Document:

[NAME OF CORPORATION]

BALATON POWER INC.

2004 STOCK OPTION PLAN

dated June 25, 2004

PART I

THE PLAN

Title

1.1  This plan is entitled the "2004 Stock Option Plan" (the "Plan") of Balaton Power Inc., a British Columbia company (the "Company").

Purpose

1.2  The purpose of the Plan is to enhance the long-term stockholder value of the Company by offering opportunities to directors, officers, employees and eligible consultants of the Company and any Related Company, as defined below, to acquire and maintain stock ownership in the Company in order to give these persons the opportunity to participate in the Company's growth and success, and to encourage them to remain in the service of the Company or a Related Company. 

PART 2

DEFINITIONS

2.1  The following terms will have the following meanings in the Plan: 

(a)  "Board" means the Board of Directors of the Company;

(b)  "Cause" unless otherwise defined in the instrument evidencing the award or in an employment or services agreement between the Company or a Related Company and a Participant, means a material breach of the employment or services agreement, dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as determined by the Plan Administrator, and its determination shall be conclusive and binding;

(c)  "Code" means the Internal Revenue Code of 1986, as amended from time to time;

(d)  "Common Stock" means the common stock, par value $0.001 per share, of the Company;

(e)  "Consultant Participant" means a Participant who is defined as a Consultant Participant in Part 5; 

(f)  "Corporate Transaction" unless otherwise defined in the instrument evidencing the Option or in a written employment or services agreement between the Company or a Related Company and a Participant, means consummation of either

    (i)  a merger or consolidation of the Company with or into any other corporation, entity or person, or

    (ii)  a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all the Company's outstanding securities or all or substantially all the Company's assets; provided, however, that a Corporate Transaction shall not include a Related Party Transaction;

(g)  "Disability" unless otherwise defined by the Plan Administrator, means a mental or physical impairment of the Participant that is expected to result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes the Participant to be unable, in the opinion of the Company, to perform his or her duties for the Company or a Related Company and to be engaged in any substantial gainful activity;

(h)  "Employment Termination Date" means, with respect to a Participant, the first day upon which the Participant no longer has an employment or service relationship with the Company or any Related Company;

(i)  "Exchange Act" means the Securities Exchange Act of 1934, as amended;

(j)  "Fair Market Value" means the per share value of the Common Stock determined as follows: 

    (i)  if the Common Stock is listed on an established stock exchange or exchanges or the NASDAQ National Market, the closing price per share on the last trading day immediately preceding such date on the principal exchange on which it is traded or as reported by NASDAQ; 

    (ii)  if the Common Stock is not then listed on an exchange or the NASDAQ National Market, but is quoted on the NASDAQ Small Cap Market, the NASDAQ electronic bulletin board or the National Quotation Bureau pink sheets, the average of the closing bid and asked prices per share for the Common Stock as quoted by NASDAQ or the National Quotation Bureau, as the case may be, on the last trading day immediately preceding such date; or 

    (iii)  if there is no such reported market for the Common Stock for the date in question, then an amount determined in good faith by the Plan Administrator;

(k)  "Grant Date" means the date on which the Plan Administrator completes the corporate action relating to the grant of an Option or such later date specified by the Plan Administrator, and on which all conditions precedent to the grant have been satisfied, provided that conditions to the exercisability or vesting of Options shall not defer the Grant Date;

(l)  "Incentive Stock Option" means an Option granted with the intention, as reflected in the instrument evidencing the Option, that it qualify as an "incentive stock option" as that term is defined in Section 422 of the Code;

(m)  "Nonqualified Stock Option" means an Option other than an Incentive Stock Option;

(n)  "Option" means the right to purchase Common Stock granted under Part 7;

(o)  "Option Expiration Date" has the meaning set forth in Section 7.6;

(p)  "Option Term" has the meaning set forth in Section 7.3;

(q)  "Participant" means the person to whom an Option is granted and who meets the eligibility requirements imposed by Part 5, including Consultant Participants, as defined in Part 5;

(r)  "Plan Administrator" has the meaning set forth in Section 3.1;

(s)  "Related Company" means any entity that, directly or indirectly, is in control of or is controlled by the Company;

(t)  "Related Party Transaction" means 

    (i)  a merger or consolidation of the Company in which the holders of shares of Common Stock immediately prior to the merger hold at least a majority of the shares of Common Stock in the Successor Corporation immediately after the merger,

    (ii)  a sale, lease, exchange or other transaction in one transaction or a series of related transactions of all or substantially all the Company's assets to a wholly-owned subsidiary corporation,

    (iii)  a mere reincorporation of the Company, or

    (iv)  a transaction undertaken for the sole purpose of creating a holding company that will be owned in substantially the same proportion by the persons who held the Company's securities immediately before such transaction;

(u)  "Retirement," unless otherwise defined by the Plan Administrator from time to time for purposes of the Plan, means retirement on or after the individual's normal retirement date under the Company's 401(k) plan or other similar successor plan applicable to salaried employees;

(v)  "Securities Act" means the Securities Act of 1933, as amended;

(w)  "Successor Corporation" has the meaning set forth in Section 11.3(a); and

(x)  "Vesting Commencement Date" means the Grant Date or such other date selected by the Plan Administrator as the date from which the Option begins to vest for purposes of Section 7.4;

PART 3

ADMINISTRATION

Plan Administrator 

3.1  The Plan shall be administered by the Board or a committee appointed by, and consisting of two or more members of, the Board (the "Plan Administrator"). If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the members of any committee acting as Plan Administrator, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange Act. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time.   At any time when no committee has been appointed to administer the Plan, then the Board will be the Plan Administrator.

Administration and Interpretation by Plan Administrator

3.2  Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to determine all matters relating to Options under the Plan, including the selection of individuals to be granted Options, the type of Options, the number of shares of Common Stock subject to an Option, all terms, conditions, restrictions and limitations, if any, of an Option and the terms of any instrument that evidences the Option. The Plan Administrator shall also have exclusive authority to interpret the Plan and the terms of any instrument evidencing the Option and may from time to time adopt and change rules and regulations of general application for the Plan's administration. The Plan Administrator's interpretation of the Plan and its rules and regulations, and all actions taken and determinations made by the Plan Administrator pursuant to the Plan, shall be conclusive and binding on all parties involved or affected. The Plan Administrator may delegate administrative duties to such of the Company's officers as it so determines. 

PART 4

STOCK SUBJECT TO THE PLAN

Authorized Number of Shares 

4.1  Subject to adjustment from time to time as provided in Section 11.1, the number of shares of Common Stock available for issuance under the Plan shall be 3,000,000  shares of Common Stock.  Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares. 

Reuse of Shares 

4.2  Any shares of Common Stock that have been made subject to an Option that cease to be subject to the Option (other than by reason of exercise or settlement of the Option to the extent it is exercised for or settled in shares) shall again be available for issuance in connection with future grants of Options under the Plan. In the event shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision or right of repurchase, such shares shall again be available for the purposes of the Plan; provided, however, that the maximum number of shares that may be issued upon the exercise of Incentive Stock Options shall equal the share number stated in Section 4.1, subject to adjustment from time to time as provided in Section 11.1; and provided, further, that for purposes of 4.3, any such shares shall be counted in accordance with the requirements of Section 162(m) of the Code. 

Limitations 

4.3  (a)  Subject to adjustment from time to time as provided in Section 11.1, not more than an aggregate of 3,000,000 shares of Common Stock shall be available for issuance pursuant to grants of Stock Options under the Plan. 

(b)  Subject to adjustment from time to time as provided in Section 11.1, not more than 1,000,000 shares of Common Stock may be made subject to Options under the Plan to any individual in the aggregate in any one fiscal year of the Company, except that the Company may make one-time grants of up to 1,000,000 shares to newly hired or newly promoted individuals, such limitation to be applied in a manner consistent with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation on deductibility of compensation under Section 162(m) of the Code. 

PART 5

ELIGIBILITY

5.1  An Option may be granted to any officer, director or employee of the Company or a Related Company that the Plan Administrator from time to time selects. An Option may also be granted to any consultant, agent, advisor or independent contractor who provides services to the Company or any Related Company (a "Consultant Participant"), so long as such Consultant Participant 

(a)  is a natural person or an alter ego entity of the natural person providing the services, 

(b)  renders bona fide services that are not in connection with the offer and sale of the Company's securities in a capital-raising transaction, and 

(c)  does not directly or indirectly promote or maintain a market for the Company's securities. 

PART 6

OPTIONS

Form and Grant of Options 

6.1  The Plan Administrator shall have the authority, in its sole discretion, to determine the type or types of Options to be granted under the Plan. Options may be granted singly or in combination. 

Settlement of Options 

6.2  The Company may settle Options through the delivery of shares of Common Stock, the granting of replacement Options or any combination thereof as the Plan Administrator shall determine. Any Option settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Plan Administrator shall determine. The Plan Administrator may permit or require the deferral of any Option payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred stock equivalents. 

