (B) the sum of the obligations of the Developer with respect
      to the loans secured by the Senior Liens, the Junior Lien and all other junior
      liens securing other builders, the Builder shall not have the right to foreclose
      on the Junior Lien, but the Builder shall be entitled to apply the amount of
      such unpaid Developer’s Reimbursement Obligation on a pro rata basis based on
      the number of lots remaining to be made available to the Builder pursuant to
      this Agreement until such Developer’s Reimbursement Obligation has been paid in
      full; and

    

    (ii)           if
      (A) the value of all remaining Lots owned by the Developer is not reasonably
      estimated to exceed (B) the sum of the obligations of the Developer with respect
      to the loans secured by the Senior Liens, the Junior Lien and all other junior
      liens securing other builders, then the Builder may elect either (X) the remedy
      set forth in Section 3(d)(i) above, or (Y) the Builder may convert the amount
      due to a five-year fully-amortizing recourse term loan at an interest rate
      of
      ten percent (10%) per annum, which requires Developer to make monthly payments
      of principal and interest to Builder.  In the event Builder elects
      option (Y) as described above, and Developer thereafter defaults in its
      obligations under such recourse term loan, Builder may foreclose on the Junior
      Lien pursuant to the provisions of applicable law.

    

    For
      so long as any delinquent
      Developer’s Reimbursement Obligation remains unpaid, Developer shall place no
      new Senior Liens against Fairway Village, nor shall the maximum amount secured
      by any then-existing Senior Liens be increased, without the prior written
      consent of the Builder.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.           Security
      For Builder’s Obligations.  The Builder acknowledges that the
      posting of the LOC’s as and when required hereunder is a vital component of the
      Developer’s ability to develop the infrastructure required for Fairway Village
      pursuant to the Bond Financing, and that the Developer will be significantly
      harmed if the Builder fails to comply with such obligation.  The
      Builder further acknowledges that this Agreement and the rights granted to
      the
      Builder hereunder are of significant and material benefit to the
      Builder.  Accordingly, the Builder covenants and agrees that, if the
      Builder breaches this Agreement, and such breach is not cured within twenty
      (20)
      days following written notice thereof from the Developer, then in addition
      to
      any other rights and remedies to which the Developer may be entitled at law
      or
      in equity, all LOC’s posted by the Builder pursuant to this Agreement shall be
      immediately forfeited in favor of the Developer, and the Builder shall have
      no
      further rights to purchase Lots on the terms of this Agreement; provided,
      however, that upon any such default, Developer shall use its good faith
      commercially reasonable efforts to attempt to obtain an agreement by any
      subsequent purchaser of the Lots which were to be purchased by Builder pursuant
      to this Agreement to post its own LOC’s in substitution for Builder’s LOC’s, and
      upon the posting of substitute LOC’s by such subsequent purchaser of such Lots,
      all LOC’s posted by the Builder (or, if said LOC’s had previously been drawn
      upon and converted into cash, then the cash derived from said LOC’s) shall be
      returned to the Builder.

    

    5.           Title
      to Lots.  The Developer hereby represents and warrants to the
      Builder that the status of title to the Lots is as set forth on Developer’s
      title policy, a copy of which is attached to this Agreement as Exhibit E
      and incorporated herein by reference, and that the Lots are not subject to
      any
      exceptions to title other than those identified in Schedule B-2 of the said
      policy.  Following the date of this Agreement, Developer shall not,
      without the prior written consent of Builder, which consent shall not
      unreasonably be withheld, conditioned or delayed, create any new encumbrances
      on
      or exceptions to title to the Lots which will survive closing on the sale of
      such Lots to Builder, other than (i) covenants, conditions, easements and
      restrictions ordinarily recorded in the development of residential housing
      developments, and typical and customary utility agreements and subdivision
      agreements, provided such covenants, conditions, easements restrictions and
      agreements shall not prevent or materially affect Purchaser’s ability to
      construct, market and sell Purchaser’s standard single family homes thereon;
      (ii) ad valorem taxes and assessments not then due and payable; (iii) zoning
      regulations of the County or city in which the lots lie; (iv) sewer and water
      facility charges; and (v) the Declaration of Easements, Covenants, Conditions
      and Restrictions recorded for Fairway Village and Sheffield Neighborhoods and
      Fairway Village Architectural Covenants.

    

    6.           Notices.
      All notices and other communications hereunder shall be in writing and shall
      be
      delivered personally against receipt or shall be sent by registered mail,
      certified mail, or Express Mail service, postage prepaid and return receipt
      requested, or by a nationally-recognized overnight delivery service, addressed
      to the parties as follows:

    

    To
      the
      Builder:                      U.S.
      Home
      Corporation                                                                

    10230
      New
      Hampshire Avenue

    Suite
      300

    Silver
      Spring, MD  20903

    Attn:  Philip
      F. Barber,

                                                            Division
      President

    Fax
      No.:
      (301) 408-0443

    

    With
      a
      copy
      to:                    U.S.
      Home Corporation

    Legal
      Department

    10707
      Clay Road

    Houston,
      Texas 77041

    Fax
      No.: (713) 877-2471

    

    And
      to:                                
 David J. Bomgardner

    Walsh,
      Colucci, Stackhouse,

    Emrich
      & Lubeley, P.C.

    13663
      Office Place, Suite 201

    Woodbridge,
      VA  22192

    Fax
      No.:
      (703) 690-2412

    

    To
      the
      Developer:                Mr.
      Edwin L. Kelly

    President

    American
      Community Properties
      Trust

    222
      Smallwood Village
      Center

    St.
      Charles, Maryland
      20602

    

    With
      a copy
      to:                    Stephen
      H. Scott, Esq.

                                             
      Chapman, Bowling & Scott, P.A.

                                             
      112 La Grange Ave

                                                           
      PO Box 610

                                                           
      La Plata, Maryland 20646

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.           Counterparts.
      This Agreement may be executed in a number of identical
      counterparts.  If so executed, each of such counterparts shall,
      collectively, constitute one agreement; but in making proof of this agreement,
      it shall not be necessary to produce or account for more than one such
      counterpart.

    

    8.           Non-Business
      Days. If the date for delivery of a notice or performance of some
      obligation of the County or the Developer falls on a Saturday, Sunday or legal
      holiday in the State of Maryland, then the date for such notice or performance
      shall be postponed until the next business day.

    

    9.           Governing
      Law.  This Agreement, and the validity, construction,
      interpretation and enforcement thereof, shall be governed by the laws of the
      State of Maryland.

    

    10.         Condition
      Precedent.  Builder acknowledges that it has obtained the
      written approval of this transaction from the Corporate Investment Committee
      of
      Lennar Corporation, and has thus satisfied a condition precedent to its
      obligations under this Agreement.

     

        11.            
      Cross Default.  For purposes of this Agreement, a default
      under this agreement by either party shall also constitute a default by that
      party under the Purchase Agreement, and a default under the Purchase Agreement
      by Developer shall also constitute a default under this agreement by Developer;
      however, a default under the Purchase Agreement by Builder shall not constitute
      a default under this Agreement by Builder.

    

     

    WITNESS
      the signatures of the parties
      set forth below:

    

    THE
      BUILDER:

    

    U.S.
      HOME CORPORATION

    

    

    By:
/s/
      Philip F.
      Barber

    Name:
      Philip F. Barber

    Title:
      Division
      President

    

    THE
      DEVELOPER:

    

    ST.
      CHARLES COMMUNITY,
      LLC

    

    By:
/s/
      Edwin L.
      Kelly

    Edwin
      L. Kelly, Chariman of the
      Management

    Committee

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