PART 7

GRANTS OF OPTIONS

Grant of Options 

7.1  The Plan Administrator shall have the authority, in its sole discretion, to grant Options as Incentive Stock Options or as Nonqualified Stock Options, which shall be appropriately designated. 

Option Exercise Price 

7.2  The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator, provided that:

(a)  the exercise price for Options granted to Participants other than Consultant Participants but shall not be less than the minimum exercise price required by Section 8.3 with respect to Incentive Stock Options and shall not be less than 85% of Fair Market Value of the Common Stock on the Grant Date with respect to Nonqualified Stock Options;

(b)  the exercise price for Options granted to Consultant Participants shall not be less than the lesser of 85% of Fair Market Value of the Common Stock on the Grant Date.

Term of Options 

7.3  Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Option (the "Option Term") shall be as established for that Option by the Plan Administrator or, if not so established, shall be ten years from the Grant Date. 

Exercise of Options 

7.4  The Plan Administrator shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and become exercisable, any of which provisions may be waived or modified by the Plan Administrator at any time. 

The Plan Administrator, in its sole discretion, may adjust the vesting schedule of an Option held by a Participant who works less than "full-time" as that term is defined by the Plan Administrator or who takes a Company-approved leave of absence. 

To the extent an Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery to the Company of a written stock option exercise agreement or notice, in a form and in accordance with procedures established by the Plan Administrator, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement, if any, and such representations and agreements as may be required by the Plan Administrator, accompanied by payment in full as described in Section 7.5. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one time, as determined by the Plan Administrator. 

Payment of Exercise Price 

7.5  The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid before the Company will issue the shares being purchased and must be in a form or a combination of forms acceptable to the Plan Administrator for that purchase, which forms may include: 

(a)  cash; 

(b)  cheque; 

(c)  tendering (either actually or, if the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock already owned by the Participant for at least six months (or any shorter period necessary to avoid a charge to the Company's earnings for financial reporting purposes) that on the day prior to the exercise date have a Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option; or 

(d)  if the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed exercise notice, together with irrevocable instructions to a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board. 

Post-Termination Exercises 

7.6  The Plan Administrator shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable, and the terms and conditions of such exercise, if the Participant ceases to be employed by, or to provide services to, the Company or a Related Company, which provisions may be waived or modified by the Plan Administrator at any time. If not so established in the instrument evidencing the Option, the Option shall be exercisable according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time: 

(a)  Except as otherwise set forth in this Section 7.6, any portion of an Option that is not vested and exercisable on the Employment Termination Date shall expire on such date. 

(b)  Any portion of an Option that is vested and exercisable on the Employment Termination Date shall expire on the earliest to occur of 

    (i)  if the Participant's Employment Termination Date occurs for reasons other than Cause, Retirement, Disability or death, the day which is three months after such Employment Termination Date; 

    (ii)  if the Participant's Employment Termination Date occurs by reason of Retirement, Disability or death, the one-year anniversary of such Employment Termination Date; and 

    (iii)  the last day of the Option Term (the "Option Expiration Date"). 

Notwithstanding the foregoing, if the Participant dies after his or her Employment Termination Date but while an Option is otherwise exercisable, the portion of the Option that is vested and exercisable on such Employment Termination Date shall expire upon the earlier to occur of 

    (iv)  the Option Expiration Date, and 

    (v)  the one-year anniversary of the date of death, unless the Plan Administrator determines otherwise. 

Also notwithstanding the foregoing, in case of termination of the Participant's employment or service relationship for Cause, all Options granted to that Participant shall automatically expire upon first notification to the Participant of such termination, unless the Plan Administrator determines otherwise. If a Participant's employment or service relationship with the Company is suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant's rights under any Option shall likewise be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered after the Participant's relationship with the Company or a Related Company has ended, any Option then held by the Participant may be immediately terminated by the Plan Administrator, in its sole discretion. 

(c)  A Participant's transfer of employment or service relationship between or among the Company and any Related Company, or a change in status from an employee to a consultant, agent, advisor or independent contractor or a change in status from a consultant, agent, advisor or independent contractor to an employee, shall not be considered a termination of employment or service relationship for purposes of this Part 7. Unless the Plan Administrator determines otherwise, a termination of employment or service relationship shall be deemed to occur if a Participant's employment or service relationship is with an entity that has ceased to be a Related Company. 

(d)  The effect of a Company-approved leave of absence on the application of this Part 7 shall be determined by the Plan Administrator, in its sole discretion. 

(e)  If a Participant's employment or service relationship with the Company or a Related Company terminates by reason of Disability or death, the Option shall become fully vested and exercisable for all the shares subject to the Option. Such Option shall remain exercisable for the time period set forth in this Section 7.6. 

PART 8

INCENTIVE STOCK OPTION LIMITATIONS

Notwithstanding any other provisions of the Plan, and to the extent required by Section 422 of the Code, Incentive Stock Options shall be subject to the following additional terms and conditions: 

Dollar Limitation 

8.1  To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time during any calendar year (under the Plan and all other stock option plans of the Company) exceeds $100,000, such portion in excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event the Participant holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted. 

Eligible Employees 

8.2  Individuals who are not employees of the Company or one of its parent corporations or subsidiary corporations may not be granted Incentive Stock Options. 

Exercise Price 

8.3  The exercise price of an Incentive Stock Option shall be at least 100% of the Fair Market Value of the Common Stock on the Grant Date, and in the case of an Incentive Stock Option granted to a Participant who owns more than 10% of the total combined voting power of all classes of the stock of the Company or of its parent or subsidiary corporations (a "Ten Percent Stockholder"), shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date. The determination of more than 10% ownership shall be made in accordance with Section 422 of the Code. 

Exercisability 

8.4  An Option designated as an Incentive Stock Option shall cease to qualify for favorable tax treatment as an Incentive Stock Option to the extent it is exercised (if permitted by the terms of the Option)

(a)  more than three months after the Employment Termination Date if termination was for reasons other than death or disability, 

(b)  more than one year after the Employment Termination Date if termination was by reason of disability, or 

(c)  after the Participant has been on leave of absence for more than 90 days, unless the Participant's reemployment rights are guaranteed by statute or contract. 

Taxation of Incentive Stock Options 

8.5  In order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Participant must hold the shares acquired upon the exercise of an Incentive Stock Option for two years after the Grant Date and one year after the date of exercise. 

A Participant may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option. The Participant shall give the Company prompt notice of any disposition of shares acquired on the exercise of an Incentive Stock Option prior to the expiration of such holding periods. 

Code Definitions 

8.6  For the purposes of this Part 8, "parent corporation," "subsidiary corporation" and "disability" shall have the meanings attributed to those terms for purposes of Section 422 of the Code. 

PART 9

WITHHOLDING

General 

9.1  The Company may require the Participant to pay to the Company the amount of any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Option. The Company shall not be required to issue any shares Common Stock under the Plan until such obligations are satisfied. 

Payment of Withholding Obligations in Cash or Shares 

9.2  The Plan Administrator may permit or require a Participant to satisfy all or part of his or her tax withholding obligations by 

(a)  paying cash to the Company, 

(b)  having the Company withhold from any cash amounts otherwise due or to become due from the Company to the Participant, 

(c)  having the Company withhold a portion of any shares of Common Stock that would otherwise be issued to the Participant having a value equal to the tax withholding obligations (up to the employer's minimum required tax withholding rate), or 

(d)  surrendering any shares of Common Stock that the Participant previously acquired having a value equal to the tax withholding obligations (up to the employer's minimum required tax withholding rate to the extent the Participant has held the surrendered shares for less than six months). 

PART 10

ASSIGNABILITY

10.1  Neither an Option nor any interest therein may be assigned, pledged or transferred by the Participant or made subject to attachment or similar proceedings other than by will or by the applicable laws of descent and distribution, and, during the Participant's lifetime, such Options may be exercised only by the Participant. Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit a Participant to assign or transfer an Option or may permit a Participant to designate a beneficiary who may exercise the Option or receive payment under the Option after the Participant's death; provided, however, that any Option so assigned or transferred shall be subject to all the terms and conditions of the Plan and those contained in the instrument evidencing the Option. 

PART 11

ADJUSTMENTS

Adjustment of Shares 

11.1  In the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders other than a normal cash dividend, or other change in the Company's corporate or capital structure, including, without limitation, a Related Party Transaction, results in 

(a)  the outstanding shares of Common Stock, or any securities exchanged therefor or received in their place, being exchanged for a different number or kind of securities of the Company or of any other corporation, or 

(b)  new, different or additional securities of the Company or of any other corporation being received by the holders of shares of Common Stock of the Company, then the Plan Administrator shall make proportional adjustments in 

    (i)  the maximum number and kind of securities subject to the Plan and issuable as Incentive Stock Options as set forth in Part 4 and the maximum number and kind of securities that may be made subject to Options and to Options to any individual as set forth in Section 4.3, and 

    (ii)  the number and kind of securities that are subject to any outstanding award and the per share price of such securities, without any change in the aggregate price to be paid therefor. 

The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be conclusive and binding. Notwithstanding the foregoing, a dissolution or liquidation of the Company or a Corporate Transaction shall not be governed by this Section 11.1 but shall be governed by Section 11.2 and Section 11.3, respectively. 

Dissolution or Liquidation 

11.2  To the extent not previously exercised or settled, and unless otherwise determined by the Plan Administrator in its sole discretion, Options shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a forfeiture provision or repurchase right applicable to an Option has not been waived by the Plan Administrator, the Option shall be forfeited immediately prior to the consummation of the dissolution or liquidation. 

Corporate Transaction 

11.3  Options 

(a)  In the event of a Corporate Transaction, except as otherwise provided in the instrument evidencing an Option (or in a written employment or services agreement between a Participant and the Company or Related Company) and except as provided in Section (b) below, each outstanding Option shall be assumed or an equivalent option or right substituted by the surviving corporation, the successor corporation or its parent corporation, as applicable (the "Successor Corporation"). 

(b)  If, in connection with a Corporate Transaction, the Successor Corporation refuses to assume or substitute for an Option, then each such outstanding Option shall become fully vested and exercisable with respect to 100% of the unvested portion of the Option. In such case, the Plan Administrator shall notify the Participant in writing or electronically that the unvested portion of the Option specified above shall be fully vested and exercisable for a specified time period. At the expiration of the time period, the Option shall terminate, provided that the Corporate Transaction has occurred. 

(c)  For the purposes of this Section 11.3, the Option shall be considered assumed or substituted for if following the Corporate Transaction the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Option immediately prior to the Corporate Transaction, the consideration (whether stock, cash, or other securities or property) received in the Corporate Transaction by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Corporate Transaction is not solely common stock of the Successor Corporation, the Plan Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon the exercise of the Option, for each share of Common Stock subject thereto, to be solely common stock of the Successor Corporation substantially equal in fair market value to the per share consideration received by holders of Common Stock in the Corporate Transaction. The determination of such substantial equality of value of consideration shall be made by the Plan Administrator and its determination shall be conclusive and binding. 

(d)  All Options shall terminate and cease to remain outstanding immediately following the Corporate Transaction, except to the extent assumed by the Successor Corporation. 

Further Adjustment of Options 

11.4  Subject to Section 11.2 and Section 11.3, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation or change of control of the Company, as defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to the Participants, with respect to Options. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Options so as to provide for earlier, later, extended or additional time for exercise, lifting restrictions and other modifications, and the Plan Administrator may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Plan Administrator may take such action before or after granting Options to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change of control that is the reason for such action. 

Limitations 

11.5  The grant of Options shall in no way affect the Company's right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

Fractional Shares 

11.6  In the event of any adjustment in the number of shares covered by any Option, each such Option shall cover only the number of full shares resulting from such adjustment. 

PART 12

AMENDMENT AND TERMINATION

Amendment or Termination of Plan 

12.1  The Board may suspend, amend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall deem advisable; provided, however, that to the extent required for compliance with Section 422 of the Code or any applicable law or regulation, stockholder approval shall be required for any amendment that would 

(a)  increase the total number of shares available for issuance under the Plan, 

(b)  modify the class of employees eligible to receive Options, or 

(c)  otherwise require stockholder approval under any applicable law or regulation. 

Any amendment made to the Plan that would constitute a "modification" to Incentive Stock Options outstanding on the date of such amendment shall not, without the consent of the Participant, be applicable to such outstanding Incentive Stock Options but shall have prospective effect only. 

Term of Plan 

12.2  Unless sooner terminated as provided herein, the Plan shall terminate ten years after the earlier of the Plan's adoption by the Board and approval by the stockholders. 

Consent of Participant 

12.3  The suspension, amendment or termination of the Plan or a portion thereof or the amendment of an outstanding Option shall not, without the Participant's consent, materially adversely affect any rights under any Option theretofore granted to the Participant under the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a "modification" that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Part 12 shall not be subject to these restrictions. 

PART 13

GENERAL

Evidence of Options 

13.1  Options granted under the Plan shall be evidenced by a written instrument that shall contain such terms, conditions, limitations and restrictions as the Plan Administrator shall deem advisable and that are not inconsistent with the Plan. 

No Individual Rights 

13.2  Nothing in the Plan or any Option granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant's employment or other relationship at any time, with or without Cause. 

Issuance of Shares 

13.3  Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company's counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act), and the applicable requirements of any securities exchange or similar entity. 

The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state securities laws, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made. The Company may issue certificates for shares with such legends and subject to such restrictions on transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws. 

To the extent the Plan or any instrument evidencing an Option provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange. 

No Rights as a Stockholder 

13.4  No Option or Stock Option denominated in units shall entitle the Participant to any cash dividend, voting or other right of a stockholder unless and until the date of issuance under the Plan of the shares that are the subject of such Option. 

Compliance With Laws and Regulations 

13.5  Notwithstanding anything in the Plan to the contrary, the Plan Administrator, in its sole discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants. Additionally, in interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an "incentive stock option" within the meaning of Section 422 of the Code. 

Participants in Other Countries 

13.6  The Plan Administrator shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of other countries in which the Company or any Related Company may operate to assure the viability of the benefits from Options granted to Participants employed in such countries and to meet the objectives of the Plan. 

No Trust or Fund 

13.7  The Plan is intended to constitute an "unfunded" plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company. 

Severability 

13.8  If any provision of the Plan or any Option is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Option under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan Administrator's determination, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, person or Option, and the remainder of the Plan and any such Option shall remain in full force and effect. 

Choice of Law 

13.9  The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Nevada without giving effect to principles of conflicts of law. 

PART 14

EFFECTIVE DATE

14.1  The effective date is the date on which the Plan is adopted by the Board. If the stockholders of the Company do not approve the Plan within 12 months after the Board's adoption of the Plan, any Incentive Stock Options granted under the Plan will be treated as Nonqualified Stock Options.<PAGE>

--------------------------------------------------------------------------------
   Certain confidential information has been omitted from this exhibit 10.31
     pursuant to a confidentail treatment request filed separately with the
Securities and Exchange Commission. The ommited information is indicated by the
 symbol "***" at each place in this Exhibit 10.31 where the omitted information
                           appeared in the original.
--------------------------------------------------------------------------------

                    REAL ESTATE PURCHASE AND SALE AGREEMENT
                                 (POINTE WEST)

      THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (the "Agreement") is made and
entered into as of the Effective Date (as hereinafter defined), by and between
POINTE WEST OF VERO BEACH LTD., a Florida limited partnership (the "Seller") and
HOMES BY CALTON, LLC, a Florida limited liability company (the "Purchaser").

RECITALS:

      A.    Seller is the owner of certain real property located in Indian River
County, Florida, described on EXHIBIT A attached hereto (the "Property").

      B.    Seller plans to develop and plat the Property into a subdivision
consisting of two or more plats (hereinafter referred to as "Pointe West South
Village") with eighty two (82) lots as shown on the preliminary subdivision plan
(the "Subdivision Plan") of the Property prepared by the Seller which is
attached hereto as EXHIBIT B. Subsequently, Seller plans to develop and plat a
subdivision adjacent to the Property to be known as "Pointe West East Village".

      C.    Purchaser desires to purchase 41 of the lots as described in EXHIBIT
C attached hereto (the "Lots"), in multiple closings and to construct single
family detached residences thereon (the "Intended Improvements").

      D.    Seller desires to sell the Lots to Purchaser and Purchaser desires
to purchase the Lots from Seller, upon the terms and conditions herein
contained.

      E.    Purchaser desires to obtain a right of first refusal to purchase one
half of the golf course lots in Pointe West East Village.

      NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants hereinafter made, it is agreed as follows:

1.    RECITALS. The recitals set forth above are incorporated herein by
reference and made a part hereof as fully as if set forth herein verbatim.

2.    AGREEMENT TO PURCHASE AND SELL. For the consideration and upon and subject
to the terms and conditions hereinafter set forth, Seller agrees to sell and
convey to Purchaser, and Purchaser agrees to purchase from Seller, the Lots
together with all improvements constructed thereon and all rights, easements,
appurtenances, and hereditaments appertaining thereto.

                                       1
<PAGE>

3.    EFFECTIVE DATE. This Agreement shall become effective on the date this
Agreement is signed by the last of Purchaser and Seller (the "Effective Date").

4.    SCHEDULE OF LOT PURCHASES AND PURCHASE PRICE. Seller agrees to sell all of
the Lots to Purchaser and Purchaser agrees to purchase all of the Lots from
Seller at a rate of a minimum of two (2) Lots per month and at least six (6)
Lots per calendar quarter. Lot purchases in excess of two per month may be
applied toward the purchase requirement applicable for future months in the same
calendar quarter, but may not be applied toward the minimum monthly Lot purchase
requirement for months in future calendar quarters. The Lot takedown schedule is
more fully described on Schedule A-1 attached hereto. The closing on the first
two Lots, as described on EXHIBIT C (the "Phasing Plan"), will take place ten
days (10) days after the requirements of Section 9 hereunder are satisfied as to
the Phase One Lots (the "Initial Closing"). The purchase price (the "Purchase
Price Schedule") for the Lots are shown on the Lot Closing Schedule attached
hereto as EXHIBIT D.

After the Initial Closing, provided this Agreement is not in default (after the
applicable cure period), as defined in Section 16 below, Purchaser may purchase
Lots at any time by giving Seller a minimum of five (5) days written notice
prior to the date Purchaser desires to close on any Lots. The notice shall
identify the Lots desired to be purchased by Purchaser and the requested date of
closing.

If the Purchaser does not satisfy the minimum Lot takedown requirement, Seller
may, at Seller's sole option, sell a sufficient number of Lots to bring the
Purchaser into compliance with the minimum Lot take down requirement to third
parties with the understanding that said third parties must contract with an
approved golf builder to build a house within two (2) years. Seller shall not
exercise the right to sell Lots to third parties until five (5) business days
shall have elapsed from the time Seller shall have notified Purchaser in writing
of the Purchaser's failure to satisfy the minimum Lot takedown requirement and
Seller's intention to sell Lots to Third Parties. If, during five (5) business
days after such written notice is given to Purchaser, Purchaser shall come into
compliance with the minimum Lot takedown requirement, then Seller may not sell
Lots to a third party.

As long as the Purchaser is not in default of any condition of this agreement,
Seller shall extend to Purchaser the right of first refusal to purchase fifty
percent (50%) of the golf front lots in the East Village at the market price a
willing buyer would pay.

5.    DEPOSIT. Purchaser shall deposit with Seller a deposit in the amount of
$300,000. Fifty percent (50%) of the deposit or $150,000 will be due five (5)
business days after the conclusion of the Inspection Period (as defined in
Section 11(E) below) and the balance of $150,000 shall be due sixty (60) days
after the Effective Date. The Purchaser deposit will be returned with a credit
of ten thousand dollars ($10,000) off of st 30 lots purchased.

                                       2
<PAGE>

6.    DEED OF CONVEYANCE. Seller shall convey to Purchaser, at the time of the
Closings, title in fee simple to the Lots by recordable special warranty deed
(the "Deed" or "Deeds") signed by all parties necessary or required by the title
insurance commitment, free and clear of all liens and encumbrances, except for
real estate taxes for the year of the Closings and subsequent years not yet due
and payable. Permitted exception to the title policy are those matters shown on
EXHIBIT E and all other matters approved in writing by Purchaser (the "Permitted
Exceptions").

7.    DEFECTS IN TITLE. Within thirty (30) days after the Effective date, Seller
shall supply Purchaser with a pro forma title insurance commitment issued by
Attorneys Title Insurance Fund, Inc. showing that after each Lot closing, title
will be vested in Purchaser, subject only to the Standard ALTA Form B Owner's
Title Insurance Policy Exceptions, the Permitted Exceptions and any purchase
money mortgage executed by Purchaser in connection with the Purchase of the Lot.
If the title to the Property is subject to any other matter not reasonably
acceptable to Purchaser, then Purchaser shall, prior to the expiration of the
Inspection Period, give Seller written notice of such objections to title to the
Property. Seller shall use its best efforts to eliminate or modify all
unacceptable matters to the reasonable satisfaction of Purchaser. Seller shall
not be obligated to file suit nor expend more than Ten Thousand Dollars
($10,000) to cure title defects provided, however, Seller shall remove from
title to the Property (i) any mortgage, construction law lien or other
encumbrance granted or incurred by Seller against the Property, or (ii) past due
and delinquent taxes or assessments. Seller shall have until the Initial Lot
Closing to cure any such title defects. In the event Seller is unable to satisfy
said defects within the time permitted or Seller notifies Purchaser that Seller
is unable to cure a title defect pursuant to this Agreement, Purchaser, at its
option may elect to (i) terminate its obligation to purchase whereupon the
Deposit shall be returned to Purchaser and this Agreement shall be of no further
force or effect; or (ii) take title to the Lots Seller can convey without title
defects and reduce the Purchase Price by the price assigned to the Lots with
title defects; or (iii) notify Seller within fifteen (15) days from the receipt
of Seller's notice that Purchaser will accept title to the Property with the
defects and proceed to close on the Property in accordance with the terms of
this Agreement.

8.    SURVEY. On or before each Closing, Purchaser may, at its sole expense,
have a survey of a Lot or Lots Purchaser is purchasing prepared by a licensed
surveyor. In the event the survey(s) show any encroachments of any improvements
upon, from, or onto the Property or any easement, lack of ingress and egress, or
any other types of encumbrances, except those acceptable to Purchaser, in
Purchaser's sole and absolute discretion, said conditions or encroachments shall
be treated in the same manner as a title defect under the procedure set forth in
this Agreement, except that the time period to notify Seller of the defect shall
be extended until five (5) business days after receipt of the survey.

9.    LOT COMPLETION REQUIREMENTS. Immediately after receipt of Purchasers

                                        3
<PAGE>

deposit money and after obtaining the approvals and permits, Seller shall
promptly begin development of the Phase One Lots and construction of the
Subdivision Improvements (as hereinafter defined) for Phase One and shall
diligently pursue completion of the Phase One Lots and Subdivision Improvements.
Seller shall start the

development of the Phase Two Lots, as defined on EXHIBIT C, in a timely manner
in order to meet the agreed upon purchase schedule.

Except for the Initial Closing, the Lot completion requirements that must be
satisfied at the time a Lot is purchased are as follows:

      A.    The Lot shall be substantially constructed and developed as shown on
            the construction plans for the Property to be mutually agreed upon
            (the "Construction Plans").

      B.    Seller shall have installed and substantially completed the
            following subdivision improvements adjacent to the Lot so that said
            improvements shall be available to serve the Lot (hereinafter
            collectively referred to as the "Subdivision Improvements"):

            (1)   All water and sanitary sewer lines shall have been constructed
            and accepted for maintenance in accordance with governmental
            requirements and shall be fully sufficient to service the Lots, and
            shall be stubbed to the Lot with service available so as to allow
            Purchaser, upon payment of the applicable connection fees, to
            connect to such systems.

            (2)   The Lot shall have storm drainage retention and detention
            facilities, storm sewer lines a drainage system as required by all
            applicable governmental agencies accepted and approved by Indian
            River County.

            (3)   Paved streets, curbs, and gutters to the Lot shall have been
            constructed and approved by Indian River County.

            (4)   Underground telephone transmission lines and underground
            electric power lines shall have been completed with power
            immediately available located adjacent to the Lot.

      C.    The Lot size and building pad dimensions for the Lot meets or
            exceeds that as shown on EXHIBIT F attached hereto.

      D.    The Lot shall comply with all governmental ordinances, codes,
            development orders, and regulations including but not limited to
            those relating to zoning, platting, and subdivision regulations in
            effect as of the Closing Dates.

                                       4

<PAGE>

      E.    The plat in which the Lot is located shall have been recorded in the
            public records of Indian River County.

      F.    The Lot is ready; both legally and physically, for the construction
            thereon of a single family detached residence. The Lot shall not be
            deemed "completed" unless Purchaser can, after submission of
            building plans meeting all governmental requirements, obtain a
            building permit from Indian River County to construct a single
            family detached residence and a Certificate of Occupancy can be
            issued upon completion of the home by the Purchaser.

      G.    Seller shall have all required street signs installed on the roads
            serving the Lot and shall have installed any overhead street
            lighting required by any governmental authority that provides
            illumination to the Lot.

      H.    Seller shall have delivered to Purchaser a set of as-built plans and
            drawings of the Subdivision Improvements serving or related to the
            Lot and a written certification from the project engineer stating
            Seller has completed each and every one of the foregoing conditions.

      I.    Seller shall provide verification of the flood hazard area
            designation used to determine if the purchase of flood insurance is
            required for the obtaining of any federally insured loan.

Notwithstanding the foregoing, Purchaser shall have the right to purchase a Lot
in accordance with this Agreement if the Lot is substantially complete. In the
event Purchaser elects to close on one or more Lots which have not been fully
and completely developed pursuant to the terms of this Agreement, Seller agrees
(i) to promptly and without delay complete the development of those Lots, and
(ii) to indemnify Purchaser from any loss or expense which Purchaser may suffer
by virtue of any work on the Lots or the right of way adjacent to the Lots. This
provision includes, but is not limited to, an indemnification for damages
suffered by Purchaser for utility contractors damaging or destroying Purchaser's
erosion control measures. Notwithstanding anything in this Agreement to the
contrary, Seller does and shall indemnify, defend, save, and hold harmless
Purchaser from and against any and all causes of action, losses, claims,
damages, liabilities, and all costs and expenses, attorney fees and court costs,
fees and costs and all other expenses related to, growing out of, or arising
from any breach of any of the above representations or obligations. The
provisions of this Section shall survive the Closings.

10.   INSTALLATION OF SIDEWALKS AND COMMUNITY FEATURES. Purchaser shall, at its
expense, install sidewalks in the front or side, as applicable, of any Lots

                                       5
<PAGE>

which are required to have sidewalks, in accordance with the sidewalk plan
approved by Indian River County or the appropriate governmental authority and
all applicable governmental regulations. Seller shall, at its expense, install
any and all other required sidewalks on the Property as required by Indian River
County or the appropriate governmental authority. All Sidewalk Completion bonds
for the Lots referenced in this agreement, required by Indian River County as
part of the Final Plat Process shall be provided by Purchaser.

Seller acknowledges that the entrance off 12th Street into the South Village
will include signage and landscaping with a similar design and theme as the
Links Lane, 74th Avenue Entrance.

Seller acknowledges that the improvements for the park located in the center of
the South Village will be similar in caliber to the improvements constructed in
the Central Village Park located east of 76th Drive between 15th Lane and 15th
Street.

11.   CONDITIONS PRECEDENT TO CLOSING. Purchaser's obligation to close on a Lot
pursuant to this Agreement is conditioned on the following:

      A.    Except as set forth in this Agreement, no material adverse change in
            the condition of the Property shall have occurred since the
            Effective Date.

      B.    As of each Closing, the Lot and Subdivision Improvements shall be
            completed as set forth in Section 9 of this Agreement and there
            shall be no governmental prohibition (including zoning and
            concurrency restrictions) that prevents Purchaser from receiving
            building permits for construction of single-family house on each Lot
            and upon completion of such house a certificate of occupancy,
            without exception or qualification.

      C.    To the best of Seller's knowledge, all of Seller's covenants and
            obligations contained in this Agreement shall have been performed by
            Seller, and all of Seller's representations and warranties are true
            and correct and shall be true and correct at each Closing.

      D.    There is ingress and egress to the Property sufficient for the
            Intended Improvements.

      E.    The Purchaser shall have been satisfied, in its sole discretion, of
            the results of its due diligence conducted during the fourteen (14)
            day period beginning on the April 6, 2004 (the "Inspection Period").
            If Purchaser is not satisfied, in its sole discretion, of the
            results of its due diligence conducted during the Inspection Period,
            then the Purchaser shall notify the Seller in writing within five
            (5) business days after the Inspection Period that Purchaser is
            terminating this agreement, whereupon this

                                       6
<PAGE>

            Agreement shall be terminated and all parties release from all
            liability hereunder. Failure to give such notice or If Purchaser
            shall notify Seller in writing within five (5) business days after
            the Inspection Period that it is willing to proceed with the
            transactions contemplated by this agreement, or if Purchaser shall
            make the initial deposit of $150,000, then Purchaser shall be deemed
            to have waived the right to terminate this Agreement due to the
            outcome of its due diligence investigation during the Inspection
            Period.

If conditions precedents (A) through (D) above to Purchaser's obligation shall
not have been satisfied prior to each Closing, Purchaser shall notify Seller of
the unfulfilled condition, and Seller shall have up to sixty (60) days to cause
such condition to be fulfilled. Closing shall occur five (5) business days
following satisfaction of all unsatisfied conditions precedent. If Seller has
not corrected the unfulfilled condition within said sixty (60) day period,
Purchaser may cancel this Agreement by notifying Seller and seek other remedies
provided for in this Agreement. If Purchaser elects to terminate this Agreement,
Seller is obligated to return the Deposit to Purchaser whereupon the parties
hereto shall be relieved of all further obligations hereunder, or Purchaser may,
at Purchaser's option and in Purchaser's sole discretion, (i) take title to only
the completed Lots and those acceptable to Purchaser and reduce the Purchase
Price by the purchase price of each Lot Seller is unable to complete and
purchase the remainder of the Lots when complete, or (ii) proceed to close
without thereby waiving Purchaser's right to seek specific performance of
Seller's obligations under this Agreement. Seller shall use its best efforts to
promptly complete the unfulfilled condition.

In the event a Closing on a Lot is delayed due to an unfulfilled condition
precedent to closing, all subsequent Closing Dates for Lots within the same plat
as the Lot on which the closing is delayed shall be likewise extended.

12.   THE CLOSINGS. The sale and purchase of the Lots shall be consummated at
closings to be held on the Closing Dates set forth in Section 4 of this
Agreement at the office of the Title Company selected by Seller in Indian River
County Florida.

A.    DELIVERY BY SELLER. At each Closing, Seller shall deliver or cause to be
            delivered to Purchaser:

            (1)   The Deed duly executed by Seller.

            (2)   All other documentation necessary or required to complete the
            purchase and sale contemplated in this Agreement including, without
            limitation, any tax proration agreements, utility agreements, or
            documentation or affidavits reasonably requested by Purchaser or
            Title Company.

                                       7
<PAGE>

            (3)   A no-lien, gap and exclusive possession affidavit in form and
            content customarily used in Florida and sufficient to allow the
            issuer of the Title Insurance Commitment at closing to delete the
            standard exceptions under schedule B-I of the Title Insurance
            Commitment.

            (4)   In order to comply with the requirements of the Foreign
            Investment Real Property Tax Act of 1980 ("FIRPTA"), Seller will
            deliver to Purchaser at closing Seller's affidavit under penalty of
            perjury stating the Seller is not a "foreign person" as defined in
            Section 1445 of the Internal Revenue Code of 1986 and the U.S.
            Treasury Regulations there under, setting forth Seller's taxpayer
            identification number, and that Seller intends to file a United
            States income tax return with respect to the transfer. Seller
            represents and warrants to Purchaser that they have not made nor
            does Seller have any knowledge of any transfer of the Property or
            any part thereof that is subject to any provisions of FIRPTA that
            has not been fully compiled with by either transferor or transferee.

            As required by law, if Seller fails to comply with the requirement
            of this paragraph, Purchaser shall withhold 10% of the Purchase
            Price in lieu of payment thereof to Seller and pay it over instead
            to the Internal Revenue Service in such form and manner as may be
            required by law.

            (5)   A "Marked Up" title commitment showing the deletions of the
            Schedule B-I items and Standard Exceptions (1), (3), (4), (5) and
            (6) in Schedule B-II of the title commitment.

      B.    DELIVERY BY PURCHASER. At each Closing, Purchaser shall deliver or
            cause to be delivered to Seller:

                  (1)   Cash, cashier's check, bank check or a wire transfer in
            the amount of the Purchase Price, together with such additional
            funds as may be necessary to pay Purchaser's share of the Closing
            costs and prorations hereunder.

                  (2)   All other documentation necessary or required to
            complete the purchase and sale contemplated in this Agreement
            including, without limitation, any tax proration agreements, utility
            agreements, or documentation or affidavits reasonably requested by
            Seller or Title Company.

                  (3)   An unsecured promissory note for $4,000 for the balance
            of the marketing fees payable 180 days after the lot closing as
            described in Section 26 below.

                                       8
<PAGE>

13.   CLOSING COSTS AND PRORATION. At each Closing, Seller shall pay for the
documentary stamps on the Deed, the cost of the title commitment and premium for
the title insurance policy to be furnished to Purchaser at the Closing and
recording fees for corrective instruments, if necessary. Purchaser shall pay for
recording the Deeds and the cost of any Lot survey.

All other expenses incurred by Seller and Purchaser with respect to each
Closing, including, but not limited to, attorneys fees and costs and expenses
incurred in connection with the satisfaction of conditions hereunder, shall be
borne and paid exclusively by the party incurring them, except to the extent
otherwise specifically provided in this Agreement. The following items shall be
prorated and adjusted between Seller and Purchaser as of the day of each
Closing:

      A.    TAXES Real property or ad valorem taxes for each Lot shall be
            prorated between Seller and Purchaser for the year in which a
            Closing is held on the basis of the tax statement for such year (due
            allowance being made for early payment discounts); provided,
            however, that if such tax statement is not available as of the
            Closing, the tax proration between Seller and Purchaser shall be
            estimated based upon the most recent tax bill and subsequently
            readjusted upon receipt of the tax bill for the year in which the
            Closing occurs. Seller and Purchaser agree to adjust the proration
            of taxes and, if necessary, to refund or pay, on or before January 1
            of the year following the Closing.

      B.    EXPENSE PRORATIONS. Seller shall pay in full all special assessments
            levied against each Lot prior to Closing. Purchaser shall pay all
            special assessments levied after Closing.

      C.    DEVELOPMENT FEES. Seller shall be responsible for all fees, costs,
            and expenses necessary to obtain final engineering plan approval,
            preliminary subdivision plan approval, final plat approval and the
            other permits and approvals, including payments for mitigation
            credit in connection with the St. Johns River Water Management
            District permit necessary for development of the Property. Purchaser
            shall be responsible for the payment of all fees and other charges
            imposed by Indian River County or other governmental authorities
            relating to the construction of residences on the Lots and utility
            hookup fees.

14.   SELLER'S WARRANTIES, COVENANTS, AND REPRESENTATIONS. Seller warrants as of
the Effective Date and as of the date of each Closing that the following are and
shall be true and correct:

                                       9
<PAGE>

      A.    Seller has full right and authority to enter into this Agreement and
            to consummate the transactions contemplated in this Agreement.

      B.    Each of the persons executing this Agreement on behalf of Seller is
            authorized to do so.

      C.    This Agreement constitutes a valid and legally binding obligation of
            the Seller, enforceable in accordance with its terms.

      D.    Seller and all such other persons deemed as the transferor of the
            Property are not foreign persons requiring the withholding of tax by
            Purchaser pursuant to Section 1445 of the Internal Revenue Code.

      E.    Seller shall have on the date of each Closing, good, marketable and
            insurable title to the Property, free and clear of all mortgages,
            liens, encumbrances, leases, tenancies, security interests,
            covenants, conditions, restrictions, rights-of-way, easements, or
            reservations, except the Permitted Exceptions, except those items to
            be released at closing.

      F.    Any lien against the Property, incurred by Seller, shall be removed
            and satisfied of record by Seller at Closing. If subsequent to
            Closing any lien shall be filed against the Property or its assigns
            based on any act or claims against Seller, Seller shall, within
            thirty (30) days after delivery of written notice by Purchaser of
            the filing thereof, take such action by bonding, depositing payment
            or otherwise, as will remove, transfer, insure over, or satisfy such
            lien of record which affects the Property.

      G.    From and after the Effective Date, Seller will comply fully with all
            permits, approvals, exemptions, and other rights relating to the
            Property.

      H.    Seller has received no notice and has no knowledge of any pending
            liens, or any special assessments to be made against the Property by
            governmental authority.

      I.    The Lots contain no threatened or endangered species or endangered
            or protected habitats or items of archaeological significance as
            defined by applicable state and federal laws

      J.    There are no wetlands or state jurisdictional waters located upon
            any Lot.

      K.    The Association, as described in Section 23 of this Agreement, is an
            existing corporation and Seller has properly funded the Association
            and

                                       10
<PAGE>

            the Association is in compliance with all applicable laws and rules
            relating to homeowner associations.

      L.    Seller represents and warrants that, to the best of Seller's
            knowledge, no hazardous substances as defined by the Comprehensive
            Environmental Response, Compensation and Liability Act of 1980
            ("CERCLA"), 42 USC 9601(14), pollutants or contaminants as defined
            by CERCLA, or hazardous wastes as defined by the Resource
            Conservation and Recovery Act, 42 USC 6903 (5), or other similar
            applicable federal or state laws or regulations including, but not
            limited to, asbestos, pesticides, PCB'S, and urea formaldehyde, have
            been generated, released, stored or deposited over, beneath, or on
            the Property.

      M.    The current applicable zoning classification of the Property will
            permit the construction of the Intended Improvements and Seller has
            or will, prior to the expiration of the Inspection Period, provide
            Purchaser with a copy of the zoning conditions for Pointe West and
            Seller represents that there have been no modifications or changes
            to those zoning conditions.

      N.    All builders on the golf course are signing a substantially similar
            agreement as to price, take downs, terms, etc.

Notwithstanding anything in this Agreement to the contrary, Seller does and
shall indemnify, defend, save, and hold harmless Purchaser from and against any
and all losses, claims, damages, liabilities, and all costs and expenses,
attorney fees and court costs, fees and costs, and all other expenses related
to, growing out of, or arising from any breach of any representation or warranty
of Seller set forth above. The provisions of this Section shall survive the
Closings or the termination of this Agreement.

15.   PURCHASER'S WARRANTIES, COVENANTS, AND REPRESENTATIONS. Purchaser warrants
as of the date hereof and as of the date of each Closing that the following are
and shall be true and correct:

      A.    Purchaser is a duly authorized and existing corporation.

      B.    Purchaser has full right and authority to enter into this Agreement
            and to consummate the transactions contemplated in this Agreement.

      C.    Each of the persons executing this Agreement on behalf of Purchaser
            is an agent of Purchaser authorized to do so.

      D.    This Agreement constitutes a valid and legally binding obligation of
            the Purchaser, enforceable in accordance with its terms.

                                       11
<PAGE>

Notwithstanding anything in this Agreement to the contrary, Purchaser does and
shall indemnify, defend, save, and hold harmless Seller from and against any and
all causes of action, losses, claims, damages, liabilities, and all costs and
expenses, attorney fees and court costs, fees and costs and all other expenses
related to, growing out of, or arising from any breach of any representation or
warranty of Purchaser set forth above. The provisions of this Section shall
survive the Closings or the termination of this Agreement.

16.   DEFAULT AND REMEDY. If Purchaser shall be in breach of its obligations
hereunder and if such breach on Purchaser's part is not cured within five (5)
business days after Seller shall have notify Purchaser in writing of such
breach, then Purchaser shall be deemed to be in default of this Agreement. Upon
default of this Agreement Seller may terminate this Agreement and any remaining
deposit monies not credited against past sales shall be retained by Seller as
liquidated damages and as an estimate of Seller's actual damages, as Seller's
sole remedy. If Seller shall fails or refuses to convey the Property according
to the terms of this Agreement, and such failure to convey continues for five
(5) business days after Purchaser shall have notified Seller in writing of such
failure, then Purchaser shall be entitled to seek specific performance of this
Agreement. If the Seller shall be in breach of its obligations hereunder, other
than the obligation to convey the Property according to the terms of this
Agreement, and such breach on Seller's part is not cured within five (5)
business days after Purchaser gives written notice of such breach to Seller,
then Purchaser shall have the right to an immediate refund of the Deposit and to
seek specific performance of this Agreement.

17.   BROKERAGE COMMISSION. Seller represents and warrants to Purchaser that
Seller has not engaged the services of a real estate broker or agent in
connection with the sale and purchase transaction contemplated in this
Agreement, except OnSite Realty Group, Inc. to whom Seller has agreed to pay
commissions pursuant to separate agreements. Seller shall be solely responsible
for any commissions or payments relating to this transaction due to the Brokers.
Purchaser represents and warrants to Seller that Purchaser has not engaged the
services of a real estate broker or agent in connection with the sale and
purchase transaction contemplated in this Agreement. Seller shall indemnify
Purchaser against and hold Purchaser harmless from all liabilities, costs,
damages and expenses (including reasonable attorneys fees), arising from any
claims for commissions or other similar fees in connection with the transaction
covered by this Agreement, based upon alleged arrangements or agreements made by
Seller. Purchaser shall indemnify Seller against and hold Seller harmless from
all liabilities, costs, damages, and expenses (including reasonable attorneys
fees) arising from any claims for brokerage commissions or other similar fees in
connection with the transactions covered by this Agreement, based upon alleged
arrangements or agreements made by Purchaser except claims made by the Brokers.

                                       12
<PAGE>

18.   CONDEMNATION. If all or any of the Lots are taken in condemnation or under
the right of eminent domain after the Effective Date and before a scheduled
Closing, Purchaser may, at its option, and within five (5) days after receipt of
notice of such taking, either (I) terminate this Agreement with respect to the
affected Lots by written notice to Seller and receive an immediate refund of the
portion of the Deposit applicable to the affected Lots, or (ii) proceed to close
the purchase and sale as provided in this Agreement. If Purchaser elects to
close, Seller shall deliver to Purchaser at the next Closing any proceeds
actually received by Seller attributable to the affected Lots from any such
condemnation or eminent domain proceeding, and shall assign to Purchaser its
right to receive any award not yet paid, and there shall be no reduction in the
Purchase Price.

19.   SIGNAGE. Purchaser and Seller agree that Purchaser may place marketing
signs approved by Seller, on the Property at locations approved by Seller after
the expiration of the Inspection Period, provided such signs do not violate any
law or governmental regulation.

20.   HOMEOWNERS ASSOCIATION. Purchaser acknowledges Seller has established a
community association (the "Association") under a Declaration of Covenants,
Conditions, Restrictions, Easements and Reservations for Pointe West (the
"Declaration") which will encumber the Property. Purchaser, as an owner of the
Property purchased hereunder, will be a member of the Association, subject to
all of the rights and obligations applicable to a member of the Association.
Purchaser agrees to accept title to the Property, subject to the Declaration and
to abide by and comply with all the terms and conditions thereof. Seller will
deliver a copy of the Declaration, the Association documents and the most recent
Association budget (collectively, the "Association Documents") to Purchaser
within ten (10) days from the Effective Date.

Seller does and shall indemnify, defend, save, and hold harmless Purchaser from
and against any loss, liability, cost, injury, expense, or damage of any and
every kind whatsoever (including without limitation, court costs and attorneys'
fees and expenses) arising from or related to Seller's acts or omissions as
Declarant or Developer under the Declaration or in the management or use of the
Property.

At the Initial Closing, Seller shall deliver to Purchaser a partial assignment
of its rights and exemptions as Declarant under the Declaration assigning
Purchaser all rights as may be reasonably necessary to facilitate the completion
and sale of Lots and improvements thereon, including but not limited to, a model
area, the maintenance of a sales office in the model area, the showing of
Property, the display of signs, and the right to construct or place sales and
construction offices of a temporary nature on the Property. Purchaser shall not
have any other Developer rights or duties

The Association Documents provide that assessments shall commence upon the
transfer of title to the Purchaser. Dues for the amenities will begin when Lot
title transfers to Purchaser. If it is decided that the South Village is to
become maintenance

                                       13
<PAGE>

free, dues for the amenities will be due at Lot transfer but the South Village
association dues will not be due until a CO is issued and the Lot is actually
receiving a benefit ie. Irrigation, lawn maintenance.

Notwithstanding any architectural review criteria contained in the Association
Documents, Seller acknowledges and agrees that Seller shall promptly review the
plans for the homes Purchaser will be building within the Property and Seller
will not unreasonably withhold approval of same. All floor plans and elevation
must have a minimum of three (3) different front elevations and two (2) rear
elevations. No identical elevation may be constructed next to each other.
Purchaser shall be entitled to make non-structural or other minor alterations to
the plans of any home design without seeking further architectural review
approval of Seller or the homeowners association. In addition, Purchaser agrees
that each home shall have a minimum landscape budget of six thousand dollars
($6,000) not including sod and irrigation and that a landscape plan for each
home will be submitted to Seller for his review and approval. For as long as
Seller is in control of the Homeowners Association, Purchaser shall not be
subject to any architectural review board fees or assessments relative to any
plans pre-approved by Seller as provided herein. Seller does and shall
indemnify, defend, save, and hold harmless Purchaser from and against any and
all losses, claims, damages, liabilities, and all costs and expenses, attorney
fees and court costs, fees and costs, and all other expenses related to, growing
out of, or arising from any breach of the foregoing representation. The
provisions of this paragraph shall survive the Closings or the termination of
this Agreement.

21.   RECREATIONAL AMENITIES. Purchaser agrees that the Seller assess an initial
non refundable fee to each third party purchaser from Purchaser to provide for
the establishment, maintenance or repair of a clubhouse and other recreational
facilities and community programs (the "Recreational Fee"). In addition, each
third party purchaser who pays the Recreational Fee shall have the right to
obtain a Sport Membership by paying the periodic dues to the Golf Club.
Subsequent purchasers of homes in Pointe West may assume a homeowner's Sport
Membership in the Golf Club, provided the homeowner is a Sport Member of the
Golf Club in good standing and current in payment of dues. If a Sport Membership
cannot be assumed, a subsequent purchaser from an existing homeowner in Pointe
West may obtain a Sport Membership by paying the then current Sport Membership
price. The Purchaser shall join in, consent and otherwise execute any and all
documents required to be signed by builders (commercial and residential) in the
Pointe West, or owners of land within Pointe West, to provide for the
Recreational Fee, provided that Purchaser shall have no liability associated
with the assessment, collection or operation of the Recreational Fee other than
as to payment of Recreational Fees properly imposed upon Lots purchased by
Purchaser. The initial assessment of the Recreational Fee shall not exceed Two
Thousand Dollars ($2,000) per Lot and is due at the time of third party home
closing. The Seller anticipates that a portion of the Recreational Fee will
provide the owner of each Lot with a social membership with rights to access the
clubhouse and its amenities

                                       14
<PAGE>

and limited access to the golf course.

22.   GOLF COURSE. On or before the sale and collection of the Recreational Fee
from all of the Lots, Seller shall commence the construction of a golf course
clubhouse and related facilities on Seller's Property within Pointe West, which
shall be no less than 4,000 square feet. Seller's golf course at Pointe West
(the "Golf Course") will either be a pay-for-play course open to the general
public, including without limitation the buyers of the dwelling units to be
constructed by Purchaser on the Property ("Pointe West Homeowners") or a private
golf course that provides limited access to all Pointe West Homeowners. If
Seller offers memberships to the Golf Course, Seller agrees to offer memberships
to Pointe West Homeowners at more favorable terms than offered to members of the
general public.

23.   DEFECTIVE LOT. In the event that Purchaser, prior to the commencement of
construction on any Lot, through no fault of Purchaser, discovers fill materials
unsuitable to support standard house footing, then Purchaser shall have the
right to reconvey the Lot involved (the "Defective Lot") to Seller provided
Purchaser discovers such condition and provides Seller written notice thereof
within one (1) year following the Closing of the Defective Lot. The purchase
price to be paid by Seller to Purchaser for any such Defective Lot shall be the
Purchase Price per Lot paid therefore by Purchaser. In the event a reconveyance
to Seller of a Defective Lot occurs hereunder, then Seller and Purchaser shall
equally bear the entire cost of any (i) recording fee and (ii) state, county or
other recordation tax, documentary stamp tax, or other transfer tax incurred in
recording the deed to any such Defective Lot. The reconveyance shall be free and
clear of all encumbrances except those to which the conveyance by Seller to
Purchaser was subject.

24.   ATTORNEY'S FEES. In connection with any litigation concerning this
Agreement, the prevailing party shall be entitled to recover costs and
reasonable attorney's fees through all trial and appellate levels of litigation.

25.   NOTICES. All notices to be given or to be served upon any party hereto in
connection with this Agreement must be in writing, and shall be hand delivered
or sent by facsimile transmission or by an overnight delivery service. Notice
shall be deemed to have been given and received when personally served, on the
day sent when notice is given by facsimile transmission and upon delivery when
notice is given by overnight delivery service. Notices shall be given to Seller
and Purchaser at the addresses set forth in this Agreement. Any party hereto
may, at any time, by giving three (3) days written notice to the other party,
designate a substitute address to which such notice shall be given. Notices
delivered on Saturday, Sunday or a national holiday shall be deemed delivered on
the next business day. The initial addresses of the parties shall be set forth
below:

                                       15
<PAGE>

As to Seller:         Pointe West of Vero Beach Ltd.
                      1999 Pointe West Drive
                      Vero Beach, Florida 32966
                      Attention: Mr. Chuck Mechling
                      Telephone: (772) 794-9912
                      Telecopy: (772) 794-9916

With a copy to:       Hatch & Doty, P.A.
                      701 A-1-A Highway
                      Suite 220
                      Vero Beach, Florida 32963
                      Attention: Ira C. Hatch, Esq.
                      Telephone (772) 234-4711
                      Telecopy (772) 234-8299

As to Purchaser:      Homes by Calton, LLC
                      2013 Indian River Blvd.
                      Vero Beach, Florida 32960
                      Attention: Maria Caldarone
                      Telephone: (772) 794-1414
                      Telecopy: (772) 794-2828

With a copy to:       Samuel Block, Esquire
                      3339 Cardinal Drive
                      Suite 200
                      Vero Beach, Florida 32963
                      Telephone: (772) 234-1501
                      Telecopy: (772) 231-3923

26.   POINTE WEST MARKETING PROGRAM. Seller shall present to Purchaser during
the Inspection Period the Pointe West Welcome Center Document. In consideration
of the Purchaser's payment of $8,000 per Lot to be paid $4,000 at the Lot
closing and $4,000 due 180 days after the lot closing. Seller agrees to
undertake a program of marketing/advertising for Pointe West, including the
Property to be conveyed to Purchaser pursuant to this Agreement (the "Marketing
Program").

      A.    The Marketing Program is intended to be a shared vehicle promoting
            Pointe West and specifically identifying the participants in the
            Marketing Program, including Seller, Purchaser and other builders
            active in Pointe West.

      B.    All participants in the Marketing Program, including Seller, shall
            contribute

                                       16
<PAGE>

            fees to the Program. If any sign or advertisement paid for by the
            Marketing Program identifies any participant in the Marketing
            Program, including but not limited to Seller or Purchaser, all
            participants will be identified in such advertisements and signs
            paid for through the Marketing Program.

      C.    All participants in the Marketing Program shall be treated
            equitably.

      D.    Seller shall include the requirement of participation in the
            Marketing Program in each contract to sell single family residential
            land to builders within Pointe West, and Seller shall collect all
            amounts due as Marketing Fees from all participants. Purchaser shall
            not be required to pay Marketing Fees unless all future builders and
            owners of land in Pointe West are required to pay Marketing Fees.

      E.    Within sixty (60) days of the Effective Date and on or before each
            December 1 thereafter until either Purchaser has sold all residences
            in Pointe West constructed by Purchaser, Seller shall deliver to
            Purchaser, and to all other participants in the Marketing Program,
            an annual plan for the Marketing Program setting forth the proposed
            signs and advertisements, and other promotional events, for the
            ensuing year. Purchaser shall have fifteen (15) days after receipt
            of the proposed annual plan in which to notify Seller in writing of
            suggestions it may have.

      F.    Seller agrees that Marketing Fees paid by builders and owners in
            Pointe West shall be used for Pointe West per the Pointe West
            Welcome Center Agreement.

27.   LOT GRADE AND SOIL COMPACTION. Seller shall be responsible for grading
each Lot such that the entire Lot is within two and one half (2 1/2) inches
above or below the elevation of the grade of the nearest curb to the Lot.
Purchaser shall grade each Lot so that all stormwater from the Lot shall drain
into or onto adjacent road rightsof- way, drainage easements, retention and/or
detention areas, swales or other drainage facilities and shall not drain or flow
onto, over, under, across or upon any adjacent Lot, unless a drainage easement
shall exist therefore in accordance with all applicable regulations of the St.
Johns Water management District and all applicable permits.

Purchaser shall comply with all regulations governing maximum impervious surface
areas and other regulations concerning the land areas of a Lot covered by a
house and related improvement

28.   POLLUTION CONTROL. Purchaser and Seller will fully comply with the General
NPDES Permit to Discharge Storm Water Associated with Construction Activities,
pursuant to the Clean Water Act or similar laws (the "Permit"). If either party

                                       17
<PAGE>

fails to do so, the other may elect the default remedies available to it under
this Agreement. After Notice to the defaulting party and the expiration of the
applicable cure period, the non defaulting party shall have the right, but not
the obligation, to perform the defaulting party's obligations under said Permit,
including creating and implementing the requisite Erosion, Sedimentation and
Pollution Control Plan. All reasonable costs associated with the performance of
the obligations under the Permit, including attorneys' and consultants' fees,
shall be reimbursed to the non defaulting party by the defaulting party within
fifteen (15) days of demand by the non defaulting party. In addition, Purchaser
and Seller hereby fully indemnify and hold the other harmless against any and
all consequences, including any claims by third parties or any governmental
authority, resulting directly or indirectly from the other's failure to comply
with the Permit. Purchaser shall not be required to complete any Closing unless
Seller is in compliance with the NPDES rules (including the establishment of an
approved plan and monitoring obligations) at the time of the Closing.

29.   MISCELLANEOUS PROVISIONS.

      A.    ENTIRE AGREEMENT. This Agreement, including all exhibits attached
            hereto, embodies the complete and entire agreement between the
            parties regarding this transaction and supersedes all prior
            negotiations, agreements and understandings relating thereto. It may
            not be varied or modified except by written agreement executed by
            both Seller and Purchaser.

      B.    NON-WAIVER. No delay or omission in the exercise of any right or
            remedy accruing to Seller or Purchaser upon any breach under this
            Agreement shall impair such right or remedy or be construed as a
            waiver of any other breach occurring before or after such breach.
            The waiver by Seller or Purchaser of any breach of any term,
            covenant or condition in this Agreement stated shall not be deemed
            to be a waiver of any other breach, or of a subsequent breach of the
            same or any other term, covenant or condition herein contained.

      C.    FURTHER ASSURANCES. In addition to the obligations recited in this
            Agreement and contemplated to be performed, executed or delivered by
            Seller and Purchaser, both parties shall perform, execute and
            deliver or cause to be performed, executed and delivered, at the
            Closings or after the Closings, any and all further acts, deeds and
            assurances as either party or the Title Company may reasonably
            require to consummate this transaction and vest title to the
            Property in Purchaser.

      D.    GOVERNING LAW. This Agreement shall be construed under and in
            accordance with the laws of the State of Florida and venue for its
            enforcement shall be in Indian River County.

                                       18
<PAGE>

      E.    PARTIAL INVALIDITY. If any provision in this Agreement is held to be
            invalid, illegal, or unenforceable in any respect or the application
            of any provision is held to be invalid, illegal, or unenforceable as
            to any person, fact, circumstance or situation, such invalidity,
            illegality, or unenforceability shall not affect the remainder of
            such provision, any other provision hereof, or any permitted
            application provided that the invalidity or unenforceability of such
            provision does not materially adversely affect the benefits accruing
            to, or the obligations imposed upon, any party hereunder, and the
            parties agree to substitute for the invalid or unenforceable
            provision a valid and enforceable provision that most closely
            approximates the intent and economic effect of the invalid or
            unenforceable provision. This Agreement shall be construed so as to
            be valid, legal, binding, and enforceable to the fullest extent
            permitted by law, and as if this Agreement had never contained any
            such invalid, illegal, or unenforceable provision. This Agreement
            shall be construed so as to be valid, legal, binding and enforceable
            to the fullest extent permitted by law, and as if this Agreement had
            never contained any such invalid, illegal, or unenforceable
            provision.

      F.    COUNTERPARTS. This Agreement may be executed in two or more
            counterparts, all of which together shall constitute one and the
            same instrument. There may be duplicate originals of this Agreement,
            only one of which need be produced as evidence of the terms hereof.

      G.    TIME. If any date described in this Agreement falls on a Saturday,
            Sunday or national holiday that date shall be automatically extended
            to the next day that is not a Saturday, Sunday or national holiday.
            Time shall be of the essence as to all maters set forth herein

      H.    RISK OF LOSS. Risk of loss or damage to the Property, or any part
            thereof, by fire or any other casualty from the Effective Date to
            the time of recording of the Deeds will be on the Seller and
            thereafter will be on the Purchaser.

      I.    SURVIVAL OF COVENANTS. The respective obligations and covenants in
            this agreement contained of a continuing nature shall survive the
            Closing Dates.

      J.    ASSIGNMENT. Purchaser's rights and duties pursuant to this Agreement
            may not be assigned by Purchaser, except to Southern Classic Homes,
            LC. without the written consent of Seller, which consent shall not
            be unreasonably withheld. All transfers or assignments must be
            approved by both parties, in writing, which approval will not be
            unreasonably withheld or delayed. Purchaser may not assign its
            interest in this

                                       19
<PAGE>

            Agreement if the Agreement is in default (after the applicable cure
            period) as defined in Section 16 above.

      K.    FORCE MAJEURE. In the event that the performance by either party of
            any of its obligations or undertakings hereunder shall be
            interrupted or delayed by any occurrence and not occasioned by the
            conduct of the party claiming the benefits of this clause, whether
            such occurrence be an act of God or the common enemy or the result
            of war, riot, strikes or labor unrest, civil commotion, sovereign
            conduct, or the act or conduct of any person or persons not party or
            privy hereto, then such party shall be excused from such performance
            for such period of time as is reasonably necessary after such
            occurrence to remedy the effects thereof.

IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement as of
the dates set forth below their signatures.

SELLER:

POINTE WEST OF
VERO BEACH LTD.

BY: POINTE WEST OF VERO BEACH, INC.,
    IT'S GENERAL PARTNER

By: ________________________________
Charles R. Mechling, President
Dated: ____________________, 2004

PURCHASER:

HOMES BY CALTON, LLC

By: ________________________________
Its: ________________________________
Dated: _____________________, 2004

                                       20
<PAGE>

                                  EXHIBIT "A"

                              PROPERTY DESCRIPTION

Forty one (41) of the proposed eighty two (82) golf Lots located in the South
Village at Pointe West.

                                  EXHIBIT "B"

                                SUBDIVISION PLAN

Attached hereto in the form of the preliminary Plat.

                                  EXHIBIT "C"

                              LOT PHASING SCHEDULE

Phase I shall consist of Lots (Schedule to be attached during the Inspection
Period). The Initial two Lots to be purchased are (Schedule to be attached
during Inspection Period.

Phase II shall consist of Lots (Schedule to be attached during Inspection
Period).

                                       21
<PAGE>

                                   EXHIBIT D

                            PURCHASE PRICE SCHEDULE

TAKEDOWN SCHEDULE
The Purchaser agrees to purchase nineteen (19) Lots in Phase I and twenty-two
(22) Lots in Phase II according to the following takedown and pricing schedules:

Upon issuance of Land Development Building Permit 2 Lots (model construction)
Upon Completion of Subdivision Improvements 4 Lots (beginning of Phase I) -
Initial Closing Every 3 Months (quarterly) 6 Lots (2 per Month)

Phase II to commence on the completion of Phase I (19 Lots) and all Lots
purchased in the final 3 months of Phase I will count towards the minimum
quarterly Lot purchase requirement in Phase II. All Lots purchased in the final
3 months of Phase II will count towards the quarterly minimum requirement in the
East Village. See Schedule A-1 hereto for the minimum required takedown
schedule.

PRICING OF LOTS
                Base Lot Price - Phase I ***
                Base Lot Price - Phase II ***
                Base Lot Price - East Village ***

The Purchaser shall pay the base price per Lot plus a 6% simple interest
escalation to begin accruing 30 days after initial takedown in each Phase in
accordance with the attached Schedules A-2 and A-3. The Purchaser has the right
to purchase the minimum required six Lots per quarter, at a rate of two lots per
month, for the lot price and escalation fee accrued as of such date. In
addition, the Purchaser may elect to accelerate the purchase of additional Lots
during any given quarter, paying the Lot price and escalation fee accrued as of
such date.

                                  EXHIBIT "E"

                              PERMITTED EXCEPTIONS

To be attached during the Inspection Period.

                                       22
<PAGE>

                                  EXHIBIT "F"

                        LOTS SIZE AND BUILDING ENVELOPES

The Lots sizes are depicted in Exhibit "B". The minimum front setback is 5 feet.
The rear setback is 20 feet. The minimum side setback is 6 feet and the maximum
building width is 60 feet. The maximum number of homes which have side entry
courtyard style garages is 33% of the total contracted Lots.

                                       23

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